Sherritt International Corporation (
Q4 2011 Earnings Conference Call
February 22, 2012 2:00 PM ET
Paula Myson – Managing Director for Investor Relations and External Communication
David Pathe – President and CEO
Mike Robins – our Chief Financial Officer
Brian Tiessen – Senior Vice President of Metals
Dean Chambers – Chief Operating Officer, Senior Vice President
Matt Murphy – UBS Securities
Jason Shack – Heartland Advisors [ph]
Anoop Prihar – GMP Securities
Robin Kozar – RBC Capital Markets
Welcome ladies and gentlemen and thank you for standing by. Welcome to the Sherritt’s International Q4 2011 Analyst and Investor Call.
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At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session and instructions will be provided at that time. If anyone has any difficulties hearing the conference, please press star followed by the zero for operator assistance at any time.
I would like to remind everyone that this conference is being recorded today, Wednesday, February 22, 2012 at 2 PM Eastern Time. I will now turn the conference over to Ms. Paula Myson, Managing Director for Investor Relations and External Communication. Please go ahead.
Thank you, Ron. And good afternoon, everyone. Our results for release this morning, a copy of the release along with the MD&A and full financial statements are available on our website.
Today’s conference call is being webcast live on the Internet. And anyone may listen to the call by accessing the website homepage and clicking on the webcast link for the conference call. We’ll be posting a replay of the webcast on the website later today.
Before we begin our comments I’d like to remind everyone that today’s press release and some of the comments we’ll be making on the call today include forward-looking statements.
We’d like to refer everyone to the cautionary language included in the press release and to the risk factors described in our CEDAR filings. On the call today are David Pathe, our President and CEO, Mike Robins, our Chief Financial Officer and we also have Dean Chambers and Brian Tiessen on the line today.
So, just a quick run through the program of today’s call, Mike Robins will begin by briefly summarizing our financial results and then turn the call over to David Pathe. Following David’s remarks, we’ll open up the call for your questions.
So to begin, I’ll turn the call over to Mike Robins.
Thanks, Paula. I will be providing a brief summary of the highlights of the performance for Sherritt and an overview of the business. But before I do that, I just like to point out that we completed our transition IFRS this year and to let everybody know that there’s one major difference between Canadian GAAP and IFRS under on our earnings. And that is the treatment of the Ambatovy loans.
Under Canadian GAAP, we capitalize the interest on the Ambatovy loans. And under IFRS, we do not. So as a result of that, there’s about $65 million worth of interest that affected our earnings this year that would not have affected our earnings last year. Offset by about $20 million worth of FX. So the net impact was about $35 million to our bottom line. So, in fact we’ll provide a little bit of context in terms of our results when you compare it against Canadian GAAP.
Now in terms of our performance, it was a good year. Our EPS was 37% higher than last year, up about $0.18. And it was driven primarily by our operating performance. EBITDA being almost $100 million higher than last year.
Our pricing in the oil business and our thermal coal were both very strong for the year. And our production in the metal’s business was at a record level.
Now, in our fourth quarter, we had a very strong operating performance, EBITDA being $14 million higher than last year. But our earnings were down by about 33%, down to $0.10 a share. That was primarily because of three one-time adjustments. The major item being a six-cent hit related to the make whole payments on an early redemption of our 2012 debentures.
In addition to that, we had a three-cent reduction in our earnings related to some management estimates associated with the depletion of coal and the reclamation of our coal properties in our Prairie operations.
And then we had a small right down in our oil business which caused about a penny. So the net impact of those one-time items was about $0.10.
So, the effective tax rate on an apples to apples basis was 31% this year as compared to 30% last year. And last year being normalize for the adjustments associated with our discontinued talc business and impairment to Turkish Oil Properties [ph].
So, finally in terms of a summary, I’d like to note that our cash balance ended up the year at a healthy $630 million, down slightly from 2010 primarily as a result of our continued investment in the Ambatovy operations offset by additional cash that we got from our debenture operating in the fourth quarter.
So why don’t I now move on to our commentary in our four main businesses. The metals operation ended up with the production records for the year for our mix sulfides, our finished nickel and our finished cobalt products.
This is the function of the continued management focus on optimizing production levels. Prices were stable over the year and a year-over-year and as a result, our revenue was up slightly for the year compared to last year.