Market Newsdesk

November 12, 2020 5:15 pm

AirBoss Appoints Highly Regarded Washington D.C. Lawyer, Stephen M. Ryan to Board of Directors

NEWMARKET, Ontario, Nov. 12, 2020 (GLOBE NEWSWIRE) — AirBoss of America Corp. (TSX: BOS) (the “Company” or “AirBoss”), a diversified manufacturer of rubber compound products and personal protective equipment, including to the U.S. defense and health care markets, today announced the appointment of Stephen M. Ryan, a highly regarded legal advisor based in Washington D.C., to its Board of Directors effective November 12, 2020.

“Steve Ryan further enhances AirBoss’ expertise and insight in its work with government agencies, particularly in our growing presence in the U.S. marketplace. AirBoss will be able to benefit from Steve’s insights gained from his work and relationships resulting from his representations of numerous well-known multinational corporations in their interactions with various government agencies over the past four decades,” said Mr. Gren Schoch, Chairman and CEO of AirBoss. “His legal expertise helping private sector companies in highly regulated industries navigate government contracts and government ethics will be an important addition to our Board, notably as we continue to ramp up supply of our personal protective equipment (PPE) to various government agencies globally.”

From 2007 through his retirement next month, Mr. Ryan led the Government Strategies practice group at the Washington, DC office of McDermott Will & Emery LLP, a large international law firm. Previously, he served as general counsel to the U.S. Senate Committee on Homeland and Governmental Affairs (GAC) under its Chairman, Senator John Glenn of Ohio; as deputy counsel of the President’s Commission on Organized Crime during the administration of President Ronald Reagan; and, as an Assistant U.S. Attorney in Washington, DC, during which he received a special commendation from the U.S. Attorney General and other U.S. Department of Justice awards. Mr. Ryan also served abroad as an advisor to the countries of Latvia, Lithuania, and Poland after they obtained independence from the former Soviet Union, and he helped train chief judges in Moscow. Mr. Ryan has also been as an adjunct professor at Georgetown University Law Center for over a decade and is the co-author of a book on government procurement ethics.

Mr. Ryan graduated from Cornell University and the University of Notre Dame Law School with honors. As part of his deep commitment to pro bono activity, Steve is on the Global Board of Operation HOPE, a primarily African-American financial literacy group. In addition, Steve serves on the Board of the Shakespeare Theatre Company in Washington, D.C., and also serves as Chair of the Theatre’s selection committee on new trustees.

AirBoss of America Corp.

AirBoss of America Corp. is a group of complementary businesses supplying custom compounded rubber, survivability solutions and anti-vibration components to a diverse group of customers globally. AirBoss Rubber Solutions is a top-tier North American custom rubber compounder with 450 million turn pounds of annual capacity. AirBoss Defense Group manufactures and supplies a growing array of Chemical, Biological, Radioactive, Nuclear and Explosive (“CBRN-E”) protective solutions and is a leading provider of personal protective equipment to governments, militaries and frontline healthcare workers both in the U.S. and internationally. AirBoss Engineered Products is a supplier of innovative anti-vibration solutions to the North American automotive market. The Company’s shares trade on the TSX under the symbol BOS. Visit www.airbossofamerica.com or www.adg.com for more information.

AIRBOSS
FORWARD LOOKING
INFORMATION
DISCLAIMER

Certain statements contained or incorporated by reference herein, including those that express management’s expectations or estimates of future developments or AirBoss’ future performance, constitute “forward-looking information” or “forward-looking statements” within the meaning of applicable securities laws, and can generally be identified by words such as “will”, “may”, “could” “expects”, “believes”, “anticipates”, “forecasts”, “plans”, “intends” or similar expressions. These statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events and performance
.

Statements containing forward-looking information are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward-looking information involves known and unknown contingencies, uncertainties and other risks that may cause AirBoss’ actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by the forward-looking information. Numerous factors could cause actual results to differ materially from those in the forward-looking information, including without limitation: impact of general economic conditions; dependence on key customers; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; AirBoss’ ability to maintain existing customers or develop new customers in light of increased competition; AirBoss’ ability to successfully integrate acquisitions of other businesses and/or companies or to realize on the anticipated benefits thereof; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws and potential litigation; ability to obtain financing on acceptable terms; environmental damage and non-compliance with environmental laws and regulations; impact of global health situations; potential product liability and warranty claims and equipment malfunction. COVID-19 could also negatively impact the Company’s operations and financial results in future periods. There is increased uncertainty associated with future operating assumptions and expectations as compared to prior periods. As such, it is not possible to estimate the impacts COVID-19 will have on the Company’s financial position or results of operations in future periods. While the direct impacts of COVID-19 are not determinable at this time, the Company has undrawn credit facility as at
September
30, 2020 that can provide financing up to $60,000. This list is not exhaustive of the factors that may affect any of AirBoss’ forward-looking information
.

All of the forward-looking information in this press release is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward-looking
information
. All subsequent written and oral forward-looking
information
attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly th
is
forward-looking
information
except as required by applicable laws. Risks and uncertainties about AirBoss’ business are more fully discussed under the heading “Risk Factors”
in our most recent Annual Information Form and are otherwise disclosed in our filings with securities regulatory authorities which are available on SEDAR at www.sedar.com.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/b1fab237-c4a2-44c8-9f4b-e51e9f9e0b50

November 12, 2020 5:15 pm

Cypress Environmental Partners Reports Third Quarter Results

Cypress Environmental Partners Reports Third Quarter Results

TULSA, Okla.–(BUSINESS WIRE)–
Today, Cypress Environmental Partners, L.P., (NYSE: CELP) reported its financial results for the three months ended September 30, 2020.

HIGHLIGHTS

Third quarter 2020 Adjusted EBITDA of $3.6 million, an increase of 16% over second quarter 2020.
Third quarter 2020 Pipeline Inspection Services segment gross margin of $5.1 million, an increase of 15% from second quarter 2020.
Third quarter 2020 Pipeline & Process Services segment gross margin of $1.3 million, a decrease of 38% from second quarter 2020.
Third quarter 2020 Water & Environmental Services segment gross margin of $0.9 million, an increase of 10% from second quarter 2020.
Net loss attributable to common unitholders of $0.5 million for the three months ended September 30, 2020.
Distributable cash flow (DCF) of $(0.1 million) for the three months ended September 30, 2020, inclusive of $1.3 million in cash paid for tax payments related to 2019 results.
Continued the temporary suspension of our common unit distribution to protect our balance sheet and liquidity.
Cost reductions representing over $4.5 million of savings on an annualized basis.
Reduced debt and exited the third quarter with approximately $9.6 million of cash and cash equivalents and a net debt leverage ratio of 3.0x.
Made additional progress with the in-line inspection technology investment currently owned by its GP that is focused on next generation 5G MFL in-line inspection (“Smart Pigging”) for the municipal water industry and traditional energy pipelines.

THIRD QUARTER 2020 SUMMARY FINANCIAL RESULTS

		Three Months Ended
		September 30,
		2020		2019
		(Unaudited)
		(in thousands, except per unit amounts)

Net income	$	805	$	5,480
Net (loss) income attributable to common unitholders	$	(471)	$	3,813
Net (loss) income per limited partner unit – basic	$	(0.04)	$	0.32
Net (loss) income per limited partner unit – diluted	$	(0.04)	$	0.26
Adjusted EBITDA(1)	$	3,615	$	9,504
Distributable cash flow(1)	$	(55)	$	5,766

(1) This press release includes the following financial measures not presented in accordance with U.S. generally accepted accounting principles, or GAAP: adjusted EBITDA, adjusted EBITDA attributable to limited partners, and distributable cash flow. Each such non-GAAP financial measure is defined below under “Non-GAAP Financial Information”, and each is reconciled to its most directly comparable GAAP financial measure in schedules at the end of this press release.

CEO’S PERSPECTIVE

“Our business results improved in the third quarter but remain pressured as a result of ongoing demand headwinds from COVID-19, and the resulting commodity prices that continue to impact our customers and in turn, us. In the second quarter we temporarily suspended our common unit distributions and we continued that suspension for the third quarter to protect our balance sheet. Our primary focus continues to be safely serving our customers, and ensuring the health and safety of our employees during this unprecedented and dynamic environment as we face the potential second wave of COVID-19 and winter flu season,” said Peter C. Boylan III, chairman, president, and CEO. “Our dedicated employees delivered improved third quarter results due in part to improved volumes in our Environmental Services segment. I am proud of how all our employees have handled the challenges with the pandemic in the field, office, and work-from-home environments.

“We continue to focus on winning new customers while supporting our existing clients. We view the next two quarters as a period of transition for our customers that should represent the bottom of this cycle. However, while the global lockdowns are evolving, therapeutics are advancing, and vaccine development is progressing, the near-term recovery remains fragile as we enter winter with potential subsequent waves of COVID-19 that could pose a significant risk to this outlook. Protecting people, property, and the environment will continue to be important for us and all of our customers. Our leadership team has begun working on a diversification strategy to begin offering our inspection services to other industries including renewables (wind, solar, hydro), electrical transmission, municipal water and sewer, and infrastructure (bridges). Many of our inspectors and employees have the skills to offer these services to these new markets.”

GROWTH UPDATE

Pipeline Inspection Services

During the third quarter we had ~ 700 inspectors and technicians working throughout the United States. Although several large projects that had been previously awarded were delayed or cancelled in 2020 with the economic downturn, CELP continues to bid on new work.
CELP continues to aggressively pursue organic business development (despite the work-from-home environment) and has successfully been awarded some new customer contracts and relationships that should benefit CELP in the future.

Pipeline & Process Services (“PPS”)

The PPS segment continues to have a strong year; with several new customers and projects benefitting the backlog. This division has made some additional investment in the Houston energy complex with a focus on maintenance and integrity projects.

Water & Environmental Services (“Environmental Services”)

Volumes continued to improve in the Bakken, despite the rig count ending the quarter at 11 rigs, compared with a trough in Q2 2016 of 22 rigs, and a recent peak of 55 rigs in Q4 2019. The rig count in this basin was as high as 198 rigs in Q3 2014. Today’s rigs are substantially more efficient than those of six years ago. Operators continued to increase production during the quarter, after having choked back wells earlier this year when oil prices collapsed.
CELP recently completed a new contract with a public energy company to connect its pipeline to one of its water treatment facilities. This facility began receiving volumes from this pipeline in October 2020.

COMMON UNIT DISTRIBUTIONS

On July 28, 2020, CELP announced that it has temporarily suspended common unit distributions and the suspension continued for the third quarter.

CELP’s distributable cash flow was $(0.1 million) for the three months ended September 30, 2020, inclusive of $1.3 million in cash paid for tax payments related to 2019 results.

THIRD QUARTER 2020 OPERATING RESULTS BY BUSINESS SEGMENT

Pipeline Inspection Services

The segment’s results for the three months ended September 30, 2020 and 2019 were:

Revenue – $41.9 million and $99.7 million, respectively.
Gross Margin – $5.1 million and $11.1 million, respectively.

Pipeline & Process Services (“PPS”)

PPS segment’s results for the three months ended September 30, 2020 and 2019 were:

Revenue – $4.7 million and $6.2 million, respectively.
Gross Margin – $1.3 million and $2.1 million, respectively.

Water & Environmental Services (“Environmental Services”)

Environmental Services segment’s results for the three months ended September 30, 2020 and 2019 were:

Revenue – $1.4 million and $3.1 million, respectively.
Gross Margin – $0.9 million and $2.3 million, respectively

CAPITALIZATION, LIQUIDITY, AND FINANCING

Credit Facility

CELP has a $110 million revolving credit facility. Proceeds from this facility can be used to fund working capital requirements and other general partnership purposes, including growth and acquisitions. CELP had $9.6 million of cash and cash equivalents at September 30, 2020.

The credit facility matures on May 28, 2021. CELP is working with the lenders regarding the possibility of utilizing the U.S. Federal Reserve Main Street Expanded Loan Facility, and/or a renewal, modification, and reduction of the current facility.
As of September 30, 2020, CELP had $62.6 million of debt outstanding (inclusive of finance leases). At September 30, 2020, CELP’s leverage ratio (calculated as debt net of cash and cash equivalents divided by trailing-twelve-month EBITDA as defined in the credit agreement) was 3.0 times on a net debt basis. The effective interest rate on CELP’s debt as of September 30, 2020 was 3.7%.

CAPITAL EXPENDITURES

During the quarter CELP had $0.2 million in maintenance capital expenditures and $0.1 million in expansion capital expenditures, which are reflective of an attractive business model that requires minimal capital expenditures.

QUARTERLY REPORT

CELP filed its quarterly report on Form 10-Q for the three months ended September 30, 2020 with the Securities and Exchange Commission today. CELP will also post a copy of the Form 10-Q on its website at www.cypressenvironmental.biz. Unitholders may request a printed copy of CELP’s complete audited financial statements and annual report for the year ended December 31, 2019 free of charge by contacting CELP at the email address below.

NON-GAAP FINANCIAL INFORMATION

This press release and the accompanying financial schedules include the following non-GAAP financial measures: adjusted EBITDA, adjusted EBITDA attributable to limited partners, and distributable cash flow. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. CELP’s non-GAAP financial measures should not be considered in isolation or as an alternative to its financial measures presented in accordance with GAAP, including revenues, net income or loss attributable to limited partners, net cash provided by or used in operating activities, or any other measure of liquidity or financial performance presented in accordance with GAAP as a measure of operating performance, liquidity, or ability to service debt obligations and make cash distributions to unitholders. The non-GAAP financial measures presented by CELP may not be comparable to similarly-titled measures of other entities because other entities may not calculate their measures in the same manner.

CELP defines adjusted EBITDA as net income or loss exclusive of (i) interest expense, (ii) depreciation, amortization, and accretion expense, (iii) income tax expense or benefit, (iv) equity-based compensation expense, (v) and certain other unusual or nonrecurring items. CELP defines adjusted EBITDA attributable to limited partners as adjusted EBITDA exclusive of amounts attributable to the general partner and to noncontrolling interests. CELP defines distributable cash flow as adjusted EBITDA attributable to limited partners less cash interest paid, cash income taxes paid, maintenance capital expenditures, and cash distributions on preferred equity. Management believes these measures provide investors meaningful insight into results from ongoing operations.

These non-GAAP financial measures are used as supplemental liquidity and performance measures by CELP’s management and by external users of its financial statements, such as investors, banks, and others to assess:

financial performance of CELP without regard to financing methods, capital structure or historical cost basis of assets;
CELP’s operating performance and return on capital as compared to those of other companies, without regard to financing methods or capital structure;
viability and performance of acquisitions and capital expenditure projects and the overall rates of return on investment opportunities; and
the ability of CELP’s businesses to generate sufficient cash to pay interest costs, support its indebtedness, and make cash distributions to its unitholders.

ABOUT CYPRESS ENVIRONMENTAL PARTNERS, L.P.

Cypress Environmental Partners, L.P. is a master limited partnership that provides essential environmental services to the energy and municipal water industries, including pipeline & infrastructure inspection, NDE testing, various integrity services, and pipeline & process services throughout the United States. Cypress also provides environmental services to upstream energy companies and their vendors in North Dakota, including water treatment, hydrocarbon recovery, and disposal into EPA Class II injection wells to protect our groundwater. Cypress works closely with its customers to help them protect people, property, and the environment, and to assist their compliance with increasingly complex and strict rules and regulations. Cypress is headquartered in Tulsa, Oklahoma.

CAUTIONARY STATEMENTS

This press release may contain or incorporate by reference forward-looking statements as defined under the federal securities laws regarding Cypress Environmental Partners, L.P., including projections, estimates, forecasts, plans and objectives. Although management believes that expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond CELP’s control. If any of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, CELP’s actual results may vary materially from what management forecasted, anticipated, estimated, projected or expected.

The key risk factors that may have a direct bearing on CELP’s results of operations and financial condition are described in detail in the “Risk Factors” section of CELP’s most recently filed annual report and subsequently filed quarterly reports with the Securities and Exchange Commission. Investors are encouraged to closely consider the disclosures and risk factors contained in CELP’s annual and quarterly reports filed from time to time with the Securities and Exchange Commission. The forward-looking statements contained herein speak as of the date of this announcement. CELP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Information contained in this press release is unaudited and subject to change.

CYPRESS ENVIRONMENTAL PARTNERS, L.P.
Unaudited Condensed Consolidated Balance Sheets
As of September 30, 2020 and December 31, 2019
(in thousands)
	September 30,			December 31,
	2020			2019

ASSETS
Current assets:
Cash and cash equivalents	$	9,585		$	15,700
Trade accounts receivable, net		31,478			52,524
Prepaid expenses and other		1,620			988
Total current assets		42,683			69,212
Property and equipment:
Property and equipment, at cost		26,906			26,499
Less: Accumulated depreciation		15,789			13,738
Total property and equipment, net		11,117			12,761
Intangible assets, net		18,053			20,063
Goodwill		50,316			50,356
Finance lease right-of-use assets, net		678			600
Operating lease right-of-use assets		2,057			2,942
Debt issuance costs, net		387			803
Other assets		588			605
Total assets	$	125,879		$	157,342

LIABILITIES AND OWNERS’ EQUITY
Current liabilities:
Accounts payable	$	2,117		$	3,529
Accounts payable – affiliates		357			1,167
Accrued payroll and other		8,637			14,850
Income taxes payable		360			1,092
Finance lease obligations		249			183
Operating lease obligations		379			459
Current portion of long-term debt		62,029			–
Total current liabilities		74,128			21,280
Long-term debt		–			74,929
Finance lease obligations		362			359
Operating lease obligations		1,614			2,425
Other noncurrent liabilities		173			158
Total liabilities		76,277			99,151

Owners’ equity:
Partners’ capital:
Common units (12,209 and 12,068 units outstanding at
September 30, 2020 and December 31, 2019, respectively)		29,185			37,334
Preferred units (5,769 units outstanding at September 30, 2020 and December 31, 2019)		44,291			44,291
General partner		(25,876	)		(25,876	)
Accumulated other comprehensive loss		(2,449	)		(2,577	)
Total partners’ capital		45,151			53,172
Noncontrolling interests		4,451			5,019
Total owners’ equity		49,602			58,191
Total liabilities and owners’ equity	$	125,879		$	157,342

CYPRESS ENVIRONMENTAL PARTNERS, L.P.
Unaudited Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2020 and 2019
(in thousands, except per unit data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019

Revenue	$	48,047		$	108,934		$	168,218		$	310,401
Costs of services		40,702			93,533			145,537			270,170
Gross margin		7,345			15,401			22,681			40,231

Operating costs and expense:
General and administrative		4,301			6,557			15,167			18,946
Depreciation, amortization and accretion		1,250			1,116			3,669			3,329
Gain on asset disposals, net		(4	)		–			(27	)		(23	)
Operating income		1,798			7,728			3,872			17,979

Other (expense) income:
Interest expense, net		(959	)		(1,376	)		(3,235	)		(4,102	)
Foreign currency (losses) gains		106			(47	)		(167	)		138
Other, net		142			82			412			220
Net income before income tax expense		1,087			6,387			882			14,235
Income tax expense		282			907			573			1,731
Net income		805			5,480			309			12,504

Net income attributable to noncontrolling interests		243			634			852			692
Net income (loss) attributable to partners / controlling interests		562			4,846			(543	)		11,812

Net income attributable to preferred unitholder		1,033			1,033			3,099			3,099
Net (loss) income attributable to common unitholders	$	(471	)	$	3,813		$	(3,642	)	$	8,713

Net (loss) income per common limited partner unit:
Basic	$	(0.04	)	$	0.32		$	(0.30	)	$	0.72
Diluted	$	(0.04	)	$	0.26		$	(0.30	)	$	0.65

Weighted average common units outstanding:
Basic		12,209			12,065			12,171			12,030
Diluted		12,209			18,350			12,171			18,207

Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020		2019
	(in thousands)

Net income	$	805		$	5,480	$	309	$	12,504
Add:
Interest expense		959			1,376		3,235		4,102
Depreciation, amortization and accretion		1,464			1,391		4,391		4,155
Income tax expense		282			907		573		1,731
Equity-based compensation		211			303		729		746
Foreign currency losses		–			47		167		–
Less:
Foreign currency gains		106			–		–		138
Adjusted EBITDA	$	3,615		$	9,504	$	9,404	$	23,100

Adjusted EBITDA attributable to noncontrolling interests		368			783		1,274		1,114
Adjusted EBITDA attributable to limited partners / controlling interests	$	3,247		$	8,721	$	8,130	$	21,986

Less:
Preferred unit distributions		1,033			1,033		3,099		3,099
Cash interest paid, cash taxes paid, maintenance capital expenditures		2,269			1,922		4,463		5,604
Distributable cash flow	$	(55	)	$	5,766	$	568	$	13,283

Reconciliation of Net (Loss) Income Attributable to Limited Partners to Adjusted
EBITDA Attributable to Limited Partners and Distributable Cash Flow

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
	(in thousands)

Net (loss) income attributable to limited partners	$	562		$	4,846	$	(543	)	$	11,812
Add:
Interest expense attributable to limited partners		959			1,376		3,235			4,102
Depreciation, amortization and accretion attributable to limited partners		1,346			1,255		3,999			3,759
Income tax expense attributable to limited partners		275			894		543			1,705
Equity based compensation attributable to limited partners		211			303		729			746
Foreign currency losses attributable to limited partners		–			47		167			–
Less:
Foreign currency gains attributable to limited partners		106			–		–			138
Adjusted EBITDA attributable to limited partners		3,247			8,721		8,130			21,986

Less:
Preferred unit distributions		1,033			1,033		3,099			3,099
Cash interest paid, cash taxes paid and maintenance capital expenditures
attributable to limited partners		2,269			1,922		4,463			5,604
Distributable cash flow	$	(55	)	$	5,766	$	568		$	13,283


Reconciliation of Net Cash Flows Provided by Operating
Activities to Adjusted EBITDA and Distributable Cash Flow
						Nine Months Ended September 30,
						2020			2019
						(in thousands)

Cash flows provided by operating activities						$	18,216		$	5,055
Changes in trade accounts receivable, net							(21,046	)		20,879
Changes in prepaid expenses and other							642			(121	)
Changes in accounts payable and accrued liabilities							7,482			(8,023	)
Change in income taxes payable							733			(166	)
Interest expense (excluding non-cash interest)							2,801			3,711
Income tax expense (excluding deferred tax benefit)							573			1,731
Other							3			34
Adjusted EBITDA						$	9,404		$	23,100

Adjusted EBITDA attributable to noncontrolling interests							1,274			1,114
Adjusted EBITDA attributable to limited partners / controlling interests						$	8,130		$	21,986

Less:
Preferred unit distributions							3,099			3,099
Cash interest paid, cash taxes paid, maintenance capital expenditures							4,463			5,604
Distributable cash flow						$	568		$	13,283

Operating Data
	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2020			2019			2020			2019

Total barrels of saltwater disposed (in thousands)		1,978			3,989			6,069			10,322
Average revenue per barrel	$	0.73		$	0.76		$	0.72		$	0.77
Environmental Services gross margins		64.6	%		74.1	%		63.8	%		71.5	%
Average number of inspectors		659			1,540			792			1,548
Average number of U.S. inspectors		659			1,539			792			1,547
Average revenue per inspector per week	$	4,842		$	4,925		$	4,809		$	4,802
Pipeline Inspection Services gross margins		12.2	%		11.1	%		10.7	%		10.7	%
Average number of field personnel		28			29			27			28
Average revenue per field personnel per week	$	12,696		$	16,264		$	13,954		$	11,496
Pipeline & Process Services gross margins		28.0	%		33.1	%		27.0	%		29.2	%
Maintenance capital expenditures (in thousands)	$	161		$	234		$	557		$	521
Expansion capital expenditures (in thousands)	$	72		$	296		$	1,170		$	1,158
Common unit distributions (in thousands)	$	–		$	2,534		$	2,564		$	7,599
Preferred unit distributions (in thousands)	$	1,033		$	1,033		$	3,099		$	3,099
Net debt leverage ratio	2.99x			2.34x			2.99x			2.34x

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112006105/en/

Investors or Analysts:

Cypress Environmental Partners, L.P. – Jeff Herbers – Vice President & Chief Financial Officer

[email protected] or 918-947-5730

KEYWORDS: Oklahoma United States North America

INDUSTRY KEYWORDS: Energy Other Energy Environment

MEDIA:

Logo

November 12, 2020 5:14 pm

APCO Holdings, LLC, Promotes Crystal Meinert to Vice President, Human Resources

Norcross, GA, Nov. 12, 2020 (GLOBE NEWSWIRE) — APCO Holdings, LLC, a leading provider and administrator of automotive F&I products and home to the EasyCare, GWC Warranty and MemberCare brands, announced today that Crystal Meinert has been promoted to Vice President, Human Resources.

In her new role as a member of the APCO Holdings executive leadership team, Crystal will lead the HR function, overseeing all department operations and championing on the company’s people-focused initiatives.

Since joining APCO Holdings in 2017, Crystal has become an integral part of the HR team. Initially hired as Director of HR for GWC Warranty, Crystal was promoted to Director of HR Transformation for the entire organization in 2019. In March 2020, she took on responsibility for leading the entire Human Resources department for APCO Holdings and has played a vital role in leading the company’s efforts to provide organizational support for employees during the pandemic and driven the company’s diversity and inclusion initiative.

“I look forward to developing and executing talent strategies that support and accelerate the strategic growth goals for APCO Holdings,” said Meinert. “My primary objective is to strengthen and grow an engaged, inclusive, and invested workforce while driving the people-focused initiatives that will move the business forward.”

Crystal brings over 11 years of HR experience, holding progressively senior roles as her career advanced. Before joining APCO Holdings, Crystal served as an HR Business Partner for Amazon and as HR Manager and Senior Advisor at CVS Health. While at CVS Health, she supported employee relation efforts for over 280,000 employees across the country.

“We have a high-performing team and a strong focus on recruiting, retaining, and recognizing our talent for their contributions,” says Fin O’Neill, Chairman & CEO of APCO Holdings. “Crystal’s extensive experience in leadership development, diversity and inclusion efforts, organizational effectiveness, and employee engagement will help us continue to advance our company’s capabilities and culture. I’m confident that Crystal’s commitment to our company’s core values will help accelerate our growth.”

Crystal received her B.S. degree in Management and Human Resources from Bloomsburg University and holds certifications as a Professional in Human Resources (PHR) and a Certified Professional (SHRM-CP).

About APCO Holdings, LLC. (APCO)

Since 1984, APCO has grown to become a leading provider and administrator of F&I products for the auto industry. Built on a foundation of financial security and a commitment to understanding our customers’ needs, APCO is a trusted partner to some of the most well-respected insurers, highly successful dealerships, and leading auto industry players in the country. The company markets its products using the EasyCare, GWC Warranty, and MemberCare brands, as well as other private label products, through a network of independent agents and an internal salesforce that specialize in consulting with and servicing the automotive dealership markets. EasyCare, GWC Warranty, and MemberCare F&I products are the only “MotorTrend Recommended Best Buy” in the industry. They also carry top ratings from the Better Business Bureau, have protected over 11 million customers and paid over $3.5 billion in claims. For more information about the APCO Holdings family of brands, please visit apcoholdings.com. 

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Ashley Braswell
EasyCare APCO
678-615-1142
[email protected]

November 12, 2020 5:13 pm

Navigator Holdings Ltd. Preliminary Third Quarter 2020 Results (Unaudited)

PR Newswire

LONDON, Nov. 12, 2020 /PRNewswire/ —

Highlights

Navigator Holdings Ltd. (the “Company”, “we”, “our” and “us”) (NYSE: NVGS) reported operating revenue of $81.4 million for the three months ended September 30, 2020, compared to $75.6 million for the three months ended September 30, 2019.
Net income was $1.5 million or an earnings per share of $0.03 for the three months ended September 30, 2020 compared to a net loss of $2.9 million or a loss per share of $0.05 for the three months ended September 30, 2019.
Adjusted EBITDA⁽¹⁾ was $31.9 million for the for the three months ended September 30, 2020, comprising $27.5 million from the operations of the vessels and $4.4 million from our 50/50 joint venture (the “Export Terminal Joint Venture”) relating to the ethylene export marine terminal at Morgan’sPoint, Texas (the “Marine Export Terminal”). This compared to $29.5 million for the three months ended September 30, 2019.
Fleet utilization decreased to 78.8% for the three months ended September 30, 2020 compared to 84.6% for the three months ended September 30, 2019.
On August 4, 2020, we amended our Terminal Facility to provide for a total availability of $69.0 million and to enable the immediate drawdown of $34.0 million for general corporate purposes.
On September 10, 2020, issued new senior unsecured $100 million 5-year bonds at a fixed coupon of 8.00% per annum to refinance the 2017 Bonds that were scheduled to mature in February 2021.
On September 17, 2020, entered into a new $210 million revolving credit facility to refinance one of its secured credit facilities which enabled the Company to borrow an additional approximate $30 million for general corporate purposes.
Following the execution of the above facilities, our cash and undrawn amounts available from our loan facilities has increased significantly during the quarter, to approximately $120.0 million at September 30, 2020, with no further loan maturities until April 2022.
We have achieved a record of 714 days without a Lost-Time-Incident (LTI) across our in-house technical managed fleet of 17 vessels.

The Company’s financial information for the quarter ended September 30, 2020 included in this press release is preliminary and is subject to change in connection with the completion of the Company’s quarter-end close procedures and further financial review. Actual results may differ from these estimates as a result of the completion of the Company’s quarter-end closing procedures, review adjustments and other developments that may arise between now and the time such financial information for the quarter ended September 30, 2020 is finalized.

Ethylene Marine Export Terminal

The ethylene Marine Export Terminal continues to be operational although throughput has been affected by hurricane Laura, which disrupted power supply to nearby ethylene crackers, reducing the availability of ethylene to export. The 30,000 ton storage tank, which will increase the terminal’s throughput capacity, is currently being commissioned and is on schedule to be operational in December. Thereafter the committed offtake agreements, which have minimum terms of five years, are expected to result in approximately 940,000 tons of annual throughput.

The Company contributed $7.5 million to the Export Terminal Joint Venture during the third quarter of 2020 with a draw down on the Company’s Terminal Facility. In addition, since September 30, 2020 the Company has contributed a further $2.0 million to the Export Terminal Joint Venture, also drawn from the Terminal Facility. To date the Company has contributed $142.5 million of our expected share of the approximate $146.5 million towards the capital cost of the Marine Export Terminal.

Trends

Notwithstanding the disruptions to the global economy due to the COVID19 pandemic, the commercial environment coming into the third quarter of 2020 was relatively stable. With the Asian markets emerging from governmental lockdowns sooner than those in the West and less susceptible to further pandemic waves, arbitrage opportunities opened and remained into the summer months. The initial demand for ethylene exports from our Marine Export Terminal continued apace into July and the first half of August, including a world record for the largest ethylene cargo ever loaded – 20,000mt on Navigator Eclipse (37,500cbm / MEGC), that was delivered to China.

However, in mid-August, with predictions of hurricane Laura making landfall in Louisiana, ethylene producers initiated precautionary procedures by shutting down various crackers. Hurricane Laura’s impact was considerable and long-standing in the Lake Charles area of Louisiana where approximately one quarter of U.S. ethylene production is located. Although minimal physical damage resulted from the hurricane, the local power grid was severely impacted and multiple producers had to wait for the local utility companies to re-establish electricity supply before re-starting their ethylene crackers. This reduction in U.S. domestic ethylene production lead to U.S. ethylene prices rising sharply due to reduced supply, much of which was consumed domestically with only limited volumes available for exports. Expected increased ethylene export volumes for September and October following the severe hurricane season and the impact on the Lake Charles area by hurricane Laura did not materialize, reducing throughput at the terminal as well as our expected earnings days for the ethylene fleet. Our utilization for the spot fleet reduced in September and October as a direct consequence. The ethylene vessels that were ballasting into the U.S. Gulf during this period were forced to compete with semi-refrigerated and fully-refrigerated non-ethylene petrochemical cargoes and LPG, where available.

Electricity is now restored in the Lake Charles area and the ethylene crackers have re-commenced production. U.S. domestic ethylene prices are softening and the market dynamics are returning to what we experienced during the summer months; low U.S. ethylene price creating arbitrage with the rest of the world, thus providing employment for the ethylene fleet. We expect our utilization level to rise as a result of the widening of the ethylene arbitrage for November and December.

As well as lifting the world record ethylene cargo on Navigator Eclipse, our midsize ethylene/ethane carriers had a positive quarter in the ethane market. We extended an existing time charter to a large European chemical player for a further year and concluded a new three year time charter with a large Chinese chemical producer.

Very Large Gas Carriers had a solid quarter, regaining much of the losses of the previous three months, The Baltic spot index rose by 85% during the third quarter of 2020, but in contrast the handy-size vessel twelve month charter assessment declined slightly from $620,000 pcm to $605,000 pcm reemphasizing a stable profile due to the vessels’ flexibility in trading in LPG, petrochemicals and ammonia markets.

COVID-19

The impact of COVID-19 continues to affect global economic conditions that effect our business, financial condition and the results of our operations. The ultimate longevity of the COVID-19 pandemic is uncertain and its future effects depend on the spread of the outbreak and the reactions of various national governments to the virus. Therefore, an estimate of the likely impact cannot be made with certainty at this time.

Crew changes remain a challenge, similar to most shipowners, although an increasing number of crew changes have successfully occurred during the quarter, with 49 crew members now with overdue leave of an average of 34 days. Drydocking vessels too has been difficult with some yards closing on short notice. However, drydockings have occurred at various dockyards around the world and the Company has completed five drydocks during the third quarter, with a further three being scheduled for later in 2020.

Results of Operations for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2020

The following table compares our operating results for the three months ended September 30, 2019 and 2020:

	Three Months Ended September 30, 2019	Three Months Ended September 30, 2020	Percentage Change
	(in thousands, except percentages)
Operating revenue	$ 75,624	$ 75,613	0.0%
Operating revenue – Luna Pool collaborative arrangements	–	5,738	–

Total operating revenue	$ 75,624	$ 81,351	7.6%

Expenses:
Brokerage commissions	1,217	1,220	0.2%
Voyage expenses	13,387	14,584	8.9%
Voyage expenses – Luna Pool collaborative arrangements	–	4,525	–
Vessel operating expenses	26,820	27,221	1.5%
Depreciation and amortization	19,009	19,180	0.9%
General and administrative costs	4,631	6,525	40.9%
Other Income	–	(212)	–

Total operating expenses	$ 65,064	$ 73,043	12.3%

Operating income	$ 10,560	$ 8,308	(21.3%)
Foreign currency exchange gain/(loss) on senior secured bonds	4,171	(1,612)	–
Unrealized (loss)/gain on non-designated derivative instruments	(5,197)	2,137	–
Interest expense	(12,406)	(9,820)	(20.8%)
Write off of deferred financing costs	–	(155)	–
Interest income	197	52	(73.6%)

Loss before taxes and share of result of equity accounted joint venture	$ (2,675)	$ (1,090)	(59.3%)
Income taxes	(131)	(120)	(8.4%)
Share of result of equity accounted joint ventures	(107)	3,147	–

Net (loss) / income	$ (2,913)	$ 1,937	–
Net income attributable to non-controlling interest	—	(446)	–

Net (loss) / income attributable to stockholders of Navigator Holdings Ltd	$ (2,913)	$ 1,491	–

Operating Revenue
. Operating revenue was $75.6 million for the three months ended September 30, 2020, principally the same as for the three months ended September 30, 2019. However, there were compensating differences as follows:

a decrease in operating revenue of approximately $4.5 million attributable to decrease in fleet utilization which fell to 78.8% for the three months ended September 30, 2020 from 84.6% for the three months ended September 30, 2019;
a decrease in operating revenue of approximately $0.9 million attributable to a decrease in vessel available days of 48 days or 1.4% for the three months ended September 30, 2020 compared to the three months to September 30, 2019, primarily due to an increase in the number of dry dockings undertaken during the three months ended September 30, 2020, compared to the three months ended September 30, 2019;
an increase in operating revenue of approximately $4.1 million attributable to an increase in average monthly time charter equivalent rates, which increased to an average of approximately $696,166 per vessel per calendar month ($22,892 per day) for the three months ended September 30, 2020, compared to an average of approximately $652,314 per vessel per calendar month ($21,446 per day) for the three months ended September 30, 2019; and
an increase in operating revenue of approximately $1.2 million primarily attributable to an increase in pass through voyage costs, including additional canal transits for the three months ended September 30, 2020 compared to the three months ended September 30, 2019

The following table presents selected operating data for the three months ended September 30, 2019 and 2020, which we believe are useful in understanding the basis for movement in our operating revenue.

	Three Months Ended September 30, 2019	Three Months Ended September 30, 2020
Fleet Data:
Weighted average number of vessels	38.0	38.0
Ownership days	3,496	3,496
Available days	3,432	3,384
Operating days	2,902	2,666
Fleet utilization	84.6%	78.8%
Average daily time charter equivalent rate (*)	$ 21,446	$ 22,892

* Non-GAAP Financial Measure—Time charter equivalent: Time charter equivalent (“TCE”) rate is a measure of the average daily revenue performance of a vessel. TCE is not calculated in accordance with U.S. GAAP. For all charters, we calculate TCE by dividing total operating revenue, less any voyage expenses, by the number of operating days for the relevant period. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses, whereas for voyage charters, also known as spot market charters, we pay all voyage expenses. TCE rate is a shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters and contracts of affreightment) under which the vessels may be employed between the periods. We include average daily TCE rate, as we believe it provides additional meaningful information in conjunction with net operating revenue, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies.

Reconciliation of Operating Revenue to TCE rate

The following table represents a reconciliation of operating revenue to TCE rate. Operating revenue is the most directly comparable financial measure calculated in accordance with U.S. GAAP for the periods presented.

	Three Months Ended September 30, 2019	Three Months Ended September 30, 2020
	(in thousands, except operating days and average daily time charter equivalent rate)
Fleet Data:
Operating revenue (excluding collaborative arrangements)	$ 75,624	$ 75,613
Voyage expenses (excluding collaborative arrangements)	13,387	14,584

Operating revenue less Voyage expenses	62,237	61,029

Operating days	2,902	2,666
Average daily time charter equivalent rate	$ 21,446	$ 22,892

Operating Revenue – Luna Pool collaborative arrangements
. Pool earnings are aggregated and then allocated (after deducting pool overheads and managers fees) to the Pool Participants in accordance with the Pooling Agreement. Operating revenue – Luna Pool collaborative arrangements was $5.7 million for the three months ended September 30, 2020, which represents our share of pool net revenue generated by the other participant’s vessels in the pool. The Luna Pool, which comprises nine of the Company’s ethylene vessels and five ethylene vessels from Pacific Gas Pte. Ltd., focuses on the transportation of ethylene and ethane to meet the growing demands of our customers. The Luna Pool became operational during the second quarter of 2020 and consequently there was no Operating Revenue – Luna Pool collaborative arrangements for the three months ended September 30, 2019.

Brokerage Commissions
. Brokerage commissions, which typically vary between 1.25% and 2.5% of operating revenue, was $1.2 million for the three months ended September 30, 2020, the same as for the three months ended September 30, 2019.

Voyage Expenses.
Voyage expenses increased by $1.2 million or 8.9% to $14.6 million for the three months ended September 30, 2020, from $13.4 million for the three months ended September 30, 2019. Panama Canal transit costs have increased in the three months ended September 30, 2020 as a result of increased trade from the U.S. Gulf to the Far East through the Panama Canal. However bunker costs have reduced as a result of a decrease in bunker prices, although more bunkers have been consumed as the number of voyage charter days increased by approximately 18.2% during the three months ended September 30, 2020, as compared to the three months ended September 30, 2019.

Voyage Expenses – Luna Pool collaborative arrangements
. Voyage expenses – Luna Pool collaborative arrangements were $4.5 million for the three months ended September 30, 2020, which represents the other participant’s share of pool net revenues generated by our vessels in the pool. The net effect after deducting operating revenue – Luna Pool collaborative arrangements was that the other participant’s vessels contributed $1.2 million to our vessels in the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there were no Voyage Expenses – Luna Pool collaborative arrangements for the three months ended September 30, 2019.

Vessel Operating Expenses
. Vessel operating expenses increased by 1.5% to $27.2 million for the three months ended September 30, 2020, from $26.8 million for the three months ended September 30, 2019. Average daily vessel operating expenses increased by $115 per vessel per day, or 1.5%, to $7,786 per vessel per day for the three months ended September 30, 2020, compared to $7,672 per vessel per day for the three months ended September 30, 2019.

Depreciation and Amortization
. Depreciation and amortization increased by 0.9% to $19.2 million for the three months ended September 30, 2020, from $19.0 million for the three months ended September 30, 2019. Depreciation and amortization included amortization of capitalized drydocking costs of $1.7 million and $1.9 million for the three months ended September 30, 2020 and 2019 respectively.

General and Administrative Costs
. General and administrative costs increased by $1.9 million or 40.9% to $6.5 million for the three months ended September 30, 2020, from $4.6 million for the three months ended September 30, 2019. The increase in general and administrative costs includes a loss of $0.5 million on the revaluation of an Indonesian Rupiah bank account for the three months ended September 30, 2020, relative to the three months ended September 30, 2019, additional audit and internal control related costs of $0.3 million and additional terminal insurance of $0.2 million.

Other Income
. Other income was $0.2 million for the three months ended September 30, 2020 and consists of management fees for commercial and administrative activities performed by the Company for the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no other income for the three months ended September 30, 2019.

Non-operating Results

Foreign Currency Exchange Gain/Loss on Senior Secured Bonds
. Exchange gains and losses relate to non-cash movements on our 600 million Norwegian Kroner 2018 Bonds which are translated to U.S. Dollar at the prevailing exchange rate as of September 30, 2020. The foreign currency exchange loss of $1.6 million for the three months ended September 30, 2020 was as a result of the Norwegian Kroner strengthening against the U.S. Dollar, being NOK 9.4 to USD 1.0 as of September 30, 2020 compared to NOK 9.7 to USD 1.0 as of June 30, 2020.

Unrealized Gain/Loss on Non-designated Derivative Instruments
. The unrealized gains on non-designated derivative instruments of $2.1 million for the three months ended September 30, 2020 relates to the fair value movement in our cross-currency interest rate swap and is primarily due to the strengthening of the Norwegian Kroner against the U.S. Dollar. The unrealized loss on this swap for the three months ended September 30, 2019 was $5.2 million.

Interest Expense. Interest expense decreased by $2.6 million, or 20.8%, to $9.8 million for the three months ended September 30, 2020, from $12.4 million for the three months ended September 30, 2019. This is primarily as a result of a reduction in 3-month US LIBOR interest rates.

Write off of Deferred Financing Costs

. The write off of deferred financing costs of $0.2 million for the three months ended September 30, 2020 related to a portion of the remaining unamortized deferred financing costs of the $290.0 million secured term loan facility that was fully re-financed prior to its maturity date. No loan refinancing occurred during the three months ended September 30, 2019.

Write off of Redemption Premium on 7.75% Senior Unsecured Bond

. In connection with the redemption of the 2017 Bonds, pursuant to which we redeemed all of the outstanding principal amount in September 2020, we incurred $0.2 million in charges that were written off on such bonds on maturity which are presented within interest expense for the three months ended September 30, 2020.

Income Taxes
. Income taxes related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore and our consolidated variable interest entity (“VIE”), incorporated in Malta. For the three months ended September 30, 2020, we had a tax charge of $120,000 compared to taxes of $131,042 for the three months ended September 30, 2019.

Share of result of equity accounted joint ventures
. The share of result of the Company’s 50% ownership in the Export Terminal Joint Venture was a gain of $3.1 million for the three months ended September 30, 2020, primarily as a result of volumes being exported through the Marine Export Terminal following the commencement of the throughput agreements during the second quarter of 2020.

Non-Controlling Interest.
We have entered into a sale and leaseback arrangement in November 2019 with a wholly-owned special purpose vehicle (“lessor SPV”) of a financial institution. Although we do not hold any equity investments in this lessor SPV, we have determined that we are the primary beneficiary of this entity and accordingly, we are required to consolidate this VIE into our financial results. Thus, the income attributable to the financial institution of $0.4 million is presented as the non-controlling interest in our financial results for the three months ended September 30, 2020.

Results of Operations for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2020

The following table compares our operating results for the nine months ended September 30, 2019 and 2020:

	Nine Months Ended September 30, 2019	Nine Months Ended September 30, 2020	Percentage Change
	(in thousands, except percentages)
Operating revenue	$ 225,313	$ 236,739	5.1%
Operating revenue – Luna Pool collaborative arrangements	–	8,334	–

Total operating revenue	$ 225,313	$ 245,073	8.8%

Expenses:
Brokerage commissions	3,759	3,780	0.6%
Voyage expenses	43,181	46,856	8.5%
Voyage expenses – Luna Pool collaborative arrangements	–	7,568	–
Vessel operating expenses	83,742	81,120	(3.1%)
Depreciation and amortization	56,870	57,541	1.2%
General and administrative costs	14,628	17,542	19.9%
Other Income	–	(329)	–

Total operating expenses	$ 202,180	$ 214,078	5.9%

Operating income	$ 23,133	$ 30,995	34.0%
Foreign currency exchange gain on senior secured bonds	3,219	4,953	53.9%
Unrealized loss on non-designated derivative instruments	(3,552)	(5,470 )	54.0%
Interest expense	(36,768)	(32,488 )	(11.6%)
Write off of deferred financing costs	–	(155)	–
Interest income	617	367	(40.5%)

Loss before taxes and share of result of equity accounted joint venture	$ (13,351)	$ (1,798)	(86.5%)
Income taxes	(305)	(456)	49.5%
Share of result of equity accounted joint ventures	(247)	(58)	(76.5%)

Net loss	$ (13,903)	$ (2,312)	(83.4%)
Net income attributable to non-controlling interest	—	(1,351)	—

Net loss attributable to stockholders of Navigator Holdings Ltd	$ (13,903)	$ (3,663)	(73.7%)

Operating Revenue
. Operating revenue increased by $11.4 million or 5.1% to $236.7 million for the nine months ended September 30, 2020, from $225.3 million for the nine months ended September 30, 2019. This increase was principally due to:

an increase in operating revenue of approximately $1.3 million attributable to an increase in fleet utilization which rose to 85.4% for the nine months ended September 30, 2020 from 84.8% for the nine months ended September 30, 2019;
an increase in operating revenue of approximately $5.8 million attributable to an increase in average monthly time charter equivalent rates, which increased to an average of approximately $661,082 per vessel per calendar month ($21,733 per day) for the nine months ended September 30, 2020, compared to an average of approximately $640,685 per vessel per calendar month ($21,063 per day) for the nine months ended September 30, 2019.
an increase in operating revenue of approximately $0.7 million attributable to an increase in vessel available days of 37 days or 0.4% for the nine months ended September 30, 2020, primarily due to an increase in the number of ownership days for the leap year; and
an increase in operating revenue of approximately $3.7 million primarily attributable to an increase in pass through voyage costs for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

The following table presents selected operating data for the nine months ended September 30, 2019 and 2020, which we believe are useful in understanding the basis for movement in our operating revenue.

	Nine Months Ended September 30, 2019	Nine Months Ended September 30, 2020
Fleet Data:
Weighted average number of vessels	38.0	38.0
Ownership days	10,374	10,412
Available days	10,193	10,230
Operating days	8,647	8,737
Fleet utilization	84.8 %	85.4%
Average daily time charter equivalent rate (*)	$ 21,063	$ 21,733

Reconciliation of Operating Revenue to TCE rate

	Nine Months Ended September 30, 2019	Nine Months Ended September 30, 2020
	(in thousands, except operating days and average daily time charter equivalent rate)
Fleet Data:
Operating revenue (excluding collaborative arrangements)	$ 225,313	$ 236,739
Voyage expenses (excluding collaborative arrangements)	43,181	46,856

Operating revenue less Voyage expenses	182,132	189,883

Operating days	8,647	8,737
Average daily time charter equivalent rate	$ 21,063	$ 21,733

Operating Revenue – Luna Pool collaborative arrangements
. Pool earnings are aggregated and then allocated (after deducting pool overheads and managers fees) to the Pool Participants in accordance with the Pooling Agreement. Operating revenue – Luna Pool collaborative arrangements was $8.3 million for the nine months ended September 30, 2020, which represents our share of pool net revenues generated by the other participant’s vessels in the pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no Operating Revenue – Luna Pool collaborative arrangements for the nine months ended September 30, 2019.

Brokerage Commissions
. Brokerage commissions, which typically vary between 1.25% and 2.5% of operating revenue, marginally increased by 0.6%, to $3.8 million for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019. The increase was primarily due to an increase in operating revenue on which brokerage commissions are based.

Voyage Expenses.
Voyage expenses increased by 8.5% to $46.9 million for the nine months ended September 30, 2020, from $43.2 million for the nine months ended September 30, 2019. Panama Canal transit costs have increased significantly in the nine months ended September 30, 2020 as a result of increased trade from the U.S. Gulf to the Far East through the Panama Canal. These transit cost increases are partly off-set by reductions in bunker costs as a result of bunker price decreases, although more bunkers have been consumed as the number of voyage charter days increased by approximately 3.0% during the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019

Voyage Expenses
. – Luna Pool collaborative arrangements. Voyage expenses – Luna Pool collaborative arrangements was $7.6 million for the nine months ended September 30, 2020, which represents the other participant’s share of pool net revenue generated by our vessels in the pool. The net effect after deducting Operating revenue – Luna Pool collaborative arrangements was that the other participants vessels contributed $0.8 million to our vessels in the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no Voyage Expenses – Luna Pool collaborative arrangements for the nine months ended September 30, 2019.

Vessel Operating Expenses
. Vessel operating expenses decreased by 3.1% to $81.1 million for the nine months ended September 30, 2020, from $83.7 million for the nine months ended September 30, 2019. Average daily vessel operating expenses decreased by $281 per vessel per day, or 3.5%, to $7,791 per vessel per day for the nine months ended September 30, 2020, compared to $8,072 per vessel per day for the nine months ended September 30, 2019. This was primarily due to a general underspend in vessel operating expenses across the fleet during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as well as unexpected costs incurred for repairs and maintenance in 2019 which have not reoccurred for the nine months ended September 30, 2020.

Depreciation and Amortization
. Depreciation and amortization increased by 1.2% to $57.5 million for the nine months ended September 30, 2020, from $56.9 million for the nine months ended September 30, 2019. Depreciation and amortization included amortization of capitalized drydocking costs of $5.8 million and $5.7 million for the nine months ended September 30, 2020 and 2019, respectively.

General and Administrative Costs
. General and administrative costs increased by $2.9 million or 19.9% to $17.5 million for the nine months ended September 30, 2020, from $14.6 million for the nine months ended September 30, 2019. The increase in general and administrative costs was primarily due to a loss of $1.0 million on the revaluation of an Indonesian Rupiah bank account for the nine months ended September 30, 2020 relative to the three months ended September 30, 2019; additional audit and internal control related costs of $1.0 million; additional insurance costs of $0.6 million for the now operational Marine Export Terminal; and the write off of previously capitalized legal costs of $0.5 million relating to the Marine Export Terminal.

Other Income
. Other income was $0.3 million for the nine months ended September 30, 2020 and consists of management fees for commercial and administrative activities performed by the Company for the Luna Pool. The Luna Pool became operational during the second quarter of 2020 and consequently there was no other income for the nine months ended September 30, 2019.

Non-operating Results

Foreign Currency Exchange Gain on Senior Secured Bonds
. Exchange gains and losses relate to non-cash movements on our 600 million Norwegian Kroner 2018 Bonds which are translated to U.S. Dollars at the prevailing exchange rate as of September 30, 2020. The foreign currency exchange gain of $5.0 million for the nine months ended September 30, 2020 was as a result of the Norwegian Kroner weakening against the U.S. Dollar, being NOK 9.4 to USD 1.0 as of September 30, 2020 compared to NOK 8.8 to USD 1.0 as of December 31, 2019.

Unrealized Loss on Non-designated Derivative Instruments
. The unrealized loss on non-designated derivative instruments of $5.5 million for the nine months ended September 30, 2020 relates to the fair value movement in our cross-currency interest rate swap and is primarily due to the weakening of the Norwegian Kroner against the U.S. Dollar. The unrealized loss on this swap for the nine months ended September 30, 2019 was $3.6 million.

Interest Expense. Interest expense decreased by $4.3 million, or 11.6%, to $32.5 million for the nine months ended September 30, 2020, from $36.8 million for the nine months ended September 30, 2019. This reduction in interest expense is primarily as a result of reductions in 3-month US LIBOR interest rates, offset by $2.4 million lower interest costs capitalized on the Marine Export Terminal for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Write off of Deferred Financing Costs

. The write off of deferred financing costs of $0.2 million for the nine months ended September 30, 2020 related to a portion of the remaining unamortized deferred financing costs of the $290.0 million secured term loan facility that was fully re-financed prior to its maturity date. No loan refinancing occurred in the nine months ended September 30, 2019.

Income Taxes
. Income taxes related to taxes on our subsidiaries incorporated in the United Kingdom, Poland and Singapore and our consolidated variable interest entity (“VIE”), incorporated in Malta. For the nine months ended September 30, 2020, we had a tax charge of $456,000 compared to taxes of $305,388 for the nine months ended September 30, 2019.

Share of result of equity accounted joint ventures
. The share of result of the Company’s 50% ownership in the Export Terminal Joint Venture was a loss of $0.1 million for the nine months ended September 30, 2020, primarily as a result of initial losses following the terminal becoming operational in December 2019 being offset by profits since June when the committed offtake agreements became effective. This compared to a loss of $0.2 million for the nine months ended September 30, 2019, which related to costs incurred prior to the Marine Export Terminal becoming operational.

Non-Controlling Interest.
We have entered into a sale and leaseback arrangement with a wholly-owned special purpose vehicle (“lessor SPV”) of a financial institution. While we do not hold any equity investments in this lessor SPV, we have determined that we are the primary beneficiary of this entity and accordingly, we are required to consolidate this VIE into our financial results. Thus, the income attributable to the financial institution of $1.4 million is presented as the non-controlling interest in our financial results for the nine months ended September 30, 2020.

Reconciliation of Non-GAAP Financial Measures

The following table sets forth a reconciliation of net income attributable to the stockholders of the Company to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2019 and 2020:

	(in thousands)		(in thousands)
	Three months ended		Nine months ended
	September 30, 2019	September 30, 2020	September 30, 2019	September 30, 2020
Net income / (loss) attributable to the stockholders of Navigator Holdings Ltd.	$ (2,913)	$ 1,937	$ (13,903)	$ (2,312 )
Net interest expense	12,209	9,923	36,151	32,276
Income taxes	131	120	305	456
Depreciation and amortization	19,009	19,180	56,870	57,541
Depreciation from the Export Terminal Joint Venture	–	1,262	–	3,771

EBITDA⁽¹⁾	$ 28,436	$ 32,422	$ 79,423	$ 91,732
Foreign currency exchange (gain) / loss on senior secured bonds	(4,171)	1,612	(3,219)	(4,953 )
Unrealized loss / (gain) on non-designated derivative instruments	5,197	(2,137)	3,552	5,470

Adjusted EBITDA⁽¹⁾	$ 29,462	$ 31,897	$ 79,756	$ 92,249

¹ EBITDA and Adjusted EBITDA are not measurements prepared in accordance with U.S. GAAP (non-GAAP financial measures). EBITDA represents net income attributable to stockholders of the Company before net interest expense, income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA before foreign currency exchange gain or loss on senior secured bonds and unrealized gain or loss on non-designated derivative instruments. Management believes that EBITDA and Adjusted EBITDA are useful to investors in evaluating the operating performance of the Company. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to consolidated net income, cash generated from operations or any measure prepared in accordance with U.S. GAAP, and our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies. See the table above for a reconciliation of EBITDA and Adjusted EBITDA to net income / (loss) attributable to stockholders of the Company, our most directly comparable U.S. GAAP financial measure.

Our Fleet

The following table sets forth our vessels as of November 12, 2020:

Operating Vessel	Year Built	Vessel Size (cbm)	Employment Status	Current Cargo	Charter Expiration Date
Ethylene/ethane capable semi-refrigerated
Navigator Orion*	2000	22,085	Spot market	—	—
Navigator Neptune*	2000	22,085	Time charter	Ethane	November 2020
Navigator Pluto	2000	22,085	Time charter	LPG	January 2021
Navigator Saturn*	2000	22,085	Contract of affreightment	Ethylene	—
Navigator Venus*	2000	22,085	Time charter	Ethane	November 2020
Navigator Atlas*	2014	21,000	Contract of affreightment	Ethylene	—
Navigator Europa*	2014	21,000	Contract of affreightment	Ethylene	—
Navigator Oberon*	2014	21,000	Spot market	—	—
Navigator Triton*	2015	21,000	Contract of affreightment	Ethylene	—
Navigator Umbrio*	2015	21,000	Spot market	—	—
Navigator Aurora	2016	37,300	Time charter	LPG	December 2026
Navigator Eclipse	2016	37,300	Time charter	Ethylene	December 2020
Navigator Nova	2017	37,300	Time charter	Ethane	September 2023
Navigator Prominence	2017	37,300	Time charter	Ethane	December 2021

Semi-refrigerated
Navigator Magellan	1998	20,700	Spot market	LPG	—
Navigator Aries	2008	20,750	Time charter	LPG	November 2020
Navigator Capricorn	2008	20,750	Spot market	Butadiene	—
Navigator Gemini	2009	20,750	Spot market	—	—
Navigator Pegasus	2009	22,200	Spot market	Propylene	—
Navigator Phoenix	2009	22,200	Spot market	Butadiene	—
Navigator Scorpio	2009	20,750	Spot market	LPG	—
Navigator Taurus	2009	20,750	Spot market	LPG	—
Navigator Virgo	2009	20,750	Spot market	LPG	—
Navigator Leo	2011	20,600	Time charter	LPG	December 2023
Navigator Libra	2012	20,600	Time charter	LPG	December 2023
Navigator Centauri	2015	21,000	Spot market	Butadiene	—
Navigator Ceres	2015	21,000	Time charter	Propylene	December 2020
Navigator Ceto	2016	21,000	Spot market	Butadiene	—
Navigator Copernico	2016	21,000	Spot market	Butadiene	—
Navigator Luga	2017	22,000	Time charter	LPG	February 2022
Navigator Yauza	2017	22,000	Time charter	LPG	April 2022

Fully-refrigerated
Navigator Glory	2010	22,500	Time charter	Ammonia	June 2021
Navigator Grace	2010	22,500	Time charter	LPG	March 2021
Navigator Galaxy	2011	22,500	Spot market	LPG	—
Navigator Genesis	2011	22,500	Time charter	LPG	July 2021
Navigator Global	2011	22,500	Time charter	LPG	November 2020
Navigator Gusto	2011	22,500	Time charter	LPG	December 2020
Navigator Jorf	2017	38,000	Time charter	Ammonia	August 2027
*denotes our owned vessels that operate within the Luna Pool

Conference Call Details:

Tomorrow, Friday, November 13, 2020, at 9:00 A.M. ET, the Company’s management team will host a conference call to discuss the preliminary financial results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (877) 553-9962 (US Toll Free Dial In), 0(808) 238-0669 (UK Toll Free Dial In) or +44 (0) 2071 928 592 (Standard International Dial In). Please quote “Navigator” to the operator. There will also be a live, and then archived, webcast of the conference call, available through the Company’s website (www.navigatorgas.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

A telephonic replay of the conference call will be available until Friday November 20, 2020, by dialing 1(866) 331-1332 (US Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial In) or +44 (0) 3333 009785 (Standard International Dial In). Access Code: 11870348#

Navigator Gas

Attention: Investor Relations Department – [email protected]

New York: 650 Madison Ave, New York, NY 10022. Tel: +1 212 355 5893
London: 10 Bressenden Place, London, SW1E 5DH. Tel: +44 (0)20 7340 4850

About Us

Navigator Holdings Ltd. is the owner and operator of the world’s largest fleet of handysize liquefied gas carriers and a global leader in the seaborne transportation of petrochemical gases, such as ethylene and ethane, liquefied petroleum gas (“LPG”) and ammonia. Navigator’s fleet consists of 38 semi- or fully-refrigerated liquefied gas carriers, 14 of which are ethylene and ethane capable. The Company plays a vital role in the liquefied gas supply chain for energy companies, industrial consumers and commodity traders, with our sophisticated vessels providing an efficient and reliable ‘floating pipeline’ between the parties. We continue to build strong, long-term partnerships based on mutual trust, our depth of technical expertise and a modern versatile fleet. The Company also owns a 50% share, through a joint venture in an ethylene export marine terminal at Morgan’sPoint, Texas on the Houston Ship Channel, USA.

NAVIGATOR HOLDINGS LTD.
Condensed Consolidated Balance Sheets
(Unaudited)
	December 31, 2019	September 30, 2020
	(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents	$ 64,820	$ 60,996
Restricted Cash	1,310	6,060
Accounts receivable, net of allowance for credit losses of $188 (December 31, 2019: nil)	23,462	22,404
Accrued income	6,280	3,727
Prepaid expenses and other current assets	17,670	24,120
Bunkers and lubricant oils	9,645	9,665
Insurance Receivable	2,939	3,000

Total current assets	126,126	129,972
Non-current assets
Vessels, net	1,609,527	1,561,367
Property, plant and equipment, net	1,159	840
Investment in equity accounted joint ventures	130,660	145,956
Right-of-use asset for operating leases	6,781	5,977
Prepaid expenses and other non-current assets	—	2,543

Total non-current assets	1,748,127	1,716,683

Total assets	$ 1,874,253	$ 1,846,655

Liabilities and stockholders’ equity
Current liabilities
Current portion of secured term loan facilities, net of deferred financing costs	$ 64,703	$ 62,535
Current portion of operating lease liabilities	1,178	1,210
Accounts payable	10,472	14,703
Accrued expenses and other liabilities	14,124	18,161
Accrued interest	4,424	1,508
Deferred income	14,154	16,320
Amounts due to related parties	451	613

Total current liabilities	109,506	115,050

Non-current liabilities
Secured term loan facilities and revolving credit facilities, net of current portion and deferred financing costs	578,676	553,321
Senior secured bond, net of deferred financing costs	67,503	62,633
Senior unsecured bond, net of deferred financing costs	98,513	98,060
Derivative liabilities	5,769	11,239
Operating lease liabilities, net of current portion	6,329	5,267
Amounts due to related parties	68,055	62,850

Total non-current liabilities	824,845	793,370

Total Liabilities	934,351	908,420
Commitments and contingencies
Stockholders’ equity
Common stock—$.01 par value per share; 400,000,000 shares authorized; 55,903,672 shares issued and outstanding, (December 31, 2019: 55,826,644)	558	559
Additional paid-in capital	592,010	592,868
Accumulated other comprehensive loss	(331)	(394)
Retained earnings	347,566	343,752

Total Navigator Holdings Ltd. stockholders’ equity	939,803	936,785
Non-controlling interest	99	1,450

Total equity	939,902	938,235

Total liabilities and stockholders’ equity	$ 1,874,253	$ 1,846,655

NAVIGATOR HOLDINGS LTD.
Condensed Consolidated Statements of Operations
(Unaudited)

	Three months ended September 30,		Nine months ended September 30,
	2019	2020	2019	2020

	(in thousands except share and per share data)
Revenues
Operating revenue	$ 75,624	$ 75,613	$ 225,313	$ 236,739
Operating revenue- Luna Pool collaborative arrangements	—	5,738	—	8,334

Total operating revenues	75,624	$ 81,351	225,313	$ 245,073

Expenses
Brokerage commissions	1,217	1,220	3,759	3,780
Voyage expenses	13,387	14,584	43,181	46,856
Voyage expenses – Luna Pool collaborative arrangements	—	4,525	—	7,568
Vessel operating expenses	26,820	27,221	83,742	81,120
Depreciation and amortization	19,009	19,180	56,870	57,541
General and administrative costs	4,631	6,525	14,628	17,542
Other Income	—	(212)	—	(329)

Total operating expenses	65,064	$ 73,043	202,180	$ 214,078

Operating income	10,560	8,308	23,133	30,995
Other income / (expense)
Foreign currency exchange gain / (loss) on senior secured bonds	4,171	(1,612)	3,219	4,953
Unrealized (loss) / gain on non-designated derivative instruments	(5,197)	2,137	(3,552)	(5,470 )
Interest expense	(12,406 )	(9,820)	(36,768 )	(32,488 )
Write off of deferred financing costs	—	(155)	—	(155)
Interest income	197	52	617	367

Loss before income taxes and share of result of equity accounted joint venture	(2,675)	(1,090)	(13,351)	(1,798)
Income taxes	(131)	(120 )	(305)	(456 )
Share of result of equity accounted joint ventures	(107)	3,147	(247)	(58 )

Net (loss) / income	(2,913)	1,937	(13,903)	(2,312)
Net income attributable to non-controlling interest	—	(446)	—	(1,351)

Net (loss) / income attributable to stockholders of Navigator Holdings Ltd	$ (2,913)	$ 1,491	$ (13,903)	$ (3,663 )

(Loss) / earnings per share attributable to stockholders of Navigator Holdings Ltd.:
Basic and diluted:	$ (0.05)	$ 0.03	$ (0.25)	$ (0.07)
Weighted average number of shares outstanding:
Basic:	55,829,239	55,903,672	55,781,276	55,881,948
Diluted:	55,829,239	56,243,608	55,781,276	55,881,948

NAVIGATOR HOLDINGS LTD.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	Nine Months ended September 30, 2019	Nine Months ended September 30, 2020
	(in thousands)
Cash flows from operating activities
Net loss	$ (13,903)	$ (2,312)
Adjustments to reconcile net income to net cash provided by operating activities
Unrealized (gain)/loss on non-designated derivative instruments	3,552	5,470
Depreciation and amortization	56,870	57,541
Payment of drydocking costs	(9,060 )	(7,307)
Amortization of share-based compensation	1,116	859
Amortization of deferred financing costs	2,936	3,836
Call option premium on redemption of 7.75% senior unsecured bonds	—	236
Share of result of equity accounted joint ventures	247	58
Unrealized foreign exchange loss/(gain) on senior secured bonds	(3,219)	(4,953)
Other unrealized foreign exchange gain	(198)	(306)
Changes in operating assets and liabilities
Accounts receivable	(6,599)	907
Bunkers and lubricant oils	343	(20)
Accrued income and prepaid expenses and other assets	(1,546)	(7,285)
Accounts payable, accrued interest, accrued expenses and other liabilities	3,851	6,488
Amounts due to related parties	—	162

Net cash provided by operating activities	34,390	53,374


Cash flows from investing activities
Payments to acquire ballast water systems	(2,565)	(1,756)
Investment in equity accounted joint ventures	(75,440 )	(15,000)
Purchase of other property, plant and equipment	(255)	(36)
Insurance recoveries	1,130	740

Net cash used in investing activities	(77,130)	(16,052)

Cash flows from financing activities
Proceeds from secured term loan facilities and revolving credit facilities	162,000	15,000
Proceeds from revolving loan facility	—	185,000
Issuance of senior secured bonds	—	100,000
Issuance cost of 8.0% senior unsecured bond	—	(1,963)
Issuance costs of secured bond	(136)	(141)
Issuance costs of unsecured bond amendment	(1,325)	—
Issuance costs of secured term loan facilities	(1,448)	—
Issuance costs of revolving loan facilities	—	(1,924)
Issuance costs of refinancing of vessel to related parties	—	(18)
Repayment of 7.75% senior unsecured bonds	—	(100,236)
Repayment of financing of vessel to related parties	—	(5,208)
Issuance costs of Terminal Facility	(2,765)	(72)
Repayment of secured term loan facilities and revolving credit facilities	(128,150 )	(226,834)

Net cash provided/(used in) by financing activities	28,176	(36,396)

Net decrease in cash, cash equivalents and restricted cash	(14,564)	926
Cash, cash equivalents and restricted cash at beginning of period	71,515	66,130

Cash, cash equivalents and restricted cash at end of period	$ 56,951	$ 67,056

Supplemental Information
Total interest paid during the period; net of amounts capitalized	$ 35,478	$ 31,417

Total tax paid during the period	$ 225	$ 212

IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto, including our financial forecast. In addition, we and our representatives may from time to time make other oral or written statements that are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate as described in this press release. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue,” “scheduled,” or the negative of these terms or other comparable terminology. Forward-looking statements appear in a number of places in this press release. These risks and uncertainties include but are not limited to:

the completion of the Company’s quarter-end close procedures and further financial review with respect to the Company’s financial statements for the quarter ended September 30, 2020, and other developments that may arise between now and the disclosure of the Company’s final results for such quarter;
global epidemics or other health crises such as the outbreak of COVID-19, including its impact on our business;
future operating or financial results;
pending acquisitions, business strategy and expected capital spending;
operating expenses, availability of crew, number of off-hire days, drydocking requirements and insurance costs;
fluctuations in currencies and interest rates;
general market conditions and shipping market trends, including charter rates and factors affecting supply and demand;
our ability to continue to comply with all our debt covenants;
our financial condition and liquidity, including our ability to refinance our indebtedness as it matures or obtain additional financing in the future to fund capital expenditures, acquisitions and other corporate activities;
estimated future capital expenditures needed to preserve our capital base;
our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of our vessels;
our continued ability to enter into long-term, fixed-rate time charters with our customers;
the availability and cost of low sulfur fuel oil compliant with the International Maritime Organization sulfur emission limit reductions, generally referred to as “IMO 2020,” which took effect January 1, 2020;
our vessels engaging in ship to ship transfers of LPG or petrochemical cargoes which may ultimately be discharged in sanctioned areas or to sanctioned individuals without our knowledge;
changes in governmental rules and regulations or actions taken by regulatory authorities;
potential liability from future litigation;
our expectations relating to the payment of dividends;
our ability to successfully remediate material weaknesses in our internal control over financial reporting and our disclosure controls and procedures;
our expectation regarding providing in-house technical management for certain vessels in our fleet and our success in providing such in-house technical management;
our expectations regarding the completion of construction and financing of the Marine Export Terminal and the financial success of the Marine Export Terminal and our related Export Terminal Joint Venture; and
other factors detailed from time to time in other periodic reports we file with the Securities and Exchange Commission.

All forward-looking statements included in this press release are made only as of the date of this press release. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. We expressly disclaim any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common stock.

View original content:http://www.prnewswire.com/news-releases/navigator-holdings-ltd-preliminary-third-quarter-2020-results-unaudited-301172417.html

SOURCE Navigator Gas

November 12, 2020 5:12 pm

Shawcor Ltd. Announces Third Quarter 2020 Results

Third quarter 2020 revenue was $268 million, 32% lower than the $394 million reported in the third quarter of 2019.
Adjusted EBITDA¹ in the third quarter of 2020 was $17.8 million, 58% lower than the $42.4 million reported in the third quarter of 2019.
Net loss² in the third quarter of 2020 was $18.3 million (or loss per share of $0.26 diluted) compared with a net income of $6.5 million (or $0.09 earnings per share diluted) in the third quarter of 2019. Excluding the impact of restructuring cost and the adjustment for Argentina hyperinflationary accounting, adjusted net loss¹ in the third quarter of 2020 was $11.2 million (or adjusted loss per share¹ of $0.16) compared with adjusted net income¹ of $6.0 million (or $0.09 adjusted earnings per share¹) in the third quarter of 2019.
The Company’s order backlog was $542 million at September 30, 2020, compared to the backlog of $553 million at June 30, 2020.

TORONTO, Nov. 12, 2020 (GLOBE NEWSWIRE) — Shawcor Ltd. (TSX: SCL) Mr. Steve Orr, Chief Executive Officer of Shawcor Ltd. remarked, “Third quarter revenue and Adjusted EBITDA were primarily impacted by improved performances in the Company’s non-oil and gas related businesses and unanticipated supply chain disruptions across the company as a result of the COVID-19 pandemic and in our Gulf of Mexico operations due to Hurricane Laura. During the quarter we continued to take actions to reduce our cost structure, including initiating the controlled shutdown of one of our two pipe coating locations in Southeast Asia, and to preserve cash and keep our employees safe while servicing customers in these unprecedented times.”

Mr. Orr added, “We anticipate an improved and stronger performance for the remainder of the year and into 2021, with an expected fourth quarter Adjusted EBITDA, before COVID related government assistance, in the $25 to $30 million range. Our confidence for improved performance is based on continued improvement in demand for our products and services across all the markets we service, the execution of secured work in our backlog, including the recently announced Payara project, and the positive impact of our cost reduction activity.”

¹
EBITDA, Adjusted EBITDA, adjusted net income or loss and adjusted earnings or loss per share are Non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these Non-GAAP measures.

²
Net Loss attributable to shareholders of the Company.

Selected Financial Highlights

^{(in thousands of Canadian dollars, except per share amounts and percentages)}		Three Months Ended September 30,					Nine Months Ended September 30,
		2020			2019		2020			2019
		$		%	$	%	$		%	$	%
Revenue		267,659			394,015		852,804			1,155,382
Gross profit		74,321		27.8 %	114,618	29.1%	227,402		26.7 %	330,242	28.6%
(Loss) Income from Operations ^(a)		(19,289	)	(7.2 %)	17,117	4.3%	(277,272	)	(32.5 %)	54,127	4.7%
Net (Loss) Income for the period ^(b)		(18,311	)		6,520		(289,989	)		48,490
(Loss) Earnings per share (“EPS”):
Basic		(0.26	)		0.09		(4.12	)		0.69
Diluted		(0.26	)		0.09		(4.12	)		0.69

Adjusted EBITDA ^(c)		17,803		6.7 %	42,396	10.8%	28,263		3.3 %	106,854	9.2%
Adjusted Net (Loss) Income Attributable to Shareholders		(11,181	)	(4.2 %)	6,006	1.5%	(65,981	)	(7.7 %)	28,225	2.4%
Adjusted Net (Loss) Income ^(b)(c)		(11,275	)		6,243		(66,365	)		28,463
Adjusted EPS ^(c)
Basic		(0.16	)		0.09		(0.94	)		0.40
Diluted		(0.16	)		0.09		(0.94	)		0.40
^(a)	^{Operating loss in the nine month ended September 30, 2020 includes restructuring costs of $29.7 million and impairment charges of $206.7 million.}
^(b)	^{Attributable to shareholders of the Company.}
^(c)	^{Adjusted EBITDA, Adjusted Operating Income or Loss, Adjusted Net Income or Loss and Adjusted EPS are non-GAAP measure. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non GAAP Measures for further details and a reconciliation of these Non-GAAP measures.}

1.0 KEY DEVELOPMENTS – THIRD QUARTER

Contract Award for the Payara Project

On October 1, 2020, the Company announced that its pipe coating division had been awarded a definitive contract with Saipem to provide thermal insulation and anticorrosion coating services for the Payara development project located in the Stabroek block offshore Guyana. The value of the award is in the range of $55-65 million and is scheduled to commence in Q4 2020 from Shawcor’s Veracruz, Mexico and Channelview, Texas facilities. Saipem previously awarded Shawcor coating contracts for the first two phases of the Liza development in Guyana in 2017 and 2018, respectively.

Impact of COVID-19

In March 2020, global market downturn caused by the COVID-19 pandemic and recent changes in oil and gas supply and demand resulted in an immediate decrease in demand for products and services supplied by Shawcor. The situation remains dynamic and the ultimate duration and magnitude of the impact on the global economy and on the Company remains unknown at this time.

The implications on Shawcor as a result of decreases in demand may be significant and include:

Material declines in revenue and cash flows
Future impairments charges to property, plant and equipment
Increased risk of non-payment of accounts receivables; and
Additional restructuring charges

The Company has taken measures to address the reduced current demand and the high degree of uncertainty in future demand. These measures include targeting in excess of $60 million in annualized selling, general and administrative (“SG&A”) and other cost savings and generating in excess of $40 million in cash from working capital reductions and asset sales.

The Company has completed the following actions to reduce costs, preserve cash and meet its stated targets.

Suspension of the regular quarterly dividend, commencing in the second quarter.

Reduced Board compensation by 30%, CEO cash compensation by 20% and Senior Executive cash compensation by 10%.

With further actions taken in the quarter, salaried workforce headcount has been reduced by over 19% since March 2020.

Aggressive cost controls were implemented and are expected to generate over $10 million in annualized savings. This includes the elimination of all non-essential travel, entertainment and other discretionary spending.

During the quarter, planned capital spending has been further reduced to the $30-$35 million range for 2020 to include only essential maintenance capital and select growth spending to deliver on firm orders, particularly in our Composite Systems Tank business (formerly ZCL Composites).

The controlled shutdown of 5 pipe coating facilities, including a facility in South East Asia that was announced in the current quarter, and several girth weld inspection branches. The Company continues to assess its international footprint and will likely take further optimization actions in the upcoming quarters.

Reduced working capital by $47.3 million, excluding the impact of increased restructuring liabilities, and generated cash proceeds from asset sales of $16.5 million in the first nine months of 2020.

The Company has incurred $29.7 million of restructuring costs to date as a result of the actions completed.

The Company continues to expect the total value of its completed and planned initiatives will meet its stated targets and result in a quarterly normalized SG&A run-rate of approximately $70 million.

1.1 Third Quarter Highlights and Outlook

Adjusted EBITDA¹ of $17.8 million in the third quarter reflected the improved contributions from Shawcor’s non-oil and gas businesses as demand strengthened in automotive and industrial markets, the continuing economic and industry disruption and uneven impact caused by the global COVID-19 pandemic and second wave resurgence, a recovery in composite pipe activity as oil and gas market conditions somewhat stabilized and the positive benefit of $17 million recorded from government wage support programs.

During the quarter, the Company was awarded the Payara offshore project in Guyana and continued to execute work and ramp-up of its pipe coating facilities. Hurricane Laura, which landed in the US Gulf Coast in August, negatively impacted the supply chain of key materials and resulting production at the Channelview, Texas facility. Although this supply chain issue has been subsequently addressed and production has resumed at the Channelview facility, this will negatively impact fourth quarter results as work has been pushed out. In addition, the Company has effectively managed supply chain disruptions resulting from COVID-19 by working closely with customers to sequence projects. Employee safety and HSE procedures continued to be prioritized and the Company experienced no site-wide shutdowns as a result of COVID-19 during the quarter.

¹
EBITDA and Adjusted EBITDA are Non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these Non-GAAP Measures.

Non-oil and gas businesses experienced a rebound in activity as automotive demand recovered, industrial markets strengthened and demand for composite tanks remained strong during the quarter. The increased demand resulted in material contributions from non-oil and gas businesses which accounted for over 35% of total revenues.

Weakness in commodity prices persisted and OPEC+ production curtailments created a fragile environment for our oil and gas related businesses. Despite these conditions demand moved off second quarter lows and some market stability returned which translated into improved composite pipe activity during the quarter.

Progress was made during the quarter towards the Company’s targets of $60 million in sustainable annualized SG&A cost reductions and $40 million in incremental cash generation. The Company has now reduced its salaried workforce by over 19% as a result of actions taken to date and continued actions to optimize its operating footprint with the closure of one of two Southeast Asia pipe coating facilities. The Company remains on track to meet its goal of a quarterly normalized SG&A cost run rate of $70 million and incurred one-time restructuring charges of $12.5 million during the quarter.

The Company remains focused on cash generation initiatives as evidenced by the positive cash inflow in the third quarter of $59 million from reduced working capital, excluding the impact of increased restructuring liabilities, and $5.8 million from proceeds of asset sales. Although the Company expects that there will be a need to increase working capital as demand gradually returns, it will work diligently to manage working capital to minimize the re-investment. Planned capital expenditures have also been further reduced in the quarter to the $30-$35 million range for the year.

The Pipeline and Pipe Services Segment’s revenues continue to be impacted by suppressed activity levels as a result of COVID-19 and lower commodity prices which although having improved over the second quarter lows, with WTI crude trading in the $35-45 range during the quarter, WTI and Brent Crude prices remain over 35% lower than at the start of the year. North American exploration and production operators continued their focus on portfolio quality, capital discipline and industry consolidation. Capital spending reductions remain in the range of 50% on a year-over-year basis and drilling activity in North American oil and gas basins remained muted with quarter-end rig counts in Canada and the U.S. totalling 75 and 266, respectively. Completion activity improved as more drilled but uncompleted wells were moved to production. Demand for small diameter pipe coating in the U.S. and Western Canada was limited during the quarter as customers utilized existing inventories and delayed projects. Revenues from the land-based small diameter market decreased in the quarter as a result of the closure of four of the Company’s North American coating facilities initiated earlier in the year. Demand for call-out non-destructive testing (“NDT”) inspection services and large diameter girth weld inspection services to pipeline operators continued to be impacted by the delay or cancellation of certain U.S. transmission projects. Despite these conditions, certain projects were advanced during the quarter and an award of approximately $20 million for girth weld inspection services was secured for a major US land transmission line. Demand from operators for pipeline engineering design and integrity management services remained strong and continued to be resilient as customers looked externally for expertise to backfill internal resources gaps to manage advanced integrity asset programs on existing assets. Work continued to be executed on several international and offshore projects and production ramp-up continued at facilities in Mexico, Brazil, Scotland, Norway and Indonesia. Revenues from the Channelview (Texas) location were lower than expected in the quarter as result of Hurricane Laura, which caused supply chain disruptions and related impact on production.

The Composite Systems segment experienced higher revenues on the strength of continued demand for retail fuel and water and wastewater tank applications. Revenues continued to reflect investments in North American convenience store retail modernization and the trend to replace both early generation single-wall fibreglass reinforced plastics (“FRP”) and aging, legacy steel tanks with new double-wall FRP solutions. The business maintained its focus on execution and delivery during the quarter to meet the high backlog. North American completion activity and international demand improved as compared to the previous quarter resulting in higher revenues for composite pipe products. Large and mid-size operators worked through existing pipe inventories and drilled but uncompleted wells moved to production in some basins leading to improved demand for the segments core composite products as well as new, larger diameter spoolable pipe. These developments and project orders in international markets resulted in the business restarting production at its Calgary, Alberta facilities during the quarter. Business development activities continued during the quarter with active project bids for composite pipe products in Australia, India, South America and the Middle East. Conditions in Western Canada continued to be depressed with lower demand for OCTG tubulars management services. During the quarter the business started the distribution of relined downhole tubulars in the Permian Basin market through the Composite Pipe sales team in Midland, Texas.

The Automotive and Industrial segment experienced higher revenues as global automotive OEM assembly plants increased capacity utilization primarily as the sector experienced a stronger than anticipated recovery. This resulted in increased demand for the Company’s automotive heat-shrink products and appliances during the quarter. The specialty wire and cable business experienced slightly lower revenue following a strong second quarter performance in North American electrical and communication markets.

Order Backlog

The Company’s order backlog consists of firm customer orders only and represents the revenue the Company expects to realize on booked orders over the succeeding twelve months. The Company reports the twelve-month billable backlog as a leading indicator of changes in consolidated revenue. The order backlog of $542 million as at September 30, 2020, represents a slight decrease over the $553 million order backlog as June 30, 2020. This decrease reflects revenue generated in the quarter from backlog orders and the impact of a lower Canadian to U.S. dollar exchange rate.

In addition to the backlog, the Company closely monitors its bidding activity and the value of outstanding firm bids, which represents bids provided to customers with firm pricing and conditions against a defined scope, is over $870 million as of September 30, 2020, higher compared to the $790 million from last quarter largely due to the addition of a bid for a gas project in Qatar offset by the Payara project moving into backlog. Included in the firm bid, but not in the backlog, are unsanctioned conditional awards between engineering and procurement companies (“EPC’s”) and Shawcor for a scope of work that is estimated at over $120 million in revenue to be executed beyond the third quarter of 2020. The Company is also working with customers on several other projects and the value of budgetary estimates at the end of the third quarter was over $2.5 billion. Although the timing of these projects is uncertain, the Company’s bid and budgetary figures represent a diverse portfolio of opportunities to sustain and build the backlog.

Outlook

The Company’s financial performance is correlated with the level of industry activity and the level of investment in energy and infrastructure for resource development, storage and transportation around the globe and the resultant demand for the Company’s products and services.

Despite market challenges, the Company expects results to improve in the fourth quarter and into 2021 based on increased demand in the Composite pipe business, positive recovery signs in automotive and industrial markets, the ramp-up and execution of pipe coating work secured in the backlog and the continued strength in Composite tank demand. Based on these factors and actions taken to reduce costs and streamline operations earlier the year, the Company expects improved financial performance for the remainder of the year and into 2021, with fourth quarter Adjusted EBITDA, net of government assistance, in the $25 to $30 million range.

The long term outlook remains uncertain and difficult to forecast as the pace and magnitude of a broader market recovery will be dependent on the nature and duration of the COVID-19 pandemic and its impact on economic output and overall energy demand. Many exploration and production (“E&P”) operators have significantly curtailed production and the industry remains focused on capital discipline to ensure long term sustainability.

The Company’s performance will be determined by the strength of its diverse base business and the return of demand for its products and services, particularly in the U.S. and international energy markets. The Company expects results will benefit from actions taken to right size the business, improve profitability and meet its stated targets for annualized cost reduction and cash generation. These actions include reducing expenses and spending, aligning the Company’s operational footprint, cost structure and human resources with market demand, supported by the controlled closure of facilities initiated to date, which includes the 5 pipe coating plants and several girth weld inspection branches.

The Company’s base oil and gas business in North America is tied to the spending programs and budgets of E&P operators. In the U.S. land market, operators have reduced capital spending budgets to date by up to 50% as a result of the decline in economic activity and oil and gas demand as well as regulatory delays in transmission line projects. The Company expects U.S. land demand to stabilize at current levels and does not anticipate any near-term material improvement in demand for its products and services which are tied to the North American drilling and completion market. In Western Canada, limited off-take capacity in the region caused by the lack of new pipeline infrastructure has resulted in continued depressed spending and the Company does not expect improved market conditions or demand in the medium term.

As the economy and energy demand recovers, the Company continues to expect that the global oil & gas capex cycle will resume and that large international and offshore projects will be sanctioned as NOC’s (National Oil Companies) and IOC’s (International Oil Companies) realign their portfolios. These investments are required to replace, maintain and rehabilitate infrastructure that is at or beyond its useful design life, replace production due to reservoir depletion, requirements for advanced technologies and non-corrosive materials, or to address geopolitical challenges which are affecting several important producing regions. Additionally, higher investments in gas, specifically LNG and for domestic energy, are being supported by the increased demand for gas and greener alternatives to support continued energy transition.

Further detail on the outlook for the Pipeline and Pipe Services, Composite Systems and Automotive and Industrial segments are set out below.

Pipeline and Pipe Services Segment

Market demand for Company’s Pipeline and Pipe Services segment is driven by capital spending and investments by major EPC’s and international and national oil and gas producers. The Company has a track record of providing leading solutions and successful execution on critical international and offshore development projects.

The Company expects to continue to execute work secured in its backlog, including new international and offshore projects expected to be awarded in the fourth quarter, and continues to ramp-up pipe coating facilities in Channelview (Texas), Mexico, Brazil, Scotland, Norway and Indonesia.

The outlook for the pipe coating business is closely tied to project development and sanctioning timelines. The Company continues to engage with EPC’s and producers as they review project portfolios and expects certain projects which are yet to be sanctioned to be delayed in the near-term as a result of cost controls and reduced capital spending. Projects with the greatest likelihood of moving ahead are those tied to securing long-term domestic energy supply, projects undertaken as a result of national economic development and those that risk the loss of drilling-rights due to non-development timelines.

The Company continues to monitor international developments including Norway’s consideration of time-limited tax relief measures for oil and gas development, momentum in Brazil’s pre-salt offshore projects and Middle Eastern offshore designed to meet domestic energy requirements. In addition, the Company is monitoring progress on a previously deferred major East African crude oil project for which budgetary estimates were provided during the quarter.

North American demand for the pipeline and pipe services segment is closely tied to drilling and completion activity, the development of new and the repair/replacement of transmission pipelines and requirements for pipeline integrity and regulatory compliance. These activities drive the demand for small and large diameter pipe coatings and joint protection, girth weld inspection services and engineering design and consulting services.

Although activity in U.S. land has somewhat stabilized in the quarter, operators have moved to restructure, reduce capital spending budgets and in some cases consolidate through acquisition. The Company expects demand to stabilize at these lower levels and gradually improve in the next several quarters as operators return to a minimum base level of investment to maintain current levels of production. Possible COVID-19 resurgence remains a recovery risk and the industry is expected to continue its focus on employee safety and risk mitigation protocols.

The Company will continue its efforts to adjust its pipe coating footprint to match market activity levels and exit certain North American and international locations and/or product lines which are not strategic over the longer term. The continued depression experienced in Western Canada in the first half of the year is expected to continue as off-take capacity remains limited, there is no certainty of new pipeline infrastructure being built and lower commodity prices continue.

Composite Systems Segment

Market demand for the Company’s Composite Systems segment businesses are driven by North American drilling and completion activity, demand for international oil and gas gathering line applications, advanced materials in OCTG and underground storage and treatment tanks in retail fuel, water and wastewater and oil and gas. The segment benefits from a lower cost of ownership of composite systems versus steel and other materials, the development of larger diameter pipe applications and its international market qualifications.

The composite pipe business benefited from improved conditions in the third quarter as North American land completion activity and demand for the segment’s core products returned to more stable levels. Operators remained disciplined and maintained drill rigs and activity at levels similar to the previous quarter. Rig counts are expected to continue to lag completions for the balance of the year and operators are likely to continue the trend towards industry rationalization and consolidation.

Demand for the segment’s core pipe products in North America is expected to remain low compared to historical levels in the near-term, however the Company believes that the lower demand can be partially offset by the continued commercialization of the larger diameter pipe applications, market share gains as operators adopt composite technology for its overall cost profile and environmental advantages, and continued business development work on international energy and infrastructure projects.

Demand for composite storage tanks is delinked from the dynamics of oil and gas markets and is expected to remain strong throughout the balance of 2020. The business continues to focus on the execution of its historically high backlog and benefits from North American infrastructure spending. Fuel market tank demand is expected to remain strong as commercial and convenience store retailers realize the benefits of higher fuel margins and replace early generation single-wall FRP and legacy steel tanks with new double-wall FRP tanks to meet insurance company and banking requirements in some jurisdictions.

The demand for water storage and treatment tanks is expected to be supported by anticipated higher infrastructure spending and through its partnership with third parties to jointly develop complete product solutions for commercial and municipal water projects. The Company expects to deliver on its composite tank order backlog over the balance of the year with a focus on safe operations, productivity improvements and supply chain management.

Automotive and Industrial Segment

Demand for the Company’s Automotive and Industrial segment businesses generally follows GDP activity; however, the segment continues to be well positioned to capture the growing trend of electronic content in automobiles with specified sealing, insulating and customized application equipment systems for Tier 1 assembly customers and the expected increased spending on nuclear facility refurbishment.

The global automotive recovery and associated demand is expected to continue over the near-term as OEM assembly plants and Tier 1 suppliers increase capacity levels and re-stock inventories driven by the low interest rate environment, growth in consumer demand as the importance of personal transportation increases as a result of COVID-19 and electrical and hybrid government incentive programs.

Over the long-term demand for electric and plug-in hybrid passenger vehicles and light trucks is expected to grow and represent more than 50% of global vehicle sales by the early part of the next decade, with Europe and China to be the market leaders in vehicle electrification.

Industrial market demand for heat-shrink products is expected to continue its moderate recovery, while demand for specialty wire and cable products is expected to remain steady with solid demand from electrical utilities and communications providers in eastern North America.

2.0 CONSOLIDATED INFORMATION AND RESULTS FROM OPERATIONS

2.1 Revenue

The following table sets forth revenue by reportable operating segment for the following periods:

		Three Months Ended						Nine Months Ended
			September 30,			September 30,			September 30,			September 30,
^{(in thousands of Canadian dollars)}			2020			2019^(b)			2020			2019^(b)
Pipeline and Pipe Services		$	135,634		$	210,645		$	472,426		$	675,506
Composite Systems			83,972			129,996			240,472			318,709
Automotive and Industrial			49,270			53,809			142,283			162,910
Elimination^(a)			(1,217	)		(435	)		(2,377	)		(1,743	)
Consolidated revenue		$	267,659		$	394,015		$	852,804		$	1,155,382
^(a)	^{Represents the elimination of the inter-segment sales between the Pipeline and Pipe Services segment, the Composite Systems segment and the Automotive and Industrial segment.}
^(b)	^{Restated to conform with current period presentation of segments.}

Third Quarter 2020 versus Third Quarter 2019

Consolidated revenue decreased by $126.4 million, or 32%, from $394.0 million during the third quarter of 2019, to $267.7 million during the third quarter of 2020, reflecting revenue decreases of $75.0 million in the Pipeline and Pipe Services segment, $46.0 million in the Composite Systems segment and $4.5 million in the Automotive and Industrial segment. The decreases in all segments continue to reflect the impact of the global COVID-19 pandemic and the ongoing volatility in the energy markets.

In the Pipeline and Pipe Services segment, revenue in the third quarter of 2020 was $135.6 million, or 36% lower than in the third quarter of 2019, due to lower revenues in North America and Latin America, partially offset by higher revenues in the Middle East, Africa and Russia (“EMAR”) and Asia Pacific regions. See Section 3.1 – Pipeline and Pipe Services Segment for additional disclosure on the segment.

In the Composite Systems segment, revenue was $46.0 million lower during the third quarter of 2020, compared to $130.0 million in the third quarter of 2019, primarily due to decreased demand for composite pipe products. See Section 3.2 – Composite Systems Segment for additional disclosure on the segment.

In the Automotive and Industrial segment, revenue was $4.5 million lower during the third quarter of 2020, compared to $53.8 million in the third quarter of 2019, primarily due to decreased demand for automotive products and overall decreased activity levels in the North America and Latin America regions. See Section 3.3 – Automotive and Industrial Segment for additional disclosure on the segment.

Nine Months ended September 30, 2020 versus Nine Months ended September 30, 2019

Consolidated revenue decreased by $302.6 million, or 26%, from $1,155 million for the nine month period ended September 30, 2019, to $852.8 million for the nine month period ended September 30, 2020, reflecting revenue decreases of $203.1 million in the Pipeline and Pipe Services segment, $78.2 million in the Composite Systems segment and $20.6 million in the Automotive and Industrial segment.

In the Pipeline and Pipe Services segment, revenue in the nine month period ended September 30, 2020 was $472.4 million, or 30% lower than in the nine month period ended September 30, 2019, due to lower revenues in North America, Latin America and the EMAR regions, and partially offset by higher revenue in Asia Pacific. See Section 3.1 – Pipeline and Pipe Services Segment for additional disclosure on the segment.

In the Composite Systems segment, revenue was $78.2 million lower in the nine month period ended September 30, 2020, compared to $318.7 million in the nine month period ended September 30, 2019, primarily due to decreased demand for composite pipe products, partially offset by the benefit related to the inclusion of a full quarter of revenues in the first quarter of 2020 related to the acquisition of the ZCL business in April 2019. See Section 3.2 – Composite Systems Segment for additional disclosure on the segment.

In the Automotive and Industrial segment, revenue was $20.6 million lower in the nine month period ended September 30, 2020, compared to $162.9 million in the nine month period ended September 30, 2019, due to decreased activity levels in North America and EMAR, slightly offset by higher revenue in the Asia Pacific region. See Section 3.3 – Automotive and Industrial Segment for additional disclosure on the segment.

2.2 Loss/Income from Operations (“Operating Loss/ Income”)

The following table sets forth operating (loss) income and Adjusted EBITDA for the following periods:

		Three Months Ended					Nine Months Ended
			September 30,			September 30,		September 30,			September 30,
^{(in thousands of Canadian dollars, except percentages)}			2020			2019		2020			2019
Operating (loss)/income^(a)		$	(19,289	)	$	17,117	$	(277,272	)	$	54,127
Operating margin^(b)			(7.2%	)		4.3%		(32.5 %	)		4.7%

Adjusted EBITDA^(b)		$	17,803		$	42,396	$	28,263		$	106,854
Adjusted EBITDA margin^(b)			6.7 %			10.8%		3.3 %			9.2%
^(a)	^{Operating loss in the nine months ended September 30, 2020 includes $29.7 million of restructuring costs and $206.7 million of impairment charge.}
^(b)	^{Operating margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these Non-GAAP measures.}

In the first quarter of 2020, the Company conducted a review of its impairment testing on property, plant and equipment, intangible assets and goodwill due to the current uncertain business climate brought about by the global COVID-19 pandemic and the volatility in the energy markets. As a result of this review, the Company recorded impairment charges of $203.1 million due to the current market conditions for certain assets and the Company’s assessment of the related future demand and market recovery. The impairment charges included $143.6 million and $46.0 million on intangible assets and goodwill for Pipeline Performance Group (formerly Bredero Shaw) and Shawcor Inspection Services, respectively, and $13.4 million on assets at two U.S. land pipe coating facilities and certain assets related to large diameter products in its Composite Systems facility in Alberta. In the third quarter of 2020, the Company recorded an additional impairment of $3.6 million on assets at a pipe coating facility in Asia Pacific for the Pipeline Performance Group related to the recently announced closure plans.

Operating Income in the nine months of 2020 includes an additional quarter of income from the ZCL composite tank business as compared to the same period in 2019 as the acquisition of the ZCL business was completed in April 2019, which had a net positive impact on the nine months of 2020 results.

In response to the current challenging business conditions, the Company also completed several cost reduction and cash preservation initiatives. As a result of the significant reduction of the salaried workforce and the shut down of certain facilities and branch offices in the second and third quarter, the Company has recorded restructuring costs of $29.7 million in the current year.

Third Quarter 2020 versus Third Quarter 2019

The third quarter of 2020 had an Operating Loss of $19.3 million, a decrease compared to the $17.1 million Operating Income in the third quarter of 2019. The decrease is primarily due to a $40.3 million decrease in gross profit, the negative impact of the $12.4 million restructuring costs, a $3.6 million impairment charge in the current quarter, and $4.2 million less from gain on sale of land. This is partially offset by a decrease of $22.3 million in SG&A expenses.

The current quarter benefited from COVID-19 related government wage subsidies recorded of $17 million, of which $9.5 million was recorded in cost of goods sold and $7.5 million was recorded in SG&A expenses.

The $40.3 million decrease in gross profit resulted from the $126.4 million decrease in revenue, as explained above, and a 1.3 percentage point decrease in gross margin from the third quarter of 2019. The decrease in the gross margin percentage was primarily due to product and project mix, the decrease in revenue and the impact of lower utilization of facilities on the absorption of manufacturing overheads due to the continued impact of the global COVID-19 pandemic and ongoing volatility in the energy markets. The decrease in gross margin is partially offset by $9.5 million of COVID-19 related government wage subsidies recorded in the current quarter.

SG&A expenses decreased by $22.3 million compared to the third quarter of 2019, primarily due to the completed cost control and headcount reduction initiatives that resulted in decreases of $12.2 million in compensation related costs (includes a $1.5 million reduction in incentive-based compensation) and $3.5 million in travel and entertainment expenses. The current quarter also benefited from COVID-19 related government wage subsidies of $7.5 million.

Adjusted EBITDA was $17.8 million in the third quarter of 2020 compared to $42.4 million in the third quarter of 2019. See Section 7.0 Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

Nine Months ended September 30, 2020 versus Nine Months ended September 30, 2019

The nine months of 2020 had an Operating Loss of $277.3 million, a significant decrease compared to the $54.0 million Operating Income in the nine months of 2019. The decrease is primarily due to the negative impact of the $206.7 million impairment charge, a $102.8 million decrease in gross profit, $29.7 million incurred in restructuring costs, an additional $7.6 million in net foreign exchange losses and a $36.8 million lower gain on sale of land; partially offset by a $47.7 million decrease in SG&A expenses.

The nine months results benefited from COVID-19 related government wage subsidies recorded of $24.6 million, of which $9.5 million was recorded in cost of goods sold and $15.1 million was recorded in SG&A expenses.

The $102.8 million decrease in gross profit resulted from the $302.6 million decrease in revenue, as explained above, and a 1.9 percentage point decrease in the gross margin from the nine month period of 2019. The decrease in the gross margin percentage was primarily due to product and project mix, the decrease in revenue and the impact of lower utilization of facilities on the absorption of manufacturing overheads primarily due to the impact of global COVID-19 pandemic and the volatility in the energy markets. The decrease in gross margin was partially offset by $9.5 million of COVID-19 related government wage subsidies recorded in the current period.

SG&A expenses decreased by $47.7 million compared to the first nine months of 2019, primarily due to the completed cost control and headcount reduction initiatives that resulted in decreases of $29.9 million in compensation related costs (includes a $14.2. million reduction in incentive-based compensation) and $7.7 million in travel and entertainment expenses. The current period also benefited from the COVID-19 related government wage subsidies of $15.1 million and the absence of non-recurring integration and acquisition costs related to the ZCL business in the current period compared to the $9.4 million incurred in the prior year period. This was partially offset by the current period including an additional quarter of ongoing SG&A expenses of $5.6 million for the ZCL business as it was acquired in April 2019 and increases of $4.9 million of provisions and equipment expenses and $1.7 million of professional fees.

Adjusted EBITDA was $28.3 million in the nine month period ended September 30, 2020 compared to $106.9 million in the nine month period ended September 30, 2019. See Section 7.0 Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

2.3 Income from Investments in Associates

The following table sets forth the income from investments in associates for the following periods:

	Three Months Ended				Nine Months Ended
		September 30,		September 30,		September 30,		September 30,
^{(in thousands of Canadian dollars)}		2020		2019		2020		2019
Income from investments in associates	$	8,083	$	234	$	8,175	$	8,976

The Company has equity-accounted investments in Zedi Inc. (“Zedi”) and Power-Feed-Thru Systems and Connectors, LLC (“PFT”). In the third quarter of 2020, the Company recorded a gain of $8.2 million in the investment in Zedi based on a current valuation of the investment. During the second quarter of 2019, Zedi disposed of its software and automation businesses which represented a substantial part of its operations and as a result, the Company received $29.2 million of proceeds and recorded a gain of $9.7 million.

3.0 SEGMENT INFORMATION

3.1 Pipeline and Pipe Services Segment

The following table sets forth, by geographic location, the revenue, Operating (Loss) Income and Adjusted EBITDA for the Pipeline and Pipe Services segment for the following periods:

		Three Months Ended				Nine Months Ended
			September 30,		September 30,		September 30,		September 30
^{(in thousands of Canadian dollars, except percentages)}			2020		2019^(a)		2020		2019^(a)
North America		$	67,405	$	124,090	$	236,806	$	384,498
Latin America			2,229		32,846		28,506		85,600
EMAR			51,058		50,288		153,732		183,257
Asia Pacific			14,942		3,421		53,382		22,151
Total revenue		$	135,634	$	210,645	$	472,426	$	675,506

Operating (Loss) Income ^(b)		$	(36,647 )	$	(9,292)	$	(276,297 )	$	9,537
Operating margin ^(c)			(27 %)		(4.4%)		(58.5 %)		1.4%

Adjusted EBITDA ^(c)		$	(11,885 )	$	6,826	$	(22,958 )	$	24,516
Adjusted EBITDA margin ^(c)			(8.8 %)		3.2%		(4.9 %)		3.6%
^(a)	^{Restated to conform with current period presentation of segments.}
^(b)	^{Operating loss in the nine months ended September 30, 2020 includes $18.0 million restructuring costs and $196.9 million of impairment charges.}
^(c)	^{Operating margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these Non-GAAP measures.}

Third Quarter 2020 versus Third Quarter 2019

Revenue in the third quarter of 2020 was $135.6 million, a decrease of $75.0 million, or 36%, from $210.6 million in the comparable period of 2019. This was primarily due to lower revenues in North America and Latin America, partially offset by higher revenue in EMAR and Asia Pacific:

North America revenue decreased by $56.7 million, or 46%, primarily as a result of lower activity levels for small and large diameter pipe coating and girth weld inspection services in the region, partially offset by higher revenue from engineering services.

Revenue in Latin America decreased by $30.6 million, or 93%, primarily due to lower revenue from the Liza II and other pipe coating project activity in Mexico compared to the prior year quarter.

In EMAR, revenue increased by $0.7 million, or 2%, primarily due to higher pipe coating project activity at the Leith, Scotland facility and Orkanger, Norway facility. This was partially offset by lower activity levels at Ras Al Khaimah, UAE (“RAK”) facilities, Italy facilities and lower revenue from field joint coating projects in the region.

Revenue in Asia Pacific increased by $11.5 million, or 337%, mainly due to higher pipe coating project activities at the Kabil, Indonesia facility and the Kuantan, Malaysia facility.

In the third quarter of 2020, the Operating Loss was $36.6 million, as compared to an Operating Loss of $9.3 million in the third quarter of 2019. The decline reflects a $31.7 million decrease in gross profit, $10.0 million of restructuring costs and a $3.6 million impairment. This is partially offset by a decrease of $13.0 million in SG&A, as explained in Section 2.2 above, a decrease in depreciation and amortization of $3.0 million, and a gain on sale of land of $1.2 million.

The current quarter benefited from COVID-19 related government wage subsidies recorded of $5.4 million, of which $3.6 million was recorded in cost of goods sold and $1.8 million was recorded in SG&A expenses.

The decrease in the gross profit was primarily due to the lower revenue, as explained above, and an 8.0 percentage point decrease in gross margin. The decrease in the gross margin percentage was primarily due to product and project mix, lower utilization in North America and Latin America facilities and the related impact on the absorption of manufacturing overheads. The decrease in gross profit was partially offset by COVID-19 related government subsidies recorded in the third quarter.

Adjusted EBITDA in the third quarter of 2020 was negative $11.9 million compared to positive $6.8 million in the third quarter of 2019. See Section 7.0 – Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

Nine Months ended September 30, 2020 versus Nine Months ended September 30, 2019

Revenue in the nine months of 2020 was $472.4 million, a decrease of 203.1 million, or 30%, from $675.5 million in the comparable period of 2019. This was primarily due to lower revenues in North America, Latin America and EMAR, partially offset by higher revenue in Asia Pacific:

North America revenue decreased by $147.7 million, or 38%, primarily as a result of lower activity levels for small and large diameter pipe coating and girth weld inspection services in the region, partially offset by higher revenue from engineering services. Revenue for the first nine months of 2020 was also negatively impacted by the delay of revenue in the first quarter caused by the execution of work to address the fourth quarter 2019 service quality event at the Channelview, Texas facility.
Revenue in Latin America decreased by $57.1 million, or 67%, primarily due to lower activity levels in Brazil and Argentina and Mexico compared to the nine month period of the prior year.
In EMAR, revenue decreased by $29.5 million, or 16%, primarily due to lower revenue levels at the Italy and UK facilities, partially offset by higher pipe coating project activity levels at the Leith, Scotland, Orkanger, Norway and RAK facilities and higher revenue from field joint coating projects in the region.
Revenue in Asia Pacific increased by $31.2 million, or 141%, mainly due to higher pipe coating project activity at the Kabil, Indonesia facility, partially offset by lower revenue from the Kuantan, Malaysia facility.

In the first nine months of 2020, Operating Loss was $276.3 million compared to Operating Income of $9.5 million in the comparable prior year period. The decrease reflects the negative impact of the $196.9 million impairment charge recorded, $18.0 million of restructuring costs and a $70.0 million decrease in gross profit, and were partially offset by a decrease of $23.2 million in SG&A expenses, as explained in Section 2.2 above, and a decrease in depreciation and amortization of $7.1 million. The first nine months of 2020 included a gain on sale of land of $1.2 million compared to a gain on sale of land of $32.6 million in the nine months of 2019.

The nine months results benefited from COVID-19 related government wage subsidies recorded of $7.5 million, of which $3.6 million was recorded in cost of goods sold and $3.9 million was recorded in SG&A expenses.

The decrease in the gross profit was primarily due to the lower revenue, as explained above, and a 3.3 percentage point decrease in gross margin. The decrease in the gross margin percentage was primarily due to product and project mix, lower utilization in North America and Latin America facilities and the related impact on the absorption of manufacturing overheads. The decreases in gross profit was partially offset by the COVID-19 related government wage subsidies recorded in the period.

Adjusted EBITDA in the nine months of 2020 was negative $23.0 million compared to positive $24.5 million in the nine months of 2019. See Section 7.0- Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

3.2 Composite Systems Segment

The following table sets forth, by geographic location, the revenue, Operating (Loss) Income and Adjusted EBITDA for the Composite Systems segment for the following periods:

		Three Months Ended				Nine Months Ended
			September 30,		September 30,		September 30,		September 30,
^{(in thousands of Canadian dollars, except percentages)}			2020		2019^(a)		2020		2019^(a)
North America		$	83,220	$	126,574	$	237,049	$	309,541
Latin America			489		1,376		2,326		4,678
EMAR			298		1,781		1,069		2,939
Asia Pacific			(35 )		265		28		1,551
Total revenue		$	83,972	$	129,996	$	240,472	$	318,709

Operating Income ^(b)		$	13,058	$	21,067	$	733	$	40,359
Operating margin ^(c)			15.6 %		16.2%		0.3 %		12.7%

Adjusted EBITDA ^(c)		$	21,596	$	27,230	$	39,718	$	67,534
Adjusted EBITDA margin ^(c)			25.7 %		20.9%		16.5 %		21.2%
^(a)	^{Restated to conform with current period presentation of segments.}
^(b)	^{Operating Income in the nine months ended September 30, 2020 includes $4.2 million of restructuring costs and $9.8 million of impairment charges.}
^(c)	^{Operating margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these Non-GAAP measures.}

Third Quarter 2020 versus Third Quarter 2019

Revenue in the third quarter of 2020 decreased by $46.0 million, or 35%, compared to the third quarter of 2019, primarily due to the negative impact of global COVID-19 pandemic and the volatility in the energy markets. North America revenue decreased by $43.4 million, or 34%, primarily due to lower demand for composite pipe products which resulted from the continued capital discipline focus of exploration and production operators and low oil and gas prices. In addition, tubular management service activity levels in Western Canada remain depressed. This was partially offset by higher revenues in the composite tank business as demand in the retail fuel market remains strong.

Operating Income in the third quarter of 2020 was $13.1 million compared to an Operating Income of $21.1 million in the third quarter of 2019. The decrease reflects a $7.3 million decrease in gross profit, the negative impact of the $0.4 million restructuring costs and is partially offset by a decrease of $5.0 million in SG&A expenses, as explained in Section 2.2 above.

The current quarter benefited from COVID-19 related government wage subsidies recorded of $7.7 million, of which $4.3 million was recorded in cost of goods sold and $3.4 million was recorded in SG&A expenses.

The decrease in gross profit was primarily due to the decrease in revenue, as explained above, offset by an 8.5 percentage point increase in gross margin. The increase in the gross margin points was primarily due to higher utilization in the composite tank facilities driven by process improvements and partially offset by lower utilization in the composite pipe facility. The third quarter of 2019 also included a one-time inventory revaluation adjustment of $3.6 million related to the acquisition of the composite tank business. In addition, the decreases in gross profit was partially offset by the COVID-19 related government wage subsidies recorded in the third quarter.

Adjusted EBITDA in the third quarter of 2020 was $21.6 million compared to $27.2 million in the third quarter of 2019. See Section 7.0 -Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

Nine Months ended September 30, 2020 versus Nine Months ended September 30, 2019

Revenue in the nine months of 2020 decreased by $78.2 million, or 25%, compared to the nine months of 2019, primarily due to the negative impact of the ongoing global COVID-19 pandemic and the volatility in the energy markets. North America revenue decreased by $72.5 million, or 23%, primarily due to lower demand level in composite pipe products, attributed to the continued capital discipline focus of exploration and production operators and low oil and gas prices. In addition, tubular management service activity levels were lower in Western Canada. These decreases were partially offset by the increased revenue in the composite tank business from continued strong demand in the retail fuel market. In addition, the current year-to-date period includes an additional quarter of revenues from the ZCL business which was acquired in April 2019.

Operating Income in the nine months of 2020 was $0.7 million compared to Operating Income of $40.4 million in the first nine months of 2019. The operating results for the current period include an additional quarter of operating income from the composite tank business as the ZCL business was acquired in April 2019. The decrease reflects the negative impact of the $4.2 million restructuring costs, the $9.8 million impairment charge recorded in the first quarter of this year, a $24.5 million decrease in gross profit and an increase of $3.1 million in depreciation and amortization, partially offset by a decrease of $6.3 million in SG&A expenses.

The nine months results benefited from COVID-19 related government wage subsidies recorded of $10.5 million, of which $4.3 million was recorded in cost of goods sold and $6.2 million was recorded in SG&A expenses.

The decrease in gross profit was primarily due to the decrease in revenue, as explained above. The decrease in the gross margin was primarily due to lower utilization in the composite pipe facility and the related impact on the absorption of manufacturing overheads partially offset by higher margins in the composite tank business due to higher plant utilization and process improvements. In addition, the decreases in gross profit was partially offset by the COVID-19 related government wage subsidies recorded in the period.

The decrease in SG&A expenses reflects reduced costs as result of restructuring initiatives completed, the absence of non-recurring integration and acquisition costs related to the ZCL business in the current period compared to the $3.8 million incurred in the prior year period and $6.2 million of COVID-19 related government wage subsidies recorded in the period. This was partially offset by the current period including an additional quarter of ongoing SG&A expenses of $5.6 million for the ZCL business which was acquired in April 2019.

Adjusted EBITDA in the nine months of 2020 was $39.7 million compared to $67.5 million in the nine months of 2019. See Section 7.0 – Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

3.3 Automotive and Industrial Segment

The following table sets forth, by geographic location, the revenue, Operating Income and operating margin for the Automotive and Industrial segment for the following periods:

		Three Months Ended				Nine Months Ended
			September 30,		September 30,		September 30,		September 30,
^{(in thousands of Canadian dollars, except percentages)}			2020		2019		2020		2019
North America		$	29,457	$	33,332	$	89,396	$	96,853
EMAR			16,416		17,752		44,548		58,407
Asia Pacific			3,397		2,725		8,339		7,650
Total revenue		$	49,270	$	53,809	$	142,283	$	162,910

Operating Income ^(a)		$	6,043	$	8,593	$	13,516	$	26,414
Operating margin ^(b)			12.3 %		16.0%		9.5 %		16.2%

Adjusted EBITDA ^(b)		$	9,244	$	9,708	$	23,253	$	29,754
Adjusted EBITDA margin ^(b)			18.8 %		18.0%		16.3 %		18.3%
^(a)	^{Operating Income in the nine months ended September 30, 2020 includes $6.3 million of restructuring costs.}
^(b)	^{Operating margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. Non-GAAP measures do not have a standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures provided by other companies. See Section 7.0 – Reconciliation of Non-GAAP Measures for further details and a reconciliation of these Non-GAAP measures.}

Third Quarter 2020 versus Third Quarter 2019

Revenue in the third quarter of 2020 decreased by $4.5 million, or 8.4%, compared to the third quarter of 2019, due to lower demand for heat shrink tubing products in the automotive sector in North America and EMAR, slightly offset by higher revenue in Asia Pacific. The decline in the automotive sector reflects that a majority of global automotive OEM assembly plants temporarily halted production and suspended operations late in the first quarter as a result of COVID-19 and have yet to return to full capacity as of the third quarter of 2020.

Operating Income in the third quarter of 2020 was $6.0 million compared to an Operating Income of $8.6 million in the third quarter of 2019. The decrease in Operating Income was primarily due to the negative impact of $2.0 million in restructuring costs and a decrease in gross profit of $1.3 million.

The current quarter benefited from COVID-19 related government wage subsidies recorded of $2.4 million, of which $1.6 million was recorded in cost of goods sold and $0.8 million was recorded in SG&A expenses.

The decrease in gross profit was primarily due to the decrease in revenue, as explained above and lower utilization in the manufacturing plants, which was partially offset by COVID-19 related government wage subsidies recorded in the current quarter.

Adjusted EBITDA in the third quarter of 2020 was $9.2 million compared to $9.7 million in the third quarter of 2019. See Section 7.0 – Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

Nine Months ended September 30, 2020 versus Nine Months ended September 30, 2019

Revenue in the nine months of 2020 decreased by $20.6 million, or 13%, compared to the nine months of 2019, due to lower demand for heat shrink tubing products in the automotive sector in North America and EMAR, slightly offset by higher revenue in Asia Pacific. The decline in the automotive sector reflects that a majority of global automotive OEM assembly plants temporarily halted production and suspended operations late in the first quarter as a result of COVID-19, continued for much of the second quarter, and have yet to come back to full capacity as of the third quarter.

Operating Income in the nine months of 2020 was $13.5 million, lower compared to $26.4 million in the nine months of 2019. The decrease in Operating Income was primarily due to the negative impact of $6.3 million in restructuring costs and a decrease in gross profit of $8.4 million, partially offset by a decrease of $1.8 million in SG&A expenses.

The nine months results benefited from COVID-19 related government wage subsidies recorded of $3.2 million, of which $1.6 million was recorded in cost of goods sold and $1.6 million was recorded in SG&A expenses.

The decrease in gross profit was primarily due to the decrease in revenue, as explained above, and a 1.8 percentage point decrease in gross margin. The decrease in gross margin was primarily due to product mix, lower plant utilization and the related impact on the absorption of manufacturing overheads. The decrease in gross profit was partially offset by the COVID-19 related government wage subsidies recorded in the period.

Adjusted EBITDA in the nine months of 2020 was $23.3 million compared to $29.8 million in the nine months of 2019. See Section 7.0 – Reconciliation of Non-GAAP Measures for additional disclosures regarding Adjusted EBITDA.

3.4 Financial and Corporate

Financial and corporate costs include corporate expenses not allocated to the operating segments and other non-operating items, including foreign exchange gains and losses on foreign currency denominated cash and working capital balances. The corporate division of the Company only earns revenue that is considered incidental to the activities of the Company. As a result, it does not meet the definition of a reportable operating segment as defined under IFRS.

The following table sets forth the Company’s unallocated financial and corporate expenses for the following periods:

	Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
^{(in thousands of Canadian dollars)}		2020			2019			2020			2019
Financial and corporate expenses	$	(1,743	)	$	(3,251	)	$	(15,224	)	$	(22,183	)

Third Quarter 2020 versus Third Quarter 2019

The third quarter of 2020 reflected financial and corporate loss of $1.7 million compared to an operating loss of $3.3 million in the same period of 2019. The third quarter of 2020 included $1.5 million of COVID-19 related governmental wage subsidies and reflected a decrease of $1.7 million in incentive-based compensation costs when compared to the same period in 2019. This was partially offset by decrease of $2.2 million in foreign exchange gain.

Nine Months ended September 30, 2020 versus Nine Months ended September 30, 2019

Financial and corporate costs in the nine months of 2020 were $15.2 million compared to $22.2 million in the nine months of 2019. The decrease was primarily due to the decrease of $11.3 million in incentive-based compensation, and $3.4 million of COVID-19 related government wage subsidies recorded in the period, partially offset by a $7.6 million increase in foreign exchange loss. The period also reflects an absence of non-recurring acquisition costs related to the ZCL business in the current period compared to the $5.0 million incurred in the prior year period.

4.0 LIQUIDITY AND CAPITALIZATION

As at September 30, 2020, the Company had cash and cash equivalents totalling $106.8 million (December 31, 2019 – $98.2 million) and had unutilized lines of credit available to use of $275.2 million (December 31, 2019 – $275.6 million).

The effects of the COVID-19 pandemic and the rapid decline in oil prices has adversely impacted demand for the Company’s products and services and its operating results, financial position and access to sources of liquidity. With the uncertainty about the extent and depth of the market contraction and its impact on financial results, the Company turned its focus in the second quarter on the reduction of costs and cash preservation to protect its balance sheet. As communicated in April 2020, the Company targeted $60 million in sustainable annualized SG&A savings and $40 million in incremental cash generation. The Company has made significant progress to date on these targets by reducing CEO, executive and Board compensation, reducing the salaried workforce levels by over 19%, optimizing its footprint with the closure of four North American pipe coating facilities, announced plans to close a pipe coating facility in South East Asia and several girth well inspection branch offices and making significant cuts to other operating costs and capital budgets. As a result of these efforts the Company is on track to meet its goal of a quarterly normalized SG&A run rate of $70 million. During the first nine months of 2020, the Company has also delivered positive cash flow of $47.3 million from reduced working capital, excluding the impact of increased restructuring liabilities, and $16.5 million from proceeds of asset sales. Based on these actions completed and planned, its diversified business and current backlog, the Company expects to generate sufficient cash flows to fund its operations, working capital requirements and capital program.

5.0 FORWARD-LOOKING INFORMATION

This news release includes certain statements that reflect management’s expectations and objectives for the Company’s future performance, opportunities and growth, which statements constitute “forward-looking information” and “forward-looking statements” (collectively “forward-looking information”) under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward-looking information involves estimates, assumptions, judgements and uncertainties. These statements may be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “anticipate”, “expect”, “believe”, “predict”, “estimate”, “continue”, “intend”, “plan” and variations of these words or other similar expressions. Specifically, this document includes forward-looking information in the Outlook Section and elsewhere in respect of, among other things, the impact and duration of the global COVID-19 pandemic and the related impacts on the Company’s operations, including exposure to additional risks and liabilities and on the global supply and demand of oil and gas, the completion of restructuring initiatives and cost controls, including facility and branch closures, and the levels of cost savings and cash generation to be achieved thereby, the achievement of its anticipated quarterly normalized SG&A, the future outlook for capital expenditures in the offshore oil and gas sector and US land drilling and completion activity, the demand for its products in retail fuel, automotive and industrial markets, the level of financial performance in the fourth quarter of 2020 and into 2021, the effect of the Company’s diversified portfolio of products on revenue and operating income, the demand for the Company’s products in the Pipeline and Pipe Services, Composite Systems and the Automotive and Industrial segments of the Company’s business, the expected development of the Company’s order backlog and the impact thereof on the Company’s revenue and operating income, including the award of contracts on outstanding bids, the impact of global economic activity on the demand for the Company’s products, the impact of continuing demand for oil and gas, the impact of global oil and gas commodity prices, the impact of changing energy demand, supply and prices and the impact and likelihood of changes in competitive conditions in the markets in which the Company participates, the execution of definitive contracts for and the timing to complete certain pipe coating projects, the likelihood that projects will be sanctioned in the future, and the impact thereof on the Company’s business, the ability of the Company to fund its operating and capital requirements and the ability of the Company to satisfy its debt covenants.

Forward-looking information involves known and unknown risks and uncertainties that could cause actual results to differ materially from those predicted by the forward-looking information. We caution readers not to place undue reliance on forward-looking information as a number of factors could cause actual events, results and prospects to differ materially from those expressed in or implied by the forward-looking information. Significant risks facing the Company include, but are not limited to: the duration and the impact of the COVID-19 pandemic on the Company, its employees, customers, suppliers, energy and commodity markets and on the global economy, the impact on the Company of changes in the strategy by U.S. oil and gas operators to heighten focus on capital discipline and shareholder returns, the impact on the Company of reduced demand for its products and services, including the delay, suspension or cancellation of existing and anticipated contracts, as a result of lower investment in global oil and gas extraction, infrastructure and transportation activity following the previous declines in the global price of oil and gas, long term changes in global or regional economic activity and changes in energy supply and demand, which with other factors, impact on the level of global pipeline infrastructure construction; exposure to product and other liability claims; shortages of or significant increases in the prices of raw materials used by the Company; compliance with environmental, trade and other laws; political, economic and other risks arising from the Company’s international operations; the impact of climate change on the demand for the Company’s products and fluctuations in foreign exchange rates, as well as other risks and uncertainties described herein under “Risks and Uncertainties” and in the Company’s annual MD&A and in the Company’s Annual Information Form under “Risk Factors”.

These statements of forward-looking information are based on assumptions, estimates and analysis made by management in light of its experience and perception of trends, current conditions and expected developments as well as other factors believed to be reasonable and relevant in the circumstances. These assumptions include those in respect of the continuation or renewal of certain COVID 19 related restrictions on a more targeted basis than the basis on which those restrictions were imposed earlier in the year and the impact thereof on global economic activity, the Company’s ability to manage supply chain disruptions caused by the COVID-19 pandemic or natural disasters, global oil and gas prices, the commencement of work by the Company on the Payara Project during the fourth quarter of 2020, the delay in the near term of certain projects and the likelihood of projects tied to securing long-term domestic energy supply or drilling rights being sanctioned, the recommencement of increased capital expenditures in the global offshore oil and gas segment, the commencement of recovery of the global economy, no growth in Western Canada and stable demand levels in U.S. land markets in 2021, stronger than previously anticipated recovery of demand in the automotive market, particularly in North America and Europe, solid demand in the retail fuel market and stable demand in the industrial markets, the Company’s ability to execute projects under contract, the continued supply of and stable pricing for commodities used by the Company, the availability of personnel resources sufficient for the Company to operate its businesses, the maintenance of operations in major oil and gas producing regions, the adequacy of the Company’s existing accruals in respect of environmental compliance and in respect of litigation and tax matters and other claims generally, and the level of payments under the Company’s performance, bid and surety bonds and the ability of the Company to satisfy all covenants under the Credit Facility and having sufficient liquidity to fund its obligations and planned initiatives. The Company believes that the expectations reflected in the forward-looking information are based on reasonable assumptions in light of currently available information. However, should one or more risks materialize, or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking information included in this document and the Company can give no assurance that such expectations will be achieved.

When considering the forward-looking information in making decisions with respect to the Company, readers should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not assume the obligation to revise or update forward-looking information after the date of this document or to revise it to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

To the extent any forward-looking information in this document constitutes future oriented financial information or financial outlooks, within the meaning of securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future oriented financial information and financial outlooks, as with forward-looking information generally, are based on the assumptions and subject to the risks noted above.

6.0 CONFERENCE CALL AND ADDITIONAL INFORMATION

Shawcor will be hosting a Shareholder and Analyst Conference Call and Webcast on Friday, November 13th, 2020 at 9:00 AM ET, which will discuss the Company’s Third Quarter 2020 Financial Results. To participate via telephone, please dial 1-877-776-4039 or 1-315-625-6955. Conference Call ID: 2083391. Web PIN: 8396; Alternatively, please go to the following website address to participate via webcast: https://edge.media-server.com/mmc/p/48xiyixv

The Company’s third quarter MD&A and financial statements are available on Shawcor’s website at www.shawcor.com.

Additional information relating to the Company, including its Annual Information Form, is available on SEDAR at www.sedar.com.

For further information, please contact:

Paul Pierroz
Senior Vice President, Corporate & Investor Relations
Telephone: 416.744.5540
E-mail: [email protected]

Source: Shawcor Ltd.
Shawcor.ER

Shawcor Ltd.

Interim Consolidated Balance Sheets (Unaudited)
	September 30,				December 31,
^{(in thousands of Canadian dollars)}		2020			2019

ASSETS

Current Assets
Cash and cash equivalents	$	106,830		$	98,218
Loans receivable		–			712
Accounts receivable		212,610			246,745
Contract assets		40,825			41,616
Income taxes receivable		18,341			33,493
Inventory		171,687			160,792
Prepaid expenses		19,555			17,560
Derivative financial instruments		168			177
Total current assets		570,016			599,313

Non-current Assets
Property, plant and equipment		382,186			420,027
Right-of-use assets		77,218			84,269
Intangible assets		217,268			271,514
Investments in associates		14,592			15,400
Deferred income tax assets		33,367			37,462
Other assets		4,514			5,396
Goodwill		245,598			377,704
Total non-current assets		974,743			1,211,772
TOTAL ASSETS	$	1,544,759		$	1,811,085

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued liabilities	$	197,353		$	177,452
Provisions		19,187			25,694
Income taxes payable		16,532			18,918
Derivative financial instruments		132			330
Contract liabilities		52,992			43,693
Lease liabilities		20,281			21,461
Other liabilities		3,324			9,518
Total current liabilities		309,801			297,066

Non-current Liabilities
Long-term debt		434,566			435,462
Lease liabilities		62,367			67,768
Provisions		20,740			20,477
Employee future benefits		16,831			15,390
Deferred income tax liabilities		10,171			19,306
Other liabilities		5,215			5,669
Total non-current liabilities		549,890			564,072
Total liabilities		859,691			861,138

Equity
Share capital		719,172			710,563
Contributed surplus		26,272			32,615
Retained (deficit) earnings		(107,508	)		193,027
Non-controlling interests		4,197			4,647
Accumulated other comprehensive income		42,935			9,095
Total equity		685,068			949,947
TOTAL LIABILITIES AND EQUITY	$	1,544,759		$	1,811,085

Shawcor Ltd.

Interim Consolidated Statements of (Loss) Income (Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
^{(in thousands of Canadian dollars, except per share amounts)}		2020			2019			2020			2019

Revenue
Sale of products	$	139,075		$	189,423		$	404,022		$	507,549
Rendering of services		128,584			204,592			448,782			647,833
		267,659			394,015			852,804			1,155,382

Cost of Goods Sold and Services Rendered		193,338			279,397			625,402			825,140

Gross Profit		74,321			114,618			227,402			330,242

Selling, general and administrative expenses		55,053			77,398			185,824			233,488
Research and development expenses		2,293			3,716			9,090			10,411
Foreign exchange (gains) losses		(938	)		(3,178	)		4,242			(3,352	)
Depreciation and amortization		22,343			24,951			70,275			73,562
Gain on sale of land		(1,213	)		(5,386	)		(1,213	)		(37,994	)
Impairment		3,623			–			206,707			–
Restructuring costs		12,449			–			29,749			–
(Loss) Income from Operations		(19,289	)		17,117			(277,272	)		54,127

Income from investments in associates		8,083			234			8,175			8,976
Finance costs, net		(6,673	)		(6,528	)		(18,068	)		(15,468	)
Cost associated with repayment of long-term debt and credit facilities		–			–			–			(12,308	)
Net monetary loss		(390	)		(504	)		(1,245	)		(2,391	)
(Loss) Income before Income Taxes		(18,269	)		10,319			(288,410	)		32,936

Income tax expense (recovery)		136			3,562			1,963			(15,792	)

Net (Loss) Income	$	(18,405	)	$	6,757		$	(290,373	)	$	48,728

Net (Loss) Income Attributable to:
Shareholders of the Company	$	(18,311	)	$	6,520		$	(289,989	)	$	48,490
Non-controlling interests		(94	)		237			(384	)		238
Net (Loss) Income	$	(18,405	)	$	6,757		$	(290,373	)	$	48,728

(Loss) Earnings per Share
Basic	$	(0.26	)	$	0.09		$	(4.12	)	$	0.69
Diluted	$	(0.26	)	$	0.09		$	(4.12	)	$	0.69

Weighted Average Number of Shares Outstanding (000s)
Basic		70,415			70,152			70,344			70,137
Diluted		70,415			70,434			70,344			70,420

Shawcor Ltd.

Interim Consolidated Statements of Cash Flows (Unaudited)
^{(in thousands of Canadian dollars)}	Three Months Ended September 30,						Nine Months Ended September 30,
		2020			2019			2020			2019
Operating Activities
Net (loss) income	$	(18,405	)	$	6,757		$	(290,373	)	$	48,728
Add (deduct) items not affecting cash
Depreciation and amortization		22,343			24,951			70,275			73,562
Impairment		3,623			–			206,707			–
Impact of Inventory revaluation adjustment		–			3,612			–			7,000
Interest expense on right-of-use assets leases		940			861			2,896			2,421
Share-based compensation and incentive-based compensation		1,195			2,674			(1,741	)		12,479
Deferred income taxes		(2,469	)		(4,449	)		(3,475	)		(28,535	)
(Gain) loss on disposal of property, plant and equipment		(137	)		702			(653	)		389
Gain on sale of land		(1,213	)		(5,386	)		(1,213	)		(37,994	)
Unrealized (gain) loss on derivative financial instruments		(443	)		(50	)		(189	)		1,255
Income from investments in associates		(8,083	)		(234	)		(8,175	)		(8,976	)
Other		1,178			(2,455	)		(3,465	)		(6,201	)
Change in non-cash working capital and foreign exchange		8,781			(18,838	)		63,434			(58,980	)
Cash Provided by Operating Activities	$	7,310		$	8,145		$	34,028		$	5,148

Investing Activities
Decrease in loans receivable		–			612			748			1,824
Decrease in short-term investments		–			–			–			2,046
Purchase of property, plant and equipment		(3,317	)		(10,038	)		(16,930	)		(34,589	)
Proceeds on disposal of property, plant and equipment		5,834			6,988			7,650			47,659
Decrease in other assets		220			128			627			366
Proceeds from investments in associate		–			–			8,878			29,171
Business acquisition net of cash acquired		–			–			–			(291,477	)
Cash Provided by (Used in) Investing Activities		2,737			(2,310	)		973			(245,000	)

Financing Activities
(Decrease) increase in long-term debt		(842	)		(29,000	)		(1,724	)		158,085
Repayment of lease liabilities		(5,750	)		(5,238	)		(16,888	)		(18,677	)
Issuance of shares		–			–			–			357
Dividends paid to shareholders		–			(10,522	)		(10,546	)		(31,562	)
Cash (Used in) Provided by Financing Activities	$	(6,592	)	$	(44,760	)	$	(29,158	)	$	108,203

Effect of Foreign Exchange on Cash and Cash Equivalents		(346	)		(1,219	)		2,769			(3,349	)

Net increase (decrease) in Cash and Cash Equivalents		3,109			(40,144	)		8,612			(134,998	)
Cash and Cash Equivalents – Beginning of Period		103,721			122,410			98,218			217,264

Cash and Cash Equivalents – End of Period	$	106,830		$	82,266		$	106,830		$	82,266
Cash		105,029			82,261			105,029			82,261
Cash Equivalents		1,801			5			1,801			5
Total Cash and Cash Equivalents	$	106,830		$	82,266		$	106,830		$	82,266

7.0 RECONCILIATION OF NON-GAAP MEASURES

The Company reports on certain non-GAAP measures that are used to evaluate its performance and segments, as well as to determine compliance with debt covenants and to manage its capital structure. These non-GAAP measures do not have standardized meanings under IFRS and are not necessarily comparable to similar measures provided by other companies. The Company discloses these measures because it believes that they provide further information and assist readers in understanding the results of the Company’s operations and financial position. These measures should not be considered in isolation or used in substitution for other measures of performance prepared in accordance with GAAP. The following is a reconciliation of the non-GAAP measures reported by the Company.

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA is also a non-GAAP measure defined as EBITDA adjusted for items which do not impact day to day operations. Adjusted EBITDA is calculated by adding back to EBITDA the sum of impairments, costs associated with repayment of long-term debt and credit facilities, gain on sale of land, gain on sale of investment in associates, acquisition costs, restructuring costs and hyperinflationary adjustments. The Company believes that EBITDA and Adjusted EBITDA are useful supplemental measures that provide a meaningful indication of the Company’s results from principal business activities prior to the consideration of how these activities are financed or the tax impacts in various jurisdictions and for comparing its operating performance with the performance of other companies that have different financing, capital or tax structures. The Company presents Adjusted EBITDA as a measure of EBITDA that excludes the impact of transactions that are outside the Company’s normal course of business or day to day operations. Adjusted EBITDA is used by many analysts in the oil and gas industry as one of several important analytical tools to evaluate financial performance and is a key metric in business valuations. It is also considered important by lenders to the Company and is included in the financial covenants of the Company’s Credit Facility.

	Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
^{(in thousands of Canadian dollars)}		2020			2019			2020			2019

Net (Loss) Income	$	(18,405	)	$	6,757		$	(290,373	)	$	48,728

Add:
Income tax expense (recovery)		136			3,562			1,963			(15,792	)
Finance costs, net		6,673			6,528			18,068			15,468
Amortization of property, plant, equipment, intangible and ROU assets		22,343			24,951			70,275			73,562
Cost associated with repayment of long-term debt and credit facilities		–			–			–			12,308
EBITDA	$	10,747		$	41,798		$	(200,067	)	$	134,274
ZCL acquisition costs and other related items		–			3,674			–			16,357
Hyperinflation adjustment for Argentina		446			2,310			1,336			3,904
Gain on sale of land		(1,213	)		(5,386	)		(1,213	)		(37,994	)
Gain on investment in associate		(8,249	)		–			(8,249	)		(9,687	)
Impairment		3,623			–			206,707			–
Restructuring costs		12,449			–			29,749			–
Adjusted EBITDA	$	17,803		$	42,396		$	28,263		$	106,854

Pipeline and Pipe Services Segment

	Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
^{(in thousands of Canadian dollars)}		2020			2019			2020			2019

Operating (Loss) Income	$	(36,647	)	$	(9,292	)	$	(276,297	)	$	9,537

Add:
Amortization of property, plant, equipment, intangible and ROU assets		12,426			15,433			39,814			46,960
EBITDA	$	(24,221	)	$	6,141		$	(236,483	)	$	56,497
Hyperinflation adjustment for Argentina		(80	)		636			(160	)		522
Gain on sale of land		(1,213	)		–			(1,213	)		(32,552	)
Gain on investment in associate		–			49			–			49
Impairment		3,623			–			196,879			–
Restructuring costs		10,006			–			18,019			–
Adjusted EBITDA	$	(11,885	)	$	6,826		$	(22,958	)	$	24,516

Composite Systems Segment

	Three Months Ended					Nine Months Ended
		September 30,		September 30,			September 30,		September 30,
^{(in thousands of Canadian dollars)}		2020		2019			2020		2019

Operating Income	$	13,058	$	21,067		$	733	$	40,359

Add:
Amortization of property, plant, equipment, intangible and ROU assets		8,128		7,900			24,911		21,796
EBITDA	$	21,186	$	28,967		$	25,644	$	62,155
ZCL acquisition costs and other related items		–		3,650			–		10,822
Gain on sale of land		–		(5,387	)		–		(5443	)
Impairment		–		–			9,828		–
Restructuring costs		410		–			4,246		–
Adjusted EBITDA	$	21,596	$	27,230		$	39,718	$	67,534

Automotive and Industrial Segment

	Three Months Ended				Nine Months Ended
		September 30,		September 30,		September 30,		September 30,
^{(in thousands of Canadian dollars)}		2020		2019		2020		2019

Operating Income	$	6,043	$	8,593	$	13,516	$	26,414

Add:
Amortization of property, plant, equipment, intangible and ROU assets		1,174		1,115		3,482		3,340
EBITDA	$	7,217	$	9,708	$	16,998	$	29,754
Restructuring costs		2,027		–		6,255		–
Adjusted EBITDA	$	9,244	$	9,708	$	23,253	$	29,754

Adjusted Net (Loss) Income and Adjusted EPS

Adjusted net (loss) income is a non-GAAP measure defined as net income before acquisition-related and integration items, including transaction costs and financing fees; cost reduction and integration related initiatives such as separation benefits, retention payments, other exit costs, impact of inventory revaluation adjustment and certain costs associated with integrating an acquired company’s operations; gains or losses from early termination of debt and hedging activities; gains and losses on the disposal of land; gain on investment in associate; asset impairment charges; restructuring cost; hyperinflation adjustment for Argentina and the tax effect of the pre-tax adjustments above at applicable tax rates and certain other tax items. We define adjusted EPS as adjusted net (loss) income attributable to shareholders divided by the weighted average number of shares and the weighted average number of diluted shares.

	Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
^{(in thousands of Canadian dollars)}		2020			2019			2020			2019

Net (Loss) Income	$	(18,405	)	$	6,757		$	(290,373	)	$	48,728

Add:
ZCL acquisition costs and other related items		–			3,674			–			16,357
Hyperinflation adjustment for Argentina		898			2,636			2,971			5,832
Cost associated with repayment of long-term debt and credit facilities		–			–			–			12,308
Gain on sale of land		(1,213	)		(5,386	)		(1,213	)		(37,994	)
Gain on investment in associate		(8,249	)		–			(8,249	)		(9,687	)
Restructuring costs		12,449			–			29,749			–
Impairment		3,623			–			206,707			–
Tax effect of the above adjustments		(378	)		(1,438	)		(5,957	)		(7,081	)
Adjusted Net (Loss) Income	$	(11,275	)	$	6,243		$	(66,365	)	$	28,463
Adjusted Net (Loss) Income Attributable to Shareholders	$	(11,181	)	$	6,006		$	(65,981	)	$	28,225
Adjusted EPS
Basic	$	(0.16	)	$	0.09		$	(0.94	)	$	0.40
Diluted	$	(0.16	)	$	0.09		$	(0.94	)	$	0.40

Operating Margin/Adjusted Operating Margin

Operating margin/adjusted operating margin are defined as operating (loss) income divided by revenue and are non-GAAP measures. The Company believes that operating margin and adjusted operating margin are useful supplemental measures that provide meaningful assessment of the business performance of the Company and its Operating Segments. The Company uses these measures as key indicators of financial performance, operating efficiency and cost control based on volume of business generated.

Adjusted Operating (Loss) Income

Adjusted Operating (Loss) Income is a non-GAAP measure calculated by adding back to Operating (loss) income the sum of gain from sale of land, ZCL acquisition costs and other related items, restructuring cost, impairment and hyperinflationary adjustments. Adjusted Operating (Loss) Income does not have a standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures provided by other companies.

The following table sets forth the Company’s Adjusted Operating (Loss) Income:

	Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
^{(in thousands of Canadian dollars)}		2020			2019			2020			2019

(Loss) Income from operation	$	(19,289	)	$	17,117		$	(277,272	)	$	54,127

Add:
ZCL acquisition costs and other related items		–			3,674			–			16,357
Hyperinflation adjustment for Argentina		502			2,000			1,713			3,329
Gain on sale of land		(1,213	)		(5,386	)		(1,213	)		(37,994	)
Restructuring costs		12,449			–			29,749			–
Impairment		3,623			–			206,707			–
Adjusted Operating (Loss) Income	$	(3,928	)	$	17,405		$	(40,316	)	$	35,819

November 12, 2020 5:11 pm

Dundee Precious Metals Declares Dividend

TORONTO, Nov. 12, 2020 (GLOBE NEWSWIRE) — Dundee Precious Metals Inc. (TSX: DPM) (“DPM” of “the Company”) today announced that its Board of Directors has declared a fourth quarter dividend of US$0.02 per common share.

The dividend is payable on January 15, 2021 to shareholders of record as at 5:00 p.m. Toronto local time on December 31, 2020 and qualifies as an “eligible dividend” for Canadian income tax purposes.

Shareholders may elect to receive their dividend in US or Canadian dollars by contacting their broker or, where applicable, Computershare Investor Services Inc., the Company’s registrar and transfer agent. If no election is made, residents of Canada will be paid in Canadian dollars and non-residents of Canada will be paid U.S. dollars. Dividends to be paid in Canadian dollars will be converted to Canadian dollars using the spot exchange rate on January 8, 2021.

Dividends paid to shareholders that are non-residents of Canada are generally subject to withholding tax unless reduced in accordance with the provisions of an applicable tax treaty.

About Dundee Precious Metals

Dundee Precious Metals Inc. is a Canadian based, international gold mining company engaged in the acquisition of mineral properties, exploration, development, mining and processing of precious metals. The Company’s operating assets include the Chelopech operation, which produces a gold-copper concentrate containing gold, copper and silver and a pyrite concentrate containing gold, located east of Sofia, Bulgaria; the Ada Tepe operation, which produces a gold concentrate containing gold and silver, located in southern Bulgaria; and the Tsumeb smelter, a complex copper concentrate processing facility located in Namibia. DPM also holds interests in a number of developing gold and exploration properties located in Canada and Serbia, and its 9.4% interest in Sabina Gold & Silver Corp and 19.4% interest in INV Metals Inc.

For further information please contact:

David Rae

President and Chief Executive Officer
Tel: (416) 365-5092
[email protected]

Hume Kyle

Executive Vice President and Chief Financial Officer
Tel: (416) 365-5091
[email protected]

Jennifer Cameron

Director, Investor Relations
Tel: (416) 219-6177
[email protected]

November 12, 2020 5:11 pm

Dundee Precious Metals Announces Third Quarter 2020 Results; Delivered Strong Operating Performance and Generated Record Financial Results

(All monetary figures are expressed in U.S. dollars unless otherwise stated)

TORONTO, Nov. 12, 2020 (GLOBE NEWSWIRE) — Dundee Precious Metals Inc. (TSX: DPM)(“DPM” or the “Company”) today announced its operating and financial results for the third quarter of 2020.

Third
Quarter
F
inancial and Operating
Highlights
:

Strong m

etal

s

production
– Produced 79,844 ounces of gold in concentrate, as Ada Tepe and Chelopech continued to deliver strong production and performance. Copper production was 9.2 million pounds;
Solid smelter performance

–
Throughput of 55,880 tonnes at Tsumeb, despite 15 days of scheduled maintenance during the quarter;
Strong cost performance at all operations

–
Reported an all-in sustaining cost per ounce of gold⁽¹⁾ of $640 and a cash cost per tonne of complex concentrate smelted⁽¹⁾ of $407;
Record quarterly free cash flow generation –
Generated $42.3 million in cash flow from operating activities and a record $59.0 million of free cash flow⁽¹⁾;
Growing earnings

– Reported record net earnings attributable to common shareholders of $53.7 million, reflecting strong gold production combined with higher gold prices. Reported record adjusted net earnings⁽¹⁾ of $51.3 million or $0.28 per share;
Strengthened f

inancial position

– Ended the quarter with $252.4 million of cash resources, comprised of $102.4 million in cash and an undrawn $150 million long-term revolving credit facility (“RCF”), as well as an investment portfolio of $75.6 million; and
Well-positioned to deliver 2020 guidance –
Tracking towards the upper end of guidance for gold production and lowered 2020 all-in sustaining cost guidance range to $650 to $720 per ounce.

“Our operations continued to perform extremely well during the third quarter, delivering higher gold production and a lower all-in sustaining cost year-over-year. Our strong operating results, combined with higher gold prices, generated another quarter of record net earnings and free cash flow as we continue to demonstrate the significant potential of our operating assets,” said David Rae, President and CEO.

“Notably, we have significantly reduced our all-in sustaining cost guidance for the year, and we continue to track towards the upper end of our gold production guidance. Our performance is a credit to the outstanding efforts undertaken at each of our sites to effectively manage the challenges of the COVID-19 pandemic while prioritizing the health and safety of our workforce and host communities.”

Key Financial and Operati
o
n
al
Highlights

$ millions, except where noted Ended Sept ember 30,	Three Months		Nine Months
	2020	2019	2020	2019
Revenue	15 8.0	94.9	46 6.7	279.4
Cost of sales	82.3	71.8	257.4	208.2
Earnings before income taxes	5 9.0	11.6	1 60.8	28.3
Net earnings attributable to common shareholders	5 3.7	7.3	14 5.7	21.8
Basic earnings per share	0. 30	0.04	0.8 1	0.12
Adjusted EBITDA⁽¹⁾	8 4.6	32.5	240.8	83.2
Adjusted net earnings⁽¹⁾	51.3	4.2	14 3.2	18.4
Adjusted basic earnings per share⁽¹⁾	0.2 8	0.02	0. 7 9	0.10
Cash provided from operating activities	42. 3	22.7	127. 2	46.5
Free cash flow⁽¹⁾	5 9.0	21.0	1 6 6.6	55.4
Metals contained in concentrate produced:
Gold (ounces)
Chelopech	49,823	40,328	141,542	130,436
Ada Tepe	30,021	25,314	92,630	30,665
Total gold in concentrate produced	79,84 4	65,642	234,172	161,101
Copper (‘000s pounds)	9,22 4	10,142	27,98 3	27,219
Silver (ounces)	48,50 7	55,842	156,559	122,587
Payable metals in concentrate sold:
Gold (ounces)
Chelopech	37,877	28,054	113,365	109,037
Ada Tepe	31,297	10,094	94,901	10,094
Total payable gold in concentrate sold	69,174	38,148	208,266	119,131
Copper (‘000s pounds)	7,560	6,604	25,623	23,071
Silver (ounces)	40,596	28,987	140,514	91,947
Cash cost per tonne of ore processed⁽¹⁾:
Chelopech	38.01	35.28	37.32	35.11
Ada Tepe	34.00	50.62	39.40	49.51
All-in sustaining cost per ounce of gold⁽¹⁾	6 40	740	65 5	755
Complex concentrate smelted at Tsumeb (tonnes)	55,880	42,186	179,406	166,675
Cash cost per tonne of complex concentrate smelted at Tsumeb⁽¹⁾	40 7	516	36 9	408

1) Adjusted EBITDA; adjusted net earnings; adjusted basic earnings per share; free cash flow; cash cost per tonne of ore processed; all-in sustaining cost per ounce of gold; and cash cost per tonne of complex concentrate smelted at Tsumeb are not defined measures under IFRS. Refer to the “Non-GAAP Financial Measures” section of the MD&A (as defined below) for more details, including reconciliations to IFRS measures.

Third Quarter Operating Highlights

In the third quarter of 2020, the Company achieved record net earnings and free cash flow reflecting continued strong operating performance at Chelopech and Ada Tepe, combined with strong gold prices. Ada Tepe continued to deliver impressive performance, with production in the period higher than planned as a result of higher gold grades and higher volumes of ore treated. Chelopech continued its consistent track record in the third quarter, with gold production higher than expected due to higher gold recoveries in pyrite concentrate. Chelopech and Ada Tepe are on track to achieve the upper end of their respective 2020 production guidance. Tsumeb also had a strong quarter, processing 55,880 tonnes of complex concentrate, despite 15 days of scheduled maintenance during the period, and remains on track to achieve its 2020 production guidance.

Net Earnings and Adjusted Net Earnings

Net earnings attributable to common shareholders were $53.7 million ($0.30 per share) and $145.7 million ($0.81 per share) for the third quarter and first nine months of 2020, respectively, compared to $7.3 million ($0.04 per share) and $21.8 million ($0.12 per share) for the same periods in 2019.

Adjusted net earnings in the third quarter and first nine months of 2020 were $51.3 million ($0.28 per share) and $143.2 million ($0.79 per share), respectively, compared to $4.2 million ($0.02 per share) and $18.4 million ($0.10 per share) for the corresponding periods in 2019.
These increases were due primarily to higher volumes of gold sold, higher realized gold prices and the favourable impact of a stronger U.S. dollar relative to the ZAR, partially offset by higher depreciation.

Adjusted EBITDA

Adjusted EBITDA⁽¹⁾ in the third quarter and first nine months of 2020 was $84.6 and $240.8 million, respectively, compared to $32.5 million and $83.2 million in the corresponding periods in 2019, reflecting higher volumes of gold sold, higher realized gold prices and the favourable impact of a stronger U.S. dollar relative to the ZAR.

Production, Delivery and Cost Measures

Gold contained in concentrate produced in the third quarter of 2020 increased by 22% to 79,844 ounces, relative to the corresponding period in 2019, due primarily to higher gold grades and recoveries at Chelopech and higher volumes of ore processed at Ada Tepe, partially offset by lower gold grades at Ada Tepe. Ada Tepe achieved commercial production in June 2019 and full design capacity in the third quarter of 2019. Copper production in the third quarter of 2020 decreased by 9% to 9.2 million pounds, relative to the corresponding period in 2019, due primarily to lower copper grades and recoveries.

Gold contained in concentrate produced in the first nine months of 2020 increased by 45% to 234,172 ounces, relative to the corresponding period in 2019, due primarily to additional production from Ada Tepe and higher gold grades at Chelopech. Copper production in the first nine months of 2020 increased by 3% to 28.0 million pounds, relative to the corresponding period in 2019, due primarily to higher copper grades, partially offset by lower copper recoveries.

Payable gold in concentrate sold in the third quarter of 2020 increased by 81% to 69,174 ounces, relative to the corresponding period in 2019, due primarily to increased concentrate deliveries combined with higher gold production as a result of higher grades. Payable copper in concentrate sold in the third quarter of 2020 of 7.5 million pounds was 14% higher than the corresponding period in 2019 due primarily to the timing of gold-copper concentrate deliveries from Chelopech.

Payable gold in concentrate sold in the first nine months of 2020 increased by 75% to 208,266 ounces, relative to the corresponding period in 2019, due primarily to higher deliveries from Ada Tepe. Payable copper in concentrate sold in the first nine months of 2020 of 25.6 million pounds was 11% higher than the corresponding period in 2019 due primarily to the timing of gold-copper concentrate deliveries from Chelopech and higher copper grades, partially offset by lower copper recoveries.

Complex concentrate smelted during the third quarter of 2020 of 55,880 tonnes was 32% higher than the corresponding period in 2019. This reflects 15 days of scheduled maintenance to replace certain equipment in the offgas system during the period, compared with 27 days of maintenance in the same period in 2019. Complex concentrate smelted in the first nine months of 2020 of 179,406 tonnes was 8% higher than the corresponding period in 2019 due primarily to a steadier state of operations in 2020. No additional significant maintenance is planned prior to the Ausmelt furnace reline, which is currently scheduled to occur in the first quarter of 2021.

A table comparing production, delivery and cash cost measures for the third quarter and first nine months of 2020 to 2020 guidance can be found on page 7 of this news release.

Cost
M
easures

Cost of sales in the third quarter and first nine months of 2020 of $82.3 million and $257.4 million, respectively, was $10.5 million and $49.2 million higher than the corresponding periods in 2019 due primarily to increased deliveries from Ada Tepe and Chelopech and higher depreciation from Ada Tepe following the start of commercial production in June 2019. This was partially offset by the favourable impact of a stronger U.S. dollar relative to the ZAR and lower depreciation at Tsumeb as a result of an impairment charge taken in the fourth quarter of 2019.

All-in sustaining cost per ounce of gold in the third quarter and first nine months of 2020 of $640 and $655, respectively, was 14% and 13% lower than the corresponding periods in 2019. This was due primarily to low cost production from Ada Tepe and higher by-product credits, partially offset by higher treatment charges for Chelopech, higher general and administrative expenses as a result of higher share-based compensation, and higher cash outflows for sustaining capital expenditures.

Cash cost per tonne of complex concentrate smelted in the third quarter and first nine months of 2020 of $407 and $369, respectively, was 21% and 10% lower than the corresponding periods in 2019 due primarily to higher volumes of complex concentrate smelted, the favourable impact of a weaker ZAR relative to the U.S. dollar and higher acid deliveries, partially offset by lower acid prices.

Cash provided from operating activities

Cash provided from operating activities in the third quarter and first nine months of 2020 of $42.3 million and $127.2 million, respectively, compared with $22.7 million and $46.5 million in the corresponding periods in 2019, is not reflective of the significant increase in earnings in 2020 as a result of increases in non-cash working capital of $27.9 million and $67.0 million in the third quarter and first nine months of 2020, respectively. The third quarter increase was due primarily to the timing of a $25.0 million customer receipt that came in just after quarter-end. The increase for the first nine months was also impacted by longer settlement terms on Ada Tepe sales, increased deliveries and higher gold prices.

In addition, during the third quarter and first nine months of 2020, Ada Tepe delivered 6,992 ounces and 27,094 ounces of gold, respectively, pursuant to a prepaid forward gold sales arrangement resulting in $9.6 million and $37.1 million of deferred revenue being recognized in revenue during the third quarter and first nine months of 2020, respectively, with no corresponding impact on cash as these deliveries were in partial satisfaction of the $50.0 million of upfront proceeds received in 2016. The Company has 6,993 ounces of gold remaining to be delivered under this arrangement, which will be completed during the fourth quarter of 2020.

For a detailed discussion on the factors affecting cash provided from operating activities, refer to the “Liquidity and Capital Resources” section contained in the MD&A.

Free Cash Flow

Free cash flow in the third quarter and first nine months of 2020 was $59.0 million and $166.6 million, respectively, compared to $21.0 million and $55.4 million in the corresponding periods in 2019. These increases were due primarily to higher volumes of gold sold, higher realized gold prices and the favourable impact of a stronger U.S. dollar relative to the ZAR, partially offset by higher cash outflows for sustaining capital expenditures and the impact of the prepaid forward gold sales arrangement.

Capital
E
xpenditures

Capital expenditures incurred during the third quarter and first nine months of 2020 were $13.2 million and $35.5 million, respectively, compared to $13.3 million and $53.7 million in the corresponding periods in 2019.

Growth capital expenditures⁽¹⁾ incurred during the third quarter and first nine months of 2020 were $1.0 million and $5.2 million, respectively, compared to $2.3 million and $35.0 million in the corresponding periods in 2019. These decreases were related principally to the construction of the Ada Tepe gold mine, which was completed in 2019.

Sustaining capital expenditures⁽¹⁾ incurred during the third quarter and first nine months of 2020 were $12.2 million and $30.3 million, respectively, in line with guidance, compared to $11.0 million and $18.7 million in the corresponding periods in 2019. The year-over-year increase was due primarily to spending at Ada Tepe, which commenced commercial production in June 2019, and the work on the tailings management facility at Chelopech.

Timok Gold Project, Serbia
(the “Timok gold project”)

Following encouraging results from the optimization work completed in 2019, the Company initiated a pre-feasibility study (“PFS”) for the Timok gold project, which will now focus on the oxide portion of the Mineral Resource. Additional potential upside from the sulphide portion of the Mineral Resource will require additional variability testwork and will be considered as part of a potential feasibility study. The PFS is progressing well and is on track for completion in the fourth quarter of 2020 with a release in the first quarter of 2021.

Exploration

At Chelopech, an intensive diamond drilling program commenced in the third quarter of 2020 at the West Shaft prospect, located approximately one kilometre south-west of the Chelopech mine. This was initiated following an intercept of significant high sulphidation Au-Cu mineralization in June 2020, as part of near mine scout drilling programs. Additionally, deep directional drilling is continuing at the Wedge prospect, with a focus on testing more conceptual targets in proximity to the Chelopech mine.

As part of sustained efforts to support a mine life extension at Ada Tepe, mapping, core re-logging and conceptual modelling led to the identification of additional near-mine exploration targets. A significant drilling program is planned in the fourth quarter of 2020 to test these areas. A target delineation drilling program was completed at Chatal Kaya, within the Chiriite exploration license, to ascertain the along strike and down-dip extents of the epithermal vein hosted gold mineralization.

In Serbia, targeted delineation drilling of oxide mineralization proximal to Bigar Hill, the main deposit of the Timok gold project, has been successful at identifying additional shallow oxide gold mineralization at the Chocolate prospect. Further infill and target delineation drilling programs are scheduled to be completed in the fourth quarter of 2020.

Financial
P
osition
and Liquidity

DPM ended the third quarter of 2020 with a cash position of $102.4 million, $75.6 million of investments, comprised primarily of its 9.4% interest in Sabina Gold and Silver Corp. (“Sabina”) and 19.4% equity interest in INV Metals Inc. (“INV”), and $150.0 million of undrawn capacity under its RCF.

Capital
A
llocation and
Declaration of
D
ividend

As part of its strategy, the Company adheres to a disciplined capital allocation framework that is based on three fundamental considerations – balance sheet strength, reinvestment in the business, and the return of capital to shareholders. With Ade Tepe contributing its first full year of production since its successful commissioning and ramp-up in 2019, 2020 marks the beginning of a period of significant free cash flow generation, which will be used to further strengthen DPM’s balance sheet, reinvest in the business, and return cash to shareholders by way of dividends.

On November 12, 2020, the Company declared a dividend of $0.02 per common share payable on January 15, 2021 to shareholders of record on December 31, 2020, resulting in an aggregate of $0.08 per common share of dividends being declared in 2020.

The Company’s dividend has been set at a level that is considered to be sustainable based on the Company’s free cash flow outlook and is expected to allow the Company to build additional balance sheet strength to support further growth, a key element of DPM’s strategy. The declaration, amount and timing of any future dividend are at the sole discretion of the Board of Directors and will be assessed based on the Company’s capital allocation framework, having regard for the Company’s financial position, overall market conditions, and its outlook for sustainable free cash flow, capital requirements, and other factors considered relevant by the Board of Directors.

Response to Coronavirus (“COVID-19”)

To date, as a result of the proactive actions being taken within the regions in which we operate and by personnel at each of our sites, the Company has not experienced any material disruptions to its operations as a result of the COVID-19 pandemic. The Company’s Chelopech and Ada Tepe mines in Bulgaria continue to operate at full capacity and have not experienced any disruptions to their operations.

As previously reported, the Tsumeb smelter in Namibia curtailed its operations by shutting down ancillary plants for 30 days during the month of April in response to a government directive to the natural resources sector aimed at limiting staffing levels. Full operations resumed in May with ongoing management of the number of employees and contractors working at site and continued observance of the COVID-19 controls that have been established across all sites. The smelter remains on track to achieve 2020 annual guidance.

To date, MineRP continues to operate with minimal impact on its ability to service existing customers remotely, although, there have been some delays starting up new projects and converting a growing customer pipeline as customers satisfy themselves that implementation can be effectively executed remotely. This is particularly evident in certain regions where the impact of COVID-19 has been higher as new business has lagged in these regions.

On-Track to Meet
or Beat
2020 Guidance

DPM’s 2020 production guidance remains unchanged from the guidance issued in February 2020, including expected gold production of 257,000 to 299,000 ounces and 35 to 40 million pounds of copper. Based on the strong operating performance achieved in the first nine months of 2020, annual production and deliveries at Chelopech and Ada Tepe are expected to be at the upper end of the 2020 guidance. As a result, the all-in sustaining cost guidance was reduced to a range of $650 to $720 per ounce of gold from the previously-issued guidance of $700 to $780 per ounce of gold. Tsumeb remains on track to achieve its 2020 production guidance and is expected to achieve the lower end of its 2020 cost guidance due primarily to the weakening of the ZAR relative to the U.S. dollar.

The Company’s outlook for 2021 and 2022 remains unchanged from the outlook issued in February 2020, except for the 2021 outlook for Ada Tepe’s sustaining capital expenditures, which has been increased to a range of $15 million to $19 million, from $4 million to $5 million. This increase is due primarily to accelerating grade control drilling, which was previously planned over several years and treated as an operating cost, in order to provide large representative and high quality samples for better grade control and mine planning over the life of mine.

For additional information regarding the Company’s detailed guidance for 2020, please refer to the “Three-Year Outlook” section of the MD&A.

(1) Adjusted net
earnings
,
adjusted basic
earnings
per share, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), all-in sustaining cost per ounce of gold, cash
cost per tonne of complex concentrate smelted
at Tsumeb
, net of by-product credits, free cash flow,
and growth and sustaining capital expenditures have no standardized meaning under International Financial Reporting Standards (“IFRS”). Presenting these measures from period to period helps management and investors evaluate earnings and cash flow trends more readily in comparison with results from prior periods. Refer to the “Non-GAAP Financial Measures” section of the
M
anagement’s
D
iscussion and
A
nalysis for the three
and
nine months
ended
September 30
,
2020
(the “
MD&A
”)
for further discussion of these items, including reconciliations to IFRS measures
.

Selected
Production, Delivery and Cost Measures
and Guidance

	Q 3 2020				YTD September 2020				2020 G uidance ⁽ ¹⁾
	Chelopech	Ada Tepe	Tsumeb	Consolidated	Chelopech	Ada Tepe	Tsumeb	Consolidated	2020 G uidance ⁽ ¹⁾
Ore processed (‘000s tonnes)	558.4	219.3	–	777.7	1,660.2	677.3	–	2,337.5	2,855 – 3,092
Metals contained in concentrate produced
Gold (‘000s ounces)	49.8	30.0	–	79.8	141.5	92.6	–	234.1	257 – 299
Copper (million pounds)	9.2	–	–	9.2	28.0	–	–	28.0	35 – 40
Payable metals in concentrate sold
Gold (‘000s ounces)	37.9	31.3	–	69.2	113.4	94.9	–	208.3	229 – 267
Copper (million pounds)	7.5	–	–	7.5	25.6	–	–	25.6	33 – 38
All-in sustaining cost per ounce of gold ⁽ ² ⁾	–	–	–	640	–	–	–	655	650 – 720
Complex concentrate smelted (‘000s tonnes)	–	–	55.9	55.9	–	–	179.4	179.4	230 – 265
Cash cost per tonne of complex concentrate smelted ⁽ ² ⁾	–	–	407	407	–	–	369	369	– 450

1) As disclosed in the MD&A and available at www.sedar.comandwww.dundeeprecious.com
2) All-in sustaining cost per ounce of gold and cash cost per tonne of complex concentrate smelted arenot defined measures under IFRS. Refer to the “Non-GAAP Financial Measures” section of the MD&A for reconciliations to IFRS measures.

This news release and DPM’s unaudited condensed interim consolidated financial statements and MD&A for the three and nine months ended September 30, 2020 are posted on the Company’s website at www.dundeeprecious.com and have been filed on SEDAR at www.sedar.com.

Qualified Person

The technical and scientific information in this news release, with respect to the Company’s material mineral projects, has been prepared in accordance with Canadian regulatory requirements set out in NI 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves, and has been reviewed and approved by Ross Overall, B.Sc. (Applied Geology), Corporate Mineral Resource Manager of DPM, who is a Qualified Person as defined under NI 43-101, and who is not independent of the Company.

Third quarter
2020
Results

On Friday, November 13, 2020 at 9:00 AM EST, DPM will host a conference call and audio webcast to discuss the results, followed by a question-and-answer session. Participants are encouraged to dial into the call 15 minutes before its scheduled start time or to join via the audio webcast to reduce hold time in advance of the call.

The call-in numbers and webcast details are as follows:

Date:	Friday, November 13, 2020
Time:	9:00 AM EST
Webcast:	https://edge.media-server.com/mmc/p/3pmxch77
Canada and USA Toll Free:	1-844-402-0878
International:	+1-478-219-0512
Passcode:	8269926

Replay:	1-855-859-2056
Outside Canada or USA:	1-404-537-3406
Replay Passcode:	8269926
Replay Available Until:	7 days following the call

About Dundee Precious Metals

Dundee Precious Metals Inc. is a Canadian based, international gold mining company engaged in the acquisition of mineral properties, exploration, development, mining and processing of precious metals. The Company’s operating assets include the Chelopech operation, which produces a gold-copper concentrate containing gold, copper and silver and a pyrite concentrate containing gold, located east of Sofia, Bulgaria; the Ada Tepe operations, which produces a gold concentrate containing gold and silver, located in southern Bulgaria; and the Tsumeb smelter, a complex copper concentrate processing facility located in Namibia. DPM also holds interests in a number of developing gold and exploration properties located in Canada, Serbia and Ecuador, including its 9.4% interest in Sabina and 19.4% interest in INV.

Cautionary Note Regarding Forward
Looking Statements

This news release contains “forward looking statements” or “forward looking information” (collectively, “Forward Looking Statements”) that involve a number of risks and uncertainties. Forward Looking Statements are statements that are not historical facts and are generally, but not always, identified by the use of forward looking terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “outlook”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or that state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions. The Forward Looking Statements in this news release relate to, among other things: measures the Company is undertaking in response to the COVID-19 outbreak, including its impacts on the Company’s global supply chains, the level of and duration of reductions or curtailments in operating levels at any of the Company’s operations or in its exploration and development activities; expected cash flow; the price of gold, copper, silver and acid, toll rates, metals exposure and stockpile interest deductions at Tsumeb; the estimation of Mineral Reserves and Mineral Resources and the realization of such mineral estimates; estimated capital costs, operating costs and other financial metrics, including those set out in the three-year outlook provided by the Company; currency fluctuations; the impact of any impairment charges; the processing of Chelopech concentrate; timing of further optimization work at Tsumeb; potential benefits of any upgrades and/or expansion, including the planned rotary furnace installation, at the Tsumeb smelter; results of economic studies; success of exploration activities; achieving the results set out in any preliminary economic assessment (the “PEA”); the commencement, completion and results of the prefeasibility study for the Timok gold project (the “PFS”); success of permitting activities; permitting timelines; success of investments, including potential acquisitions; requirements for additional capital; government regulation of mining and smelting operations; environmental risks; reclamation expenses; potential or anticipated outcome of title disputes or claims; benefits of digital initiatives; the payment of dividends; the timing and number of common shares of the Company that may be purchased pursuant to the Company’s normal course issuer bid (the “NCIB”); and timing and possible outcome of pending litigation, if any. Forward Looking Statements are based on certain key assumptions and the opinions and estimates of management and Qualified Person (in the case of technical and scientific information), as of the date such statements are made, and they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any other future results, performance or achievements expressed or implied by the Forward Looking Statements. In addition to factors already discussed in this news release, such factors include, among others: risks relating to the Company’s business generally, the impact of global pandemics, including changes to the Company’s supply chain, product shortages, delivery and shipping issues, closure and/or failure of plant, equipment or processes to operate as anticipated, employees and contractors becoming infected, lost work hours and labour force shortages; fluctuations in metal and acid prices, toll rates and foreign exchange rates; possible variations in ore grade and recovery rates; inherent uncertainties in respect of conclusions of economic evaluations and economic studies, including the PEA and the PFS; changes in project parameters, including schedule and budget, as plans continue to be refined; uncertainties with respect to actual results of current exploration activities; uncertainties and risks inherent to developing and commissioning new mines into production, which may be subject to unforeseen delays; uncertainties inherent with conducting business in foreign jurisdictions where corruption, civil unrest, political instability and uncertainties with the rule of law may impact the Company’s activities; limitations on insurance coverage; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; actual results of current and planned reclamation activities; opposition by social and non-governmental organizations to mining projects and smelting operations; unanticipated title disputes; claims or litigation; the failure to realize on the potential benefits of any upgrades and/or expansion, including the planned rotary furnace installation, at the Tsumeb smelter; cyber-attacks and other cybersecurity risks; there being no assurance that the Company will purchase additional common shares of the Company under the NCIB; risks related to the implementation, cost and realization of benefits from digital initiatives; failure to realize projected financial results from MineRP; risks related to operating a technology business reliant on the ownership, protection and ongoing development of key intellectual properties; as well as those risk factors discussed or referred to in the Company’s MD&A under the heading “Risks and Uncertainties” and under the heading “Cautionary Note Regarding Forward Looking Statements” which include further details on material assumptions used to develop such Forward Looking Statements and material risk factors that could cause actual results to differ materially from Forward Looking Statements, and other documents (including without limitation the Company’s most recent Annual Information Form) filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available on SEDAR at www.sedar.com.

The reader has been cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in Forward Looking Statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that Forward Looking Statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company’s Forward Looking Statements reflect current expectations regarding future events and speak only as of the date hereof. Other than as it may be required by law, the Company undertakes no obligation to update Forward Looking Statements if circumstances or management’s estimates or opinions should change. Accordingly, readers are cautioned not to place undue reliance on Forward Looking Statements.

For further information, please contact:

DUNDEE PRECIOUS METALS INC.

David Rae

President and Chief Executive Officer
Tel: (416) 365-5092
[email protected]

Hume Kyle

Executive Vice President and Chief Financial Officer
Tel: (416) 365-5091
[email protected]

Jennifer Cameron

Director, Investor Relations
Tel: (416) 219-6177
[email protected]

November 12, 2020 5:10 pm

Transcontinental Realty Investors, Inc. Reports Earnings for Q3 2020

Transcontinental Realty Investors, Inc. Reports Earnings for Q3 2020

DALLAS–(BUSINESS WIRE)–
Transcontinental Realty Investors, Inc. (NYSE: TCI), is reporting its results of operations for the quarter ended September 30, 2020. For the three months ended September 30, 2020, the Company reported a net income applicable to common shares of $7.7 million or $0.88 per diluted share, compared to a net loss applicable to common shares of $7.8 million or $0.89 per diluted share for the same period in 2019.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant impact on the Company’s results of operations or cash flows during the three months ended September 30, 2020.

The Company collected approximately 96% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 97% from office tenants.
The Company did not grant any abatements or significant deferments of rents.
Occupancy remains stable at 91% at September 30, 2020 and 2019.
The Company continued to obtain positive leasing spreads for new leases and renewals at it properties.
Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.

The future impact of COVID-19 on the Company’s business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.

Financial Results

Rental revenues were $11.5 million for the three months ended September 30, 2020, compared to $11.4 million for the three months ended September 30, 2019. For 2020, we generated revenues of $7.8 million and $3.7 million from our commercial and multifamily segments respectively.

Net operating (loss) was ($1.5) million for the three months ended September 30, 2020, compared to $0.4 million for the same period in 2019. The $1.9 million increase in net operating loss is primarily due to the placement in service of two new multifamily apartment communities in 2020. Operating expense of new properties generally exceed their rental revenues during initial lease-up.

Interest income was $4.3 million for three months ended September 30, 2020, compared to $5.2 million for the same period in 2019. The decrease of $0.9 million in interest income was primarily due to collection on notes receivable in 2020.

Interest expense was to $6.3 million for the three months ended September 30, 2020, compared to $8.0 million for the same period in 2019. The $1.7 million decrease in interest expense was primarily due to the refinancing of the mortgage note payable on Browning Place in 2019.

Loss on foreign currency transactions was a loss of $1.5 million for the three months ended September 30, 2020 as compared to $5.2 million for the same period in 2019. The decrease is foreign currency loss was due a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Gain on sale or write-down of assets increased $7.2 million for the three months ended September 30, 2020, compared the same period in 2019. The increase is primarily due to the sale Bridgeview Plaza for $5.3 million, resulting in a gain of $4.8 million in 2020, and the sale of Farnham Park Apartments for $13.3 million, resulting in a gain of $2.7 million.

About Transcontinental Realty Investors, Inc.

Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including apartments, office buildings, shopping centers, and developed and undeveloped land. The Company invests in real estate through direct ownership, leases and partnerships and invests in mortgage loans on real estate. For more information, visit the Company’s website at www.transconrealty-invest.com.

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues:
Rental revenues (including $262 and $212 for the three months and $673 and $527 for the nine months ended 2020 and 2019, respectively, from related parties)	$	11,453		$	11,407		$	34,461		$	34,352
Other income		706			1,990			3,885			7,394
Total revenues		12,159			13,397			38,346			41,746
Expenses:
Property operating expenses (including $254 and $237 for the three months ended and $750 and $741 for the nine months ended 2020 and 2019, respectively, from related parties)		6,388			5,403			18,507			18,722
Depreciation and amortization		3,526			3,416			10,338			9,964
General and administrative (including $1,017 and $935 for the three months ended and $2,783 and $3,355 for the nine months ended 2020 and 2019, respectively, from related parties)		1,643			1,929			7,063			6,468
Advisory fee to related party		2,139			2,200			6,483			6,196
Total operating expenses		13,696			12,948			42,391			41,350
Net operating (loss) income		(1,537	)		449			(4,045	)		396

Interest income (including $3,752 and $4,618 for the three months ended and $11,255 and $13,483 for the nine months ended 2020 and 2019, respectively, from related parties)		4,348			5,232			13,102			14,668
Interest expense (including $380 and $514 for the three months ended and $1,193 and $1,517 for the nine months ended 2020 and 2019, respectively, from related parties)		(6,291	)		(8,037	)		(21,999	)		(23,642	)
(Loss) gain on foreign currency transaction		(1,470	)		(5,153	)		774			(13,296	)
Loss on extinguishment of debt		–			(5,219	)		–			(5,219	)
Income (losses) from unconsolidated joint ventures		365			(178	)		(740	)		(1,474	)
Gain on sales or write-down of assets		12,328			5,140			21,802			9,409
Income tax expense		(50	)		–			(346	)		–
Net income (loss)		7,693			(7,766	)		8,548			(19,158	)
Net income attributable to non-controlling interest		–			(21	)		(400	)		(583	)
Net income (loss) attributable to common shares	$	7,693		$	(7,787	)	$	8,148		$	(19,741	)

Earnings (loss) per share – attributable to common shares
Basic and diluted	$	0.88		$	(0.89	)	$	0.93		$	(2.26	)
Weighted-average number of common shares outstanding:
Basic and diluted		8,717,767			8,717,767			8,717,767			8,717,767


TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and par value amounts)
(Unaudited)

	September 30, 2020			December 31, 2019
Assets
Real estate, net	$	380,715		$	387,790
Notes receivable (including $66.287 in 2020 and $57,817 in 2019 from related parties)		123,854			112,357
Cash and cash equivalents		32,967			51,179
Restricted cash		28,030			32,082
Investment in unconsolidated joint ventures		71,171			81,780
Receivable from related parties		140,050			141,541
Other assets		68,558			59,189
Total assets	$	845,345		$	865,918

Liabilities and Equity
Liabilities:
Mortgages and notes payable	$	242,300		$	245,773
Bonds payable		203,192			223,265
Accounts payable and other liabilities (including $937 in 2020 and $935 in 2019 to related parties)		24,642			26,115
Accrued interest payable		3,281			7,230
Deferred revenue		9,315			9,468
Total liabilities		482,730			511,851

Equity
Shareholders’ Equity:
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares at September 30, 2020 and December 31, 2019.		87			87
Treasury stock at cost, 200 shares in 2020 and 2019		(2	)		(2	)
Paid-in capital		257,853			257,853
Retained earnings		82,813			74,665
Total shareholders’ equity		340,751			332,603
Non-controlling interest		21,864			21,464
Total equity		362,615			354,067
Total liabilities and equity	$	845,345		$	865,918

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112006104/en/

Transcontinental Realty Investors, Inc.

Investor Relations

Erik Johnson (469) 522-4200

[email protected]

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Residential Building & Real Estate Commercial Building & Real Estate Construction & Property REIT

MEDIA:

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November 12, 2020 5:09 pm

Contango Announces Revision to the Schedule for its Third Quarter 2020 Earnings Conference Call

HOUSTON, Nov. 12, 2020 (GLOBE NEWSWIRE) — Contango Oil & Gas Company (NYSE American: MCF) (“Contango” or the “Company”) announced today that it has revised the schedule for its third quarter 2020 earnings release conference call. In conjunction with the earnings release, Contango will now conduct a conference call to discuss the contents of that release on Monday, November 16, 2020 at 4:00 pm Central Standard Time.

Teleconference Call

Those interested in participating in the earnings conference call may do so by clicking h ere to j oin and entering your information to be connected. The link becomes active 15 minutes prior to the scheduled start time, and the conference coordinator will call you. If you are not at a computer, you can join by dialing 800-309-1256, (International 1-323-347-3622) and entering participation code 732123. A replay of the call will be available Monday, November 16, 2020 at 7:00 pm CST through Monday, November 23, 2020 at 7:00 pm CST by clicking here.

About Contango Oil & Gas Company

Contango Oil & Gas Company is a Houston, Texas based, independent oil and natural gas company whose business is to maximize production and cash flow from its offshore properties in the shallow waters of the Gulf of Mexico and onshore properties in Texas, Oklahoma, Louisiana and Wyoming and, when determined appropriate, to use that cash flow to explore, develop, exploit, and increase production from its existing properties, to acquire additional PDP-heavy crude oil and natural gas properties or to pay down debt. Additional information is available on the Company’s website at http://www.contango.com. Information on our website is not part of this release.


Contact:
Contango Oil & Gas Company
E. Joseph Grady – 713-236-7400
Senior Vice President and Chief Financial and Accounting Officer

November 12, 2020 5:09 pm

Dream Impact Trust Provides Business & Liquidity Update

Dream Impact Trust Provides Business & Liquidity Update

This press release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.

TORONTO–(BUSINESS WIRE)–DREAM IMPACT TRUST (TSX: MPCT.UN) (“MPCT”, “we” or the “Trust”) today provided a business update.

On October 13^thMPCT announced its intention to become a pure-play impact investment vehicle, meaning that it pursues investments that provide both attractive market returns and generates measurable and verifiable positive impact. Since then, the Trust has made steady progress building out the processes and oversight structure for our impact management framework. Through Dream Unlimited Corp. (“Dream”), the Trust’s asset manager, MPCT is now a Signatory to the Operating Principles for Impact Management (the “Principles”) and a member of the Global Impact Investing Network. The Principles are a framework for the design and implementation of systems and processes for the management of investments targeting positive social and environmental impacts. By aligning ourselves with these established standards, we are promoting transparency and formalizing our approach to the measurement and reporting of the impacts we create. In addition, the Trust’s annual disclosure statements will be verified by an independent third-party expert in this field. As we work through our detailed impact plan across the Trust’s portfolio, we are targeting net-zero greenhouse gas emissions across our properties by 2035. We expect to publish the Trust’s inaugural disclosure statement outlining our core impact objectives and further details on our measurement approach by mid-2021.

As of November 2020, the Trust had strong liquidity with nearly $120 million in cash on hand to fund our ongoing development commitments, distributions and operating costs. We are changing the collateral base of MPCT’s $50 million operating facility to be more beneficial to the Trust. Once completed, we expect to generate an additional $38 million of liquidity which we expect to use to acquire income properties meeting our impact criteria. MPCT currently has two income properties under exclusive negotiations for a further 55,000 sf of GLA, which is in addition to the Trust’s 980,000 sf of existing GLA (at 100% project level). We believe that by investing in income properties that generate attractive returns and provide opportunities to create impact, we will be able to grow the Trust’s recurring income segment while continuing to buildout our extensive development pipeline. For further details on our existing portfolio, refer to section 1.7 Summary of Portfolio Assets in our Management’s Discussion & Analysis for the period ended September 30, 2020.

In anticipation of the expiry of our agreement with Dream pursuant to which Dream agreed to accept units of the Trust in payment of its management fees, the Trust is in discussions with Dream regarding an extension of such agreement for up to three years to continue to settle our fee in units based on net asset value, along with other amendments that will further align our asset manager with MPCT. Under the original fee agreement, which is set to expire on December 31, 2020, the net asset value as at December 31, 2018 of $8.74 per unit was used for the purposes of determining the number of units to be issued to Dream. The extension would be effective January 1, 2021 and would be subject to applicable regulatory approval and the approval of unitholders.

By continuing to settle our asset management fees in units and deploying our enhanced liquidity into new income properties, we expect to improve the Trust’s operating cash flows and provide further security for our ongoing distributions.

On October 23^rd, we obtained zoning approval for the West Don Lands Blocks 3/4/7 and 20 through a Municipal Zoning Order (“MZO”) issued by the Province of Ontario. The West Don Lands development includes Blocks 3/4/7, Block 20 and Block 8, which is currently under construction, and will deliver an aggregate 2,286 purpose-built rental units, including 686 affordable units and 300,000 sf of commercial space under the Province’s Affordable Housing Lands Program upon completion. The MZO approval was a significant milestone for the Trust as it accelerates the development timeline and secured additional density to deliver one of the largest affordable housing programs in Canada. We are currently working towards obtaining construction financing for Blocks 3/4/7 and, based on current development timelines, expect to break ground next spring.

In addition, construction is well underway on Block 10, the Trust’s first rental building at Zibi, our 34-acre waterfront community along the Ottawa River. Block 10 is a 162-unit rental building, of which 149 units will be affordable, that will house Zibi’s District Thermal Energy plant upon completion in 2022. The Trust has received credit approval to close on long-term financing for Block 10, which would otherwise not be available for market rental projects, as well as a $20 million loan and $3 million grant for the construction of the District Thermal plant. Completion of the plant is an integral component of our plan to provide zero-carbon heating and cooling for all of Zibi’s tenants and residents.

Conference Call

Senior management will host a conference call on Friday, November 13, 2020 at 11:00am (ET). To access the call, please dial 1.888.465.5079 in Canada or 1.416.216.4169 elsewhere and use passcode 9919 703#. To access the conference call via webcast, please go to the Trust’s website at www.dreamimpacttrust.ca and click on Calendar of Events in the News and Events section. The presentation for the call can be found here. A taped replay of the conference call and the webcast will be available for 90 days.

About Dream Impact Trust

Dream Impact Trust is a real estate impact investing vehicle that targets projects that create positive and lasting impacts on communities and the environment, while achieving market returns. Dream Impact Trust provides investors with access to an exceptional portfolio of real estate development and income properties that would not be otherwise available in a public and fully transparent vehicle, managed by an experienced team with a successful track record in these areas. The objectives of the Trust are to provide investors with a portfolio of high-quality real estate development opportunities that generate both strong financial returns and provide positive social and environmental impacts in our communities; balance growth and stability of the portfolio, increasing cash flow, unitholders’ equity and NAV⁽¹⁾ over time; provide predictable cash distributions to unitholders on a tax-efficient basis; and leverage access to an experienced management team and strong partnerships to generate investment opportunities, capitalize on strong market fundamentals and generate attractive returns for investors. For more information, please visit: www.dreamimpacttrust.ca.

Non-IFRS Measures

The Trust’s condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). In this press release, as a complement to results provided in accordance with IFRS, the Trust discloses and discusses certain non-IFRS financial measures including NAV, as well as other measures discussed elsewhere in this release. These non-IFRS measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other issuers. The Trust has presented such non-IFRS measures as management believes they are relevant measures of our underlying operating performance and debt management. Non-IFRS measures should not be considered as alternatives to unitholders’ equity, net income, total comprehensive income or cash flows generated from operating activities (continuing), or comparable metrics determined in accordance with IFRS as indicators of the Trust’s performance, liquidity, cash flow and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the “Non-IFRS Measures and Other Disclosures” section in the Trust’s Management’s Discussion and Analysis for the three and nine months ended September 30, 2020.

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements relating to our objectives, strategies to achieve those objectives, our beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, future growth, results of operations, performance, business prospects and opportunities, as well as statements regarding: our target to achieve net-zero greenhouse gas emissions across our properties by 2035; our approaches to impact management; our expected processes and procedures for the measurement and verification of the impact of our investments; our ability to achieve our impact and sustainability goals; the timing of our inaugural disclosure statement and further details on our measurement goals; our plans and proposals for current and future development projects, including projected sizes, density and uses, timing for expected zoning approvals and expected sustainability impact; development timelines, including commencement of construction and/or revitalization of our development projects; the restructuring of the collateral base of our $50 million operating facility, the expected additional liquidity to be generated therefrom and our proposed uses for any such additional liquidity; our ability to source and complete acquisitions of income properties that meet our impact criteria; our ability to grow the Trust’s recurring income segment while continuing to build-out our development pipeline through the acquisition of income properties; the demand for and expected returns on our impact investments; the extension of our arrangements with DAM pursuant to which DAM’s management fees are paid in units, including the terms and conditions of any such extension and the effective date and term of any such extension; and how an extension of our fee arrangement with DAM or the restructuring of our operating facility may affect our operating cash flows and distribution. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Trust’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: adverse changes in general economic and market conditions; the impact of the novel coronavirus (COVID-19) pandemic on the Trust; changes to the regulatory environment; environmental risks; local real estate conditions, including the development of properties in close proximity to the Trust’s properties and changes in real estate values; timely leasing of vacant space and re-leasing of occupied space upon expiration; dependence on tenants’ and borrowers’ financial condition; the uncertainties of acquisition activity; the ability to effectively integrate acquisitions; dependence on our partners in the development, construction and operation of our real estate projects; uncertainty surrounding the development and construction of new projects and delays and cost overruns in the design, development, construction and operation of projects; our ability to execute on our strategic plans and meet financial obligations; interest and mortgage rates and regulations; inflation; availability of equity and debt financing; foreign exchange fluctuations. Assumptions upon which forward-looking information is based may include, but are not limited to: a gradual recovery and growth of the general economy over the remainder of 2020 and 2021; relatively historically low interest costs; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; the availability of investment opportunities for growth in our target markets; the timing and ability to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; maintaining occupancy levels; and anticipated replacement of expiring tenancies. All forward-looking information in this press release speaks as of November 12, 2020. The Trust does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by law. Additional information about these assumptions and risks and uncertainties is disclosed in filings with securities regulators filed on SEDAR (www.sedar.com). These filings are also available at the Trust’s website at www.dreamimpacttrust.ca.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112006103/en/

Meaghan Peloso

Chief Financial Officer

416 365-6322

[email protected]

Kimberly Lefever

Director, Investor Relations

416 365-6339

[email protected]

KEYWORDS: North America Canada

INDUSTRY KEYWORDS: Professional Services Residential Building & Real Estate Commercial Building & Real Estate Finance Construction & Property Banking

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