CALGARY, ALBERTA -- (Marketwired) -- 08/05/14 -- Canexus Corporation (TSX: CUS) (the "Corporation" or "Canexus") today announced its financial results for the second quarter ended June 30, 2014.
Highlights:
-- Cash operating profit was $29.2 million for the three months ended June
30, 2014, representing a 52% increase over the same quarter last year
that reported $19.3 million in cash operating profit. Performance
improved as Brazil continued to generate excellent results, our chlor-
alkali business benefitted from a contract settlement and our North
American Terminal Operations ("NATO") began to contribute to cash
operating profit even though unit train operations were shut down for
the second half of June for the planned expansion. The cash payout ratio
for the second quarter was 92%.
-- The Board of Directors declared a quarterly dividend of $0.10 per common
share payable October 15, 2014 to shareholders of record on September
30, 2014.
-- Canexus is continuing to advance discussions with parties that have
expressed potential interest in certain of our assets. The Corporation
is currently engaging financial advisors to assist with the discussions.
There is no assurance that a transaction, if pursued, will be concluded.
-- At NATO, the planned shutdown of the unit train operation began on June
17, 2014. Construction to further increase unit train loading capacity
and connect this facility to the Cold Lake pipeline system continues to
progress on schedule and is in line with the revised cost estimate
(previously announced on July 2, 2014). Inter Pipeline Ltd. ("IPL") has
completed the dilbit (diluted bitumen) pipeline lateral off the Cold
Lake pipeline system from Beaverhill Station to Lamont Station, which is
the tie-in point to NATO. The IPL pipeline lateral is scheduled for line
fill with Cold Lake Blend product later this month. The Corporation
expects to complete the shutdown and recommence loading unit trains in
late August.
-- Canexus is scheduled to ship seven unit trains loaded through its
diluted bitumen and crude oil ("DBCO") truck-to-rail transload
("manifest") operations in the July to October timeframe. The
significant railcar storage capabilities associated with the manifest
facility provide a unique opportunity for Canexus' manifest customers to
capture unit train shipment economics. During the second quarter, the
manifest operation transloaded physical DBCO volumes of approximately
10,400 bbls/day compared to 17,200 bbls/day in the first quarter of
2014. Billable volumes in the second quarter inclusive of take-or-pay
volumes were 21,600 bbls/day. The manifest operation has a transload
capacity of 30,000 bbls/day for DBCO.
-- Canexus' North American chlor-alkali business generated $9.8 million in
cash operating profit for the quarter with only marginal improvements in
caustic soda prices. Results, however, benefitted from the settlement of
a take-or-pay contract obligation for hydrochloric acid ("HCl")
contributing $3.0 million to cash operating profit in the quarter.
During the second quarter, chlor-alkali operating rates were reduced as
the plant experienced premature degradation of anode coatings in some of
the electrolytic cells. Canexus has contracted three sets of replacement
cells and expects to return to normal operating rates late September.
HCl demand continued to be quite strong in the second quarter as
relatively high oil and gas commodity prices supported drilling
activity. In the US, demand from the well servicing market was strong
while supply was tight due to a series of byproduct supply outages. In
Western Canada, HCl demand exceeded expectations due to a relatively
short spring breakup period. With strong demand, price increases have
been implemented in some markets where contracts allow.
-- Canexus' North American sodium chlorate business had a slightly weaker
quarter with somewhat lower demand from customers. Cash operating profit
was $12.1 million and is expected to return to first quarter levels for
the balance of 2014. North American sodium chlorate operating rates are
expected to remain in the low 90% range for the balance of 2014,
assuming no capacity rationalization in the industry.
-- Canexus' Brazil operations had a second consecutive quarter of record
performance, generating cash operating profit of $7.6 million. Our major
customer continues to operate at high rates resulting in strong demand
for our products which are sold under a long-term fixed US dollar margin
contract.
-- Looking forward, cash operating profit for Q3/14 will be affected by the
planned maintenance in Brazil that occurred in July at both the sodium
chlorate and chlor-alkali plants, a planned maintenance shutdown at our
North Vancouver chlor-alkali facility in September and the current
shutdown at NATO for the unit train expansion project. In addition, with
the IPL lateral completed on July 1, 2014, Canexus is now committed to
paying a monthly pipeline and facility fixed fee.
"I am generally pleased with how our business performed during the quarter. Brazil continued to deliver excellent results and we are making solid progress on the NATO unit train expansion," commented Doug Wonnacott, President and CEO. "2014 is a year that will position Canexus for the future. We expect to complete the unit train expansion at NATO in late August and then focus on ramping up operations. Canexus has an impressive portfolio of assets that provide a lot of opportunity and we continue to explore options to maximize their value."
Distributable Cash
Three Months Ended Six Months Ended
June 30 June 30
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CAD thousands, except as
noted 2014 2013 2014 2013
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Cash Operating Profit 29,238 19,254 51,481 49,527
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Interest Expense (6,078) (3,159) (8,060) (6,644)
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Realized Foreign Currency
Translation Gains
(Losses) 249 (782) (8,850) 43
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Maintenance Capital
Expenditures (5,302) (5,837) (9,571) (10,394)
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Provision for Current
Income Taxes (678) (1,600) (2,551) (2,836)
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Cumulative Pension Funding
in Excess of Cumulative
Pension Expense (742) (1,682) (1,646) (673)
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Severance Costs (551) (63) 2,629 (274)
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Other (735) (133) (1,050) (811)
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Distributable Cash 15,401 5,998 22,382 27,938
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Distributable Cash Per Share 0.08 0.04 0.12 0.20
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Dividends Declared Per Share 0.1000 0.1368 0.2368 0.2736
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Cash Payout Ratio (Net of
DRIP Participation) 92% 264% 147% 114%
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Payout Ratio 118% 342% 192% 140%
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Below is a reconciliation of net cash generated from operating activities to Distributable Cash of the Corporation for the three and six months ended June 30, 2014 and 2013.
Three Months Ended Six Months Ended
June 30 June 30
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CAD thousands 2014 2013 2014 2013
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Net Cash Generated from
Operating Activities 10,390 12,608 3,058 37,629
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Change in Non-Cash
Operating Working Capital 7,727 1,122 23,417 3,967
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Non-Cash Change in Income
Tax Payable and Interest
Payable 3,613 (1,503) 3,406 (3,199)
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Interest Income 72 91 138 181
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Maintenance Capital
Expenditures (5,302) (5,837) (9,571) (10,394)
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Purchase of Foreign
Exchange Options - - - 512
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Amortization of the
Purchase Cost of Foreign
Exchange Options - (208) - (208)
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Severance Costs (551) (63) 2,629 (274)
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Operating Non-Cash Items (548) (212) (695) (276)
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Distributable Cash 15,401 5,998 22,382 27,938
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Segmented Information for the Three-Month Periods Ended June 30, 2014 and 2013
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 second quarter performance by segment.
North America
--------------------
Three Months
Ended Sodium Chlor- South
June 30, 2014 Chlorate alkali America NATO Other Total
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Sales Revenue
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Total Segment 53,873 55,354 24,193 10,734 - 144,154
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Inter-Segment 86 - - 520 (1) - 606
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Total Sales
Revenue from
External
Customers 53,787 55,354 24,193 10,214 - 143,548
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Cost of Sales 34,191 32,440 17,806 11,070 39 95,546
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Distribution,
Selling and
Marketing
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Total Segment 7,952 16,475 253 1,402 583 26,665
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Inter-Segment - 606 - - - 606
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Total External
Distribution,
Selling and
Marketing 7,952 15,869 253 1,402 583 26,059
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General and
Administrative 2,853 3,479 836 136 2,224 9,528
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Operating Profit
(Loss) 8,791 3,566 5,298 (2,394) (2,846) 12,415
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Add:
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Depreciation and
Amortization 3,329 6,199 2,332 4,236 282 16,378
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Share-based
Compensation
Expense - - - - 445 445
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Cash Operating
Profit (Loss) 12,120 9,765 7,630 1,842 (2,119) 29,238
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Cash Operating
Profit
Percentage 23% 18% 32% 18% 20%
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North America
--------------------
Three Months
Ended Sodium Chlor- South
June 30, 2013 Chlorate alkali America NATO Other Total
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Sales Revenue
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Total Segment 53,882 46,547 27,646 5,774 - 133,849
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Inter-Segment 92 - - 516 (1) - 608
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Total Sales
Revenue from
External
Customers 53,790 46,547 27,646 5,258 - 133,241
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Cost of Sales 32,577 32,197 22,631 4,900 12 92,317
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Distribution,
Selling and
Marketing
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Total Segment 7,332 15,642 255 1,304 749 25,282
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Inter-Segment - 608 - - - 608
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Total External
Distribution,
Selling and
Marketing 7,332 15,034 255 1,304 749 24,674
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General and
Administrative 2,655 3,240 1,129 127 2,906 10,057
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Operating Profit
(Loss) 11,226 (3,924) 3,631 (1,073) (3,667) 6,193
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Add:
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Depreciation and
Amortization 3,331 5,745 1,912 1,182 242 12,412
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Share-based
Compensation
Expense - - - - 649 649
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Cash Operating
Profit (Loss) 14,557 1,821 5,543 109 (2,776) 19,254
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Cash Operating
Profit
Percentage 27% 4% 20% 2% 14%
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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:
-- Q2 2014 versus Q1 2014: Sales revenue for the North America sodium
chlorate segment decreased 9% to $53.8 million for the three months
ended June 30, 2014 as compared to $58.9 million for the three
months ended March 31, 2014 primarily as a result of lower sales
volumes (9%). Realized netback prices increased marginally as a
result of the continued weakening of the Canadian dollar (three
months ended June 30, 2014 - US $0.91 as compared to US $0.92 for
the three months ended March 31, 2014). Cash operating profit
percentage decreased from 26% to 23% as a result of lower production
volumes from both our low-cost Brandon and Beauharnois plants,
partially offset by lower freight and salt costs.
-- Q2 2014 versus Q2 2013: Sales revenue for the North America sodium
chlorate segment was $53.8 million for the three months ended June
30, 2014 and 2013. Lower realized netback prices (2%) were offset by
an increase in sales volumes. Downward market pressure on netback
prices experienced late in 2013 and into 2014 was partially offset
by the weakening of the Canadian dollar (three months ended June 30,
2014 - US $0.91 as compared to US $0.98 for the three months ended
June 30, 2013). Cash operating profit percentage decreased from 27%
to 23% as a result of marginally lower production volumes and higher
electricity rates and fixed costs.
-- North America Chlor-alkali:
-- Q2 2014 versus Q1 2014: Sales revenue for the North America chlor-
alkali segment increased 10% to $55.4 million for the three months
ended June 30, 2014 as compared to $50.4 million for the three
months ended March 31, 2014. This increase was due to higher sales
volumes (caustic soda - 10% and chlorine - 4%), higher caustic soda
delivered prices (2%) and the settlement of a contract obligation
for HCl that contributed $3.0 million, more than offsetting lower
HCl sales volumes (8%). Cash operating profit percentage increased
from 10% to 18% primarily as a result of higher metric
electrochemical unit ("MECU") production volumes (2%) and lower non-
electricity energy costs as a result of greater hydrogen versus
natural gas usage, lower fixed costs and the contract settlement
noted in the preceding sentence, partially offset by lower MECU
realized netback prices (2%) and increased salt and electricity
costs.
-- Q2 2014 versus Q2 2013: Sales revenue for the North America chlor-
alkali segment increased 19% to $55.4 million for the three months
ended June 30, 2014 from $46.5 million for the three months ended
June 30, 2013. This increase was due to higher HCl and caustic soda
sales volumes (87% and 10%, respectively), higher caustic soda
delivered prices (4%) and the contract settlement noted in the
preceding paragraph, more than offsetting lower HCl and chlorine
delivered prices (22% and 10%, respectively) and lower chlorine
sales volumes (24%). Cash operating profit percentage increased from
4% to 18% as a result of an increase in our HCl capacity and market
demand for HCl supporting additional conversion of low margin
chlorine into higher margin HCl, higher MECU production volumes
(9%), and lower purchased product, salt and fixed costs and the
contract settlement noted in the preceding sentence, partially
offset by higher electricity rates. Fixed costs were higher for the
three months ended June 30, 2013 due to a planned maintenance
shutdown which was extended by nine days as a result of an equipment
failure during the attempted start-up of the plant.
-- South America:
-- Q2 2014 versus Q1 2014: Sales revenue for the South America segment
increased 3% to $24.2 million for the three months ended June 30,
2014 from $23.5 million for the three months ended March 31, 2014.
The increase in sales revenue was primarily due to higher realized
sodium hypochlorite (10%) and sodium chlorate (2%) netback prices
and higher sodium chlorate sales volumes (3%), partially offset by
lower caustic soda sales volumes (2%). Cash operating profit
percentage remained consistent at 32% with increases in realized
MECU netback prices (3%), higher sodium chlorate production volumes
(12%) and lower fixed costs being offset by lower MECU production
volumes (4%) and higher electricity and general and administrative
costs.
-- Q2 2014 versus Q2 2013: Sales revenue for the South America segment
decreased 12% to $24.2 million for the three months ended June 30,
2014 from $27.6 million for the three months ended June 30, 2013.
The decrease in sales revenue was due to lower realized caustic soda
(11%) and sodium chlorate (11%) netback prices as a result of lower
electricity costs which are predominately passed through to our
major customer, and lower sales volumes of sodium chlorate (12%),
partially offset by higher sales volumes of sodium hypochlorite
(16%), HCl (11%) and caustic soda (3%). Cash operating profit
percentage increased to 32% from 20% as a result of higher MECU
(11%) and sodium chlorate (3%) production volumes, a favorable
foreign exchange impact resulting from the weakening of both the
Brazilian Real and Canadian dollar as compared to the US dollar,
lower electricity costs not passed through to our major customer,
lower purchased product costs and lower fixed costs. Fixed costs
were lower in the second quarter of 2014 as a result of a planned
maintenance shutdown of the chlor-alkali plant in the three months
ended June 30, 2013. These gains were partially offset by lower
realized MECU netback prices (3%) and higher salt costs.
-- North American Terminal Operations:
-- Q2 2014 versus Q1 2014: Cash operating profit for the three months
ended June 30, 2014 was $2.4 million as compared to $0.7 million for
the three months ended March 31, 2014 (inclusive of transloading
services for inter-segment chlor-alkali products of $0.5 million and
$0.6 million, respectively). External sales revenue increased 33%
primarily as a result of increased unit train transload volumes (75%
- inclusive of revenues earned under take-or-pay contracts for
minimum transload volume commitments). Prior to March 1, 2014, unit
train operating costs net of unit train sales revenues were being
capitalized. On March 1, 2014, the unit train facility was
determined to be ready for its intended use. Cash cost of sales
(cost of sales before depreciation and amortization included in cost
of sales) comprise fixed costs including employee costs, pipeline
operating costs and other costs of operating the Bruderheim
Terminal. The increase in cash cost of sales ($1.0 million) was
primarily due to unit train operating costs no longer being
capitalized (net of revenue from unit train operations) after March
1, 2014.
-- Q2 2014 versus Q2 2013: Cash operating profit for the three months
ended June 30, 2014 was $2.4 million as compared to $0.6 million for
the three months ended June 30, 2013 (inclusive of transloading
services for inter-segment chlor-alkali products of $0.5 million in
each three month period). External sales revenue increased 94% as a
result of unit train operations (Q2/14 unit train transload volumes
of 3,803 railcars - inclusive of revenues earned under take-or-pay
contracts for minimum transload volume commitments). The increase in
cash cost of sales ($3.1 million) was primarily due to unit train
operations.
General Market Fundamentals
North America Sodium Chlorate: Global pulp markets performed largely as expected during the second quarter of 2014. Supply of softwood pulp remained restricted in select regions, which provided support for existing price levels and allowed for modest price appreciation in some cases. While slower than expected, hardwood pulp fundamentals continued to deteriorate in the second quarter of 2014, primarily due to excess capacity from new mills in South America and Asia. As a result, combined producer inventories were at 33 days in June, with softwood declining by five days since the beginning of the year to 25 days, while hardwood decreased by two days from its January level of 44 days. Benchmark pricing for Northern Bleached Softwood Kraft, which has held previous highs in recent months, is expected to start a slow decline in the third quarter of 2014 as a result of softening hardwood fundamentals and lower cyclical demand in select end-use segments. As of June, year-to-date global shipments of pulp were up by 0.5%, while pulp shipments into China increased by over 4% compared to the same period last year.
North American demand for sodium chlorate was stable throughout the quarter as producers worked through the shipping challenges caused by the harsh winter and railroad system issues. As of June, year-to-date North American sodium chlorate exports were slightly lower than the same period last year due to shipping restrictions in the beginning of the year and new capacity in South America. However, North American export volumes are expected to mirror 2013 volumes for the second half of 2014. Operating rates for the North American industry were steady throughout the second quarter of 2014, and are expected to remain in the low 90%'s for the remainder of 2014.
North America Chlor-alkali: The North American chlor-alkali industry operated at 84% of capacity in the second quarter of 2014 compared to 82% in the first quarter of 2014. Chlorine production volume grew 6% in the second quarter of 2014, as compared to growth of 1% in the first quarter due to increased demand from vinyl producers, seasonal water treatment and HCl.
Current demand for HCl in North America exceeds supply due primarily to supply constraints at several US by-product sources. Demand from the Western Canadian oil and gas sector was lower than the first quarter of 2014, but higher than seasonal expectations. Continued growth in the US oil and gas sector supported increased demand there.
Caustic soda demand in Western Canada was strong during the second quarter due to high operating rates from the pulp and paper sector. Import product volumes increased during the quarter due to production issues impacting a local producer.
MECU prices increased in the quarter due to caustic soda price improvement. Caustic soda and HCl price increases have been announced for implementation in the third quarter of 2014.
South America: Brazilian pulp production and exports for the first half of 2014 were 5.4% and 12.8% higher, respectively, than the corresponding period of 2013. Pricing pressure is now expected in the fourth quarter of 2014 as a result of new capacity entering the market (Montes de Plata).
Canexus Brazil experienced slightly higher than expected sodium chlorate demand from its major customer in the second quarter, partially offsetting the effects of increased competition in the merchant market.
In the first half of 2014, the Brazilian chlor-alkali industry capacity utilization rate was 84.7%, 0.6% higher than the same period in 2013. Canexus Brazil's chlor-alkali capacity utilization rate was 96% for the same period.
Oil & Gas: In June 2014, the Canadian Association of Petroleum Producers ("CAPP") provided its annual outlook for crude oil. According to CAPP, oil sands output is expected to grow by nearly 3 million bbls/day, to 4.8 million bbls/day in 2030 from 1.9 million bbls/day last year. This represents a compounded annual growth rate of approximately 6%. With such significant oil sands production growth expected, CAPP predicts that all major proposed transportation infrastructure projects, including crude-by-rail, will be required to meet Western Canada's transportation needs by 2030. Recent uncertainty regarding the timing of some pipeline projects continues to support demand for crude-by-rail in the near term.
In the second quarter of 2014, price differentials between Western Canadian Select ("WCS") and West Texas Intermediate ("WTI") averaged US $20.04/bbl as compared to US $23.13/bbl in the first quarter of 2014. The narrowing of the price differential was due to a variety of factors including increased refinery demand in the US Midwest, a continued increase in crude-by-rail volumes and a number of pipeline capacity improvements and expansion projects. PIRA Energy Group expects Canadian crude differentials to improve in the near term as additional crude-by-rail facilities open in the coming months and new pipeline capacity to Cushing and Montreal is added, relieving bottlenecks that currently restrict demand in the Midwest and Ontario during seasonal refinery maintenance.
Drilling activity remained strong during the second quarter of 2014, supported by relatively high oil and gas commodity prices. WTI averaged US $102.99/bbl for the quarter while NYMEX natural gas was US $4.58 per thousand cubic feet ("mcf") and AECO natural gas averaged CAD $4.70 per million British thermal units ("mmbtu"). Since spring break-up, rig count in both the US and Canada has been increasing which should continue to support demand for HCl.
Financial Updates
-- Long-term Debt and Finance Income (Expense):
-- Canexus borrows in US dollars and a substantial portion of our
revenues are denominated in or referenced to the US dollar. During
Q2/14, we recorded an unrealized currency translation gain of $10.6
million on long-term debt as a result of the strengthening of the
Canadian dollar at the end of the quarter compared to the end of
Q1/14 (Q2/13 - $10.0 million unrealized loss). Canexus also realized
foreign currency losses of $0.7 million on repayments of long-term
debt in the quarter (Q2/13 - $0.8 million). These amounts are
included in finance income (expense).
-- Interest expense in the quarter was $6.1 million (Q2/13 - $3.2
million). Interest capitalized on major projects was $0.9 million in
Q2/14 (Q2/13 - $1.4 million).
-- Other Income (Expense):
-- In Q2/14, mark-to-market fair value gains of $1.4 million (Q2/13 -
$0.4 million losses) and realized losses of $0.1 million (Q2/13 -
$Nil) were recorded on foreign exchange option contracts and average
rate range forward contracts.
-- In Q2/14, we recorded mark-to-market fair value gains on a cross
currency swap of $0.8 million as a result of the strengthening of
the Canadian dollar at the end of the quarter compared to the end of
Q1/14 (Q2/13 - $0.5 million losses) and realized losses of $0.1
million (Q2/13 - $0.1 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 Q2/13, we
recorded mark-to-market fair value gains of $0.4 million on interest
rate swaps.
-- General and Administrative: General and administrative expenses were
lower for Q2/14 as compared to Q2/13 as a result of reduced business
development activities in the quarter.
-- Capital Expenditures: Capital expenditures in Q2/14 were $28.1 million,
of which $20.2 million was spent on expansion projects, $5.3 million on
maintenance projects and $2.6 million on continuous improvement
projects. Expansion capital was primarily spent on the expansion of NATO
unit train operations.
-- Provision for Income Taxes: Provision for income taxes was higher in
Q2/14 as compared to Q2/13 due to higher income in the Canadian and
South American taxable legal entities which are consolidated into the
Corporation. As of June 30, 2014, the Corporation had approximately $811
million of future tax deductions resulting from capital expenditures
which can be used to shelter future taxable income in Canada.
-- Liquidity: At June 30, 2014, total borrowings under committed credit
facilities were $232 million with remaining available undrawn capacity
of approximately $192 million. Cash on hand at June 30, 2014 was $5.7
million.
Operating Results for the Three and Six Months Ended June 30, 2014 and 2013
Three Months Ended Six Months Ended
June 30 June 30
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CAD thousands 2014 2013 2014 2013
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Sales Revenue 143,548 133,241 284,065 274,476
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Cost of Sales (1) 95,546 92,317 186,125 180,883
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Gross Profit 48,002 40,924 97,940 93,593
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Distribution, Selling and
Marketing 26,059 24,674 53,979 49,985
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General and Administrative
(2) 9,528 10,057 21,983 19,550
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Operating Profit 12,415 6,193 21,978 24,058
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Finance Expense (755) (19,955) (16,297) (33,911)
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Other Income (Expense) 2,099 (57) 2,631 556
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Income (Loss) Before Income
Taxes 13,759 (13,819) 8,312 (9,297)
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Provision for (Recovery of)
Income Taxes
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Current 678 1,600 2,551 2,836
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Deferred 1,691 (652) 1,692 (763)
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2,369 948 4,243 2,073
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Net Income (Loss) 11,390 (14,767) 4,069 (11,370)
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Notes:
(1) Depreciation and Amortization included in the three and six months
ended June 30, 2014 - $16.1 million and $29.0 million, respectively;
Depreciation and Amortization included for the three and six months
ended June 30, 2013 - $12.2 million and $23.7 million, respectively.
(2) Depreciation and Amortization included for the three and six months
ended June 30, 2014 - $0.3 million and $0.6 million, respectively;
Depreciation and Amortization included for the three and six months
ended June 30, 2013 - $0.2 million and $0.5 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 and webcast at 7 am MT (9 am ET) on August 6, 2014, to discuss the financial and operating results of the Corporation. A presentation will be available on our website to facilitate the conference call. Please call 1-877-881-1303 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 end of day ET on August 20, 2014. To access the replay, call 1-800-319-6413 or +1-604-638-9010, followed by passcode 9153#.
Non-GAAP Measures
Cash Operating Profit, 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 Q2/14 and 2013 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 the IPL pipeline lateral line fill; the duration of operational downtime for the shutdown on the pipeline connected unit train facility expansion; expectations for chlor-alkali operating rates increasing and the range and timing thereof following the replacement of cells with degraded anode coatings; the implications on cash operating profit in Q3/14 of planned maintenance in Brazil and North Vancouver and the current shutdown at NATO for the unit train facility expansion; expectations regarding the ability to unlock shareholder value, strengthen Canexus' balance sheet and develop a clear strategy and vision; expectations for Northern Bleached Softwood Kraft benchmark pricing; expectations for the remainder of 2014 for exports and operating rates for the North American sodium chlorate industry; expectations for pricing in South America in Q4/14 as a result of new pulp capacity; anticipated oil sands production growth and expected growth both in crude-by-rail capacity and transportation to address transportation needs; expectations for Canadian crude differentials resulting from the alleviation of bottlenecks through anticipated additional crude-by-rail facilities and additional pipeline capacity being added; and expectations for and the impact of rig counts in the US and Canada on demand for HCl. 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 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, the Corporation 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.
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 and is committed to Responsible Care® through safe operating practices. Canexus' common shares (CUS) and debentures (Series III - CUS.DB.A; 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.
Contacts:
Canexus Corporation
Richard McLellan, CA
Senior Vice President and CFO
(403) 571-7300
Canexus Corporation
Lavonne Zdunich, CA
Investor Relations
(403) 571-7356
