Primary Energy Recycling Corporation Announces Fourth Quarter and Year-End 2007 Results
OAK BROOK, IL, Feb. 29 /PRNewswire-FirstCall/ — Primary Energy Recycling Corporation (TSX: PRI.UN) (the “Company”) today released its financial results for the three months and year ended December 31, 2007. All amounts are in U.S. dollars unless otherwise indicated.
Summary – Revenue of $21.2 million in the fourth quarter of 2007 increased by 15.8% from the fourth quarter of 2006. – Distributable cash for the fourth quarter of 2007 is 11.7% greater than the same period in 2006. – Monthly cash distributions to holders of Enhanced Income Securities (EISs) resumed at an annualized rate of Cdn $0.80 per year in December 2007 following the Second Amendment and Limited Waiver to Credit Agreement.
“The fourth quarter was our best quarter in a year,” said John Prunkl, President of the Company’s Manager. “Throughout 2007, the Company’s facilities generally performed effectively. However, we had disappointing financial performance at Harbor Coal, as well as a 35-day unplanned outage at our North Lake facility which also impacted results. We continue to work to amend the Harbor Coal agreement with a goal of providing a more simplified tolling formula that is intended to yield improved stability and a more predictable cash flow. It is our understanding all senior management approvals have been obtained by our customer and the amendment is now before their board for final ratification. While progress has been encouraging and the process is coming to a conclusion, the agreement will not be executed as of February 29, 2008. As a result, the Company is subject to provisions outlined in the Second Amendment and Limited Waiver to Credit Agreement that may result in cash sweeps and additional interest costs depending upon financial results. If the Harbor Coal amendment is executed subsequent to February 29, 2008, the cash sweep and increased interest provisions are eliminated.”
During 2007, the Company paid distributions of Cdn $0.83 per EIS to unitholders which compares favorably to the current annualized Cdn $0.80 distribution level. At year-end 2007, the Company had cash on-hand of $15.3 million and $12.0 million of undrawn revolver capacity.
In the fourth quarter of 2007, the Company earned revenue of $21.2 million, an increase of 15.8% from the fourth quarter of 2006 primarily due to increased Energy Service revenue at the Company’s Harbor Coal facility. Total operating and maintenance expenses for the fourth quarter of 2007 were $7.6 million, up 12.5% from the fourth quarter of 2006 due to additional service fee expense at the Harbor Coal facility. General and administrative expenses for the fourth quarter of 2007 were $2.9 million, an increase of 46.9% over the same period in the prior year which is the result of 2007 additional property tax expenses and professional fees totaling $0.3 million combined with a fourth quarter 2006 management incentive fee expense reduction of $0.6 million.
The Company’s revenue of $75.0 million for the full year of 2007 decreased 13.8% from 2006 primarily as a result of an Energy Service revenue decline at the Harbor Coal facility and unplanned outages at other facilities. Operating and maintenance expenses in 2007 were $30.1 million, down 4.1% over 2006 primarily due to lower production costs at the company’s Harbor Coal facility. General and administrative expenses for the year were $11.1 million, an increase of 19.0% from the prior year primarily related to a $2.2 million property tax settlement realized in 2006 which did not recur in 2007.
Distributable Cash Summary (in 000′s of US$, except per share data and as otherwise indicated) For the Years Ended December 31, ———————— 2007 2006 ———— ———— Reconciliation of cash flows from operating activities to Distributable Cash: Cash provided by operating activities $ 14,588 $ 31,774 Add: Cash interest expense 21,544 19,349 Changes in operating assets and liabilities (2,062) (4,558) Accretion of asset retirement obligations (216) (202) Less: Interest on credit facility 11,498 10,744 Interest on separate subordinated notes 1,856 1,856 ———— ———— Distributable Cash $ 20,500 $ 33,763 ———— ———— ———— ———— Per Common and equivalent Common Share $ 0.55 $ 0.91 ———— ———— ———— ———— Interest on EIS Subordinated Notes $ 7,776 $ 7,776 Distributions on Common Shares 14,290 22,293 Distributions on non-controlling Class B preferred interest 1,520 1,523 Distributions on non-controlling Class B common interest 2,921 4,558 ———— ———— Total distributions $ 26,507 $ 36,150 ———— ———— ———— ———— Per Common and equivalent Common Share $ 0.71 $ 0.97 ———— ———— ———— ———— Hedge rate (Cdn$ per US$) $ 1.1698 $ 1.1687 Distributable Cash (Cdn$) $ 23,981 $ 39,459 ———— ———— ———— ———— Per Common and equivalent Common Share (Cdn$) $ 0.64 $ 1.06 ———— ———— ———— ———— Hedge rate (Cdn$ per US$) $ 1.1698 $ 1.1687 Total distributions (Cdn$) $ 31,008 $ 42,249 ———— ———— ———— ———— Per Common and equivalent Common Share (Cdn$) $ 0.83 $ 1.13 ———— ———— ———— ———— Excess (shortfall) distributable cash (Cdn$) $ (7,027) $ (2,790) ———— ———— ———— ———— Per Common and equivalent Common Share (Cdn$) $ (0.19) $ (0.07) ———— ———— ———— ———— Payout Ratio 129.3% 107.1% Payout ratio since inception is 108.3%.
The Company’s full financial statements and Management’s Discussion and Analysis, are available at http://www.sedar.com/ or the Company’s website at http://www.primaryenergyrecycling.com/.
Conference Call and Webcast
Management will also host a conference call to further discuss the fourth quarter and annual results on Friday, February 29, at 10 a.m. (ET). Following management’s presentation, there will be a question and answer session. To participate in the conference call, please dial 416-644-3418 or 1-800-732-6179. A conference call replay will be available until 12 a.m. on March 7, 2008. The replay can be accessed by dialing 416-640-1917 or 1-877-289-8525 and entering passcode 21263186 followed by the number sign. A webcast replay will also be available for 90 days by accessing a link through the Investor Information section at http://www.primaryenergyrecycling.com/.
Non-GAAP Measures
Distributable Cash and EBITDA are not recognized measures under U.S. GAAP or Canadian GAAP and do not have standardized meanings prescribed by U.S. GAAP or Canadian GAAP. Therefore, Distributable Cash and EBITDA may not be comparable to similar measures presented by other companies. See the definitions of Distributable Cash and EBITDA in the Company’s MD&A.
Forward-Looking Statements
When used in this news release, the words “anticipate”, “expect”, “project”, “believe”, “estimate”, “forecast” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to operating performance, regulatory parameters, weather and economic conditions and the factors discussed in the Company’s public filings available on SEDAR at http://www.sedar.com/. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
About Primary Energy Recycling Corporation
Primary Energy Recycling Corporation owns a majority interest in Primary Energy Recycling Holdings LLC (“PERH”). PERH, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 percent interest in a pulverized coal facility (collectively, the “Projects”). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8 MMlbs/hour. PERH creates value for its customers by capturing and recycling waste energy from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for its customers’ use. For more information, please see http://www.primaryenergyrecycling.com/.
Primary Energy Recycling Corporation
CONTACT: V. Michael Alverson, Chief Financial Officer, EPCOR USA VenturesLLC, (630) 371-0505, investorinfo@primaryenergy.com