CALGARY, ALBERTA--(Marketwired - May 7, 2014) - Canexus Corporation (TSX:CUS) (the "Corporation" or "Canexus") today announced its financial results for the first quarter ended March 31, 2014.

Highlights:

  • Cash operating profit was $25.9 million (before one-time costs of approximately $3.7 million; including these costs, cash operating profit was $22.2 million) compared to $24.6 million in the fourth quarter of 2013. Cash operating profit in the current quarter was less than the first quarter of 2013 ($30.3 million) mainly due to lower results from our North American chlor-alkali business. Distributable cash was $7.0 million for the first quarter of 2014 after being reduced by $9.4 million for realized foreign currency translation losses on repayment of US dollar debt.
  • The Board of Directors declared a quarterly dividend of $0.10 per common share, representing a 27% reduction from the previous quarterly dividend of $0.1368. This change results in Canexus retaining significant capital as we complete the North American Terminal Operations ("NATO") unit train expansion project. The dividend is payable July 15, 2014 to shareholders of record on June 30, 2014.
  • Start-up and commissioning activities of the initial phase of the unit train project were completed at the end of February. Canexus loaded seven and 12 unit trains in the months of March and April, respectively, and expects to load approximately 16 unit trains in May. To date, unit train activity levels have been negatively affected by rail service and vapour incineration system issues identified during early start-up and commissioning activities.

    The next staged expansion, to further increase unit train loading capacity at the Bruderheim Terminal and connect it to the Cold Lake pipeline system, is expected to start-up in late August. The Corporation plans to take a 60- to 90-day period of downtime, commencing in June, to most efficiently complete the remaining work. Canexus does not expect to reach planned activity levels of 10.5 unit trains per week until sometime in 2015 given start-up and commissioning commencing in late August, the ramp up of the expanded capacity and uncertain timing for implementation of design changes to the vapour incineration system. The total estimated cost of the project remains as previously announced.
  • The diluted bitumen and crude oil ("DBCO") truck-to-rail transload ("manifest") operations averaged physical volumes of approximately 17,200 bbls/day compared to 16,200 bbls/day in the fourth quarter of 2013. Challenging winter weather conditions impacted operations. The highest daily transload volume to date was established at just over 27,100 bbls/day compared to a transload capacity of 30,000 bbls/day. Canexus completed its DBCO capacity expansion in the third quarter of 2013. The planned downtime for the unit train project will not affect manifest operations.
  • Canexus' chlor-alkali results continue to be affected by weakness in caustic soda and hydrochloric acid ("HCl") markets. Caustic soda netback pricing (delivered price net of freight) improved approximately 2% in the first quarter and a similar improvement is expected in the second quarter. Weakness in the Canadian dollar should support caustic soda prices as competing product imported from Asia is priced in US dollars. HCl demand was solid in the first quarter of 2014 and continued into April prior to spring break-up in Western Canada which affects the oil and gas end-use market. HCl netback pricing improved over Q4/13, with greater sales volumes into Western Canada. Netback pricing was materially lower than Q1/13 with lower delivered prices in both Canada and the United States and with the significant incremental sales volumes in 2014 being placed into the United States.
  • Canexus' North American sodium chlorate business had a solid quarter. Cash operating profit was up slightly from the fourth quarter of 2013 with higher production volumes from our low-cost Brandon plant. Volumes have remained stable and new contract settlements entering 2014 at slightly lower prices have been largely offset by the strengthening US dollar, as approximately two-thirds of the Corporation's sales take place in the United States. North American sodium chlorate operating rates are expected to remain in the low 90% range for the balance of 2014, assuming no capacity rationalization in the industry. Our Brandon plant is expected to run at capacity and the Corporation continues to implement modest de-bottleneck projects.
  • Canexus' Brazil operations achieved record cash operating profit for the quarter of $7.6 million. First quarter results benefited from strong demand from our major customer and the stronger US dollar. Our long-term fixed US dollar margin contract with our major customer should generate solid results for the balance of 2014.

"I am generally pleased with how our business performed during the first quarter. The chemical business met our expectations, with Brazil achieving record results, and we continue to move forward at NATO. The unit train expansion project at NATO is very important to Canexus and represents the opportunity for significant low-risk future cash flow growth," stated Richard Ott, Interim President and CEO. "NATO is anchored by take-or-pay contracts and there is high demand for transport options for crude oil in Western Canada. To date, we have 60-70% of our unit train planned activity levels contracted for multiple years and we continue to meet with existing and potential customers for the remaining volumes. We are no longer in active discussions with the prospective customer referenced last quarter for an additional 2 unit trains per week.

"2014 is not without its challenges though. We continue to face headwinds in the North American chlor-alkali business and we need to complete the construction and ramp up of the NATO unit train expansion. Railroad capacity and power continues to be an issue we expect will resolve itself.

"To ensure we continue to maintain financial flexibility, the board believed it was prudent to revise our dividend. We remain committed to paying a dividend and will re-evaluate the level each quarter as we continue to realize the expected cash flow from the manifest and unit train operations at NATO. Lastly, I am pleased to report we are making solid progress in our search for a permanent Calgary-based President and CEO to lead Canexus," Mr. Ott added.

Distributable Cash

Three Months Ended
March 31
CAD thousands, except as noted 2014 2013
Cash Operating Profit 22,243 30,273
Interest Expense(1) (1,982 ) (3,485 )
Realized Foreign Currency Translation Gains (Losses) (9,099 ) 825
Maintenance Capital Expenditures (4,269 ) (4,557 )
Provision for Current Income Taxes (1,873 ) (1,236 )
Technology Conversion Project ("TCP") Severance Costs Paid (189 ) (211 )
Cumulative Pension Funding (in Excess) Lower than Cumulative Pension Expense (904 ) 1,009
Severance Costs 3,369 -
Other (315 ) (678 )
Distributable Cash 6,981 21,940
Distributable Cash Per Share 0.04 0.16
Dividends Declared Per Share 0.1368 0.1368
Cash Payout Ratio (Net of DRIP Participation) 269 % 73 %
Payout Ratio 354 % 85 %

Note:

(1) Excluding amortization of transaction costs of the extendible revolving credit facility and senior secured notes, net interest cost on net defined benefit plan liabilities and accretion of provisions.

Below is a reconciliation of net cash (used in) generated from operating activities to distributable cash of the Corporation for the three months ended March 31, 2014 and 2013.

Three Months Ended
March 31
CAD thousands 2014 2013
Net Cash (Used in) Generated from Operating Activities (7,332 ) 25,021
Changes in Non-Cash Operating Working Capital 14,528 2,311
Non-Cash Change in Income Tax Payable and Interest Payable (207 ) (1,696 )
Interest Income 66 90
Maintenance Capital Expenditures (4,269 ) (4,557 )
Realized Foreign Currency Translation Gains on Cash 1,162 534
TCP Severance Costs Paid (189 ) (211 )
Purchase of Foreign Exchange Options - 512
Severance Costs 3,369 -
Operating Non-Cash Items(1) (147 ) (64 )
Distributable Cash 6,981 21,940

Note:

(1)Operating non-cash items represent items such as the timing of recognition of: (i) pension funding and pension expense, and (ii) the cost of foreign exchange option contracts. The cost of foreign exchange option contracts is recognized as a decrease in net cash generated from operating activities in the period purchased. For purposes of calculating distributable cash the cost is recognized as a decrease in distributable cash over the term of the foreign exchange option contracts.

Segmented Information for the Three-Month Periods Ended March 31, 2014 and 2013

Canexus has a total of six manufacturing plants - four in Canada and two at one site in Brazil - organized into three business units. Canexus also provides fee-for-service hydrocarbon transloading at its NATO terminal in Bruderheim, Alberta as a separate business unit. Below is the Corporation's first quarter performance by segment.

North America
Three Months Ended March 31, 2014 Sodium
Chlorate		 Chlor-
alkali		 South
America
NATO(2)
Other
Total
Sales Revenue
Total Segment 59,020 50,399 23,498 8,299 - 141,216
Inter-Segment 86 - - 613 - 699
Total Sales Revenue from External Customers 58,934 50,399 23,498 7,686 - 140,517
Cost of Sales 35,262 30,535 17,237 7,489 56 90,579
Distribution, Selling and Marketing
Total Segment 8,490 17,520 235 1,712 662 28,619
Inter-Segment - 699 - - - 699
Total External Distribution, Selling and Marketing 8,490 16,821 235 1,712 662 27,920
General and Administrative(1) 3,004 3,665 727 143 4,916 12,455
Operating Profit (Loss) 12,178 (622 ) 5,299 (1,658 ) (5,634 ) 9,563
Add:
Depreciation and Amortization 3,050 5,890 2,320 1,695 282 13,237
Share-based Compensation Recovery - - - - (557 ) (557 )
Cash Operating Profit (Loss) 15,228 5,268 7,619 37 (5,909 ) 22,243
Cash Operating Profit Percentage 26 % 10 % 32 % 0 % 16 %
North America
Three Months Ended March 31, 2013 Sodium
Chlorate		 Chlor-
alkali		 South
America		 NATO(2)
Other
Total
Sales Revenue
Total Segment 58,937 53,551 24,246 5,359 - 142,093
Inter-Segment 77 - - 781 - 858
Total Sales Revenue from External Customers 58,860 53,551 24,246 4,578 - 141,235
Cost of Sales 35,291 30,209 18,822 4,169 75 88,566
Distribution, Selling and Marketing
Total Segment 7,840 15,752 226 1,701 650 26,169
Inter-Segment - 858 - - - 858
Total External Distribution, Selling and Marketing 7,840 14,894 226 1,701 650 25,311
General and Administrative(1) 2,953 3,601 1,032 140 1,767 9,493
Operating Profit (Loss) 12,776 4,847 4,166 (1,432 ) (2,492 ) 17,865
Add:
Depreciation and Amortization 3,255 5,558 1,817 899 236 11,765
Share-based Compensation Expense - - - - 643 643
Cash Operating Profit (Loss) 16,031 10,405 5,983 (533 ) (1,613 ) 30,273
Cash Operating Profit (Loss) Percentage 27 % 19 % 25 % (12 %) 21 %

Notes:

(1)North America general and administrative expenses are for functional areas such as human resources, finance, information technology and legal and are allocated to the NATO operating segment based on an assessment of the level of support provided and to the other North American operating segments based on their respective practical production capacities.
(2)NATO charges a transloading fee (an approximation of market rates charged by third party terminals) to the North America Chlor-alkali ("NACA") operating segment, for hydrochloric acid and caustic soda transloaded from railcars into trucks for delivery to NACA customers, which is eliminated for financial reporting purposes.

Highlights for each business unit are as follows:

  • North America Sodium Chlorate:
    • Q1 2014 versus Q4 2013: Sales revenue for the North America sodium chlorate segment decreased 1% to $58.9 million for the three months ended March 31, 2014 as compared to $59.5 million for the three months ended December 31, 2013 as a result of lower realized netback prices (2%) on consistent sales volumes. The weakening of the Canadian dollar (three months ended March 31, 2014 - US $0.92 as compared to US $0.96 for the three months ended December 31, 2013) partially offset the market driven declines in realized netback prices. Cash operating profit percentage increased from 24% to 26% as a result of higher production volumes from our low-cost Brandon plant.
    • Q1 2014 versus Q1 2013: Sales revenue for the North America sodium chlorate segment remained consistent at $58.9 million for the three months ended March 31, 2014 and 2013. The weakening of the Canadian dollar (three months ended March 31, 2014 - US $0.92 as compared to US $1.00 for the three months ended March 31, 2013) partially offset market driven declines in realized netback prices. Cash operating profit percentage decreased from 27% to 26% percent as a result of higher production volumes primarily from our low-cost Brandon plant, being slightly more than offset by higher electricity rates and fixed costs.
  • North America Chlor-alkali:
    • Q1 2014 versus Q4 2013: Sales revenue for the North America chlor-alkali segment declined 2% to $50.4 million for the three months ended March 31, 2014 as compared to $51.4 million for the three months ended December 31, 2013. The decrease was due to lower sales volumes (caustic soda - 11% and chlorine - 10%) and lower chlorine delivered prices (10%) which more than offset higher hydrochloric acid sales volumes (16%) and delivered prices (19%), and higher caustic soda delivered prices (3%). Cash operating profit percentage decreased from 11% to 10% as a result of higher metric electrochemical unit ("MECU") realized netback prices (3%) and lower salt costs being more than offset by lower MECU production volumes (7%) and higher natural gas costs.
    • Q1 2014 versus Q1 2013: Sales revenue for the North America chlor-alkali segment decreased 6% to $50.4 million for the three months ended March 31, 2014 from $53.6 million for the three months ended March 31, 2013. This decrease was due to higher hydrochloric acid sales volumes (67%) being more than offset by lower delivered prices (hydrochloric acid - 35%, chlorine - 6% and caustic soda - 4%) and lower sales volumes (caustic soda - 4% and chlorine - 20%). Cash operating profit percentage decreased from 19% to 10% as a result of higher MECU production volumes (5%) and lower caustic soda purchased product costs being more than offset by lower MECU realized netback prices (12%) and higher electricity, gas and fixed costs, including maintenance expense.
  • South America:
    • Q1 2014 versus Q4 2013: Sales revenue for the South America segment increased 3% to $23.5 million for the three months ended March 31, 2014 from $22.8 million for the three months ended December 31, 2013. The increase in sales revenue was primarily due to higher sodium chlorate (7%) and sodium hypochlorite (13%) sales volumes, partially offset by lower sodium chlorate (4%) and caustic soda (2%) realized netback prices and lower caustic soda sales volumes (2%). Cash operating profit percentage increased from 22% to 32% as a result of higher merchant market sodium chlorate sales volumes, higher sodium chlorate production volumes (21%) and lower purchased product, general and administrative and fixed costs. Sodium chlorate production, purchased product costs and fixed costs were negatively impacted in the fourth quarter of 2013 by the failure of a transformer.
    • Q1 2014 versus Q1 2013: Sales revenue for the South America segment decreased 3% to $23.5 million for the three months ended March 31, 2014 from $24.2 million for the three months ended March 31, 2013. The decrease in sales revenue was primarily due to lower realized netback prices (sodium chlorate - 4%, caustic soda - 2% and hydrochloric acid - 10%) and lower sales volumes (sodium chlorate and caustic soda, 2% each) which more than offset higher sodium hypochlorite sales volumes (15%). Cash operating profit percentage increased to 32% percent from 25% as a result of the favourable foreign exchange impact resulting from the weakening of both the Brazilian Real/Canadian dollar as compared to the US dollar, lower electricity costs not passed through to our major customer, and lower fixed and general and administrative costs. These gains more than offset lower sodium chlorate production volumes (4%). General and administrative costs were lower as a result of lower salaries and wages.
  • North American Terminal Operations:
    • Q1 2014 versus Q4 2013: Cash operating profit for the three months ended March 31, 2014 was $0.7 million, inclusive of transloading services of $0.6 million for inter-segment chlor-alkali products, as compared to $0.8 million, inclusive of transloading services of $0.6 million for inter-segment chlor-alkali products, for the three months ended December 31, 2013. External sales revenue increased 26% for the three months ended March 31, 2014, as compared to the three months ended December 31, 2013, primarily as a result of higher DBCO transload volumes (38% - inclusive of revenues earned under take-or-pay contracts for minimum transload volume commitments) and the start-up of unit train activity.

      Cash cost of sales (cost of sales before depreciation and amortization included in cost of sales) comprise fixed costs including employee costs, pipeline operating costs and other costs of operating the Bruderheim Terminal. The increase in cash cost of sales ($1.7 million) for the three months ended March 31, 2014, as compared to the three months ended December 31, 2013, was primarily due to the start-up of unit train operations, higher heating and diesel costs associated with cold weather and higher property taxes.
    • Q1 2014 versus Q1 2013: Cash operating profit for the three months ended March 31, 2014 was $0.7 million, inclusive of transloading services of $0.6 million for inter-segment chlor-alkali products, as compared to $0.2 million, inclusive of transloading services of $0.8 million for inter-segment chlor-alkali products, for the three months ended March 31, 2013. External sales revenue increased 68% for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, primarily as a result of the start-up in unit train operations and an increase in the number of DBCO railcars transloaded (56% - inclusive of revenues earned under take-or-pay contracts for minimum transload volume commitments) combined with higher transload fees. The commissioning of four tanks in the third quarter of 2013 in the manifest area facilitated increased transload fees under associated customer contracts for the three months ended March 31, 2014.

      The increase in cash cost of sales ($2.5 million) for the three months ended March 31, 2014, as compared to the three months ended March 31, 2013, was primarily due to the start-up of unit train activity in the current quarter ($1.1 million) and an increase in the number of employees to support an increase in DBCO transload volumes.

General Market Fundamentals

  • North America Sodium Chlorate: During the first quarter of 2014, global market conditions remained relatively stable for bleached softwood pulp, while continuing to slowly deteriorate for bleached hardwood pulp. Although demand was materially in line with expectations, deliveries of pulp to customers were negatively impacted by poor logistic services in North America, mainly due to harsh winter conditions and a port strike in Vancouver. The difficult shipping conditions created opportunities for spot pricing appreciation, but these conditions are considered short term and are expected to retreat as the weather improves. Combined producer inventories increased by one day in March from February levels to 37 days, slightly ahead of 2013 levels of 35 days. Softwood pulp stocks declined by one day month-over-month ending at 28 days in March, while hardwood inventories increased by three days month-over-month ending at 48 days in March. Benchmark pricing for Northern Bleached Softwood Kraft is at a 33 month high and is expected to peak over the next few months as market fundamentals erode due to excess hardwood capacity coming on line in Latin America. First quarter 2014 global shipments of pulp are down by 2% from 2013 levels, partly due to the logistics constraints experienced in North America and slower economic growth in China.

    North American demand for sodium chlorate was stable, despite prolonged winter conditions negatively impacting shipping efficiency. Annual 2014 sodium chlorate exports are expected to be consistent with 2013. Operating rates for the North American sodium chlorate industry were steady throughout the first quarter of 2014 and are expected to hold at about 93%.
  • North America Chlor-alkali: The North American chlor-alkali industry operated at 82% of capacity in the first quarter of 2014 compared with 81% in the fourth quarter of 2013. Despite flat chlorine demand in the first quarter of 2014, the annual growth rate is forecast to be 1.5%. New chlorine production capacity in the southeastern US was commissioned in the first quarter of 2014 which is expected to result in lower industry capacity utilization for the balance of the year.

    Hydrochloric acid supply and demand was balanced in the first quarter of 2014. Demand from oil and gas drilling activity in Western Canada increased relative to the fourth quarter of 2013 but is expected to decline in the second quarter of 2014 as spring break-up limits the ability to access drilling sites. United States demand remains strong and will provide some offset to the weaker Western Canada demand during spring break-up.

    Caustic soda demand in Western Canada declined slightly in the first quarter of 2014 compared to the fourth quarter of 2013 due to lower consumption from the pulp and paper sector. Supply shortages occurred in Western Canada in the first quarter of 2014 due to production issues impacting a local producer and shipment delays of import supply from Asia.

    MECU prices declined slightly in the first quarter of 2014. Chlorine and hydrochloric acid prices were under pressure in the period, reflecting buyer expectations of excess supply as a result of new capacity entering the market in 2014. Caustic soda prices were mostly flat with suppliers announcing price increases for the second quarter of 2014.
  • South America: Brazilian pulp production in the first quarter of 2014 was 5% higher than the same period in 2013 while Brazilian exports were 18% higher. Pricing pressure previously expected in the second quarter of 2014 is now expected in the third quarter of 2014 due to continued start-up delays on new capacity (Montes de Plata).

    Canexus Brazil experienced higher than expected sodium chlorate demand from its major customer in the first three months of the year due to higher usage. Sodium chlorate sales to the merchant market were slightly better than expected due to a shorter maintenance shutdown, resulting in higher production volumes.

    In the first quarter of 2014 the Brazilian chlor-alkali industry capacity utilization rate was 86%, 2% higher than the same period of 2013. Canexus Brazil`s chlor-alkali capacity utilization was 93% for the first three months of 2014.
  • Oil & Gas: During the first quarter of 2014, price differentials between Western Canada Select ("WCS") and WTI narrowed as compared to the fourth quarter of 2013. The narrowing of the WCS and WTI price differential was due to a variety of factors including increased refinery demand in the US Midwest, a continued increase in crude by rail volumes and a number of pipeline capacity improvements. Price differentials between western Canadian grades and other key benchmarks are expected to remain volatile.

    Drilling activity remained strong during the first quarter of 2014 in Western Canada supporting strong demand for hydrochloric acid. Demand is expected to soften during the second quarter of 2014 due to the seasonal slowdown associated with spring break-up.

Financial Updates

  • Long-term Debt and Finance Income (Expense):
    • Canexus borrows in US dollars and a substantial portion of our revenues are denominated in or referenced to the US dollar. During Q1/14, we recorded an unrealized currency translation loss of $4.2 million on long-term debt as a result of the continued weakening of the Canadian dollar at the end of the quarter compared to the end of 2013 (Q1/13 - $6.2 million unrealized currency translation loss). Canexus also realized foreign currency losses of $9.4 million on repayments of long-term debt in Q1/14 (Q1/13 - $Nil). These amounts are included in finance income (expense).
    • Interest expense in Q1/14 was $2.0 million (Q1/13 - $3.5 million). Interest capitalized on major projects in Q1/14 was $2.7 million (Q1/13 - $1.4 million).
  • Other Income (Expense):
    • In Q1/14, mark-to-market fair value losses of $0.6 million (Q1/13 - $0.2 million) and realized losses of $0.5 million (Q1/13 - $0.2 million) were recorded on foreign exchange range forward contracts.
    • In Q1/14, mark-to-market fair value losses of $0.6 million (Q1/13 - $0.3 million) were recorded on a cross currency swap. In Q3/11, we entered into a cross currency swap to effect the payment of interest in US dollars on the Series IV Convertible Debentures issued on June 30, 2011.
    • The interest rate swaps expired on April 10, 2013. In Q1/13, mark-to-market fair value gains of $0.4 million and realized losses of $0.4 million were recorded.
  • General and Administrative: General and administrative expense in Q1/14 includes $3.4 million and $0.3 million of non-recurring costs associated with severance and the closure of our Houston office, respectively.
  • Capital Expenditures: Capital expenditures in Q1/14 were $45.9 million, of which $40.0 was spent on expansion projects, $4.3 million on maintenance projects and $1.6 million on continuous improvement projects. Expansion capital was primarily spent on the expansion of NATO to include pipeline connected unit train operations. Capital spending for the remainder of the year is estimated to be approximately $80 million, including approximately $45 million to complete expansion of the unit train operation.
  • Provision for Income Taxes: Provision for income taxes is higher in Q1/14, as compared to Q1/13, due to the higher level of income generated in Brazil in Q1/14 over Q1/13. At March 31, 2014, the Corporation had approximately $796 million of future tax deductions resulting from capital expenditures which can be used to shelter future taxable income in Canada.
  • Liquidity: At March 31, 2014, total borrowings under committed credit facilities were $255 million with remaining available undrawn capacity of approximately $124 million. Cash on hand at March 31, 2014 was $3.3 million.

Operating Results for the three months ended March 31, 2014 and 2013

CAD thousands 2014 2013
Sales Revenue 140,517 141,235
Cost of Sales (1) 90,579 88,566
Gross Profit 49,938 52,669
Distribution, Selling and Marketing 27,920 25,311
General and Administrative (2) 12,455 9,493
Operating Profit 9,563 17,865
Finance Expense (15,542 ) (13,956 )
Other Income 532 613
Income (Loss) Before Income Taxes (5,447 ) 4,522
Provision for (Recovery of) Income Taxes
Current 1,873 1,236
Deferred 1 (111 )
1,874 1,125
Net Income (Loss) (7,321 ) 3,397

Notes:

(1)Depreciation and Amortization included for the three months ended March 31, 2014 - $12.9 million (three months ended March 31, 2013 - $11.5 million)
(2)Depreciation and Amortization included for the three months ended March 31, 2014 - $0.3 million (three months ended March 31, 2013 - $0.3 million)

Financial Statements, Conference Call and Webcast

Financial Statements and Management's Discussion and Analysis will be posted on the Canexus website at www.canexus.ca and filed on SEDAR. Management will host a conference call and webcast at 7 am MT (9 am ET) on May 8, 2014, to discuss the financial and operating results of the Corporation. A presentation will be available on our website to facilitate the conference call. Please call 1-877-881-1303 or +1-604-638-5340 outside of Canada and the USA. The conference call will also be accessible via webcast at www.canexus.ca. A replay of the conference call will be available until end of day on May 22, 2014. To access the replay, call 1-800-319-6413 or +1-604-638-9010, followed by passcode 9153#.

Non-GAAP Measures

Cash Operating Profit, Cash Operating Profit Percentage, Payout Ratio, Cash Payout Ratio and Distributable Cash are non-GAAP financial measures but Management believes they are useful in measuring the Corporation's performance. Readers are cautioned that these measures should not be construed as alternatives to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the Corporation's performance or as a measure of the Corporation's liquidity and cash flow. The Corporation's method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the Corporation's non-GAAP measures are unlikely to be comparable to similarly titled measures used by other issuers. Readers should consult the Corporation's Q1/14 and 2013 MD&A filed on SEDAR for a complete explanation of how the Corporation calculates each such non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements and information relating to expected future events relating to Canexus and its subsidiaries, including with respect to: expectations for unit trains to be loaded in May 2014; timing of the completion of work, including the timing and duration of operational downtime, on the pipeline connected unit train facility expansion, including the tie-in to the Cold Lake system; expectations for timing of reaching planned operating rates at the pipeline connected unit train facility; estimated cost of the pipeline connected unit train facility; expectations for DBCO transload volume for the second quarter of 2014; caustic soda pricing and the impact of foreign exchange rates thereon; North American sodium chlorate operating rates and capacity utilization of the Brandon plant for 2014; NATO cash flow growth opportunities; Canexus' dividend payment policy and strategy and the financial impact of changes thereto; expectations for pulp shipping conditions and the impact of seasonal factors thereon; expectations for Northern Bleached Softwood Kraft benchmark pricing; expectations for 2014 sodium chlorate exports and operating rates for the North American sodium chlorate industry; North American chlor-alkali demand and capacity utilization rates and the impact of capacity expansions thereon; expectations for price differentials between Western Canadian grades and other crude oil benchmarks and the impact thereof on demand for rail based oil transportation services; expectations regarding timing of price pressure in Brazil; and seasonal demand slowdowns for hydrochloric acid.
The use of the words "expects", "anticipates", "continue", "estimates", "projects", "should", "believe", "plans", "intends", "may", "will" or similar expressions are intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including market and general economic conditions, future costs, treatment under governmental regulatory, tax and environmental regimes and the other risks and uncertainties detailed under "Risk Factors" in the Corporation's Annual Information Form filed on the Corporation's SEDAR profile at www.sedar.com. Management believes the expectations reflected in these forward-looking statements are currently reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Due to the potential impact of these factors, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Any financial outlook information contained in this news release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on Management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than those for which it is disclosed herein.

About Canexus

Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Our four plants in Canada and two at one site in Brazil are reliable, low-cost, strategically located facilities that capitalize on competitive electricity costs and transportation infrastructure to minimize production and delivery costs. Canexus also provides fee-for-service hydrocarbon transloading services to the oil and gas industry from its terminal at Bruderheim, Alberta. Canexus targets opportunities to maximize shareholder returns and delivers high-quality products to its customers and is committed to Responsible Care® through safe operating practices. Canexus' common shares (CUS) and debentures (Series III - CUS.DB.A; Series IV - CUS.DB.B; Series V - CUC.DB.C) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.