CALGARY, AB--(Marketwired - July 05, 2016) - Canexus Corporation (TSX: CUS) ("Canexus" or the "Company") will host a conference call with the investment community today at 9:00 AM MST to provide an update on strategy and discuss its plan to further improve operating performance and financial flexibility.
"Canexus is a strong business with low-cost, competitive assets and reliable earnings," said Doug Wonnacott, President and CEO. "Business fundamentals and performance of our North American Sodium Chlorate and Brazil business units are strong and steady, and we expect chlor-alkali to recover as oil and gas markets improve."
Mr. Wonnacott continued, "In 2015, we adopted a philosophy of continuous improvement, to identify operational efficiencies and optimize the balance sheet. We successfully set and met targets to focus capital spending, drive operating performance, lower costs and pay down debt. We will continue on this course, with a clear roadmap to improve operating performance, reduce debt and build long-term shareholder value."
Improve Operating Performance
Canexus will focus on operational excellence of its core assets to improve efficiency and maximize margins. In 2016, Canexus expects the second phase of the Business Improvement Program to generate cash operating profit improvements of $6 million to $8 million, after one-time costs, through cost reductions, including SG&A, which will contribute to our target of 5% compound annual growth rate of cash operating profit over the next three years.
Improve Financial Flexibility
Canexus will continue to exercise financial discipline in order to lower its bank debt position, targeting a $100M reduction by the end of 2018. The Company expects to reduce its total senior debt to earnings ratio to 2.5x times over the same time period. The Company will direct free cash flow to debt reduction, including the deal break fee payable by Superior Plus Corp. of $25 million. Maintenance capital will continue to average $25 million/year and the Board of Directors is committed to reviewing the dividend on a quarterly basis to further enhance the Company's financial strength and flexibility. The Company's efforts to improve cash operating profit and further uplift in the chlor-alkali business unit will also support debt reduction. Canexus continues to be in compliance with all bank covenants.
Canexus management will host a conference call for investors, analysts and media today at 9:00 AM MST. To access the call, please dial 416-340-2216 or 1-866-223-7781. A webcast is available at: http://www.gowebcasting.com/7713
A replay of the conference call will be available until end of day on July 12, 2016. To access the replay, please dial 905-694-9451 or 1-800-408-3053, followed by passcode 4649962.
Canexus is a pure-play chemical company with a presence in North and South America. 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 delivery and production costs. Canexus targets opportunities to maximize shareholder returns, delivers high-quality products to its customers and is committed to Responsible Care® through safe operating practices. Canexus' common shares (CUS) and debentures Series IV - CUS.DB.B; Series V - CUS.DB.C; Series VI - CUS.DB.D) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.
Cash operating profit is a financial measure not determined in accordance with generally accepted accounting principles for publicly accountable enterprises in Canada ("GAAP"), but management believes is useful in measuring the Company's performance. Readers are cautioned that this measure should not be construed as alternative to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the Company's performance or as a measure of the Company's liquidity and cash flow. The Company's method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the Company's non-GAAP measures are unlikely to be comparable to similarly titled measures used by other issuers. Readers should consult the Company's MD&A for the three months ended March 31, 2016 filed on SEDAR for a complete explanation of how the Company calculates cash operating profit.
This news release contains forward-looking statements and information relating to expected future events and financial and operating results of the Company and its subsidiaries, including with respect to: expectations for improved operating performance and financial flexibility generally, the reliability of the Company's earnings, expectations for chlor-alkali recovery, the strength and stability of the business fundamentals and performance of the Company's North American Sodium Chlorate and Brazil business units, the ability to improve efficiency and maximize margins, expectations for the size and timing of cash operating profit improvements and the compound annual growth rate thereof, the Company's ability to reduce its bank indebtedness and the timing and quantum thereof, the Company's ability to lower its senior debt to earnings ratio, the Company's intentions for free cash flow, the quantum of maintenance capital expenditures and the suspension of the Company's quarterly dividend. 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. Forward-looking 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 Company's Annual Information Form filed on the Company'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, the Company 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. Any financial outlook information contained in this news 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. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than those for which it is disclosed herein.