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Newalta Reports First Quarter 2014 Results, Increases Dividend

CALGARY, ALBERTA -- (Marketwired) -- 05/05/14 -- Newalta Corporation ("Newalta") (TSX: NAL) today reported results for the three months ended March 31, 2014. Reflecting its continued positive long-term outlook and the momentum associated with growth initiatives, Newalta announced a 14% percent increase in its quarterly dividend to $0.125 per share.

FINANCIAL HIGHLIGHTS(1)


                                          Three months ended
                                                   March 31,
($000s except per share data)                                    % Increase
 (unaudited)                             2014           2013      (Decrease)
----------------------------------------------------------------------------
Revenue                               187,780        171,348             10
Gross profit                           41,652         37,836             10
  - % of revenue                           22%            22%             -
Net earnings(2)                         6,503         14,160            (54)
  - per share ($) - basic                0.12           0.26            (54)
  - per share ($) - diluted              0.12           0.26            (54)
Adjusted net earnings(2)               10,368          5,753             80
  - per share ($) - basic(2)             0.19           0.11             73
Adjusted EBITDA(2)                     32,051         27,721             16
  - per share ($)(2)                     0.58           0.51             14
Cash from (used in) operating
 activities                            11,637        (19,002)           161
  - per share ($)                        0.21          (0.35)           160
Funds from operations(2)               24,103         23,699              2
  - per share ($)(2)                     0.43           0.43              -
Maintenance capital
 expenditures(2)                        3,811          3,670              4
Growth capital expenditures(2)         23,284         16,871             38
Dividends declared                      6,128          5,473             12
  - per share ($)(2)                     0.11           0.10             10
Dividends paid                          4,459          4,311              3
Book value per share, March 31,         12.24          12.05              2
Weighted average shares
 outstanding                           55,518         54,512              2
Shares outstanding, March
 31,(3)                                55,710         54,735              2
----------------------------------------------------------------------------
(1) Newalta's unaudited Condensed Consolidated Financial Statements are
    attached. References to Generally Accepted Accounting Principles
    ("GAAP") are synonymous with IFRS and references to unaudited Condensed
    Consolidated Financial Statements are synonymous with Financial
    Statements.
(2) These financial measures do not have any standardized meaning prescribed
    by GAAP and are therefore unlikely to be comparable to similar measures
    presented by other issuers. Non-GAAP financial measures are identified
    and defined later in this document.
(3) Newalta has 55,768,237 shares outstanding as at May 5, 2014.

Management Commentary

"In the first quarter, performance in New Markets and Oilfield was strong," said Al Cadotte, President and CEO of Newalta. "Revenue was up 10 percent and Adjusted EBITDA increased 16 percent, compared to last year.

"We continue to expect 20 percent growth in Adjusted EBITDA for the year, driven by strong contributions from our growth capital investments and improved market activity. We will continue to grow our New Markets and Oilfield divisions as we review strategic alternatives for our Industrial Division."

Dividend Increase

In determining the dividend, the Board of Directors considers a number of factors including forecasts for operating and financial results, maintenance and growth capital requirements, market activity and economic conditions. After a review of all factors, the Board approved a 14 percent increase in the quarterly cash dividend to $0.125 per share ($0.50 per share annualized) from $0.11 per share ($0.44 per share annualized), starting with the dividend payable to shareholders of record as of June 30, 2014.

Consolidated Overview

Results in the first quarter were driven by contributions from our growth capital investments and improved commodity prices, offset by the impact of the unusually cold winter on our operations. First quarter revenue was up 10% year-over-year to $187.8 million, while Adjusted EBITDA grew by 16% to $32.1 million. Solid contributions from New Markets and Oilfield were partially offset by Industrial. Net earnings were $6.5 million, down 54% over Q1 2013 due to stock-based compensation expense and restructuring related costs.

Q1 2014 Adjusted SG&A declined from 12.3% of revenue in 2013 to 11.1% of revenue this year, primarily due to overhead reductions in the quarter as part of the Rationalization Plan.

Capital expenditures for the three months ended March 31, 2014 were $27.1 million, focused primarily on growth capital projects in New Markets and Oilfield.

Operational Overview

New Markets revenue and gross profit in the quarter increased 37% and 17%, respectively, to $56.1 million and $14.6 million compared to prior year. Improved performance was driven by strong growth in Heavy Oil supported by our growth capital investments in onsite contracts and contributions from our Heavy Oil facilities.

Oilfield revenue and gross profit in the quarter increased 12% and 5%, respectively, to $54.3 million and $20.6 million compared to prior year. Results were positively impacted by contributions from growth capital investments, higher waste processing volumes and improved commodity prices. These gains were offset by the impact of extreme weather on operating costs.

Industrial revenue decreased by 6% to $77.3 million while gross profit increased by 14% to $6.4 million. Strong contributions from our onsite services and from the Rationalization Plan were offset by lower contributions from our oil recycling services (ORS), and the timing of waste receipts at our Stoney Creek Landfill (SCL).

Recent Developments

During the quarter, we initiated the rationalization plan associated with the comprehensive review announced in December 2013 focused primarily on our Industrial Division (the Rationalization Plan). We closed four facilities, reduced overhead in associated support functions and began redirecting lines of business. In April, we also engaged RBC Capital Markets to conduct a review of a full range of strategic alternatives for our Industrial Division, including a potential sale, IPO or spin-off of the division, in whole or in parts.

In Q1 2014, we realized approximately $1.5 million in savings and remain on track to realize approximately $10 million in annualized ongoing cash savings associated with the Rationalization Plan. We incurred approximately $4.5 million in one-time restructuring costs and anticipate incurring an additional $1.0 million before year end. Management will assess and update savings and cost estimates throughout the year.

In addition to the Rationalization Plan discussed above, we are assessing our cost structure across all divisions, including SG&A. We have identified areas where improvements can be made to better align resources with our business needs and actions will be taken throughout 2014. Once implemented, additional cost savings above those identified under the Rationalization Plan will be realized.

Outlook

We expect to deliver Adjusted EBITDA growth of 20% over 2013. Growth capital investments combined with improved commodity prices, the rationalization initiatives focused primarily on the Industrial Division and reductions in SG&A, will drive strong returns and improved results over prior year.


--  Growth in New Markets will be driven by our onsite contracts and the
    progression of the U.S. satellite program. We continue to work on
    securing new contracts, including MFT processing in the oil sands, and
    on the development of our multiphase Fort McMurray facility. In Q2, we
    will benefit from contributions from three satellites in the U.S. and
    are on track to exit 2014 with six satellites established in oil rich
    plays either operating or in some phase of construction or
    commissioning.
--  In Oilfield, growth will be driven by our satellite program, improved
    commodity prices and steady drilling activity. Our satellite program
    continues to progress with two satellites, established in late 2013,
    expected to be contributing following spring break up. In addition, we
    plan to construct two additional satellites in 2014.
--  In Industrial, we expect improved returns from steady activity levels
    and initiatives implemented under the Rationalization Plan. Activity
    levels at Ville Ste-Catherine (VSC) and SCL are expected to be in line
    with 2013.

We continue to focus on growing our portfolio of longer term contracts, strengthening our foundation of stable cash flow, and maximizing returns from our existing assets.

Other Highlights

Newalta's Board of Directors declared a first quarter dividend of $0.11 per share ($0.44 per share annualized) paid April 15, 2014 to shareholders of record on March 31, 2014.

On April 1, 2014, we issued $150 million Series 3 Senior Unsecured Debentures with a seven-year term, bearing interest at the rate of 5.875% per annum. Proceeds from the offering were used to redeem our $125 million 7.675% Series 1 Senior Unsecured Debentures and to repay a portion of outstanding debt on our credit facility. These initiatives further enhance our financial flexibility and strengthen our balance sheet by increasing the proportion of long term debt, extending the average term of our debt outstanding, and lowering our cost of debt.

Quarterly Conference Call

Management will hold a conference call on Tuesday, May 6, 2014 at 11:30 a.m. (ET) to discuss Newalta's performance for the quarter ended March 31, 2014. To participate in the teleconference, please call 416-340-2216, or 866-223-7781. To access the simultaneous webcast, please visit www.newalta.com. For those unable to listen to the live call, a taped broadcast will be available at www.newalta.com and, until midnight on Tuesday, May 13, 2014 by dialing 800-408-3053 and entering passcode 7153555 followed by the pound sign.

Newalta will hold its annual and special meeting of shareholders on Wednesday, May 7, 2013 at 11:00 a.m. Mountain Time.


Location: Newalta's corporate office, Building 'C'
220 - 12th Avenue, S.W.
Calgary, Alberta

For those unable to attend the annual and special meeting, the presentation will be webcast live at www.newalta.com and subsequently archived on Newalta's website.

About Newalta

Newalta is North America's leading provider of innovative, engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from industrial residues. We serve customers onsite directly at their operations and through a network of 85 locations in Canada and the U.S. Our proven processes, portfolio of more than 250 operating permits and excellent record of safety make us the first choice provider of sustainability enhancing services to oil, natural gas, petrochemical, refining, lead, manufacturing and mining markets. With a skilled team of more than 2,100 people, two decade track record of profitable expansion and commitment to commercializing new solutions, Newalta is positioned for sustained future growth and improvement. Newalta trades on the TSX as NAL. For more information, visit www.newalta.com.

The press release contains certain statements that constitute forward-looking information. Please refer to the section below "Forward-Looking Information", for further discussion of assumptions and risks relating to this forward looking information.

The unaudited interim Condensed Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on our website at www.newalta.com under Investor Relations/Financial Reports.


SELECTED FINANCIAL INFORMATION
                                          Three months ended
                                                   March 31,
($000s, except where otherwise                                   % Increase
 noted) (unaudited)                      2014           2013      (Decrease)
----------------------------------------------------------------------------
New Markets(1)
Revenue                                56,109         40,858             37
Gross Profit                           14,627         12,491             17
- % of revenue                             26%            31%           (16)
Revenue by Business Unit
  Heavy Oil                                71%            60%            18
  U.S.                                     29%            40%           (28)
Divisional EBITDA(2)                   18,347         14,958             23
Assets Employed(3)                    301,766        225,659             34
Oilfield(1)
Revenue                                54,328         48,632             12
Gross Profit                           20,612         19,704              5
- % of revenue                             38%            41%            (7)
Divisional EBITDA(2)                   24,059         22,681              6
Assets Employed(3)                    386,947        354,753              9
Industrial
Revenue                                77,343         81,858             (6)
Gross Profit                            6,413          5,641             14
- % of revenue                              8%             7%            14
Revenue by Business Unit
  Western Industrial                       25%            24%             6
  Eastern Industrial                       75%            76%            (1)
    VSC as a percent of
     Industrial Division                   35%            40%           (13)
Divisional EBITDA(2)                   10,451         11,192             (7)
Assets Employed(3)                    398,085        428,805             (7)
Capital Expenditures
Maintenance capital
 expenditures                           3,811          3,670              4
  New Markets                           1,054            252            318
  Oilfield                              1,242          1,852            (33)
  Industrial                              849            838              1
Growth capital expenditures            23,284         16,871             38
  New Markets                          11,990          5,323            125
  Oilfield                              6,522          5,242             24
  Industrial                            1,879          2,838            (34)
----------------------------------------------------------------------------
(1) New Markets and Oilfield Divisional EBITDA and Gross Profit for the
    three months ended March 31, 2013 have been restated to reflect a change
    in reporting structure. New Markets was reduced and Oilfield was
    increased by $527.
(2) Divisional EBITDA does not have any standardized meaning prescribed by
    GAAP.
(3) Assets employed is provided to assist management and investors in
    determining the effectiveness of the use of the assets at a divisional
    level. Assets employed is the sum of capital assets, intangible assets
    and goodwill allocated to each division. Assets employed as defined does
    not include capital assets held by corporate. Corporate assets include
    information technology, leasehold improvements, and technical
    development.

Condensed Consolidated Balance Sheets
(Unaudited - Expressed in thousands of
 Canadian Dollars)
                                                               December 31,
                                              March 31, 2014           2013
----------------------------------------------------------------------------
Assets
Current assets
  Accounts and other receivables                     146,360        148,998
  Inventories                                         60,465         57,037
  Prepaid expenses and other assets                   11,625         14,441
  Assets held for sale                                11,089          2,450
----------------------------------------------------------------------------
                                                     229,539        222,926
Non-current assets
  Property, plant and equipment                    1,026,863      1,011,921
  Permits and other intangible assets                 49,802         52,595
  Other long-term assets                              31,823         24,632
  Goodwill                                            96,167         96,167
----------------------------------------------------------------------------
TOTAL ASSETS                                       1,434,194      1,408,241
----------------------------------------------------------------------------
Liabilities
Current liabilities
  Bank indebtedness                                      739          1,321
  Accounts payable and accrued liabilities           179,274        217,283
  Dividends payable                                    6,128          6,087
----------------------------------------------------------------------------
                                                     186,141        224,691
Non-current liabilities
  Senior secured debt                                171,895        117,136
  Senior unsecured debentures                        247,129        246,970
  Other liabilities                                    1,403          2,537
  Deferred tax liability                              80,867         80,646
  Decommissioning liability                           64,767         61,099
----------------------------------------------------------------------------
TOTAL LIABILITIES                                    752,202        733,079
----------------------------------------------------------------------------
Shareholders' Equity
Shareholders' capital                                416,744        409,894
Contributed surplus                                   10,669         15,251
Retained earnings                                    246,209        245,834
Accumulated other comprehensive income                 8,370          4,183
----------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                           681,992        675,162
----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY         1,434,194      1,408,241
----------------------------------------------------------------------------

Condensed Consolidated Statements of Operations
(Unaudited - Expressed in thousands of Canadian Dollars)

(Except per share data)
                                                 For the three months ended
                                                                  March 31,
                                                        2014           2013
----------------------------------------------------------------------------
Revenue                                              187,780        171,348
Cost of sales                                        146,128        133,512
----------------------------------------------------------------------------
Gross profit                                          41,652         37,836
----------------------------------------------------------------------------
  Selling, general and administrative                 30,218         23,166
  Restructuring related costs                          4,382              -
----------------------------------------------------------------------------
Earnings before finance charges and income
 taxes                                                 7,052         14,670
----------------------------------------------------------------------------
  Finance charges                                      6,649          6,593
  Embedded derivative gain                            (6,556)        (7,068)
----------------------------------------------------------------------------
Net financing charges expense (recovery)                  93           (475)
----------------------------------------------------------------------------
Earnings before income taxes                           6,959         15,145
----------------------------------------------------------------------------
Income tax expense                                       456            985
----------------------------------------------------------------------------
Net earnings                                           6,503         14,160
----------------------------------------------------------------------------
Net earnings per share                                  0.12           0.26
Diluted earnings per share                              0.12           0.26
----------------------------------------------------------------------------

Supplementary information:
Amortization included within cost of sales            11,205         10,995
Amortization included in selling, general and
 administrative                                        3,373          3,395
----------------------------------------------------------------------------
Total amortization                                    14,578         14,390
----------------------------------------------------------------------------

Condensed Consolidated Statements of Comprehensive Income
(Unaudited - Expressed in thousands of Canadian Dollars)
                                                 For the three months ended
                                                                  March 31,
                                                        2014           2013
----------------------------------------------------------------------------
Net earnings                                           6,503         14,160
Other comprehensive income:
  Exchange difference on translating foreign
   operations                                          4,160          2,361
  Unrealized gain (loss) on available for sale
   investment                                             27            (32)
----------------------------------------------------------------------------
Other comprehensive income                             4,187          2,329
----------------------------------------------------------------------------
Total comprehensive income                            10,690         16,489
----------------------------------------------------------------------------

Condensed Consolidated Statement of Changes in Equity
(Unaudited - Expressed in thousands of Canadian Dollars)
                                                       Accumulated
                                                             other
                  Shareholders' Contributed Retained comprehensive
                        capital     surplus earnings  income (loss)   Total
----------------------------------------------------------------------------
Balance, December
 31, 2012               394,048       2,881  247,565        (3,054) 641,440
----------------------------------------------------------------------------
Changes in equity
 for the three
 months ended
 March 31, 2013
Exercise of
 options                  5,912           -        -             -    5,912
Reduction of 2012
 share issuance
 costs                      124           -        -             -      124
Issuance of shares        1,116           -        -             -    1,116
Dividends declared            -           -   (5,473)            -   (5,473)
Other
 comprehensive
 income                       -           -        -         2,329    2,329
Net earnings for
 the period                   -           -   14,160             -   14,160
----------------------------------------------------------------------------
Balance, March 31,
 2013                   401,200       2,881  256,252          (725) 659,608
----------------------------------------------------------------------------
Changes in equity
 for the nine
 months ended
 December 31, 2013
Expense related to
 vesting of
 options                      -         235        -             -      235
Reclassification
 of equity settled
 options                      -      12,598        -             -   12,598
Exercise of
 options                  4,722        (463)       -             -    4,259
Issuance of shares        3,972           -        -             -    3,972
Dividends declared            -           -  (18,198)            -  (18,198)
Other
 comprehensive
 income                       -           -        -         4,908    4,908
Net earnings for
 the period                   -           -    7,780             -    7,780
----------------------------------------------------------------------------
Balance, December
 31, 2013               409,894      15,251  245,834         4,183  675,162
----------------------------------------------------------------------------
Changes in equity
 for the three
 months ended
 March 31, 2014
Expense related to
 vesting of
 options                      -         640        -             -      640
Exercise of
 options                  5,222      (5,222)       -             -        -
Issuance of shares        1,628           -        -             -    1,628
Dividends declared            -           -   (6,128)            -   (6,128)
Other
 comprehensive
 income                       -           -        -         4,187    4,187
Net earnings for
 the period                   -           -    6,503             -    6,503
----------------------------------------------------------------------------
Balance, March 31,
 2014                   416,744      10,669  246,209         8,370  681,992
----------------------------------------------------------------------------

Condensed Consolidated Statements of Cash Flows
(Unaudited - Expressed in thousands of Canadian Dollars)
                                                 For the three months ended
                                                                  March 31,
                                                        2014           2013
----------------------------------------------------------------------------
Cash provided by (used for):
Operating Activities
Net earnings                                           6,503         14,160
Adjustments for:
  Amortization                                        14,578         14,390
  Income tax expense                                     456            985
  Income tax paid                                        (32)          (207)
  Non-cash stock-based compensation expense
   (recovery)                                          3,215         (4,313)
  Net financing charges                                   93           (475)
  Finance charges paid                                  (858)        (1,006)
  Other                                                  148            165
----------------------------------------------------------------------------
Funds from Operations                                 24,103         23,699
Increase in non-cash working capital                 (10,753)       (41,673)
Decommissioning costs incurred                        (1,713)        (1,028)
----------------------------------------------------------------------------
Cash from (used in) Operating Activities              11,637        (19,002)
----------------------------------------------------------------------------
Investing Activities
  Additions to property, plant and equipment         (60,787)       (39,782)
  Other                                                 (397)        (3,645)
----------------------------------------------------------------------------
Cash used in Investing Activities                    (61,184)       (43,427)
----------------------------------------------------------------------------
Financing Activities
  Issuance of shares                                       -          1,647
  Increase in senior secured debt                     54,759         49,501
  (Decrease) increase in bank indebtedness              (582)        14,767
  Dividends paid                                      (4,459)        (4,311)
----------------------------------------------------------------------------
Cash from Financing Activities                        49,718         61,604
----------------------------------------------------------------------------
Effect of foreign exchange on cash                      (171)           416
----------------------------------------------------------------------------
Change in cash                                             -           (409)
Cash, beginning of period                                  -            409
----------------------------------------------------------------------------
Cash, end of period                                        -              -
----------------------------------------------------------------------------

FORWARD-LOOKING INFORMATION

Certain statements contained in this document constitute "forward-looking information" as defined under applicable securities laws. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "potential", "strategy", "target", and similar expressions, as they relate to Newalta Corporation and the subsidiaries of Newalta Corporation, or their management, are intended to identify forward-looking information. In particular, forward-looking information included or incorporated by reference in this document include statements with respect to:


--  future operating and financial results;
--  business prospects and strategy including related timelines;
--  capital expenditure programs and other expenditures;
--  realization of anticipated benefits of growth capital investments,
    acquisitions and our technical development initiatives;
--  realization of anticipated benefits from our Rationalization Plan and in
    particular the anticipated value and sustainability of the cash savings
    from such initiatives;
--  anticipated industry activity levels;
--  expected demand for our services;
--  the amount of dividends declared or payable in the future;
--  our projected cost structure; and
--  expectations and implications of changes in legislation.

Such information reflects our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation:


--  general market conditions of the industries we service;
--  strength of the oil and gas industry, including drilling activity;
--  fluctuations in commodity prices for oil and the price we received for
    our recovered oil;
--  fluctuations in commodity prices for lead including the price
    differential we pay for lead feedstock and the price we receive for our
    lead products;
--  fluctuations in base oil prices including the price differential we pay
    for used oil and the price we receive for our finished lube oil
    products;
--  fluctuations in interest rates and exchange rates;
--  supply of waste lead acid batteries as feedstock to support direct lead
    sales;
--  demand for our finished lead products by the battery manufacturing
    industry;
--  our ability to secure future capital to support and develop our
    business, including the issuance of additional common shares;
--  the highly regulated nature of the environmental services and waste
    management business in which we operate;
--  dependence on our senior management team and other operations management
    personnel with waste industry experience;
--  the competitive environment of our industry in Canada and the U.S.;
--  success of our growth, acquisition and technical development strategies
    including integration of businesses and processes into our operations
    and potential liabilities from acquisitions;
--  potential operational and safety risks and hazards, obtaining insurance
    for such risks and hazards on reasonable financial terms, and potential
    failure of meeting customer safety standards;
--  the seasonal nature of our operations;
--  costs associated with operating our landfills and reliance on third
    party waste volumes;
--  risk of pending and future legal proceedings;
--  risk to our reputation;
--  our ability to attract, retain, and integrate skilled employees and
    maintain positive labour union relationships;
--  open access for new industry entrants and the general unprotected nature
    of technology used in the waste industry;
--  possible volatility of the price of, and the market for, our common
    shares, and potential dilution for shareholders in the event of a sale
    of additional shares;
--  financial covenants in our debt agreements that may restrict our ability
    to engage in transactions or to obtain additional financing; and
--  such other risks or factors described from time to time in reports we
    file with securities regulatory authorities.

On April 7, 2014, we engaged a financial advisor to conduct a review of a full range of potential strategic alternatives for our Industrial Division which review is ongoing. As such, forward-looking information in this document is made subject to any changes that may be implemented as a result of this strategic review.

By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Many other factors could also cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking information and readers are cautioned that the foregoing list of factors is not exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Furthermore, the forward-looking information contained in this document is made as of the date of this document and, in each case, is expressly qualified by this cautionary statement. Unless otherwise required by law, we do not intend, or assume any obligation, to update any such forward-looking information.

The information contained on our website does not form part of this press release.

RECONCILIATION OF NON-GAAP MEASURES

This Press Release contains references to certain financial measures, including some that do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS" or "GAAP") and may not be comparable to similar measures presented by other corporations or entities. These financial measures are identified and defined below:

"EBITDA", "EBITDA per share", "Adjusted EBITDA", and "Adjusted EBITDA per share" are measures of our operating profitability. EBITDA provides an indication of the results generated by our principal business activities prior to how these activities are financed, assets are amortized or impaired, or how the results are taxed in various jurisdictions. In addition, Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation and restructuring related costs. Adjusted EBITDA provides improved continuity with respect to the comparison of our operating results over a period of time. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our common shares while restructuring costs are outside of our normal course of business. Restructuring related costs are charges directly attributable to the Rationalization Plan associated with the comprehensive review announced in December 2013. EBITDA and Adjusted EBITDA are derived from the consolidated statements of operations and comprehensive income. EBITDA per share and Adjusted EBITDA per share are derived by dividing EBITDA and Adjusted EBITDA by the basic weighted average number of shares.

They are calculated as follows:


                                                         Three months ended
                                                                  March 31,
($000s)                                                 2014           2013
----------------------------------------------------------------------------
Net earnings                                           6,503         14,160
Add back (deduct):
    Income taxes                                         456            985
    Net finance expense (recovery)                        93           (475)
    Amortization(1)                                   14,578         14,390
----------------------------------------------------------------------------
EBITDA                                                21,630         29,060
----------------------------------------------------------------------------
Add back (deduct):
    Stock-based compensation expense
     (recovery)                                        6,039         (1,339)
    Restructuring related costs                        4,382              -
----------------------------------------------------------------------------
Adjusted EBITDA                                       32,051         27,721
----------------------------------------------------------------------------
Weighted average number of shares                     55,518         54,512
----------------------------------------------------------------------------
EBITDA per share                                        0.39           0.53
----------------------------------------------------------------------------
Adjusted EBITDA per share                               0.58           0.51
----------------------------------------------------------------------------
(1) Includes impairment charges, non-cash gains or losses on asset disposal
    and other non-cash charges.

"Divisional EBITDA" provides an indication of the results generated by the division's principal business activities prior to how the assets are amortized, and before allocation of Selling, general and administrative costs ("SG&A"). Divisional EBITDA is the sum of gross profit and amortization for the respective division. Divisional EBITDA is derived from Gross Profit as follows:


                                                         Three months ended
                                                                  March 31,
($000s)                                                 2014           2013
----------------------------------------------------------------------------
Gross Profit                                          41,652         37,836
Add back:
  Amortization included in cost of sales              11,205         10,995
----------------------------------------------------------------------------
Divisional EBITDA                                     52,857         48,831
----------------------------------------------------------------------------
  New Markets(1)                                      18,347         14,958
  Oilfield(1)                                         24,059         22,681
  Industrial                                          10,451         11,192
Deduct:
  SG&A(2)                                             26,845         19,771
  Restructuring related costs                          4,382              -
----------------------------------------------------------------------------
EBITDA                                                21,630         29,060
----------------------------------------------------------------------------
(1) New Markets and Oilfield Divisional EBITDA for the three months ended
    March 31, 2013 has been restated to reflect a change in reporting
    structure. New Markets was reduced and Oilfield was increased by $527.
(2) SG&A excludes amortization of $3,373 and $3,395 for Q1 2014 and 2013,
    respectively.

"Adjusted net earnings" and "Adjusted net earnings per share" are measures of our profitability. Adjusted net earnings provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation recovery or expense, the gain or loss on embedded derivatives and restructuring related charges. Stock-based compensation expense, a component of employee remuneration, can vary significantly with changes in the price of our common shares. The gain on the embedded derivative is a result of the change in the trading price of the debentures and the volatility of the applicable bond market. Restructuring related costs are related to initiatives outside of our normal course of business. As such, Adjusted net earnings provides improved continuity with respect to the comparison of our results over a period of time. Adjusted net earnings per share is derived by dividing Adjusted net earnings by the basic weighted average number of shares.


                                                         Three months ended
                                                                  March 31,
($000s)                                                 2014           2013
----------------------------------------------------------------------------
Net earnings                                           6,503         14,160
Add back (deduct):
  Stock-based compensation expense (recovery)          6,039         (1,339)
  Embedded derivative (gain)                          (6,556)        (7,068)
  Restructuring related costs                          4,382              -
----------------------------------------------------------------------------
Adjusted net earnings                                 10,368          5,753
----------------------------------------------------------------------------
Weighted average number of shares                     55,518         54,512
----------------------------------------------------------------------------
Adjusted net earnings per share                         0.19           0.11
----------------------------------------------------------------------------

"Book value per share" is used to assist management and investors in evaluating the book value compared to the market value.


                                                         Three months ended
                                                                  March 31,
($000s)                                                 2014           2013
----------------------------------------------------------------------------
Total Equity                                         681,992        659,608
Shares outstanding, March 31,                         55,710         54,735
----------------------------------------------------------------------------
Book value per share                                   12.24          12.05
----------------------------------------------------------------------------

"Cash Basis Return on Capital" ("ROC - Cash") is used to assist management and investors in measuring the returns realized at the consolidated level from capital employed. ROC - Cash is derived from Adjusted EBITDA less cash stock-based compensation, cash taxes and maintenance capital divided by Net Assets. Net Assets is an average of the beginning and ending balances of our total assets less current liabilities for the period.

"Divisional Return on Capital" is used to assist management and investors in measuring the returns realized at the Divisional level from capital employed. It is derived from Divisional EBITDA divided by the average of the beginning and ending balances of assets employed for the period.

"Funds from operations" is used to assist management and investors in analyzing cash flow and leverage. Funds from operations as presented is not intended to represent operating funds from operations or operating profits for the period, nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. Funds from operations is derived from the consolidated statements of cash flows and is calculated as follows:


                                                         Three months ended
                                                                  March 31,
($000s)                                                 2014           2013
----------------------------------------------------------------------------
Cash from (used in) Operating Activities              11,637        (19,002)
Add back:
  Increase in non-cash working capital                10,753         41,673
  Decommissioning obligations incurred                 1,713          1,028
----------------------------------------------------------------------------
Funds from operations                                 24,103         23,699
----------------------------------------------------------------------------
Weighted average number of shares                     55,518         54,512
----------------------------------------------------------------------------
Funds from operations per share                         0.43           0.43
----------------------------------------------------------------------------

References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Divisional EBITDA, Adjusted net earnings, Adjusted net earnings per share, ROC - Cash, Divisional Return on Capital, Funds from operations, and Funds from operations per share throughout this document have the meanings set out above. Adjusted SG&A is defined as SG&A adjusted for stock-based compensation and amortization.

Contacts:
Newalta Corporation
Anne M. Plasterer
Executive Director, Investor Relations
(403) 806-7019

Newalta Corporation
Stephanie MacVicar
Director, Investor Relations
(403) 806-7391
www.newalta.com

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