Marsulex reports results for fourth quarter and full year 2007



    TORONTO, March 6 /CNW/ - Marsulex Inc. (TSX: MLX) today announced
significant increases in net earnings and earnings per share for the three
months and year ended December 31, 2007. A number of factors in the fourth
quarter contributed to record results that more than doubled net earnings for
the year. The performances of the operating groups in 2007 demonstrated the
Company's ability to deliver sustained returns to shareholders.

    
    -------------------------------------------------------------------------
                                 Three months ending             Year ending
                                         December 31             December 31
    (in millions of dollars,                     %                       %
     except per share)           2007    2006   chg      2007    2006   chg
    -------------------------------------------------------------------------

    Revenue                    $ 73.0  $ 69.4    5.2%  $287.5  $249.6   15.2%
    Gross profit                 24.1    27.5  -12.4%    98.4    89.0   10.6%
    Selling, general,
     administrative, and
     other costs                 10.9     9.6   13.5%    35.9    30.1   19.3%
    EBITDA(1)                    13.2    17.9  -26.3%    62.5    58.9    6.1%
    Depreciation, amortization,
     asset impairment, and
     other charges               11.5    11.9   -3.4%    37.1    36.9    0.5%
    Net interest expense          2.3     3.7  -37.8%    10.6    12.4  -14.5%
    Earnings (loss) before
     income taxes                (0.6)    2.3 -126.1%    14.8     9.6   54.2%
    Income taxes/(recovery)      (8.0)    3.7    n/a     (4.9)    2.5    n/a
    Net earnings (loss)           7.4    (1.4)   n/a     19.7     7.1    n/a
    Earnings (loss) per
     share - basic               0.23   (0.04)   n/a     0.60    0.22    n/a
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) EBITDA is defined as earnings before interest, taxes, depreciation
        and amortization and described in more detail at the end of this
        release.


    HIGHLIGHTS

    Fourth Quarter Summary

    -   Revenue increased 5.2% with the Power Generation and Western Markets
        groups both reporting higher revenue
    -   Gross Profit reflects the negative impact of foreign exchange, the
        timing of energy cost pass through, and Power Generation revenue mix
    -   SG&A costs include settlement of legacy litigation and associated
        legal activity (approximately $2.2 million)
    -   Pre-tax earnings impacted by non-cash asset impairment charge of
        $3.4 million primarily related to Venezuelan joint venture
    -   Net earnings of $7.4 million includes tax recovery of approximately
        $8 million reflecting the benefit of tax losses, (including those
        assumed through the Harrowston Holdings reorganization), and
        announced Canadian tax rate reductions
    -   Quarterly dividend increased to 16 cents per share

    Strong 2007 Financial Performance

    -   Revenue and gross profit increased 15.2% and 10.6% respectively over
        2006. Full year contributions of Montreal expansion and Petcoke
        Services are main drivers
    -   EBITDA of $62.5 million compared with $58.9 million in 2006
    -   Net Earnings of $19.7 million compared with $7.1 million in 2006
    -   Marsulex introduces regular quarterly dividend.  $15 million paid
        in 2007
    -   Marsulex finalizes $205 million amended credit facility, resulting in
        greater financial flexibility and $1.8 million lower interest
        expense.
    -   Fort McMurray celebrates one year of operations
    

    Commenting on the results, Marsulex President and Chief Executive
Officer, Mr. Laurie Tugman, said, "The fourth quarter showed improvements in
revenue and net earnings despite the effects of the strong Canadian dollar,
higher sulphur prices, and the impairment charge related to certain Petcoke
Services Venezuelan contracts. The full year results demonstrate the solid
base we have established for sustainable earnings and continued growth."
    Mr. Tugman also noted that other achievements during the year have
benefited the Company and shareholders. "The amended credit agreement
completed in the first quarter resulted in lower net interest costs during the
year, and the introduction of a regular quarterly dividend added to the total
return shareholders enjoyed in 2007."

    Financial Performance for Fourth Quarter

    The increased revenue was generated from Power Generation Group projects,
which included $2.0 million negative effect of foreign exchange, and higher
volumes and sales of sulphur enhanced products within the Western Markets
Group. Industrial Services revenue in local currency was comparable to the
prior year; however, the impact of foreign exchange reduced quarterly revenues
by $3.8 million. Gross profit was $24.1 million compared with $27.5 million in
2006, the decrease reflecting the impact of foreign exchange ($1.7 million),
higher sulphur input costs in Western Markets which was partially offset by
the benefit of higher prilled sulphur sales, the pass-through of higher energy
costs which benefited the Toledo facility in 2006, and the mix of project and
licensing/royalty revenues for Power Generation.
    Pre-tax earnings in the fourth quarter were negatively affected by a
$3.4 million non-cash asset impairment charge primarily with respect to the
net book value for goodwill and intangible assets relating to certain
Venezuelan Petcoke contracts that will not be renewed. Loss before income
taxes for the fourth quarter of 2007 was $0.6 million (compared to earnings of
$2.3 million in 2006). The pre-tax loss was more than offset by approximately
$8 million tax recoveries related primarily to tax rate reductions and tax
loss benefits assumed on a reorganization and amalgamation of Marsulex with
Harrowston Holdings Limited on December 31, 2007. Net earnings for the quarter
were $7.4 million ($0.23 per share) compared to a net loss of $1.4 million in
2006 (negative $0.04 per share).

    Operating Group Results

    The Industrial Services Group produced gross profit of $16.7 million for
the quarter ($66.7 million for the year ended 2007) compared with
$17.8 million ($56.0 million for the year ended 2006). The full year results
reflected a full year's contribution from Petcoke Services and the Montreal
expansion.
    The Group's U.S. West coast sulphur prilling business benefited from
strengthening of international prices for sulphur in the second half of 2007.
Industrial Services gross profit improved despite the processing of lower
hazardous waste and petcoke volumes. The spent acid regeneration facility
processed higher volumes in the quarter, but the impact of foreign exchange
and the pass-through of higher energy costs which benefited the fourth quarter
2006 results, resulted in lower margins in 2007.
    The Western Markets Group reported gross profit of $4.7 million for the
quarter ($22.7 million for the year ended 2007), compared with $6.0 million
($24.8 million for the year ended 2006). Higher revenue and gross profit from
sales of water treatment products for the year were more than offset by lower
earnings from sulphur-enhanced products which were negatively impacted by the
CN rail disruption in the first quarter; costs related to extended maintenance
shutdowns, in the third quarter, at the Prince George plant; and a supplier's
plant and higher input costs for sulphur in the second half of the year.
    Gross profit for the Power Generation Group was $2.6 million in the
quarter compared to $3.7 million for the fourth quarter of 2006. For the year,
gross profit was $9.0 million compared with $8.2 million in 2006. Although
revenue was significantly higher for the quarter ($12.6 million in 2007;
$7.2 million in 2006) and for the year ($47.6 million in 2007; $22.1 million
in 2006) the majority came from lower margin project revenue as compared to a
higher mix of international royalty and licence fees in 2006.
    Corporate Support costs were $5.9 million in the quarter ($17.3 million
for the year ended 2007) compared to $5.2 million ($13.2 million for the year
ended 2006). The higher Corporate Support in the quarter reflects foreign
exchange gains of $0.5 million against losses of $1.1 million in 2006; the
costs of the settlement of legacy litigation ($1.5 million); legal and
consulting costs ($0.7 million) and year-end adjustments for incentive related
and other costs ($0.1 million). The increase for the year also reflects
increased head count, travel and related costs. At December 31, 2007, there
were a total of 732,000 Performance share and Deferred share units
outstanding. The total expense for the fourth quarter and the year for these
units was $1.4 million (2006 - $0.8 million) and $6.0 million (2006 -
$2.2 million) respectively, with the increase primarily reflecting the
increase in the market price of the Company's common shares.
    The Company had net earnings of $19.7 million for the year ended
December 31, 2007 compared to $7.1 million for the same period in 2006 as a
result of higher earnings from the business, including foreign exchange gains
($4.3 million increase), overall lower interest costs, and tax recoveries in
the fourth quarter.
    Charges for asset impairment of $3.4 million related primarily to the
reduction in net book value for goodwill ($1.4 million) and intangible assets
($1.8 million) on certain Venezuelan Petcoke contracts. In late 2007 and early
2008, the Company received notification that certain contracts from three
Venezuelan controlled refineries including contracts of a 50/50 joint venture
in Venezuela were not to be renewed. The gross margin on these contracts was
$1.6 million for the year. Management is currently negotiating termination of
the contracts. Given the uncertainty of future cash flows, the Company has
recorded an impairment charge of $3.2 million with respect to goodwill and
intangibles. The Company is in discussions on a number of opportunities that
would replace these contracts. Charges for asset impairment also included a
$0.2 million provision on the Company's investment in Asset-Backed Commercial
Paper. 2006 impairment charges included a $2.8 million write-down in the value
of the Company's Long Beach facility.

    
    -------------------------------------------------------------------------
                               Three months ending                Year Ended
                                       December 31               December 31
    (in thousands of dollars)       2007      2006           2007       2006
    -------------------------------------------------------------------------
    Interest expense            $  2,530  $  4,139      $  11,644  $  15,944
    Interest capitalized               -        (2)             -     (2,513)
    Interest income                 (234)     (431)        (1,061)    (1,018)
    -------------------------------------------------------------------------
    Net interest expense        $  2,296  $  3,710      $  10,583  $  12,413
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Interest expense for the year ended December 31, 2007 reflects the
reduced interest rates (overall weighted average rate of 6.9% for 2007 versus
8.0% for 2006) resulting from the March 1, 2007 refinancing. The interest
capitalized for the year ended December 31, 2006 relates to the Montreal
expansion project which was completed in the third quarter of 2006.
    The increase in the pre-tax earnings reflects the overall increase in the
business from both organic growth and acquisitions, as well as reduced
depreciation, amortization, and interest expense.
    For the year ended December 31, 2007 the Company recognized a recovery in
taxes of $4.9 million. Through a reorganization and amalgamation with
Harrowston Holdings Limited ("HHL") the Company was able to recognize a
deferred tax recovery of $4.5 million relating to certain Canadian non-capital
tax losses accumulated by HHL. In addition, the effective tax rate reflects
the utilization of previously unrecognized U.S. tax loss carry forwards and a
recovery on its future tax liability as a result of changes in the Canadian
Federal tax rates that were substantively enacted during the second and fourth
quarters of 2007. (In 2006 the Company recorded a $2.9 million recovery on
future tax liabilities for changes in the tax rates substantively enacted
during the second quarter). The current tax expense for 2007 is $1.1 million
compared to $4.3 million for 2006, which included a $2.3 million increase in
reserves. Given the recently announced rate reductions, the company's Canadian
statutory rate is expected to be 29% by 2012.
    Cash tax is dependent on the Company's earnings by legal entity, the
availability of the tax losses and accelerated tax depreciation on property,
plant and equipment and other deductions to reduce taxable income.
Historically, the Company has paid cash taxes of less than $2.0 million per
year with 2007 cash taxes reflecting the prepayments of approximately
$1.6 million. The recent reorganizations will provide additional useable tax
attributes in Canada to reduce the Company's overall cash tax burden.

    Outlook

    "The solid operating results for 2007 underscored the strength of the
existing business while the Company looks for opportunities to expand the
business. The outlook for the industries we serve continues to be positive,
and with our strengthened management team and reputation for delivering
reliable and efficient services, we are well-placed to pursue new
opportunities," Mr. Tugman said.
    Marsulex, which is based in Toronto, Ontario, is a leading provider of
industrial services, including environmental compliance solutions for air
quality control, processing or handling of industrial by-products or waste
streams, and is a producer and marketer of sulphur-based industrial chemicals.
The Company's services and products are provided to a broad base of industrial
customers in a wide range of industries. Website: www.marsulex.com
    A conference call with analysts and portfolio managers to review the
fourth quarter 2007 results will be webcast live on www.marsulex.com and
www.newswire.ca on Friday, March 7, 2008 at 10:00 a.m. Eastern Time.

    Information in this news release that is not current or historical
factual information may constitute forward-looking information, including
future-oriented financial information and financial outlooks, within the
meaning of securities laws. This information is based on certain assumptions
regarding expected growth, results of operations, performance, and business
prospects and opportunities (collectively, the "Assumptions"). While the
Company considers these Assumptions to be reasonable, based on information
currently available, they may prove to be incorrect. Forward-looking
information is subject to a number of risks, uncertainties and other factors
that could cause actual results to differ materially from what the Company
currently expects. These risks, uncertainties and other factors include, but
are not limited to: the Company's ability to renegotiate contracts; the impact
of acquisitions and growth opportunities; the timing and market acceptance of
future products; competition in the Company's markets; the Company's reliance
on customers; fluctuations in currency and exchange rates; commodity prices or
interest rates; the Company's ability to maintain good relations with its
employees; changes in the law or regulations regarding the environment or
other environmental liabilities; the Company's ability to integrate
acquisitions; and the Company's ability to protect its intellectual property
(collectively, the "Risks"). For more exhaustive information on these Risks
you should refer to our Company's filings with the securities regulatory
authorities, including the Company's most recently filed annual information
form, which is available on SEDAR at www.sedar.com. To the extent any
forward-looking information in this news release 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.
    Actual results may differ materially from what the Company currently
expects.  Other than as required under securities laws, we do not undertake to
update any forward-looking information at any particular time.  The reader
should not place undue importance on forward-looking information and should
not rely upon this information as of any other date.  All forward-looking
information contained in this news release is expressly qualified in its
entirety by this cautionary statement.

    
    Summarized financial information (unaudited)
    (In thousand of dollars, except per share information)

    Summarized Balance Sheet
    -------------------------------------------------------------------------
                                                   December 31,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
    Assets:
    Cash and cash equivalents                        $   9,022     $  40,039
    Cash held in trust                                     687         2,151
    Other current assets                                50,614        48,046
    Long term investments                                  900             -
    Property, plant and equipment, intangible and
     other assets, and goodwill                        318,923       349,620
    -------------------------------------------------------------------------
                                                     $ 380,146     $ 439,856
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities                              $  66,313     $  64,233
    Long-term debt                                     155,941       206,815
    Other liabilities                                   23,193        25,229
    Future income tax liability                         25,442        30,657
    Shareholders' equity                               109,257       112,922
    -------------------------------------------------------------------------
                                                     $ 380,146     $ 439,856
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Summarized Income Statement
    -------------------------------------------------------------------------
                                     Three months ending         Year ending
                                             December 31,        December 31,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Revenue                           $ 72,989  $ 69,368  $287,460  $249,595
    Gross profit                        24,075    27,453    98,406    88,985
    Gross profit as a percent of
     revenue                              33.0%     39.6%     34.2%     35.7%
    Selling, general, administrative
     and other                          10,892     9,631    35,860    30,079
    Depreciation and amortization        8,126     9,076    32,939    34,144
    Charges for asset impairment         3,404     2,784     3,404     2,784
    Gain on redemption of Senior
     Subordinated Notes                      -         -      (177)        -
    Expense related to debt
     refinancing                             -         -     1,000         -
    Net interest expense                 2,296     3,710    10,583    12,413
    -------------------------------------------------------------------------
    Earnings (loss) before income
     taxes                                (643)    2,252    14,797     9,565
    Income taxes/(recovery)             (8,093)    3,677    (4,876)    2,485
    -------------------------------------------------------------------------
    Net earnings (loss)               $  7,450  $ (1,425) $ 19,673  $  7,080
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Other Comprehensive
     Income                           $  5,373  $ (3,507) $ 15,938  $  5,040
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per share
     -- Basic                         $   0.23  $  (0.04) $   0.60  $   0.22
    Earnings (loss) per share
     -- Diluted                       $   0.22  $  (0.04) $   0.59  $   0.21


    Summarized Cash Flow Statement
    -------------------------------------------------------------------------
                                     Three months ending         Year ending
                                             December 31,        December 31,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Cash provided by operations
     before changes in working
     capital                          $ 13,052  $ 12,234  $ 46,923  $ 42,107
    Changes in non-cash working
     capital                            (3,789)    8,806    (6,384)   19,809
    -------------------------------------------------------------------------
    Cash from operating activities    $  9,263  $ 21,040  $ 40,539  $ 61,916
    Financing activities                (2,388)     (422)  (51,177)   30,850
    Investing activities
      Additions to property, plant
       and equipment
      -  Maintenance capital
          expenditures(1)               (5,238)   (4,219)  (13,108)   (9,665)
      -  Expansion capital
          expenditures                       -    (2,228)   (4,290)  (33,188)
      Acquisitions, net of cash acquired     -       (84)        -   (29,076)
      Decrease in cash held in trust      (247)    9,083       363     9,216
      Net increase in other assets         (13)     (662)   (2,051)   (2,042)
    -------------------------------------------------------------------------
                                        (5,498)    1,890   (19,086)  (64,755)
    Foreign exchange gain (loss) on
     cash held in foreign currency           -       559    (1,293)      378
    -------------------------------------------------------------------------
    Increase (decrease) in cash and
     cash equivalents                    1,377    23,067   (31,017)   28,389
    Cash and cash equivalents -
     beginning of period                 7,645    16,972    40,039    11,650
    -------------------------------------------------------------------------
    Cash and cash equivalents -
     end of period                    $  9,022  $ 40,039  $  9,022  $ 40,039
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Income taxes paid, net of
     refunds                          $    493  $   (175) $  3,860  $  1,086
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) including expenditures for deferred placement cells


    Supplement Business Segment Information (unaudited)
    -------------------------------------------------------------------------

    For the three
     months ended
     December 31        Industrial            Western             Power
    (in thousands        Services             Markets           Generation
     of dollars)      2007      2006      2007      2006      2007      2006
    -------------------------------------------------------------------------
    Revenue       $ 43,246  $ 47,403  $ 17,149  $ 14,776  $ 12,594  $  7,189
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross profit  $ 16,749  $ 17,789  $  4,704  $  5,964  $  2,622  $  3,700
    SGA(1)           2,899     2,677       857       545     1,261     1,256
    Foreign
     exchange
     losses
     (gains)             -         -         -         -         -         -
    -------------------------------------------------------------------------
    Earnings (loss)
     before the
     under noted  $ 13,850  $ 15,112  $  3,847  $  5,419  $  1,361  $  2,444
    Depreciation     5,643     6,295       730       619        29        28
    Amortization
     of deferred
     charges and
     intangible
     assets          1,653     2,256         -         -         -         -
    Charges for
     asset
     impairment      3,204     2,784         -         -         -         -
    Net Interest
     expense             -         -         -         -         -         -
    -------------------------------------------------------------------------
    Earnings (loss)
     before income
     taxes        $  3,350  $  3,777  $  3,117  $  4,800  $  1,332  $  2,416
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital
     expenditures $  3,974  $  4,224  $    516  $    779  $     32  $      2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the three
     months ended    Inter-segment
     December 31        Revenue
    (in thousands  Corporate Support          Total
     of dollars)      2007      2006      2007      2006
    -----------------------------------------------------
    Revenue       $      -  $      -  $ 72,989  $ 69,368
    -----------------------------------------------------
    -----------------------------------------------------
    Gross profit  $      -  $      -  $ 24,075  $ 27,453
    SGA(1)           6,352     4,093    11,369     8,571
    Foreign
     exchange
     losses
     (gains)          (477)    1,060      (477)    1,060
    -----------------------------------------------------
    Earnings (loss)
     before the
     under noted  $ (5,875) $ (5,153) $ 13,183  $ 17,822
    Depreciation        71        76     6,473     7,018
    Amortization
     of deferred
     charges and
     intangible
     assets              -      (198)    1,653     2,058
    Charges for
     asset
     impairment        200         -     3,404     2,784
    Net Interest
     expense         2,296     3,710     2,296     3,710
    -----------------------------------------------------
    Earnings (loss)
     before income
     taxes        $ (8,442) $ (8,741) $   (643) $  2,252
    -----------------------------------------------------
    -----------------------------------------------------
    Capital
     expenditures $    359  $    246  $  4,881  $  5,251
    -----------------------------------------------------
    -----------------------------------------------------


    -------------------------------------------------------------------------
    For the year
     ended
     December 31        Industrial            Western             Power
    (in thousands        Services             Markets           Generation
     of dollars)      2007      2006      2007      2006      2007      2006
    -------------------------------------------------------------------------
    Revenue
     from
     external
     customers    $174,537  $165,423  $ 65,349  $ 62,113  $ 47,574  $ 22,115
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross profit  $ 66,745  $ 55,972  $ 22,698  $ 24,840  $  8,963  $  8,173
    SGA(1)          11,585    10,570     2,731     2,078     4,214     4,235
    Foreign
     exchange
     gains               -         -         -         -         -         -
    -------------------------------------------------------------------------
    Earnings (loss)
     before the
     under noted  $ 55,160  $ 45,402  $ 19,967  $ 22,762  $  4,749  $  3,938
    Depreciation    22,953    23,092     2,630     2,391       103        99
    Amortization
     of deferred
     charges and
     intangible
     assets          6,970     6,995         -         -         -         -
    Gain realized
     on redemption
     of Senior
     Subordinated
     Notes               -         -         -         -         -         -
    Cost of
     Refinancing         -         -         -         -         -         -
    Charges for
     asset
     impairment      3,204     2,784         -         -         -         -
    Net interest
     expense             -         -         -         -         -         -
    -------------------------------------------------------------------------
    Earnings (loss)
     before income
     taxes        $ 22,033  $ 12,531  $ 17,337  $ 20,371  $  4,646  $  3,839
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital
     expenditures $ 12,090  $ 38,691  $  2,635  $  1,411  $     84  $      9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Addition to
     goodwill     $      -  $  5,916  $      -  $      -  $      -  $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Acquisition,
     excluding
     goodwill     $      -  $ 25,884  $      -  $      -  $      -  $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets
     before
     goodwill and
     intangible
     assets       $226,884  $243,188  $ 32,372  $ 31,274  $  7,064  $    919
    Goodwill and
     intangible
     assets, net of
     accumulated
     amortization   91,037   107,332     4,468     4,468     4,958     5,847
    -------------------------------------------------------------------------
    Total assets  $317,921  $350,520  $ 36,840  $ 35,742  $ 12,022  $  6,766
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -----------------------------------------------------
    For the year
     ended           Inter-segment
     December 31        Revenue
    (in thousands  Corporate Support          Total
     of dollars)      2007      2006      2007      2006
    -----------------------------------------------------
    Revenue
     from
     external
     customers    $      -  $    (56) $287,460  $249,595
    -----------------------------------------------------
    -----------------------------------------------------
    Gross profit  $      -  $      -  $ 98,406  $ 88,985
    SGA(1)          21,592    13,232    40,122    30,115
    Foreign
     exchange
     gains          (4,262)      (36)   (4,262)      (36)
    -----------------------------------------------------
    Earnings (loss)
     before the
     under noted  $(17,330) $(13,196) $ 62,546  $ 58,906
    Depreciation       283       252    25,969    25,834
    Amortization
     of deferred
     charges and
     intangible
     assets              -     1,315     6,970     8,310
    Gain realized
     on redemption
     of Senior
     Subordinated
     Notes            (177)        -      (177)        -
    Cost of
     Refinancing     1,000         -     1,000         -
    Charges for
     asset
     impairment        200         -     3,404     2,784
    Net interest
     expense        10,583    12,413    10,583    12,413
    -----------------------------------------------------
    Earnings (loss)
     before income
     taxes        $(29,219) $(27,176) $ 14,797  $  9,565
    -----------------------------------------------------
    -----------------------------------------------------
    Capital
     expenditures $    586  $    837  $ 15,395  $ 40,948
    -----------------------------------------------------
    -----------------------------------------------------
    Addition to
     goodwill     $      -  $      -  $      -  $  5,916
    -----------------------------------------------------
    -----------------------------------------------------
    Acquisition,
     excluding
     goodwill     $      -  $      -  $      -  $ 25,884
    -----------------------------------------------------
    -----------------------------------------------------
    Total assets
     before
     goodwill and
     intangible
     assets       $ 13,363  $ 46,828  $279,683  $322,209
    Goodwill and
     intangible
     assets, net of
     accumulated
     amortization        -         -   100,463   117,647
    -----------------------------------------------------
    Total assets  $ 13,363  $ 46,828  $380,146  $439,856
    -----------------------------------------------------
    -----------------------------------------------------
    (1) Selling, general, and administrative costs.
    

    EBITDA

    EBITDA is a supplemental, non-generally accepted accounting principle
financial measure. EBITDA is defined as earnings before interest, taxes,
depreciation, and amortization or "EBITDA." It is used by management
internally to measure the performance of the business as a whole as well as to
measure the performance of the individual segments and also forms the primary
basis upon which employees of the Company receive incentive compensation.
EBITDA is also used by the Company as a basis to measure compliance with
certain debt covenants. EBITDA is presented as supplemental information
because management, through its discussions with key stakeholders of the
Company including shareholders, analysts and other financial institutions,
believes it is a widely used financial indicator of the Company's operating
profitability and performance before the effects of capital investment and
financing decisions. Since EBITDA is not a recognized measure under Canadian
generally accepted accounting principles ("GAAP"), it should not be considered
in isolation of, or as a substitute for net earnings, consolidated cash flow
from operations or any other measure of performance required by GAAP or as an
indicator of the Company's operating performance. The Company's method of
calculating EBITDA may differ from other companies and accordingly, the
Company's EBITDA may not be comparable to measures used by other companies. In
addition, this measure does not necessarily represent funds available for
discretionary use, and is not necessarily a measure of the Company's ability
to fund its cash requirements. The Company's non-GAAP performance measure,
EBITDA, has certain material limitations as follows:

    
    -   It does not include interest expense. Because the Company has
        borrowed money to finance some of its operations, interest is a
        necessary part of the Company's costs and ability to generate
        revenue. Therefore, any measure that excludes interest has material
        limitations;

    -   It does not include depreciation and amortization expense. Because
        the Company must utilize capital assets in order to generate
        revenues, depreciation and amortization expense is a necessary and
        ongoing part of the Company's costs. Therefore, any measure that
        excludes depreciation and amortization expense has material
        limitations; and,

    -   It does not include taxes. Because the payment of taxes is a
        necessary and ongoing part of the Company's operations, any measure
        that excludes taxes has material limitations.
    

    Management compensates for these limitations by considering the economic
effect of the excluded expense items independently as well as in connection
with its analysis of net earnings. Because we use EBITDA to evaluate our
financial performance, we reconcile it to net earnings which is the most
comparable financial measure calculated and presented in accordance to GAAP.
The following is a reconciliation of EBITDA to net earnings:

    
                                     Three months ending         Year ending
                                             December 31,        December 31,
    (in millions of dollars)              2007      2006      2007      2006
    -------------------------------------------------------------------------

    Earnings before the undernoted
     (EBITDA)                             13.2      17.9      62.5      58.9
    Depreciation, amortization,
     asset impairment, and other
     charges                              11.5      11.9      37.1      36.9
    Net interest expense                   2.3       3.7      10.6      12.4
    -------------------------------------------------------------------------
    Earnings (loss) before income taxes   (0.6)      2.3      14.8       9.6
    Income taxes/(recovery)               (8.0)      3.7      (4.9)      2.5
    -------------------------------------------------------------------------
    Net earnings (loss)                    7.4      (1.4)     19.7       7.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Laurie Tugman, President and CEO, Tel: (416)
496-4157 or William Martin, Chief Financial Officer, Tel: (416) 496-4164

Organization Profile

MARSULEX INC.

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