Sherritt Reports First Quarter 2024 Results; Solid Performance from Power; Metals Achieved Strong Nickel Sales Volume; Slurry Preparation Plant Operating at Design Capacity
NOT FOR DISTRIBUTION TO
Leon Binedell, President and CEO of
Mr. Binedell continued, “Growing geopolitical competition over critical minerals has led to new sanctions being implemented on Russian produced metals and potential trade measures in the nickel market being contemplated against
Against this market backdrop,
FIRST QUARTER 2024 SELECTED DEVELOPMENTS
- Sherritt’s share(1) of finished nickel and cobalt production at the Moa Joint Venture (“Moa JV”) was 3,597 tonnes and 342 tonnes, respectively.
- Sherritt’s share of finished nickel and cobalt sales of 4,023 tonnes and 362 tonnes, respectively, exceeded production volumes with strong spot sales driving progress on reducing nickel inventory.
-
Net direct cash cost (“NDCC”)(2) was
US$7.24 /lb due to higher-cost opening inventory sold and lower cobalt and fertilizer by-product credits. Importantly, mining, processing and refining (“MPR”) costs, the largest component of NDCC(2), improved 13% compared to Q1 2023.-
In March NDCC(2) improved to an average of
US$6.82 /lb and continues to trend lower. -
Higher year-over-year NDCC(2) was expected during the quarter and was factored into the Corporation’s 2024 outlook for NDCC(2) which
Sherritt continues to expect will be within a range ofUS$5.50 toUS$6.00 /lb implying a 20% decrease from 2023.
-
In March NDCC(2) improved to an average of
- Electricity production was 210 GWh benefitting from increased gas supply and equipment availability.
-
Electricity unit operating cost(2) was
$17.12 /MWh benefitting from higher electricity production and sales volume. -
Net loss from continuing operations of
$40.9 million , or$(0.10) per share was primarily due to lower average-realized prices(2) for nickel, cobalt and fertilizers, partly offset by higher nickel sales volumes. -
Adjusted net loss from continuing operations(2) was
$24.6 million or$(0.06) per share, which excludes a non-cash$9.1 million revaluation loss on the net receivable pursuant to the Cobalt Swap on updates to valuation assumptions and$3.5 million of severance costs on the restructuring. -
Adjusted EBITDA(2) was
$(6.5) million . -
Available liquidity in
Canada as atMarch 31, 2024 was$67.9 million increasing from$63.0 million as atDecember 31, 2023 . -
The Moa JV received a
$20.0 million prepayment on a sales agreement for nickel deliveries in 2024. -
Continued implementation of an organization-wide restructuring and cost-cutting program to improve operational performance and respond to market conditions resulting in a reduction to the Corporation’s Canadian operations headcount by approximately 10% which is expected to result in annualized cost savings of
$13.0 million . -
The overall timing and budget to reach targeted production remains unchanged for the Moa JV expansion. The Slurry Preparation Plant (“SPP”) was commissioned and has been operating at design capacity since the end of
January 2024 , and phase two is on schedule for an expected end of year 2024 completion with commissioning and ramp up in 2025. - Advanced the mixed hydroxide precipitate (“MHP”) midstream processing flowsheet for production of nickel and cobalt sulphate while also reducing sodium sulphate effluent which is a key environmental challenge for the industry. Project focus in 2024 will be on site identification, customer and partnership arrangements, and further process development and project definition.
-
Sherritt appointedLouise Blais andSteven Goldman to the Board of Directors in accordance with its succession planning with the retirements of Maryse Bélanger in March, andJohn Warwick , who will not seek reelection at the Corporation’s annual meeting of shareholders in May.
(1) |
References to “Sherritt’s share” is consistent with the Corporation’s definition of reportable segments for financial statement purposes. Sherritt’s share of “Metals” includes the Corporation’s 50% interest in the Moa JV, its 100% interest in the utility and fertilizer operations in |
(2) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(3) |
Cobalt by-product credits include Sherritt’s share of cobalt revenue per pound of nickel sold only. |
DEVELOPMENTS SUBSEQUENT TO THE QUARTER
Subsequent to the quarter end:
-
Sherritt received an additional$10.0 million repayment from the Moa JV on the advances made for short-term working capital purposes at the Moa JV. -
Sherritt’s syndicated revolving-term credit facility was amended to extend its maturity by one year from
April 30, 2025 toApril 30, 2026 and change the EBITDA-to-Interest Expense covenant as defined in the agreement. There were no other significant changes to the terms, financial covenants or restrictions. -
Sherritt completed a 10% workforce reduction at its Corporate office. Annual cost savings from employee costs and reductions to other Corporate office-related costs are expected to be$2.0 million per year. This follows the 10% workforce reduction to the Corporation’s Canadian operations earlier this year and is in addition to the 10% workforce reduction at Sherritt’s Corporate office in 2021. Sherritt’s cost-cutting measures demonstrate its ongoing commitment to cost optimization, streamlining operations, enhancing efficiencies, improving profitability and liquidity while ensuring proper resources for safe and effective operations and to advance future growth initiatives. -
Sherritt’s Board of Directors continuously engages with shareholders and following its latest engagement, the Board has made the determination to accelerate its review of corporate costs and executive compensation which was planned to be conducted this year. Executive compensation will be assessed relative to peers to ensure it is aligned with the current size, scope and complexity of
Sherritt as well as reviewed to ensure that it is strategic, fair, appropriate and competitive, and aligns with shareholder experience which is consistent with its review in 2022. The Board will complete this review by no later thanSeptember 30, 2024 and will report on the results of this review following its completion.
Q1 2024 FINANCIAL HIGHLIGHTS
$ millions, except as otherwise noted, for the three months ended |
2024 |
2023 |
Change |
|||||||
|
|
|
|
|
|
|||||
Revenue |
$ |
28.8 |
|
$ |
58.6 |
(51 |
%) |
|||
Combined revenue(1) |
|
127.7 |
|
|
187.4 |
(32 |
%) |
|||
(Loss) earnings from operations and joint venture |
|
(22.4 |
) |
|
21.6 |
(204 |
%) |
|||
Net (loss) earnings from continuing operations |
|
(40.9 |
) |
|
13.6 |
(401 |
%) |
|||
Net (loss) earnings |
|
(40.5 |
) |
|
13.3 |
(405 |
%) |
|||
Adjusted EBITDA(1) |
|
(6.5 |
) |
|
41.2 |
(116 |
%) |
|||
Adjusted net (loss) earnings from continuing operations(1) |
|
(24.6 |
) |
|
13.3 |
(285 |
%) |
|||
Net (loss) earnings from continuing operations ($ per share) (basic and diluted) |
|
(0.10 |
) |
|
0.03 |
(433 |
%) |
|||
|
|
|
|
|
|
|||||
Cash provided by continuing operations for operating activities |
|
13.0 |
|
|
9.8 |
33 |
% |
|||
Combined free cash flow(1) |
|
15.8 |
|
|
35.7 |
(56 |
%) |
|||
Average exchange rate (CAD/US$) |
|
1.349 |
|
|
1.353 |
N/A |
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
|
|
|
|
||||||
$ millions, as at |
2024
|
|
2023
|
|
Change |
||||
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
|
|
|
|
||||
|
$ |
37.5 |
$ |
21.5 |
74 |
% |
|||
|
|
105.9 |
|
96.3 |
10 |
% |
|||
Other |
|
1.0 |
|
1.3 |
(23 |
%) |
|||
|
|
144.4 |
|
119.1 |
21 |
% |
|||
|
|
|
|
|
|
||||
Loans and borrowings |
371.3 |
|
355.6 |
4 |
% |
||||
|
|
|
|
|
|||||
The Corporation's share of cash and cash equivalents in the Moa Joint Venture, not included in the above balances: |
$ |
11.2 |
$ |
5.9 |
90 |
% |
(1) |
As at |
Cash and cash equivalents as at
Upon repayment of the advances outstanding by the Moa JV, and subject to the Moa JV’s available liquidity to support operations and expected liquidity requirements, the joint venture will be eligible to commence payment of cobalt dividends pursuant to the Cobalt Swap. At current spot nickel prices and given the prioritization of the joint venture to repay its outstanding advances, as previously disclosed, the Corporation expects that under the Cobalt Swap, the cobalt dividends are anticipated to commence in the second half the year and will not meet the annual maximum amount in 2024. As defined by the agreement, any short fall in the annual minimum payment amount will be added to the following year.
As at
Subsequent to the quarter end:
-
Sherritt received an additional$10.0 million repayment from the Moa JV on the advances made for short-term working capital purposes at the Moa JV. -
Sherritt’s syndicated revolving-term credit facility was amended to extend its maturity by one year from
April 30, 2025 toApril 30, 2026 and change the EBITDA-to-Interest Expense covenant as defined in the agreement. The benchmark rate will transition to the CORRA after cessation of the bankers’ acceptance benchmark rate. There were no other significant changes to the terms, financial covenants or restrictions. -
Sherritt paid interest of$9.4 million on the Second Lien Notes and was not required to make any mandatory redemptions.
REVIEW OF OPERATIONS
Reportable segment update
As a result of the organization-wide restructuring in
Metals
$ millions ( |
2024 |
2023 |
Change |
||||||||
|
|
|
|
|
|
||||||
FINANCIAL HIGHLIGHTS(1) |
|
|
|
|
|
||||||
Revenue |
$ |
115.1 |
|
$ |
176.5 |
|
(35 |
%) |
|||
Cost of sales |
|
131.1 |
|
|
144.5 |
|
(9 |
%) |
|||
(Loss) earnings from operations |
|
(21.0 |
) |
|
31.0 |
|
(168 |
%) |
|||
Adjusted EBITDA(2) |
|
(7.5 |
) |
|
44.5 |
|
(117 |
%) |
|||
|
|
|
|
|
|
||||||
CASH FLOW (1) |
|
|
|
|
|
||||||
Cash provided by continuing operations for operating activities |
$ |
31.2 |
|
$ |
69.5 |
|
(55 |
%) |
|||
Free cash flow(2) |
|
21.7 |
|
|
59.9 |
|
(64 |
%) |
|||
|
|
|
|
|
|
||||||
PRODUCTION VOLUMES (tonnes) |
|
|
|
|
|
||||||
Mixed Sulphides |
|
4,052 |
|
|
3,750 |
|
8 |
% |
|||
Finished Nickel |
|
3,597 |
|
|
3,483 |
|
3 |
% |
|||
Finished Cobalt |
|
342 |
|
|
367 |
|
(7 |
%) |
|||
Fertilizers |
|
57,064 |
|
|
57,991 |
|
(2 |
%) |
|||
|
|
|
|
|
|
||||||
NICKEL RECOVERY (3) (%) |
|
85 |
% |
|
88 |
% |
(3 |
%) |
|||
|
|
|
|
|
|
||||||
SALES VOLUMES (tonnes) |
|
|
|
|
|
||||||
Finished Nickel |
|
4,023 |
|
|
3,344 |
|
20 |
% |
|||
Finished Cobalt |
|
362 |
|
|
731 |
|
(50 |
%) |
|||
Fertilizer |
|
23,909 |
|
|
29,879 |
|
(20 |
%) |
|||
|
|
|
|
|
|
||||||
AVERAGE-REFERENCE PRICES (US$ per pound) |
|
|
|
|
|
||||||
Nickel(4) |
$ |
7.52 |
|
$ |
11.77 |
|
(36 |
%) |
|||
Cobalt(4) |
|
13.89 |
|
|
17.56 |
|
(21 |
%) |
|||
|
|
|
|
|
|
||||||
AVERAGE REALIZED PRICE (2) |
|
|
|
|
|
||||||
Nickel ($ per pound) |
$ |
9.90 |
|
$ |
16.47 |
|
(40 |
%) |
|||
Cobalt ($ per pound) |
|
14.51 |
|
|
19.11 |
|
(24 |
%) |
|||
Fertilizer ($ per tonne) |
|
412.05 |
|
|
566.93 |
|
(27 |
%) |
|||
|
|
|
|
|
|
||||||
UNIT OPERATING COSTS (2) (US$ per pound) |
|
|
|
|
|
||||||
Nickel - net direct cash cost |
$ |
7.24 |
|
$ |
6.46 |
|
12 |
% |
|||
|
|
|
|
|
|
||||||
SPENDING ON CAPITAL (2) |
|
|
|
|
|
||||||
Sustaining |
$ |
7.4 |
|
$ |
5.9 |
|
25 |
% |
|||
Expansion |
|
2.0 |
|
|
3.7 |
|
(46 |
%) |
|||
|
|
9.4 |
|
|
9.6 |
|
(2 |
%) |
(1) |
The Financial Highlights, and cash flow amounts for Metals combine the operations of the Moa JV, Fort Site and Metals Marketing. Breakdowns of revenue, Adjusted EBITDA, and the components of free cash flow (cash provided (used) by continuing operations for operating activities and Property, plant and equipment expenditures) for each of these operations are included in the Combined Revenue, Adjusted EBITDA and Free cash flow reconciliations, respectively, in the Non-GAAP and other financial measures section of this press release. |
(2) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(3) |
The nickel recovery rate measures the amount of finished nickel that is produced compared to the original nickel content of the ore that was mined. |
(4) |
Reference sources: Nickel – |
Revenue
Metals revenue in Q1 2024 was
Nickel revenue in Q1 2024 was
Cobalt revenue in Q1 2024 was
Fertilizer revenue in Q1 2024 was
Cobalt Swap sales
During Q1 2024, and for the remainder of 2024,
As a result, sales of cobalt will be recognized by the Moa JV at Sherritt’s 50% share until such time as
Production
Mixed sulphides production at the Moa JV in Q1 2024 was 4,052 tonnes, up 8% from the 3,750 tonnes produced in Q1 2023 benefitting from lower unplanned maintenance activities, improved ore blends and grades and additional processing capacity and efficiencies resulting from the completion of the SPP.
Sherritt’s share of finished nickel and cobalt production in Q1 2024 was 3,597 tonnes and 342 tonnes, 3% higher and 7% lower, respectively, than Q1 2023. Finished nickel production during the quarter increased due to higher nickel rich third-party feed processed partly offset by weather-related shipping delays in delivering Moa mixed sulphides feed to the refinery and reduced production rates to mitigate feed contaminants. Finished cobalt production was lower consistent with higher nickel-to-cobalt ratio in available feed processed. The delayed shipment of mixed sulphides was received at the refinery in April.
Fertilizer production in Q1 2024 of 57,064 tonnes was 2% lower compared to Q1 2023.
NDCC(1)
NDCC(1) per pound of nickel sold was
Higher year-over-year NDCC(1) was expected during the first quarter and factored into the Corporation’s 2024 outlook for NDCC(1) which
Spending on capital(1)
Sustaining spending on capital in Q1 2024 was
Growth spending on capital in Q1 2024 was
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(2) |
Cobalt by-product credits include Sherritt’s share of cobalt revenue per pound of nickel sold only. |
Expansion program and strategic developments
Moa JV expansion program update
The first phase of the Moa JV expansion program, the SPP, was commissioned and has been operating at design capacity since the end of January.
The second phase, the Processing Plant, is underway and
- civil construction and structural erection is nearing completion;
- piping installation will commence in the second quarter; and
- in response to lower nickel prices, the joint venture optimized the timing of certain capital spending items shifting some phase two spending to beyond 2024. Deferring the ordering of equipment and materials for the Fifth Sulphide Precipitation Train beyond 2024 is an additional opportunity that was identified during the quarter to optimize the timing of near-term spending without any expected impact on the timing of the ramp up of mixed sulphide precipitate production from the expansion.
The overall timing and budget to reach target production remains unchanged and is on schedule for an expected end of year 2024 completion with commissioning and ramp up in 2025. With completion of phase two of the expansion, annual mixed sulphide precipitate production is expected to increase by approximately 20% of contained nickel and cobalt and is expected to fill the refinery to nameplate capacity to maximize profitability from the joint venture’s own mine feed, displacing lower margin third-party feeds and increasing overall finished nickel and cobalt production.
Strategic developments
Sherritt’s technical expertise and innovative processing solutions are key differentiators and enablers towards the Corporation’s near-term strategic focus to expand midstream processing capacity of critical minerals for the electric vehicle supply chain in
During the quarter,
Power
$ millions (Sherritt Share, 33⅓% basis), except as otherwise noted, for the three months ended |
2024 |
2023 |
Change |
||||||
|
|
|
|
|
|
||||
FINANCIAL HIGHLIGHTS |
|
|
|
|
|
||||
Revenue |
$ |
12.0 |
$ |
10.3 |
17 |
% |
|||
Cost of sales |
|
4.0 |
|
3.4 |
18 |
% |
|||
Earnings from operations |
|
7.1 |
|
5.9 |
20 |
% |
|||
Adjusted EBITDA(1) |
|
7.6 |
|
6.4 |
19 |
% |
|||
|
|
|
|
|
|
||||
CASH FLOW |
|
|
|
|
|
||||
Cash provided by continuing operations for operating activities |
$ |
9.7 |
$ |
4.4 |
120 |
% |
|||
Free cash flow(1) |
|
7.1 |
|
3.7 |
92 |
% |
|||
|
|
|
|
|
|
||||
PRODUCTION AND SALES |
|
|
|
|
|
||||
Electricity (GWh(2)) |
|
210 |
|
158 |
33 |
% |
|||
|
|
|
|
|
|
||||
AVERAGE-REALIZED PRICE (1) |
|
|
|
|
|
||||
Electricity (per MWh(2)) |
$ |
51.25 |
$ |
58.33 |
(12 |
%) |
|||
|
|
|
|
|
|
||||
UNIT OPERATING COST (1) |
|
|
|
|
|
||||
Electricity (per MWh) |
$ |
17.12 |
$ |
19.37 |
(12 |
%) |
|||
|
|
|
|
|
|
||||
SPENDING ON CAPITAL (1) |
|
|
|
|
|
||||
Sustaining |
$ |
2.6 |
$ |
0.7 |
271 |
% |
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(2) |
Gigawatt hours (“GWh”), Megawatt hours (“MWh”). |
Revenue for Q1 2024 of
As a key partner in supporting the Cuban government's plans to increase power production,
Unit operating costs(1) for the three months ended
Spending on capital(1) of
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
OUTLOOK
2024 guidance for production volumes, unit operating costs and spending on capital remains unchanged.
CONFERENCE CALL AND WEBCAST
North American callers, please dial: |
1 (800) 717-1738 Passcode: 00402 |
|||||
International callers, please dial: |
1 (289) 514-5100 Passcode: 00402 |
|||||
Live webcast: |
Please dial in 15 minutes before the start of the call to secure a line. Alternatively, listeners can access the conference call and presentation via the webcast available on Sherritt’s website.
An archive of the webcast and replay of the conference call will also be available on the website.
FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS
Sherritt’s condensed consolidated financial statements and MD&A for the three months ended
NON-GAAP AND OTHER FINANCIAL MEASURES
Management uses the following non-GAAP and other financial measures in this press release and other documents: combined revenue, adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), average-realized price, unit operating cost/net direct cash cost (“NDCC”), adjusted net earnings/loss from continuing operations, adjusted net earnings/loss from continuing operations per share, spending on capital, combined cash provided (used) by continuing operations for operating activities and combined free cash flow.
Management uses these measures to monitor the financial performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation’s financial performance with its competitors and/or evaluate the results of its underlying business. These measures are intended to provide additional information, not to replace International Financial Reporting Standards (“IFRS”) measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies.
The non-GAAP and other financial measures are reconciled to their most directly comparable IFRS measures in the Appendix below.
ABOUT
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements. Forward-looking statements can generally be identified by the use of statements that include such words as “believe”, “expect”, “anticipate”, “intend”, “plan”, “forecast”, “likely”, “may”, “will”, “could”, “should”, “suspect”, “outlook”, “potential”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements regarding strategies, plans and estimated production amounts resulting from expansion of mining operations at the Moa Joint Venture; growing and increasing nickel and cobalt production; the Moa Joint Venture expansion program update as it relates to the Slurry Preparation Plant and the Processing Plant; statements set out in the “Outlook” section of this press release; certain expectations regarding production volumes and increases, inventory levels, operating costs, capital spending and intensity; sales volumes; revenue, costs and earnings; the availability of additional gas supplies to be used for power generation; the effect of maintenance challenges at the Moa mine, refinery and fertilizer operations; the timing of repayments of the revolving line of credit by the Moa JV, the amount and timing of dividend distributions from the Moa JV, including in the form of finished cobalt or cash under the Cobalt Swap, sales of finished cobalt and associated receipts related to cobalt received pursuant to the Cobalt Swap; growing shareholder value; expected annualized employee and other Corporate office-related cost savings; sufficiency of working capital management and capital project funding; strengthening the Corporation’s capital structure and amounts of certain other commitments.
Forward-looking statements are not based on historical facts, but rather on current expectations, assumptions and projections about future events, including commodity and product prices and demand; the level of liquidity and access to funding; share price volatility;; nickel, cobalt and fertilizer production results and realized prices; current and future demand products produced by
The Corporation cautions readers of this press release not to place undue reliance on any forward-looking statement as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, commodity risks related to the production and sale of nickel cobalt and fertilizers; security market fluctuations and price volatility; level of liquidity of
The Corporation, together with its Moa Joint Venture, is pursuing a range of growth and expansion opportunities, including without limitation, process technology solutions, development projects, commercial implementation opportunities, life of mine extension opportunities and the conversion of mineral resources to reserves. In addition to the risks noted above, factors that could, alone or in combination, prevent the Corporation from successfully achieving these opportunities may include, without limitation: identifying suitable commercialization and other partners; successfully advancing discussions and successfully concluding applicable agreements with external parties and/or partners; successfully attracting required financing; successfully developing and proving technology required for the potential opportunity; successfully overcoming technical and technological challenges; successful environmental assessment and stakeholder engagement; successfully obtaining intellectual property protection; successfully completing test work and engineering studies, prefeasibility and feasibility studies, piloting, scaling from small scale to large scale production, procurement, construction, commissioning, ramp-up to commercial scale production and completion; and securing regulatory and government approvals. There can be no assurance that any opportunity will be successful, commercially viable, completed on time or on budget, or will generate any meaningful revenues, savings or earnings, as the case may be, for the Corporation. In addition, the Corporation will incur costs in pursuing any particular opportunity, which may be significant.
Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in the Corporation’s other documents filed with the Canadian securities authorities, including without limitation the “Managing Risk” section of the Management’s Discussion and Analysis for the three months ended
The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this press release and in the Corporation’s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.
APPENDIX – NON-GAAP AND OTHER FINANCIAL MEASURES
Management uses the measures below to monitor the financial performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation’s financial performance with its competitors and/or evaluate the results of its underlying business. These measures are intended to provide additional information, not to replace IFRS measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies.
The non-GAAP and other financial measures are reconciled to the most directly comparable IFRS measure as presented in the consolidated financial statements for the three months ended
Combined revenue
The Corporation uses combined revenue as a measure to help management assess the Corporation’s financial performance across its core operations. Combined revenue includes the Corporation’s consolidated revenue, less Oil and Gas revenue, and includes the revenue of the Moa JV within the Metals reportable segment on a 50% basis. Revenue of the Moa JV is included in share of earnings of Moa Joint Venture, net of tax, as a result of the equity method of accounting and excluded from the Corporation’s consolidated revenue.
Revenue at Oil and Gas is excluded from Combined revenue as the segment is not currently exploring for or producing oil and gas and its financial results relate to ancillary drilling services, provided to a customer and CUPET, and environmental rehabilitation costs for legacy assets, which are not reflective of the Corporation’s core operating activities or revenue generation potential. The exclusion of revenue at Oil and Gas from Combined revenue represented a change in the composition of Combined revenue during the three months ended
Management uses this measure to reflect the Corporation’s economic interest in its operations prior to the application of equity accounting to help allocate financial resources and provide investors with information that it believes is useful in understanding the scope of Sherritt’s business, based on its economic interest, irrespective of the accounting treatment.
The table below reconciles combined revenue to revenue per the financial statements:
|
|
|
|
|
|
||||||
$ millions, for the three months ended |
2024 |
2023 |
Change |
||||||||
|
|
|
|
|
|
||||||
Revenue by reportable segment |
|
|
|
|
|
||||||
Metals(1) |
$ |
115.1 |
|
$ |
176.5 |
|
(35 |
%) |
|||
Power |
|
12.0 |
|
|
10.3 |
|
17 |
% |
|||
Corporate and Other |
|
0.6 |
|
|
0.6 |
|
- |
|
|||
Combined revenue |
$ |
127.7 |
|
$ |
187.4 |
|
(32 |
%) |
|||
Adjustment for Moa Joint Venture |
|
(104.2 |
) |
|
(130.9 |
) |
|
||||
Adjustment for Oil and Gas |
|
5.3 |
|
|
2.1 |
|
152 |
% |
|||
Revenue per financial statements |
$ |
28.8 |
|
$ |
58.6 |
|
(51 |
%) |
(1) |
Revenue of Metals for the three months ended |
Adjusted EBITDA
The Corporation defines Adjusted EBITDA as (loss) earnings from operations and joint venture, which excludes net finance expense, income tax expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, depreciation and amortization; impairment losses on non-current non-financial assets and investments; and gains or losses on disposal of property, plant and equipment of the Corporation and the Moa JV. The exclusion of impairment losses eliminates the non-cash impact of the losses.
Earnings/loss from operations at Oil and Gas (net of depletion, depreciation and amortization, if applicable) is deducted from/added back to Adjusted EBITDA as the segment is not currently exploring for or producing oil and gas and its financial results relate to ancillary drilling services, provided to a customer and CUPET, and environmental rehabilitation costs for legacy assets, which are not reflective of the Corporation’s core operating activities or cash generation potential. The adjustment for earnings/loss from operations at Oil and Gas (net of depletion, depreciation and amortization, if applicable) represented a change in the composition of Adjusted EBITDA during the three months ended
Management uses Adjusted EBITDA internally to evaluate the cash generation potential of Sherritt’s operating divisions on a combined and segment basis as an indicator of ability to fund working capital needs, meet covenant obligations, service debt and fund capital expenditures, as well as provide a level of comparability to similar entities. Management believes that Adjusted EBITDA provides useful information to investors in evaluating the Corporation’s operating results in the same manner as management and the Board of Directors.
The tables below reconcile (loss) earnings from operations and joint venture per the financial statements to Adjusted EBITDA:
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|||||||||
|
Metals(1) |
|
|
Power |
|
|
Oil and
|
|
|
Corporate
|
|
|
Adjustment
|
|
|
Total |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
(Loss) earnings from operations and joint venture |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
per financial statements |
$ |
(21.0 |
) |
$ |
7.1 |
$ |
(2.3 |
) |
$ |
(7.0 |
) |
$ |
0.8 |
|
$ |
(22.4 |
) |
||||||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Depletion, depreciation and amortization |
|
2.4 |
|
|
0.5 |
|
- |
|
|
0.4 |
|
|
- |
|
|
3.3 |
|
||||||
Oil and Gas loss from operations, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
depletion, depreciation and amortization |
|
- |
|
|
- |
|
2.3 |
|
|
- |
|
|
- |
|
|
2.3 |
|
||||||
Adjustments for share of earnings of Moa Joint Venture: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Depletion, depreciation and amortization |
|
11.1 |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
11.1 |
|
||||||
Net finance income |
|
- |
|
|
- |
|
- |
|
|
- |
|
|
(1.2 |
) |
|
(1.2 |
) |
||||||
Income tax expense |
|
- |
|
|
- |
|
- |
|
|
- |
|
|
0.4 |
|
|
0.4 |
|
||||||
Adjusted EBITDA |
$ |
(7.5 |
) |
$ |
7.6 |
$ |
- |
|
$ |
(6.6 |
) |
$ |
- |
|
$ |
(6.5 |
) |
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
2023 (Restated) |
|||||||||
|
Metals(1) |
|
Power |
|
Oil and
|
|
Corporate
|
|
Adjustment
|
|
Total |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Earnings (loss) from operations and joint venture |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
per financial statements |
$ |
31.0 |
$ |
5.9 |
$ |
(1.4 |
) |
$ |
(10.0 |
) |
$ |
(3.9 |
) |
$ |
21.6 |
||||||
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Depletion, depreciation and amortization |
|
2.3 |
|
0.5 |
|
0.1 |
|
|
0.3 |
|
|
- |
|
|
3.2 |
||||||
Oil and Gas loss from operations, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
depletion, depreciation and amortization |
|
- |
|
- |
|
1.3 |
|
|
- |
|
|
- |
|
|
1.3 |
||||||
Adjustments for share of earnings of Moa Joint Venture: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Depletion, depreciation and amortization |
|
11.2 |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
11.2 |
||||||
Net finance expense |
|
- |
|
- |
|
- |
|
|
- |
|
|
0.4 |
|
|
0.4 |
||||||
Income tax expense |
|
- |
|
- |
|
- |
|
|
- |
|
|
3.5 |
|
|
3.5 |
||||||
Adjusted EBITDA |
$ |
44.5 |
$ |
6.4 |
$ |
- |
|
$ |
(9.7 |
) |
$ |
- |
|
$ |
41.2 |
(1) |
Adjusted EBITDA of Metals for the three months ended |
Average-realized price
Average-realized price is generally calculated by dividing revenue by sales volume for the given product in a given segment. The average-realized price for power excludes by-product and other revenue, as this revenue is not earned directly for power generation. Transactions by a Moa JV marketing company, included in other revenue, are excluded.
Management uses this measure, and believes investors use this measure, to compare the relationship between the revenue per unit and direct costs on a per unit basis in each reporting period for nickel, cobalt, fertilizer and power and provide comparability with other similar external operations.
Average-realized price for fertilizer is the weighted-average realized price of ammonia and various ammonium sulphate products.
Average-realized price for nickel and cobalt are expressed in Canadian dollars per pound sold, while fertilizer is expressed in Canadian dollars per tonne sold and electricity is expressed in Canadian dollars per megawatt hour sold.
The tables below reconcile revenue per the financial statements to average-realized price:
$ millions, except average-realized price and sales volume, for the three months ended |
|
|
|
|
|
|
|
2024 |
|||||||||||||
|
Metals |
|
|
|
|
|
|
|
|
||||||||||||
|
|
Nickel |
|
Cobalt |
|
Fertilizer |
|
Power |
|
Other(1) |
|
Adjustment
|
|
Total |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenue per financial statements |
$ |
87.8 |
$ |
11.6 |
$ |
9.9 |
$ |
12.0 |
$ |
11.7 |
$ |
(104.2) |
$ |
28.8 |
|||||||
Adjustments to revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
By-product and other revenue |
|
- |
|
- |
|
- |
|
(1.4) |
|
|
|
|
|
|
|||||||
Revenue for purposes of average-realized price calculation |
|
87.8 |
|
11.6 |
|
9.9 |
|
10.6 |
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Sales volume for the period |
|
8.9 |
|
0.8 |
|
23.9 |
|
210 |
|
|
|
|
|
|
|||||||
Volume units |
|
Millions of
|
|
Millions of
|
|
Thousands
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||
Average-realized price(2)(3)(4) |
$ |
9.90 |
$ |
14.51 |
$ |
412.05 |
$ |
51.25 |
|
|
|
|
|
|
$ millions, except average-realized price and sales volume, for the three months ended |
|
|
|
|
|
|
|
2023 |
|||||||||||||||
|
Metals |
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Nickel |
|
|
Cobalt |
|
|
Fertilizer |
|
|
Power |
|
|
Other(1) |
|
|
Adjustment
|
|
|
Total |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue per financial statements |
$ |
121.4 |
$ |
30.8 |
$ |
16.9 |
$ |
10.3 |
|
$ |
10.1 |
$ |
(130.9 |
) |
$ |
58.6 |
|||||||
Adjustments to revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
By-product and other revenue |
|
- |
|
- |
|
- |
|
(1.1 |
) |
|
|
|
|
|
|
||||||||
Revenue for purposes of average-realized price calculation |
|
121.4 |
|
30.8 |
|
16.9 |
|
9.2 |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales volume for the period |
|
7.4 |
|
1.6 |
|
29.9 |
|
158 |
|
|
|
|
|
|
|
||||||||
Volume units |
|
Millions of
|
|
|
Millions of
|
|
|
Thousands
|
|
|
Gigawatt
|
|
|
|
|
|
|
||||||
Average-realized price(2)(3)(4) |
$ |
16.47 |
$ |
19.11 |
$ |
566.93 |
$ |
58.33 |
|
|
|
|
|
|
|
(1) |
Other revenue includes revenue from the Oil and Gas and Corporate and Other reportable segments. |
(2) |
Average-realized price may not calculate exactly based on amounts presented due to foreign exchange and rounding. |
(3) |
Power, average-realized price per MWh. |
(4) |
Fertilizer, average-realized price per tonne. |
Unit operating cost/NDCC
With the exception of Metals, which uses NDCC, unit operating cost is generally calculated by dividing cost of sales as reported in the financial statements, less depreciation, depletion and amortization in cost of sales, the impact of impairment losses, gains and losses on disposal of property, plant, and equipment and exploration and evaluation assets and certain other non-production related costs, by the number of units sold.
Metals’ NDCC is calculated by dividing cost of sales, as reported in the financial statements, adjusted for the following: depreciation, depletion, amortization and impairment losses in cost of sales; cobalt by-product, fertilizer and other revenue; cobalt gain/loss; and other costs primarily related to the impact of opening and closing inventory values, by the number of finished nickel pounds sold in the period.
Unit operating costs for nickel and electricity are key measures that management and investors uses to monitor performance. NDCC of nickel is a widely-used performance measure for nickel producers. Management uses unit operating costs/NDCC to assess how well the Corporation’s producing mine and power facilities are performing and to assess overall production efficiency and effectiveness internally across periods and compared to its competitors.
Unit operating cost (NDCC) for nickel is expressed in
The tables below reconcile cost of sales per the financial statements to unit operating cost/NDCC:
|
|
|
|
|
|
|
|
|
|
|
||||||||
$ millions, except unit cost and sales volume, for the three months ended |
|
|
|
|
|
|
|
|
|
2024 |
||||||||
|
|
Metals |
|
Power |
|
Other(1) |
|
Adjustment
|
|
Total |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales per financial statements |
$ |
131.1 |
|
$ |
4.0 |
|
$ |
8.3 |
$ |
(115.9 |
) |
$ |
27.5 |
|||||
Less: |
|
|
|
|
|
|
|
|
|
|
||||||||
Depletion, depreciation and amortization in cost of sales |
|
(13.5 |
) |
|
(0.5 |
) |
|
|
|
|
|
|
||||||
|
|
117.6 |
|
|
3.5 |
|
|
|
|
|
|
|
||||||
Adjustments to cost of sales: |
|
|
|
|
|
|
|
|
|
|
||||||||
Cobalt by-product, fertilizer and other revenue |
|
(27.3 |
) |
|
- |
|
|
|
|
|
|
|
||||||
Impact of opening/closing inventory and other(2) |
|
(3.4 |
) |
|
- |
|
|
|
|
|
|
|
||||||
Cost of sales for purposes of unit cost calculation |
|
86.9 |
|
|
3.5 |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales volume for the period |
|
8.9 |
|
|
210 |
|
|
|
|
|
|
|
||||||
Volume units |
|
Millions of
|
|
Gigawatt
|
|
|
|
|
|
|
||||||||
Unit operating cost(3)(4) |
$ |
9.80 |
|
$ |
17.12 |
|
|
|
|
|
|
|
||||||
Unit operating cost (US$ per pound) (NDCC)(5) |
$ |
7.24 |
|
|
|
|
|
|
|
|
|
$ millions, except unit cost and sales volume, for the three months ended |
|
|
|
|
|
|
|
|
|
2023 |
||||||||
|
|
Metals |
|
Power |
|
Other(1) |
|
Adjustment
|
|
Total |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales per financial statements |
$ |
144.5 |
|
$ |
3.4 |
|
$ |
7.7 |
$ |
(96.3 |
) |
$ |
59.3 |
|||||
Less: |
|
|
|
|
|
|
|
|
|
|
||||||||
Depletion, depreciation and amortization in cost of sales |
|
(13.5 |
) |
|
(0.5 |
) |
|
|
|
|
|
|
||||||
|
|
131.0 |
|
|
2.9 |
|
|
|
|
|
|
|
||||||
Adjustments to cost of sales: |
|
|
|
|
|
|
|
|
|
|
||||||||
Cobalt by-product, fertilizer and other revenue |
|
(55.1 |
) |
|
- |
|
|
|
|
|
|
|
||||||
Cobalt gain |
|
(0.5 |
) |
|
- |
|
|
|
|
|
|
|
||||||
Impact of opening/closing inventory and other(2) |
|
(11.0 |
) |
|
- |
|
|
|
|
|
|
|
||||||
Cost of sales for purposes of unit cost calculation |
|
64.4 |
|
|
2.9 |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales volume for the period |
|
7.4 |
|
|
158 |
|
|
|
|
|
|
|
||||||
Volume units |
|
Millions of
|
|
Gigawatt
|
|
|
|
|
|
|
||||||||
Unit operating cost(3)(4) |
$ |
8.74 |
|
$ |
19.37 |
|
|
|
|
|
|
|
||||||
Unit operating cost (US$ per pound) (NDCC)(5) |
$ |
6.46 |
|
|
|
|
|
|
|
|
|
(1) |
Other is composed of the cost of sales of the Oil and Gas and Corporate and Other reportable segments. |
(2) |
Other is primarily composed of royalties and other contributions, sales discounts, effect of average exchange rate changes and other non-cash items. |
(3) |
Unit operating cost/NDCC may not calculate exactly based on amounts presented due to foreign exchange and rounding. |
(4) |
Power, unit operating cost price per MWh. |
(5) |
Unit operating costs in US$ are converted at the average exchange rate for the period. |
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share
The Corporation defines adjusted net earnings/loss from continuing operations as net earnings/loss from continuing operations less items not reflective of the Corporation’s current or future operational performance. These adjusting items include, but are not limited to, inventory write-downs/obsolescence, impairment of assets, gains and losses on the acquisition or disposal of assets, unrealized foreign exchange gains and losses, gains and losses on financial assets and liabilities and other one-time adjustments that have not occurred in the past two years and are not expected to recur in the next two years. While some adjustments are recurring (such as unrealized foreign exchange (gain) loss and revaluations of allowances for expected credit losses (ACL)), management believes that they do not reflect the Corporation’s current or future operational performance.
Net earnings/loss from continuing operations at Oil and Gas is deducted from/added back to adjusted earnings/loss from continuing operations as the segment is not currently exploring for or producing oil and gas and its financial results relate to ancillary drilling services, provided to a customer and CUPET, and environmental rehabilitation costs for legacy assets, which are not reflective of the Corporation’s core operating activities or future operational performance. The adjustment for net earnings/loss from continuing operations at Oil and Gas represented a change in the composition of adjusted net earnings/loss from continuing operations during the three months ended
Adjusted net earnings/loss from continuing operations per share is defined consistent with the definition above and divided by the Corporation’s weighted-average number of common shares outstanding.
Management uses these measures internally and believes that they provide investors with performance measures with which to assess the Corporation’s current or future operational performance by adjusting for items or transactions that are not reflective of its current or future operational performance.
The table below reconcile net (loss) earnings from continuing operations and net (loss) earnings from continuing operations per share, both per the financial statements, to adjusted net (loss) earnings from continuing operations and adjusted net (loss) earnings from continuing operations per share, respectively:
|
|
|
|
|
2024 |
|
|
|
|
|
2023 |
|
||||
For the three months ended |
|
$ millions |
|
|
$/share |
|
|
$ millions |
|
|
$/share |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) earnings from continuing operations |
$ |
(40.9 |
) |
$ |
(0.10 |
) |
$ |
13.6 |
|
$ |
0.03 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusting items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
- |
|
|
- |
|
|
0.9 |
|
|
- |
|
||||
|
|
3.5 |
|
|
0.01 |
|
|
- |
|
|
- |
|
||||
Corporate and Other - Gain on repurchase of notes |
|
- |
|
|
- |
|
|
(1.3 |
) |
|
- |
|
||||
Metals - Moa JV - Inventory write-down/obsolescence |
|
0.9 |
|
|
- |
|
|
0.3 |
|
|
- |
|
||||
Metals - Fort Site - Inventory write-down/obsolescence |
|
0.9 |
|
|
- |
|
|
- |
|
|
- |
|
||||
Power - Loss (gain) on revaluation of GNC receivable |
|
10.5 |
|
|
0.02 |
|
|
(8.5 |
) |
|
(0.02 |
) |
||||
Power - (Gain) loss on revaluation of Energas payable |
|
(1.4 |
) |
|
- |
|
|
7.6 |
|
|
0.02 |
|
||||
Oil and Gas - Net loss from continuing operations, net of |
|
|
|
|
|
|
|
|
|
|
|
|
||||
unrealized foreign exchange gain/loss |
|
2.3 |
|
|
0.01 |
|
|
0.9 |
|
|
- |
|
||||
Total adjustments, before tax |
$ |
16.7 |
|
$ |
0.04 |
|
$ |
(0.1 |
) |
$ |
- |
|
||||
Tax adjustments |
|
(0.4 |
) |
|
- |
|
|
(0.2 |
) |
|
- |
|
||||
Adjusted net (loss) earnings from continuing operations |
$ |
(24.6 |
) |
$ |
(0.06 |
) |
$ |
13.3 |
|
$ |
0.03 |
|
Spending on capital
The Corporation defines spending on capital for each segment as property, plant and equipment and intangible asset expenditures on a cash basis adjusted to the accrual basis in order to account for assets that are available for use by the Corporation and the Moa Joint Venture prior to payment and includes adjustments to accruals. The Metals segment’s spending on capital includes the Fort Site’s expenditures, plus the Corporation’s 50% share of the Moa Joint Venture’s expenditures, which is accounted for using the equity method for accounting purposes.
Combined spending on capital is the aggregate of each segment’s spending on capital or the Corporation’s consolidated property, plant and equipment and intangible asset expenditures and the property, plant and equipment and intangible asset expenditures of the Moa Joint Venture on a 50% basis, all adjusted to the accrual basis.
Combined spending on capital is used by management, and management believes this information is used by investors, to analyze the Corporation and the Moa Joint Venture’s investments in non-current assets that are held for use in the production of nickel, cobalt, fertilizers, oil and gas and power generation.
The tables below reconcile property, plant and equipment and intangible asset expenditures per the financial statements to combined spending on capital, expressed in Canadian dollars:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
2024 |
||||||||||
|
|
Metals |
|
|
Power |
|
|
Other(1) |
|
|
Combined
|
|
|
Adjustment
|
|
|
Total
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment expenditures(2) |
$ |
9.5 |
|
$ |
2.6 |
$ |
- |
|
$ |
12.1 |
|
$ |
(8.4 |
) |
$ |
3.7 |
||||||
Intangible asset expenditures(2) |
|
- |
|
|
- |
|
0.2 |
|
|
0.2 |
|
|
- |
|
|
0.2 |
||||||
|
|
9.5 |
|
|
2.6 |
|
0.2 |
|
|
12.3 |
|
$ |
(8.4 |
) |
$ |
3.9 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrual adjustment |
|
(0.1 |
) |
|
- |
|
(0.1 |
) |
|
(0.2 |
) |
|
|
|
|
|||||||
Spending on capital |
$ |
9.4 |
|
$ |
2.6 |
$ |
0.1 |
|
$ |
12.1 |
|
|
|
|
|
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|||||||||
|
|
Metals |
|
Power |
|
Other(1) |
|
Combined
|
|
Adjustment
|
|
Total
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Property, plant and equipment expenditures(2) |
$ |
9.6 |
$ |
0.7 |
$ |
- |
|
$ |
10.3 |
|
$ |
(6.7 |
) |
$ |
3.6 |
||||||
Intangible asset expenditures(2) |
|
- |
|
- |
|
0.9 |
|
|
0.9 |
|
|
- |
|
|
0.9 |
||||||
|
|
9.6 |
|
0.7 |
|
0.9 |
|
|
11.2 |
|
$ |
(6.7 |
) |
$ |
4.5 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Accrual adjustment |
|
- |
|
- |
|
(0.7 |
) |
|
(0.7 |
) |
|
|
|
|
|||||||
Spending on capital |
$ |
9.6 |
$ |
0.7 |
$ |
0.2 |
|
$ |
10.5 |
|
|
|
|
|
(1) |
Includes property, plant and equipment and intangible asset expenditures of the Oil and Gas and Corporate and Other reportable segments. |
(2) |
Total property, plant and equipment expenditures and total intangible asset expenditures as presented in the Corporation’s condensed consolidated statements of cash flow. |
Combined cash provided (used) by continuing operations for operating activities and combined free cash flow
The Corporation defines cash provided (used) by continuing operations for operating activities by segment as cash provided (used) by continuing operations for operating activities for each segment calculated in accordance with IFRS and adjusted to remove the impact of cash provided (used) by wholly-owned subsidiaries. Combined cash provided (used) by continuing operations for operating activities is the aggregate of each segment’s cash provided (used) by continuing operations for operating activities including the Corporation’s 50% share of the Moa JV’s cash provided (used) by continuing operations for operating activities, which is accounted for using the equity method of accounting and excluded from consolidated cash provided (used) by continuing operations for operating activities.
The Corporation defines free cash flow for each segment as cash provided (used) by continuing operations for operating activities by segment, less cash expenditures on property, plant and equipment and intangible assets, including exploration and evaluation assets. Combined free cash flow is the aggregate of each segment’s free cash flow or the Corporation’s consolidated cash provided (used) by continuing operations for operating activities, less consolidated cash expenditures on property, plant and equipment and intangible assets, including exploration and evaluation assets, less distributions received from Moa JV, plus cash provided (used) by continuing operations for operating activities for the Corporation’s 50% share of the Moa JV, less cash expenditures on property, plant and equipment and intangible assets for the Corporation’s 50% share of the Moa JV.
The Corporate and Other segment’s cash used by continuing operations for operating activities is adjusted to exclude distributions received from Moa JV. Distributions from the Moa JV excluded from Corporate and Other are included in the Adjustment for Moa Joint Venture to arrive at total cash provided (used) by continuing operations for operating activities per the financial statements.
The Metals segment’s free cash flow includes the Fort Site and Metals Marketing’s free cash flow, plus the Corporation’s 50% share of the Moa JV’s free cash flow, which is accounted for using the equity method for accounting purposes.
Combined cash provided (used) by continuing operations for operating activities and combined free cash flow are used by management, and management believes this information is used by investors, to analyze cash flows generated from operations and assess its operations’ ability to provide cash or its use of cash, and in the case of combined free cash flow, after funding cash capital requirements, to service current and future working capital needs and service debt.
The tables below reconcile combined cash provided (used) by continuing operations for operating activities to cash provided (used) by continuing operations per the financial statements to combined free cash flow:
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|||||||||||||
|
|
|
Metals(1)(2) |
|
Power |
|
Oil and
|
|
Corporate
|
|
Combined
|
|
Adjustment
|
|
Total
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash provided (used) by continuing operations for operating activities |
|
$ |
31.2 |
|
$ |
9.7 |
|
$ |
(4.0 |
) |
$ |
(8.8 |
) |
$ |
28.1 |
|
$ |
(15.1 |
) |
$ |
13.0 |
|
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment expenditures |
|
|
(9.5 |
) |
|
(2.6 |
) |
|
- |
|
|
- |
|
|
(12.1 |
) |
|
8.4 |
|
|
(3.7 |
) |
||||||
Intangible expenditures |
|
|
- |
|
|
- |
|
|
(0.2 |
) |
|
- |
|
|
(0.2 |
) |
|
- |
|
|
(0.2 |
) |
||||||
Free cash flow |
|
$ |
21.7 |
|
$ |
7.1 |
|
$ |
(4.2 |
) |
$ |
(8.8 |
) |
$ |
15.8 |
|
$ |
(6.7 |
) |
$ |
9.1 |
|
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 (Restated) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
Metals(1)(2) |
|
Power |
|
Oil and
|
|
Corporate
|
|
Combined
|
|
Adjustment
|
|
Total
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash provided (used) by continuing operations for operating activities |
|
$ |
69.5 |
|
$ |
4.4 |
|
$ |
1.0 |
|
$ |
(28.0 |
) |
$ |
46.9 |
|
$ |
(37.1 |
) |
$ |
9.8 |
|
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment expenditures |
|
|
(9.6 |
) |
|
(0.7 |
) |
|
- |
|
|
- |
|
|
(10.3 |
) |
|
6.7 |
|
|
(3.6 |
) |
||||||
Intangible expenditures |
|
|
- |
|
|
- |
|
|
(0.9 |
) |
|
- |
|
|
(0.9 |
) |
|
- |
|
|
(0.9 |
) |
||||||
Free cash flow |
|
$ |
59.9 |
|
$ |
3.7 |
|
$ |
0.1 |
|
$ |
(28.0 |
) |
$ |
35.7 |
|
$ |
(30.4 |
) |
$ |
5.3 |
|
(1) |
Cash provided by continuing operations for operating activities for the Moa JV, Fort Site and Metals Marketing was |
(2) |
Property, plant and equipment expenditures for the Moa JV, Fort Site and Metals Marketing was |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507561635/en/
For further investor information contact:
Director, Investor Relations and Corporate Affairs
Telephone: (416) 935-2451
Toll-free: 1 (800) 704-6698
E-mail: investor@sherritt.com
Bay Adelaide Centre,
www.sherritt.com
Source: