Canexus Corporation
TSX : CUS

Canexus Corporation

November 07, 2013 20:48 ET

Canexus Corporation Announces Third Quarter Results

Initial Phase of Unit Train Expansion Nearing Start-up

CALGARY, ALBERTA--(Marketwired - Nov. 7, 2013) - Canexus Corporation (TSX:CUS) (the "Corporation" or "Canexus") today announced its financial results for the third quarter ended September 30, 2013.

Highlights:

  • Cash Operating Profit was $27.4 million for the three months ended September 30, 2013 ($35.7 million in the third quarter of 2012, and $19.3 million for the second quarter of 2013). Year-to-date, Distributable Cash was $42.4 million ($0.30 per common share), resulting in a Cash Payout Ratio of 115% (inclusive of $2.9 million of realized currency losses on repayment of long-term debt and $0.9 million of non-recurring general and administrative expenses, in the quarter).
  • The initial phase of the pipeline connected unit train expansion (capacity of seven unit trains per week) at the Corporation's North American Terminal Operations ("NATO") at Bruderheim, Alberta is expected to be mechanically complete in early December, with the first unit train shipment from the unit train facility about mid-month. The next staged expansion to further increase loading capacity of the Bruderheim Terminal is expected to be fully operational by mid-2014, to coincide with the completion of the second pipeline connection to the Cold Lake pipeline system. The total estimated cost of the pipeline connected unit train facility, when complete in mid-2014, is unchanged at $225 million. Operating Cash Flow from unit train operations, assuming 10 to 11 unit trains per week, could exceed $50 million annually and Canexus expects to be at this level of activity for the fourth quarter of 2014. With the delay in completion and commissioning of the unit train facility from the third quarter to late in the fourth quarter, and a winter start-up, we believe it prudent to be conservative in estimating the Operating Cash Flow to be generated from the NATO business unit in 2014, but expect solid performance commencing in Q4/14 and beyond.
  • The expansion of diluted bitumen and crude oil ("DBCO") truck-to-rail transload capacity at NATO was completed in the quarter. Canexus transloaded about 15,100 bbls/day of DBCO in the third quarter (up from 14,500 bbls/day in the second quarter) including 17,600 bbls/day for the month of September. The Corporation is not expecting to demonstrate the full expanded capacity in the fourth quarter due to a disposal well workover planned for the site that will restrict access to two of our loading racks. In the third quarter, Canexus shipped a unit train that was loaded in our manifest (truck-to-rail) area and assembled from the large storage track system at the site, providing significant benefit to the customer, and adding to the strong competitive advantages of the Bruderheim Terminal.
  • Canexus' chlor-alkali results continue to be affected by weakness in caustic soda and hydrochloric acid ("HCl") markets. Caustic soda pricing improved marginally in the third quarter but there has been no improvement early in the fourth quarter. HCl demand and pricing for the balance of the year and into Q1/14 will be dependent upon higher activity levels in the oil and gas segment in Western Canada. The potential for higher drilling activity in the Swan Hills region, where larger quantities of HCl are typically consumed, is evident from some companies active in this area. The final phase of HCl expansion at our North Vancouver chlor-alkali plant is now complete and was proven to full capacity in mid-October. HCl sales volumes in Q4/13 are expected to increase by 20% from the third quarter.
  • Canexus' North American sodium chlorate business had a solid quarter, which is expected to continue into the fourth quarter. North American sodium chlorate operating rates are expected to remain in the low 90% range for 2014, assuming no capacity rationalization in the industry. Our industry-leading, low-cost Brandon plant is expected to run at capacity. The Corporation continues to analyze de-bottleneck opportunities at its Brandon plant for decision in 2014 on potential implementation.
  • Canexus' Brazil operations continue to be very stable with our primary customer running at high rates.
  • The Board of Directors declared the regular quarterly dividend of $0.1368 per common share payable January 15, 2014 to shareholders of record on December 31, 2013.

"Despite weaker financial performance in 2013, we are eagerly anticipating the start of unit train operations at NATO before the end of the year," said Gary Kubera, President and CEO. "This is a very significant project for Canexus in terms of both investment and expected returns. The market fundamentals for oil-by-rail movements are strong and based on late-stage discussions with multiple potential unit train customers, Canexus expects to have the Bruderheim Terminal fully contracted by early 2014."

"Market conditions for our chlor-alkali business remain challenging and these conditions seem likely to persist into 2014. As a result, we expect Cash Operating Profit performance for the fourth quarter to be similar to this quarter. Year-to-date, our Cash Payout Ratio is above 100% and this is likely to continue for the next few quarters. We are confident our Payout Ratio will return to sustainable levels as we ramp up the capacity of manifest and unit train operations at NATO, and remain committed to our dividend," he added.

Distributable Cash

Three Months Ended
September 30
Nine Months Ended
September 30
CAD thousands, except as noted 2013 2012 2013 2012
Cash Operating Profit 27,413 35,678 76,940 98,957
Interest Expense (2,314 ) (4,860 ) (8,958 ) (15,499 )
Realized Foreign Currency Translation Losses (2,549 ) (755 ) (2,506 ) (777 )
Maintenance Capital Expenditures (6,983 ) (2,335 ) (17,377 ) (13,835 )
Provision for Current Income Taxes (398 ) (981 ) (3,234 ) (3,712 )
Technology Conversion Project ("TCP") Severance Costs Paid - - (274 ) (888 )
Cumulative Pension Funding in Excess of Pension Expense (1,231 ) (751 ) (1,904 ) (1,148 )
Other 511 (65 ) (300 ) (1,671 )
Distributable Cash 14,449 25,931 42,387 61,427
Distributable Cash Per Share 0.10 0.21 0.30 0.51
Dividends Declared Per Share 0.1368 0.1368 0.4104 0.4104
Cash Payout Ratio (Net of DRIP Participation) 117 % 51 % 115 % 59 %
Payout Ratio 144 % 65 % 141 % 81 %

Below is a reconciliation of net cash generated from operating activities to Distributable Cash of the Corporation for the three and nine months ended September 30, 2013 and 2012.

Three Months Ended
September 30
Nine Months Ended
September 30
CAD thousands 2013 2012 2013 2012
Net Cash Generated from Operating Activities 27,706 32,850 65,548 65,948
Changes in Non-Cash Operating Working Capital (10,385 ) (5,300 ) (7,250 ) 13,669
Non-Cash Change in Income Tax Payable and Interest Payable 2,506 2,004 (693 ) (1,758 )
Interest Income 278 114 459 309
Maintenance Capital Expenditures (6,983 ) (2,335 ) (17,377 ) (13,835 )
Realized Foreign Currency Translation Gains (Losses) on Cash 983 (542 ) 1,815 (517 )
TCP Severance Costs Paid - - (274 ) (888 )
Purchase of Foreign Exchange Options - - 512 -
Amortization of the Purchase Cost of Foreign Exchange Options (304 ) (662 ) (512 ) (1,571 )
Expenditures on Decommissioning Liabilities (56 ) (73 ) (269 ) (466 )
Operating Non-Cash Items 704 (125 ) 428 536
Distributable Cash 14,449 25,931 42,387 61,427

Segmented Information for the Three-Month Periods Ended September 30, 2013 and 2012

Canexus has a total of six manufacturing plants - four in Canada and two at one site in Brazil - organized into three business units. Canexus also provides fee-for-service hydrocarbon transloading at its NATO terminal in Bruderheim, Alberta as a separate business unit. Below is our third quarter performance by segment.

North America
Three Months Ended
September 30, 2013
Sodium
Chlorate
Chlor-
alkali
South
America

NATO

Other

Total
Sales Revenue
Total Segment 60,260 51,236 22,325 5,856 - 139,677
Inter-Segment 541 - - 462 (1 ) - 1,003
Total Sales Revenue from External Customers 59,719 51,236 22,325 5,394 - 138,674
Cost of Sales 35,375 29,147 18,721 5,249 157 88,649
Distribution, Selling and Marketing
Total Segment 8,028 17,185 81 827 829 26,950
Inter-Segment - 551 - - - 551
Total External Distribution, Selling and Marketing 8,028 16,634 81 827 829 26,399
General and Administrative 2,761 3,367 899 131 1,944 9,102
Operating Profit (Loss) 13,555 2,088 2,624 (813 ) (2,930 ) 14,524
Add:
Depreciation and Amortization 3,244 5,735 1,929 1,437 213 12,558
Share-based Compensation Expense - - - - 331 331
Cash Operating Profit (Loss) 16,799 7,823 4,553 624 (2,386 ) 27,413
Cash Operating Profit Percentage 28 % 15 % 20 % 12 % 20 %
North America
Three Months Ended
September 30, 2012
Sodium
Chlorate
Chlor-
alkali
South
America
NATO
Other

Total
Sales Revenue
Total Segment 58,778 60,549 25,112 3,672 - 148,111
Inter-Segment 81 - - 530 (1 ) - 611
Total Sales Revenue from External Customers 58,697 60,549 25,112 3,142 - 147,500
Cost of Sales 36,015 32,026 19,836 2,910 (175 ) 90,612
Distribution, Selling and Marketing
Total Segment 7,537 16,028 287 565 792 25,209
Inter-Segment - 611 - - - 611
Total External Distribution, Selling and Marketing 7,537 15,417 287 565 792 24,598
General and Administrative 2,323 2,834 795 110 2,368 8,430
Operating Profit (Loss) 12,822 10,272 4,194 (443 ) (2,985 ) 23,860
Add:
Depreciation and Amortization 3,133 5,782 1,885 710 (184 ) 11,326
Share-based Compensation Expense - - - - 492 492
Cash Operating Profit (Loss) 15,955 16,054 6,079 267 (2,677 ) 35,678
Cash Operating Profit Percentage 27 % 27 % 24 % 8 % 24 %
Note:
(1) NATO charges a transloading fee (an approximation of market rates charged by third party terminals) to the North America Chlor-Alkali ("NACA") business unit for hydrochloric acid and caustic soda transloaded from railcars into trucks for delivery to NACA customers, which is eliminated for financial reporting purposes.

Highlights for each business unit are as follows:

  • North America Sodium Chlorate:

    • Q3 2013 versus Q2 2013: Sales revenue for the North America sodium chlorate segment increased 11% to $59.7 million for the three months ended September 30, 2013 from $53.8 million for the three months ended June 30, 2013. The increase in sales revenue was the result of increased sales volumes (11%) on consistent realized netback prices. Cash Operating Profit Percentage increased to 28% for the three months ended September 30, 2013 compared to 27% for the three months ended June 30, 2013, primarily as a result of lower salt costs.

    • Q3 2013 versus Q3 2012: Sales revenue for the North America sodium chlorate segment increased 2% to $59.7 million for the three months ended September 30, 2013 from $58.7 million for the three months ended September 30, 2012 as a result of increased sales volumes (1%) on consistent realized netback prices. Cash Operating Profit Percentage increased to 28% for the three months ended September 30, 2013 from 27% for the three months ended September 30, 2012 as a result of higher production volumes at our Brandon plant and lower fixed costs, more than offsetting higher electricity and salt costs and a higher corporate allocation of general and administrative costs. A planned maintenance shutdown at our Brandon plant during the three months ended September 30, 2012 resulted in lower production volumes and higher fixed costs during that period.

  • North America Chlor-alkali:

    • Q3 2013 versus Q2 2013: Sales revenue for the North America chlor-alkali segment increased 10% to $51.2 million for the three months ended September 30, 2013 from $46.5 million for the three months ended June 30, 2013. The increase in sales revenue was due to higher hydrochloric acid (51%) and caustic soda (6%) sales volumes and higher chlorine (11%) realized netback prices, partially offset by lower hydrochloric acid (19%) realized netback prices. Cash Operating Profit Percentage increased to 15% for the three months ended September 30, 2013 from 4% for the three months ended June 30, 2013 as a result of higher production volumes (17%), lower caustic soda purchased product costs and lower fixed costs. Fixed costs were higher during the three months ended June 30, 2013 due to the planned maintenance shutdown being extended by nine days as a result of equipment failure during the attempted start-up of the plant. The plant returned to normal operation in May 2013.

    • Q3 2013 versus Q3 2012: Sales revenue for the North America chlor-alkali segment decreased 15% to $51.2 million for the three months ended September 30, 2013 from $60.5 million for the three months ended September 30, 2012 due to lower caustic soda (14%) and hydrochloric acid (50%) realized netback prices and lower caustic soda (6%) and chlorine (14%) sales volumes, partially offset by higher hydrochloric acid (55%) sales volumes and higher chlorine (33%) realized netback prices. Cash Operating Profit Percentage decreased from 27% for the three months ended September 30, 2012 to 15% for the three months ended September 30, 2013 as a result of lower MECU realized netback prices (15%), slightly higher electricity and salt costs and a higher corporate allocation of general and administrative costs, partially offset by lower caustic soda purchased product costs.

  • South America:

    • Q3 2013 versus Q2 2013: Sales revenue for the South America segment decreased 19% to $22.3 million for the three months ended September 30, 2013 from $27.6 million for the three months ended June 30, 2013. The decrease in sales revenue was primarily due to lower sodium chlorate sales volumes (16%) to the merchant market offset somewhat by higher sales volumes to our major customer and lower realized netback prices (14%), lower caustic soda (14%) realized netback prices, and lower sodium hypochlorite sales volumes and realized netback prices, partially offset by higher caustic soda (9%) sales volumes. Lower electricity costs in the third quarter of 2013 resulted in lower sodium chlorate and caustic soda realized netback prices due to the nature of our fixed US dollar margin contract with our major customer. Cash Operating Profit Percentage remained consistent at 20% as higher MECU production and lower fixed costs were offset by lower sales of products into the merchant market for the three months ended September 30, 2013.

    • Q3 2013 versus Q3 2012: Sales revenue for the South America segment decreased 11% to $22.3 million for the three months ended September 30, 2013 from $25.1 million for the three months ended September 30, 2012. The decrease in sales revenue was primarily due to lower sodium chlorate (5%) and hydrochloric acid (5%) sales volumes and lower sodium chlorate (8%), caustic soda (6%) and hydrochloric acid (3%) realized netback prices. Lower electricity costs in the third quarter of 2013 resulted in lower sodium chlorate and caustic soda realized netback prices due to the nature of our fixed US dollar margin contract with our major customer. Cash Operating Profit Percentage decreased from 24% for the three months ended September 30, 2012 to 20% for the three months ended September 30, 2013 as a result of lower sodium chlorate and chlor-alkali production volumes, higher fixed costs and higher purchased product costs.

  • North American Terminal Operations:

    • Q3 2013 versus Q2 2013: Cash Operating Profit for the three months ended September 30, 2013 was $1.1 million, inclusive of transloading services for inter-segment chlor-alkali products, as compared to $0.6 million for the three months ended June 30, 2013. External sales revenue increased 3% for the three months ended September 30, 2013, as compared to the three months ended June 30, 2013, primarily as a result of higher DBCO transload fees (15%) and volumes (2%), partially offset by lower transload volumes of other hydrocarbon products. During the three months ended September 30, 2013, one additional tank was commissioned which resulted in higher transload fees under associated customer contracts. The increase in DBCO transload fees and volumes more than offset the 26% decrease in other hydrocarbon products transload volumes due to lower volumes of biodiesel and condensate. The decreases in biodiesel and condensate transload volumes were due to seasonality, and a sourcing constraint experienced by a major customer, respectively.

      Cash cost of sales comprises employee costs and other costs of operating the Bruderheim Terminal. The increase in cash cost of sales ($0.1 million) for the three months ended September 30, 2013, as compared to the three months ended June 30, 2013, was due to a slight increase in salaries and wages as the terminal reached a full staffing complement during the three months ended September 30, 2013. Distribution, selling and marketing costs were favourable as compared to the three months ended June 30, 2013, primarily due to the favourable settlement of truck wait time fees in the quarter.

    • Q3 2013 versus Q3 2012: Cash Operating Profit for the three months ended September 30, 2013 was $1.1 million, inclusive of transloading services for inter-segment chlor-alkali products, as compared to $0.8 million for the three months ended September 30, 2012. External sales revenue increased 72% for the three months ended September 30, 2013, as compared to the three months ended September 30, 2012, primarily as a result of an increase in the number of railcars transloaded (13%) combined with higher transload fees. In the second and third quarters of 2013, four tanks were commissioned resulting in higher transload fees under associated customer contracts.

      The increase in cash cost of sales ($1.6 million) for the three months ended September 30, 2013, as compared to the three months ended September 30, 2012, was primarily due to an increase in the number of employees as a result of an increase in transload volumes. The increase in distribution, selling and marketing costs was due to an increase in the number of selling and marketing employees and increased railcar lease costs as a result of higher transload volumes.

General Market Fundamentals

North America Sodium Chlorate: Demand for global pulp remained solid during the third quarter of 2013. Pulp shipments to China (World 20) have increased since June, and are projected to bring current year values in line with 2012. Pulp producer inventories continue to indicate strength in the softwood markets, which should support short-term price appreciation. Current inventory levels for softwood are well balanced at 28 days, and have been very stable for the past six months. After increasing for the past three months, bleached hardwood inventory levels retreated seven days to 42 days, signifying strong global demand in part due to China's restocking of inventory levels. Hardwood levels remain slightly above what would be considered balanced inventory. Start-up delays at several new pulp mills across the globe have delayed the arrival of new softwood and hardwood capacity, which should temporarily continue to benefit most North American pulp producers in Q4/13.

North American demand for sodium chlorate in the third quarter of 2013 was stable, and modestly higher than the second quarter. North American exports of sodium chlorate for the first eight months of 2013 are also trending above the previous year's volume for the same period. Operating rates for the North American sodium chlorate industry are projected to be between 93% and 94% for the last quarter of 2013.

North America Chlor-alkali: The North American chlor-alkali industry operated at an estimated 81% of capacity in Q3/13, compared with 84% in Q2/13 and 83% in Q3/12. Chlorine demand for the first nine months of 2013 remained consistent with 2012 levels. Three new capacity expansions in the U.S. planned for the fourth quarter and the seasonal demand downturn in November and December are expected to negatively impact industry utilization rates.

North American caustic soda production in Q3/13 was approximately the same as Q2/13 and Q3/12. Year-to-date, export demand was 7% higher than 2012 but was offset by weaker domestic demand.

North American hydrochloric acid supply was balanced with demand in Q3/13. Drilling activity picked up moderately in Western Canada, as well service companies ramped up demand after a traditionally slow second quarter. Increased levels of drilling activity support stronger demand for hydrochloric acid in Q4/13.

North American MECU prices declined in Q3/13. Chlorine market prices were relatively flat and this is expected to continue into the fourth quarter. Caustic soda prices declined moderately in Q3/13. North American and Asian producers are seeking higher caustic prices in Q4/13, while buyers are pushing for additional price decreases. Hydrochloric acid experienced price declines for new contracts in Q3/13, reflecting the anticipation of incremental supply in 2014 due to announced capacity expansions.

South America: Brazilian pulp production in the first eight months of 2013 was 4.8% higher than the same period last year. Brazilian exports were 12% higher year-over-year for the same period. Pricing is not expected to face pressure until Q1/14 due to delayed start-up of new capacity.

Canexus Brazil`s major sodium chlorate customer had a higher chlorate demand in Q3/13 than expected due to higher usage. Canexus Brazil`s sodium chlorate sales to merchant market customers were lower than expected due to competitive factors during contract negotiations.

In the first nine months of 2013 the Brazilian chlor-alkali capacity utilization rate was 83%, 2% lower than the same period of 2012. Reductions were associated with manufacturing issues at one of the large domestic producers. Canexus Brazil`s chlor-alkali capacity utilization was 93% for the first nine months of 2013, which was in line with budget expectations.

Oil & Gas: Benchmark crude oil prices (Brent, WTI) continued increasing in Q3/13, pushed higher by concerns over stability in the Middle East as well as supply disruptions in Libya. Western Canadian Select (WCS) price improved gradually during Q3/13 as regional prices in North America improved as a result of an easing of the bottleneck at Cushing. Price differentials between Western Canadian grades and other key benchmarks improved during Q3/13 and are expected to remain volatile but wide enough to support strong demand for oil transportation services based on rail.

Natural gas prices were lower in Q3/13 than the prior quarter as high inventory levels continued to constrain prices. Natural gas inventories remain high and prices are expected to remain relatively stable in the short term.

Drilling activity picked up moderately in Western Canada during Q3/13, as well service companies ramped up after a traditionally slow second quarter. Increased levels of drilling activity support demand for hydrochloric acid in the fourth quarter.

Financial Updates

  • Long-term Debt and Finance Income (Expense):

    • Canexus borrows in US dollars, which creates unrealized currency translation gains as the Canadian dollar strengthens. A substantial portion of our revenues are denominated in or referenced to the US dollar. During the third quarter of 2013, we recorded an unrealized currency translation gain of $6.9 million as a result of the strengthening of the Canadian dollar at the end of the quarter compared to the end of Q2/13 (Q3/12 - $10.7 million unrealized gain). Canexus also realized foreign currency losses of $2.9 million on repayments of long-term debt in the quarter (Q3/12 - $0.4 million gains). These amounts are included in finance income (expense).

    • Interest expense in the quarter was $2.3 million (Q3/12 - $4.9 million). Interest capitalized on major projects was $2.2 million in Q3/13 (Q3/12 - $0.4 million).

  • Other Income (Expense):

    • In the third quarter of 2013, mark-to-market fair value gains of $0.2 million (Q3/12 - $0.5 million loss) and realized gains of $Nil (Q3/12 - $0.8 million) were recorded on forward foreign exchange contracts, foreign exchange option contracts and average rate range forward contracts.

    • In the third quarter of 2013, we recorded mark-to-market fair value gains on a cross currency swap of $0.3 million as a result of the strengthening of the Canadian dollar at the end of the quarter compared to the end of Q2/13 (Q3/12 - $0.6 million). In Q3/11, we entered into a cross currency swap to effect the payment of interest in US dollars on the Series IV Convertible Debentures issued on June 30, 2011.

    • The interest rate swaps expired on April 10, 2013. In the third quarter of 2012, we recorded mark-to-market fair value gains of $0.3 million and realized losses of $0.4 million on interest rate swaps.

  • General and Administrative: General and administrative expense includes $0.9 million of non-recurring costs associated with business development activities in the quarter.

  • Capital Expenditures: Capital expenditures for the three months ended September 30, 2013 were $80.3 million, of which $7.0 million was spent on maintenance projects, $1.6 million on continuous improvement projects and the balance on expansion projects ($71.7 million). Expansion capital was spent on the continued development of our NATO site and hydrochloric acid expansions at our North Vancouver facility.

  • Provision for Income Taxes: Provision for income taxes is lower in the third quarter of 2013, as compared to the same period in 2012, due to lower income in the taxable legal entities included in the companies comprising the Corporation in Q3/13 as compared to Q3/12. As of September 30, 2013, the Corporation had approximately $605 million of future tax deductions resulting from capital expenditures which can be used to shelter future taxable income in Canada.

  • Liquidity: As of September 30, 2013, total borrowings under committed credit facilities were $215 million with remaining available undrawn capacity of approximately $177 million. Cash on hand at September 30, 2013 was $1.4 million.

Operating Results for the three and nine months ended September 30, 2013 and 2012

Three Months Ended
September 30
Nine Months Ended
September 30
CAD thousands 2013 2012 2013 2012
Sales Revenue 138,674 147,500 413,150 436,709
Cost of Sales (1) 88,649 90,612 269,532 276,375
Gross Profit 50,025 56,888 143,618 160,334
Distribution, Selling and Marketing 26,399 24,598 76,384 69,783
General and Administrative (2) 9,102 8,430 28,652 27,116
Operating Profit 14,524 23,860 38,582 63,435
Finance Income (Expense) 12,742 1,166 (21,169 ) (22,929 )
Other Income (Expense) 1,247 156 1,803 (828 )
Income Before Income Taxes 28,513 25,182 19,216 39,678
Provision for Income Taxes
Current 398 981 3,234 3,712
Deferred 4,226 5,765 3,463 11,516
4,624 6,746 6,697 15,228
Net Income 23,889 18,436 12,519 24,450
Notes:
(1) Depreciation and Amortization included in the three and nine months ended September 30, 2013 - $12.3 million and $36.0 million, respectively; Depreciation and Amortization included for the three and nine months ended September 30, 2012 - $11.2 million and $33.0 million, respectively.
(2) Depreciation and Amortization included for the three and nine months ended September 30, 2013 - $0.2 million and $0.7 million, respectively; Depreciation and Amortization included for the three and nine months ended September 30, 2012 - $0.2 million and $0.6 million, respectively.

Financial Statements, Conference Call and Webcast

Financial Statements and Management's Discussion and Analysis will be posted on the Canexus website at www.canexus.ca and filed on SEDAR. Management will host a conference call at 10 a.m. ET on November 8, 2013, to discuss the results. A Q3 2013 presentation will be available on our website to facilitate the conference call. Please call 1-800-319-4610 or +1-604-638-5340 outside of Canada and the USA. The conference call will also be accessible via webcast at www.canexus.ca. A replay of the conference call will be available until midnight November 22, 2013. To access the replay, call 1-800-319-6413 or +1-604-638-9010, followed by passcode 9153#.

Non-GAAP Measures

Cash Operating Profit/Operating Cash Flow, Cash Operating Profit Percentage, Payout Ratio, Cash Payout Ratio and Distributable Cash are non-GAAP financial measures, but management believes they are useful in measuring the Corporation's performance. Readers are cautioned that these measures should not be construed as alternatives to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the Corporation's performance or as a measure of the Corporation's liquidity and cash flow. The Corporation's method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the Corporation's non-GAAP measures are unlikely to be comparable to similarly titled measures used by other issuers. Readers should consult the Corporation's Q3/13 and 2012 MD&A filed on SEDAR for a complete explanation of how the Corporation calculates each such non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements and information relating to expected future events relating to Canexus and its subsidiaries, including with respect to: timing of commissioning of the pipeline connected unit train facility; timing of the completion of the initial phase of the pipeline connected unit train facility expansion and the first shipment therefrom; timing of the impact of the recent expansion of DBCO transload capacity; timing and cost of the pipeline connected unit train facility; operating cash flow and the timing thereof from the pipeline connected unit train facility; NATO business unit performance in 2014; the impact of new capacity on pulp inventories and pulp pricing and pulp production expectations for 2014 and their impact on demand for, capacity utilization and industry operating rates for 2014 and business unit performance for Q4/13 for the North American sodium chlorate business; expectations for MECU pricing through the fourth quarter of 2013; expectations for market conditions and industry utilization rates for the chlor-alkali business and the impact of capacity expansions and seasonal demand reductions thereon; North American chlor-alkali utilization rates for the fourth quarter of 2013; natural gas inventories and pricing; the impact of oil price differentials on rail-based oil transportation services; cash operating profit for the fourth quarter of 2013; Cash Payout Ratio; and Canexus' dividend payment policy. The use of the words "expects", "anticipates", "continue", "estimates", "projects", "should", "believe", "plans", "intends", "may", "will" or similar expressions are intended to identify forward-looking statements.
These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including market and general economic conditions, future costs, treatment under governmental regulatory, tax and environmental regimes and the other risks and uncertainties detailed under "Risk Factors" in the Corporation's Annual Information Form filed on the Corporation's SEDAR profile at www.sedar.com. Management believes the expectations reflected in these forward-looking statements are currently reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Due to the potential impact of these factors, Canexus disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Such financial outlook information should not be used for purposes other than those for which it is disclosed herein.

About Canexus

Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Our four plants in Canada and two at one site in Brazil are reliable, low-cost, strategically located facilities that capitalize on competitive electricity costs and transportation infrastructure to minimize production and delivery costs. Canexus also provides fee-for-service hydrocarbon transloading services to the oil and gas industry from its terminal at Bruderheim, Alberta. Canexus targets opportunities to maximize shareholder returns and delivers high-quality products to its customers. Canexus' common shares (CUS) and debentures (Series III - CUS.DB.A; Series IV - CUS.DB.B; Series V - CUC.DB.C) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.

Contact Information

  • Canexus Corporation
    Gary Kubera
    President and CEO
    (403) 571-7300

    Canexus Corporation
    Richard McLellan
    CFO
    (403) 571-7300
    www.canexus.ca