Primary Energy Recycling Corporation announces second quarter 2008 results



    OAK BROOK, IL, July 23 /CNW/ - Primary Energy Recycling Corporation (TSX:
PRI.UN) (the "Company" ) today released its financial results for the three
and six month periods ended June 30, 2008. All amounts are in U.S. dollars
unless otherwise indicated.

    
    Key Points

    -   The Company demonstrated solid financial performance and improved
        operational stability for the second consecutive quarter following
        implementation of an amended agreement with the site host at Harbor
        Coal.
    -   The payout ratio improved to 89.2% compared to 187.4% for the second
        quarter of 2007. For the first six months of 2008, the payout ratio
        improved to 87.5% compared to 202.5% for the same period in 2007.
    -   Distributable cash generated for the second quarter and the first six
        months of 2008 was Cdn$8.3 million or Cdn$0.22 per Enhanced Income
        Security ("EIS") and Cdn$17.0 million or Cdn$0.46 per EIS,
        respectively.
    -   Operating income for the second quarter of 2008 was $1.5 million,
        compared to an operating loss of $3.0 million for the second quarter
        of 2007. The $4.5 million improvement is primarily due to the amended
        agreement at Harbor Coal and the non recurrence of the 2007 outage at
        the North Lake facility.
    

    "The Company experienced solid financial performance driven by the
ratification of the amended agreement with the site host at the Harbor Coal
facility reached earlier this year," said V. Michael Alverson, Interim
President and Chief Financial Officer of EPCOR USA Ventures, LLC (the
"Manager"). "This has created a new environment of greater operational
stability as well as more reliable and sustainable cash flow."
    In the second quarter of 2008, the Company earned revenue of
$15.6 million, a decrease of 12.8% from the second quarter of 2007. For the
first six months of 2008, the Company earned revenue of $31.8 million, a
decrease of 8.1%, from the same period in the prior year. The decrease in
revenue for the three and six month periods is primarily due to a decline in
Energy service revenue at the Company's Harbor Coal facility as a result of
2008 revenue being computed under an amended partnership agreement. Operating
and maintenance expense for the second quarter of 2008 was $2.7 million, down
67.7% from the second quarter of 2007. For the first six months of 2008,
operating and maintenance expense was $5.5 million down 62.5% from the same
period in the prior year. The decline for both the three and six month periods
is primarily due to a decline in maintenance expenses at the Company's Harbor
Coal facility as a result of the amended partnership agreement which allocates
the majority of operating and maintenance expenses to Harbor Coal's partner.
    General and administrative expense for the second quarter of 2008 was
$3.0 million, an increase of 21.2% compared to the second quarter of 2007,
primarily due to additional property tax expenses of $0.2 million and
$0.3 million in other general and administrative expenses. For the first six
months of 2008, general and administrative expense was $5.8 million, an
increase of 7.2% due to $0.4 million of additional other general and
administrative expenses.
    Distributable Cash for the second quarter and the first six months of
2008 was Cdn$8.3 million or Cdn$0.22 per EIS, and Cdn$17.0 million or
Cdn$0.46, respectively. Distributions declared in the quarter and six-month
period were Cdn$7.4 million or Cdn$0.20 per EIS and Cdn$14.9 million or
Cdn$0.40 per EIS, respectively.
    The payout ratio for the second quarter of 2008 improved to 89.2%
compared to 187.4% for the second quarter of 2007. For the first six months of
2008, the payout ratio improved to 87.5% compared to 202.5% for the same
period in 2007.
    At the end of the second quarter 2008, the Company had cash on-hand of
$11.1 million and $15.0 million of undrawn revolver capacity. During the
second quarter, a cash payment of $3.0 million was made to bring the
outstanding revolver balance to zero.
    The Company's previously announced review of strategic options as well as
discussions with EPCOR Power LP. continue.


    
    Distributable Cash Summary
    (in 000s of US$, except per share data and as otherwise indicated)

                                 Three Months Ended       Six Months Ended
                                      June 30,                June 30,
                              ----------------------- -----------------------
                                  2008        2007        2008        2007
                              ----------- ----------- ----------- -----------
    Distributable Cash         $   7,129   $   3,895   $  14,533   $   8,137
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Per Common and equivalent
     Common Share              $    0.19   $    0.10   $    0.39   $    0.22
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Interest on EIS
     Subordinated Notes        $   1,944   $   1,944   $   3,888   $   3,888
    Distributions on Common
     Shares                        3,350       4,131       6,700       9,824
    Distributions on
     non-controlling Class B
     preferred interest              380         380         760         760
    Distributions on
     non-controlling Class B
     common interest                 685         844       1,370       2,008
                              ----------- ----------- ----------- -----------
    Total distributions        $   6,359   $   7,299   $  12,718   $  16,480
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Per Common and equivalent
     Common Share              $    0.17   $    0.20   $    0.34   $    0.44
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Hedge rate (Cdn$ per US$)  $  1.1712   $  1.1712   $  1.1712   $  1.1689
    Distributable Cash (Cdn$)  $   8,349   $   4,562   $  17,021   $   9,511
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Per Common and equivalent
     Common Share (Cdn$)       $    0.22   $    0.12   $    0.46   $    0.26
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Hedge rate (Cdn$ per US$)  $  1.1712   $  1.1712   $  1.1712   $  1.1689
    Total distributions (Cdn$) $   7,448   $   8,549   $  14,896   $  19,263
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Per Common and equivalent
     Common Share (Cdn$)       $    0.20   $    0.23   $    0.40   $    0.52
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Excess (shortfall)
     distributable cash (Cdn$) $     901   $  (3,987)  $   2,125   $  (9,752)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Per Common and equivalent
     Common Share (Cdn$)       $    0.02   $   (0.11)  $    0.06   $   (0.26)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Payout Ratio                   89.2%      187.4%       87.5%      202.5%
    

    The Company's full financial statements and Management's Discussion and
Analysis, are available at www.sedar.com or the Company's website at
www.primaryenergyrecycling.com.

    Conference Call and Webcast

    Management will also host a conference call to further discuss the first
quarter results on Thursday, July 24, at 11:00 a.m. (ET). Following
management's presentation, there will be a question and answer session. To
participate in the conference call, please dial 416-644-3414 or
1-800-733-7560. A conference call replay will be available until 12 a.m. on
July 31, 2008 (ET). The replay can be accessed by dialing 416-640-1917 or
1-877-289-8525 and entering passcode 21276863 followed by the number sign. A
webcast replay will also be available for 90 days by accessing a link through
the Investor Information section at www.primaryenergyrecycling.com.

    Non-GAAP Measures

    Distributable Cash is not a recognized measure under U.S. GAAP or
Canadian GAAP and does not have a standardized meaning prescribed by U.S. GAAP
or Canadian GAAP. Therefore, Distributable Cash may not be comparable to
similar measures presented by other companies. See the definitions of
Distributable Cash in the Company's MD&A.

    Forward-Looking Statements

    When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar expressions are
intended to identify forward-looking statements. Such statements are subject
to certain risks, uncertainties and assumptions pertaining, but not limited,
to operating performance, regulatory parameters, weather and economic
conditions and the factors discussed in the Company's public filings available
on SEDAR at www.sedar.com. These forward-looking statements are made as of the
date of this press release and the Company assumes no obligation to update or
revise them to reflect new events or circumstances.

    About Primary Energy Recycling Corporation

    Primary Energy Recycling Corporation owns a majority interest in Primary
Energy Recycling Holdings LLC ("PERH"). PERH, headquartered in Oak Brook,
Illinois, indirectly owns and operates four recycled energy projects and a 50%
interest in a pulverized coal facility (collectively, the "Projects"). The
Projects have a combined electrical generating capacity of 283 megawatts and a
combined steam generating capacity of 1.8 MMlbs/hour. PERH creates value for
its customers by capturing and recycling waste energy from industrial and
electric generation processes and converting it into reliable and economical
electricity and thermal energy for its customers' use. For more information,
please see www.primaryenergyrecycling.com.





For further information:

For further information: V. Michael Alverson, Interim President & Chief
Financial Officer, Primary Energy Recycling Corporation, (630) 371-0639,
investorinfo@primaryenergy.com

Organization Profile

Primary Energy Recycling Corporation

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