Primary Energy Reports Fourth Quarter and Year End Financial Results
Revenues increase by 14% quarter over quarter
OAK BROOK, IL, March 3 /PRNewswire-FirstCall/ - Primary Energy Recycling Corporation (TSX: PRI), a company focused on creating value for its customers by recycling waste energy from industrial processes and utilizing clean heat and power technology to produce reliable and economical electricity and thermal energy, today announced its financial and operational results for the fourth quarter and year ended December 31, 2009.
Highlights for the fourth quarter and 2009:
- Increased revenues by 14% for the three months ended December 31,
2009 to $15.3 million versus the same period a year ago, and
increased operating income to $2.3 million compared to a $1.1 million
loss in the fourth quarter of 2008;
- Benefited from continuing recovery in the steel industry from the
economic downturn. Improved market conditions resulted in increased
steel production at the Company's site hosts, which positively
impacted Primary Energy Recycling's revenues. U.S. domestic raw steel
production is currently operating at 68.6% capacity versus 45.5% for
the same period last year;
- Commenced contract renewal discussions with the host at the Company's
North Lake project, which comes due in 2011;
- Closed a US$105 million secured term loan facility (the New Credit
Facility) and completed an oversubscribed rights offering for
proceeds of approximately US$50 million. The proceeds of the New
Credit Facility and rights offering were used to fully retire the
Company's outstanding US$131 million term loan;
- Amended the Management Agreement with CPI USA Ventures (Formerly
EPCOR USA Ventures). Primary Energy Recycling is now fully
responsible for its own executive management, strategic planning,
finance and business development activities;
"Our accomplishments in 2009 support our long-term goals of establishing Primary Energy Recycling as a forerunner in waste energy recycling and an important player in the clean tech sector," said John Prunkl, President and Chief Executive Officer of Primary Energy Recycling. "Going forward, we will continue to leverage our stable, predictable cash flows derived from long-term customer contracts and reinvest them into strengthening current client projects and paying down our debt. We have almost $14 million on-hand for investing in business growth and development. Energy recycling is among the lowest cost and cleanest forms of power generation available; accordingly we believe we have an exciting opportunity ahead of us in 2010 and beyond."
Financial Results
The Company's revenue of $15.3 million in the fourth quarter of 2009 increased $1.8 million, or 14.0%, compared with revenue of $13.5 million for the fourth quarter of 2008. This increase reflects an increase in the variable portion of Energy Service revenue. Market conditions in the steel industry improved in the fourth quarter of 2009 compared to the same period in 2008 and resulted in increased steel production at the Company's site hosts. The Company's facilities provide service to the primary operations of the site hosts and, in the past, increases in site host production volume have tended to have a favorable impact on variable revenue.
Operating and maintenance expense for the fourth quarter of 2009 was $2.3 million compared to $2.4 million for the fourth quarter of 2008, a decrease of $0.1 million or 6.5%. General and administrative expense for the fourth quarter of 2009 was $2.3 million compared to $3.6 million for the fourth quarter of 2008, a decrease of $1.3 million or 37.7%. The decrease is primarily due to reductions in accrued property taxes totaling $1.3 million of which $0.5 million relates to prior year property tax accruals and the remaining $0.8 million relates to 2009 property tax accruals.
Operating income for the fourth quarter of 2009 was $2.3 million compared to an operating loss of $1.1 million for the fourth quarter of 2008, an improvement of $3.4 million.
Interest expense for the fourth quarter of 2009 was $3.8 million compared to $5.0 million for the fourth quarter of 2008, a decrease of $1.2 million due to the reduced level of debt outstanding during the fourth quarter of 2009 as a result of the completion of the Recapitalization.
Deferred finance fees expensed upon extinguishment of debt for the fourth quarter of 2009 were $1.2 million in the fourth quarter of 2009 and represent the remaining unamortized deferred financing fees related to the 2005 Credit Facility which was refinanced in November 2009.
Realized and unrealized loss on derivative hedge contracts for the fourth quarter of 2009 was $0.1 million compared to $11.9 million for the fourth quarter of 2008. In the fourth quarter of 2009, the only derivative hedge contract held by the Company was an interest rate cap that was put in place in November 2009 in conjunction with the New Credit Facility. The loss recorded in the fourth quarter of 2008 resulted from currency exchange contracts and an interest rate swap agreement which are now terminated. The Company currently has no exposure to required foreign currency transactions.
The Company recorded income tax expense for the fourth quarter of 2009 of $1.1 million based primarily on the change in value of future tax assets and liabilities. For the fourth quarter of 2008, the Company recorded income tax expense of $5.4 million based on the change in value of future tax assets and liabilities.
Net loss for the fourth quarter of 2009 was $2.8 million compared to $8.7 million for the fourth quarter of 2008, a decrease of $5.9 million.
Although revenue for the fourth quarter 2009 increased from the same period in 2009, revenue for fiscal 2009 was $57.5 million, a decrease of 5.6% compared to revenue of $60.9 million for fiscal 2008. Operating income for fiscal 2009 was $2.7 million, a $0.9 million decrease compared to operating income of $3.6 million in fiscal 2008. Net income for fiscal 2009 was $7.7 million, compared to a net loss of $22.8 million in fiscal 2008, an improvement of $30.5 million resulting primarily from the gain on cancellation of debt in 2009 following completion of the Recapitalization and certain other items discussed in the Company's Management's Discussion and Analysis.
At the end of the reporting period, the Company held $24.5 million in cash.
As of December 31, 2009, there were 134,118,561 Common Shares of the Company outstanding.
The Company's full financial statements and Management's Discussion and Analysis are available at www.sedar.com or the Company's website at www.primaryenergy.com.
Conference Call
Management will host a conference call to discuss the fourth quarter and year end results on Thursday March 4, 2010 at 11:00 a.m. (ET). Following management's presentation, there will be a question and answer session. To participate in the conference call, please either log onto the Investor Information section of the Company's website at www.primaryenergyrecycling.com or dial 1.888.231.8191 or 1.647.427.7450. A conference call replay will be available until midnight on Thursday March 11, 2010 (ET) by calling 1.800. 642.1687 or 416.849.0833. Please enter the passcode 51313659 when instructed.
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 the completion of the rights offering, the refinancing of the term loan, operating performance, regulatory parameters, weather and economic conditions and the factors discussed in the Company's public filings available on SEDAR at 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 except as required by applicable securities laws.
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 three recycled energy projects, one clean heat and power project and a 50% interest in a pulverized coal facility, all located in the United States (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 using recycled waste energy from industrial processes and utilizes clean heat and power technology to produce reliable and economical electricity and thermal energy for its customers' use. For more information, please see www.primaryenergy.com.
SOURCE Primary Energy Recycling Corporation
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