Canexus Corporation Announces First Quarter Results

CALGARY, ALBERTA--(Marketwired - May 8, 2013) - Canexus Corporation (CUS.TO) (the "Corporation" or "Canexus") today announced its financial results for the first quarter ended March 31, 2013.

Highlights:

• Cash Operating Profit was $30.3 million for the three months ended March 31, 2013 ($40.3 million in the first quarter of 2012, and $35.3 million for the fourth quarter of 2012). Distributable Cash was $21.9 million ($0.16 per common share), resulting in a payout ratio of 85%.
  

• As expected, first quarter results reflect weakness in both caustic soda and chlorine prices in North America and the delay in ramp-up of truck-to-rail transload capacity at Bruderheim. Price increases announced for the second quarter for both caustic soda and chlorine were unsuccessful. The Corporation also experienced nine days of production loss (about 5,700 metric electrochemical units ("MECU")), following the attempted start-up of the North Vancouver chlor-alkali facility from its planned shutdown in April, due to equipment failure (which has since been repaired and the plant is operating at capacity). Although it is still expected that caustic soda prices will increase in the third quarter (supported by price increases implemented in Asia in March), hydrochloric acid prices are currently under pressure from lower seasonal demand in Alberta and competition for business in the U.S. As a result, it is prudent to lower our full year guidance for Cash Operating Profit to $135 to $145 million for a payout ratio of 85 to 90%.
  

• The first of two hydrochloric acid capacity expansion projects at the North Vancouver chlor-alkali facility has been successfully commissioned, increasing the current capacity to 260,000 wet metric tonnes ("WMT"). Canexus is on track to add an additional 110,000 WMT of capacity at the end of the third quarter. There is optimism that drilling activity will improve with higher oil prices and improved netbacks and in support of proposed west coast liquefied natural gas ("LNG") projects, that will lead to higher hydrochloric acid demand in Western Canada. The output from our most recent expansion is sold out under multi-year contracts.
  

• Canexus' low-cost Brandon sodium chlorate plant is on track to set another production record in 2013, with first quarter production of 77,300 metric tonnes ("MT"). Full year production is expected to be between 305,000 and 310,000 MT's and the Corporation is currently analysing additional de-bottleneck opportunities.
  

• Canexus' Brazil operations continue to be very stable with solid demand from its primary customer as well as from the merchant market for both chlorine and chlorine derivatives.
  

• In December, Canexus announced the expansion of its North American Terminal Operations ("NATO") at Bruderheim, Alberta to include pipeline connected unit train operations. The Corporation also announced that formal agreement had been reached with MEG Energy Corp. ("MEG") to connect the Canexus Bruderheim terminal ("Bruderheim" or "Bruderheim terminal") with pipelines which interconnect with the MEG Energy Stonefell Terminal, and to provide terminalling services to MEG for the loading of bitumen blend for transport by rail and the receiving of diluent shipments by rail. The Corporation is making solid progress on this project and expects to commission this expansion late in the third quarter of 2013. Significant progress is also being made on both a potential second pipeline/terminal connection to Bruderheim and on contract negotiations with strategic customers for unit train shipments from Bruderheim under multi-year, take-or-pay terms. Contracts in negotiation for unit train shipments, if completed, will exceed the capacity of the initial phase of development. This project was designed to readily accommodate staged expansion of the rail loading infrastructure and the loop tracks to be able to load two unit trains simultaneously and more efficiently stage inbound and outbound unit trains, to increase capacity of the Canexus Bruderheim Terminal from 7 to 13 unit trains per week. The capacity expansion is ready to proceed upon receiving sufficient customer commitment and could be operational by mid-2014. If this next stage of expansion is approved, it would bring the total estimated cost of the pipeline connected unit train facility to approximately $190 million through mid-2014.
  

• The Corporation continues to advance its other initiatives at the Bruderheim terminal. The expansion of diluted bitumen and crude oil ("DBCO") truck-to-rail transload capacity to 30,000 bbls/day is expected to be completed by the end of the second quarter. In the months of March and April, we transloaded about 16,000 bbls/day of diluted bitumen and crude oil. Temporary outages on the various transloading tracks will be required in the second quarter to tie in the remaining storage tanks. The addition of tanks and the recently completed West rail yard (capable of storing approximately 360 railcars) should significantly increase capacity and alleviate bottlenecks. Canexus is also on track to increase its hydrochloric acid transloading capacity in the second quarter, to coincide with the recent start-up of the hydrochloric acid capacity expansion at our North Vancouver chlor-alkali facility.
  

• The Board of Directors declared the regular quarterly dividend of $0.1368 per common share payable July 15, 2013 to shareholders of record on June 30, 2013.
  
  

"In the first quarter of 2013, market headwinds, plant outages and project delays at NATO hampered our financial performance and this will extend into the second quarter," said Gary Kubera, President and CEO. "We continue to expect to deliver record Cash Operating Profit in the second half of the year as major capital projects are completed and the challenges associated with establishing and ramping-up our NATO truck-to-rail transloading business are put behind us. The market fundamentals for oil-by-rail movements are solid and we are making excellent progress in establishing strategic long-term relationships with both producers and with end-use customers unlikely to be served by major pipelines."

"Both our North American sodium chlorate business and Brazil operations are performing well and market conditions are expected to support strong business performance over the balance of the year. Over the next few quarters, we will see the successful implementation of major projects and delivery of the cash flow expectations that we have set for these initiatives," he added.

Distributable Cash

Distributable cash of Canexus Corporation was $21.9 million ($0.16 per common share) for the quarter resulting in a payout ratio of 85%.

		Three Months Ended March 31
CAD thousands		2013		2012
Cash Operating Profit		30,273		40,303
	Interest Expense	(3,485	)	(5,670	)
	Realized Foreign Currency Translation Gains	825		39
	Maintenance Capital Expenditures	(4,557	)	(4,054	)
	Provision for Current Income Taxes	(1,236	)	(1,912	)
	Technology Conversion Project ("TCP") Severance Costs Paid	(211	)	(888	)
	Other	331		(506	)
Distributable Cash		21,940		27,312
Distributable Cash Per Share		0.16		0.23
Dividends Declared Per Share		0.1368		0.1368
Payout Ratio		85	%	60	%

Below is a reconciliation of net cash generated from operating activities to Distributable Cash of the Corporation for the three months ended March 31, 2013 and 2012.

		Three Months Ended March 31
CAD thousands		2013		2012
Net Cash Generated from Operating Activities		25,169		14,552
	Changes in Non-Cash Operating Working Capital	2,311		18,969
	Non-Cash Change in Income Tax Payable and Interest Payable	(1,696	)	(1,631	)
	Interest Income	90		57
	Maintenance Capital Expenditures	(4,557	)	(4,054	)
	Realized Foreign Currency Translation Gains on Cash	534		35
	TCP Severance Costs Paid	(211	)	(888	)
	Purchase of Foreign Exchange Options	512		-
	Amortization of the Purchase Cost of Foreign Exchange Options	-		(378	)
	Expenditures on Decommissioning Liabilities	(148	)	(136	)
	Operating Non-Cash Items	(64	)	786
Distributable Cash		21,940		27,312

Segmented Information for the Three Month Periods Ended March 31, 2013 and 2012

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 our first quarter performance by segment.

		North America
Three Months Ended March 31, 2013		Sodium Chlorate		Chlor- alkali		South America		NATO		Other		Total
Sales Revenue
	Total Segment	58,937		53,551		24,246		5,359		-		142,093
	Inter-Segment	77		-		-		781(1	)	-		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	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	%

Note:
(1)	NATO charges a transloading fee (an approximation of market rates charged by third party terminals) to the North America Chlor-alkali ("NACA") business unit for hydrochloric acid and caustic soda transloaded from railcars into trucks for delivery to NACA customers that is eliminated for financial reporting purposes.

		North America
Three Months Ended March 31, 2012		Sodium Chlorate		Chlor-alkali		South America		NATO		Other		Total
Sales Revenue
	Total Segment	59,904		60,012		27,904		2,141		-		149,961
	Inter-Segment	86		-		-		897(1	)	-		983
Total Sales Revenue from External Customers		59,818		60,012		27,904		1,244		-		148,978
	Cost of Sales	34,047		32,545		21,511		1,868		153		90,124
Distribution, Selling and Marketing
	Total Segment	6,910		13,606		354		527		692		22,089
	Inter-Segment	-		983		-		-		-		983
Total External Distribution, Selling and Marketing		6,910		12,623		354		527		692		21,106
	General and Administrative	2,756		3,362		952		131		2,269		9,470
Operating Profit (Loss)		16,105		11,482		5,087		(1,282	)	(3,114	)	28,278
Add:
Depreciation and Amortization		3,183		5,385		1,736		549		221		11,074
Share-based Compensation Expense		-		-		-		-		951		951
Cash Operating Profit (Loss)		19,288		16,867		6,823		(733	)	(1,942	)	40,303
Cash Operating Profit (Loss) Percentage		32	%	28	%	24	%	(59	%)	-		27	%

Note:
(1)	NATO charges a transloading fee (an approximation of market rates charged by third party terminals) to the North America Chlor-alkali ("NACA") business unit for hydrochloric acid and caustic soda transloaded from railcars into trucks for delivery to NACA customers that is eliminated for financial reporting purposes.

Highlights for each business unit are as follows:

• North America Sodium Chlorate:
  

  • Q1 2013 versus Q4 2012: Sales revenue for the North America sodium chlorate segment decreased 3% to $58.9 million for the three months ended March 31, 2013 from $60.5 million for the three months ended December 31, 2012. The decrease in sales revenue was due to lower sales volumes (4%) on consistent realized netback prices. Cash Operating Profit percentage decreased from 30% for the three months ended December 31, 2012 to 27% for the three months ended March 31, 2013 as a result of lower production volumes at our Brandon and Nanaimo facilities due to unplanned maintenance shutdowns, higher purchase product costs and a higher corporate allocation of general and administrative costs.
    

  • Q1 2013 versus Q1 2012: Sales revenue for the North America sodium chlorate segment decreased 2% to $58.9 million for the three months ended March 31, 2013 from $59.8 million for the three months ended March 31, 2012 as a result of a 3% decrease in sales volumes on consistent realized netback prices. Cash Operating Profit percentage decreased from 32% for the three months ended March 31, 2012 to 27% for the three months ended March 31, 2013 primarily as a result of lower production volumes (4%), higher electricity and salt costs, and slightly higher fixed costs. Fixed costs were higher during the three months ended March 31, 2013 due to unplanned maintenance shutdowns at our Brandon and Nanaimo production facilities.
    
    

• North America Chlor-alkali:
  

  • Q1 2013 versus Q4 2012: Sales revenue for the North America chlor-alkali segment decreased 7% to $53.6 million for the three months ended March 31, 2013 from $57.5 million for the three months ended December 31, 2012. The decrease in sales revenue was primarily due to lower caustic soda sales volumes (7%) and realized netback prices (10%); lower chlorine sales volumes (5%) and realized netback prices (3%); partially offset by higher hydrochloric acid sales volumes (40%). Cash Operating Profit percentage decreased from 22% for the three months ended December 31, 2012 to 19% for the three months ended March 31, 2013 as a result of lower MECU realized netback prices (3%) and a higher corporate allocation of general and administrative costs to this segment, partially offset by, lower caustic soda purchased product costs and lower fixed costs.
    

  • Q1 2013 versus Q1 2012: Sales revenue for the North America chlor-alkali segment decreased 11% to $53.6 million for the three months ended March 31, 2013 from $60.0 million for the three months ended March 31, 2012. This was due to lower caustic soda sales volumes (8%) and realized netback prices (7%); lower chlorine (76%) and hydrochloric acid (26%) realized netback prices; partially offset by higher hydrochloric acid (21%) and chlorine (14%) sales volumes. Cash Operating Profit percentage decreased from 28% for the three months ended March 31, 2012 to 19% for the three months ended March 31, 2013 as a result of lower MECU realized netbacks prices (15%), partially offset by lower caustic soda purchased product costs and lower fixed costs.
    
    

• South America:
  

  • Q1 2013 versus Q4 2012: Sales revenue for the South America segment increased 2% to $24.2 million for the three months ended March 31, 2013 from $23.8 million for the three months ended December 31, 2012. The increase in sales revenue was primarily due to higher caustic soda sales volumes (14%) and higher caustic soda (8%), sodium chlorate (2%) and sodium hypochlorite (9%) realized netbacks prices, partially offset by lower sodium chlorate sales volumes (9%). Cash Operating Profit percentage decreased from 28% for the three months December 31, 2012 to 25% for the three months ended March 31, 2013 primarily as a result of higher caustic soda purchased product costs (for producing sodium hypochlorite), higher fixed costs and slightly lower production, partially offset by higher realized netback prices for products sold into the merchant market.
    

  • Q1 2013 versus Q1 2012: Sales revenue for the South America segment decreased 13% to $24.2 million for the three months ended March 31, 2013 from $27.9 million for the three months ended March 31, 2012. The decrease in sales revenue was primarily due to lower sodium chlorate (9%), caustic soda (10%) and hydrochloric acid (13%) realized netback prices and lower sodium chlorate (7%), hydrochloric acid (8%) and caustic soda (2%) sales volumes. Cash Operating Profit percentage increased marginally to 25% for the three months ended March 31, 2013 from 24% for the three months ended March 31, 2012 as a result of lower electricity costs, partially offset by lower realized netback prices for products sold into the merchant market, lower sodium chlorate production and higher salt costs.
    
    

• North American Terminal Operations:
  

  • Q1 2013 versus Q4 2012: Cash Operating Profit for the three months ended March 31, 2013 was $0.25 million, inclusive of transloading services for inter-segment chlor-alkali products, as compared to $Nil for the three months ended December 31, 2012. External sales revenue increased 20% for the three months ended March 31, 2013 as compared to the three months ended December 31, 2012, primarily as a result of an increase in the number of railcars transloaded (18%). Cost of sales comprises employee costs and other costs of operating the Bruderheim terminal. The increase in cost of sales for the three months ended March 31, 2013, as compared to the three months ended December 31, 2012, is primarily due to an increase in the number of employees as a result of an increase in transload volumes in the quarter and in anticipation of capacity increases in our manifest business (truck-to-railcar or railcar-to-truck) expected in the second half of the year. Distribution, selling and marketing costs comprise selling and marketing employee costs and amounts paid to customers to compensate for extended truck wait times to unload ($0.6 million in Q1/13 and Q4/12). Process improvements were implemented late in the first quarter of 2013 to minimize customer truck wait times.
    

  • Q1 2013 versus Q1 2012: Cash Operating Profit for the three months ended March 31, 2013 was $0.25 million, inclusive of transloading services for inter-segment chlor-alkali products, as compared to $0.16 million for the three months ended March 31, 2012. External sales revenue increased 268% for the three months ended March 31, 2013, as compared to the three months ended March 31, 2012, primarily as a result of an increase in the number of railcars transloaded (261%). The increase in cost of sales for the three months ended March 31, 2013, as compared to the three months ended March 31, 2012, is primarily due to an increase in the number of employees as a result of an increase in transload volumes in the quarter and in anticipation of capacity increases in our manifest business (truck-to-railcar or railcar-to-truck) expected in the second half of the year. The increase in distribution, selling and marketing costs was due to an increase in the number of selling and marketing employees and to amounts paid to customers to compensate for extended truck wait times to unload (Q1/13 - $0.6 million vs. Q1/12 - $Nil). Process improvements were implemented late in the first quarter of 2013 to minimize customer truck wait times.

Market Fundamentals

North America Sodium Chlorate: Market pulp fundamentals remained relatively stable for the three months ended March 31, 2013, improving modestly in the period. Combined producer inventories were higher than historical averages for January and February, due mainly to reduced purchases from China during the Lunar New Year. As of February, producer inventories were at 35 days, slightly above a balanced level of 33 days. Softwood pulp inventories were stable from the previous month at 32 days, similar to hardwood inventories that were flat for the past two months at 39 days. Recent advances in pricing for most grades suggest that pulp shipments to China accelerated in March. Demand for pulp is expected to remain strong in most regions of the globe, as new demand coming from the start-up of several tissue machines will require market pulp. Inventories are expected to decline over the next few months due to the spring maintenance season now commencing in both North and South America. As a result of strong demand and reduced inventories, pulp prices should hold their current levels, and potentially continue their modest upward trend throughout the first half of the year.

Demand for sodium chlorate in North America was stable for the first quarter of 2013, and is expected to remain strong for the remainder of the year. Sodium chlorate exports from North America for the first two months of 2013, suggest another strong year with volumes that should mirror those of 2012. Operating rates for the North American sodium chlorate industry are expected to remain at strong levels, between 93 and 95%, for 2013.

North America Chlor-alkali: The North American chlor-alkali industry operated at an estimated 82% of capacity in the first quarter of 2013, compared with 82% in the previous quarter and 85% in the same quarter of 2012. Domestic Polyvinyl Chloride ("PVC") demand is gradually improving and export demand for PVC and isocyanates remains strong. Utilization rates are expected to be approximately 85% for the second quarter of 2013 due to increased demand from seasonal water treatment consumers.

North American caustic soda supply was balanced with demand for the first quarter of 2013, while export supply from Asia to the west coast remained strong due to weakness in domestic demand in China and Japan.

North American hydrochloric acid supply outpaced demand for the first quarter of 2013 due to strong byproduct and burner production. Hydrochloric acid demand from oil well fracturing in Western Canada was strong and balanced with supply but is expected to decline for the second quarter of 2013, consistent with reduced activity due to seasonal spring thaw conditions.

North American MECU prices held stable for the first quarter of 2013 with the exception of the west coast, where caustic soda prices declined due to the impact of lower cost imports from Asia. Downward pressure on PVC prices in Asia is resulting in higher caustic soda price nominations for export cargo booked for the second quarter of 2013. Several North American producers have announced price increases for both chlorine and caustic soda for implementation in the second quarter of 2013. Hydrochloric acid prices experienced some erosion in the first quarter of 2013 and are expected to stabilize in the second quarter of 2013.

South America: Brazilian pulp production in the first quarter was 1.8% higher than the same period in the prior year. Exports were 0.4% higher than the same period in the prior year. The Eldorado mill is now exporting and 100% capacity utilization was expected by April. Significant producers have announced price increases to be implemented May 1, 2013.

Canexus Brazil's major sodium chlorate customer demonstrated lower than expected sodium chlorate demand due to process issues but is expected to recover these production losses by the end of the year. Canexus Brazil's sodium chlorate plant operated close to planned volumes for the first quarter of 2013 due to higher sales to the merchant market.

In the first quarter of 2013, the Brazilian chlor alkali capacity utilization rate was 84%, approximately 3.0% lower than the same period in 2012. The reduction was due to manufacturing issues associated with two key producers. Canexus Brazil's chlor-alkali capacity utilization was 99% during the first quarter and was in line with expectations.

Oil & Gas: Benchmark crude oil prices (Brent, WTI) eased slightly, while Western Canadian prices ("WCS") improved gradually during the first quarter of 2013. Ongoing infrastructure bottlenecks continued to hold back regional prices in North America. Price differentials between Western Canadian grades and other key benchmarks narrowed modestly during the first quarter of 2013 but remain wide enough to support strong demand for rail-based oil transportation services.

Natural gas prices rose modestly during the first quarter of 2013 but high inventory levels continued to constrain prices. Natural gas inventories remain solid and prices are expected to remain stable in the short term. Production is expected to continue to gradually fall in North America in 2013 and prices are expected to begin increasing modestly in the longer term.

Drilling activity picked up significantly in Western Canada in the first quarter of 2013 as well-service companies took advantage of frozen ground conditions to access well sites. Drilling remains predominantly focused on oil production, however gas related drilling also increased during the first quarter of 2013. Increased levels of drilling activity support continued demand for hydrochloric acid.

Financial Updates

• Long-term Debt and Finance Income (Expense):
  

  • We borrow in US dollars, which creates unrealized currency translation gains as the Canadian dollar strengthens. A substantial portion of our revenues are denominated in or referenced to the US dollar. During the first quarter of 2013, we recorded an unrealized currency translation loss of $6.2 million as a result of the weakening of the Canadian dollar at the end of the quarter compared to year-end 2012 (Q1/12 - $4.8 million unrealized gain). These amounts are included in finance income (expense).
    

  • Interest expense in the quarter was $3.5 million (Q1/12 - $5.7 million). Interest capitalized on major projects was $1.4 million in Q1 2013 (Q1/12 - $0.2 million).
    
    

• Other Income (Expense):
  

  • In the first quarter of 2013, mark-to-market fair value losses of $0.2 million (Q1/12 - $0.3 million) and realized losses of $0.2 million (Q1/12 - $0.4 million gains) were recorded on foreign exchange option contracts. In January, we purchased foreign exchange options protecting US$5.0 million per month for both Q2 2013 (at US$0.99) and Q3 2013 (at US$0.97).
    

  • In the first quarter of 2013, we recorded mark-to-market fair value gains of $0.4 million (Q1/12 - $0.3 million) and realized losses of $0.4 million (Q1/12 - $0.3 million) on interest rate swaps.
    

  • Other income also includes $0.9 million of foreign currency translation gains on working capital in Q1 2013 (Q1/12 - $0.2 million losses).
    

  • In the first quarter of 2013, we recorded mark-to-market fair value losses on a cross currency swap of $0.3 million as a result of the weakening of the Canadian dollar at the end of the quarter compared to year-end 2012 (Q1/12 - $0.2 million gains). In Q3 2011 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.
    
    

• Capital Expenditures: Capital expenditures for the three months ended March 31, 2013 were $53.5 million, of which $4.6 million was spent on maintenance projects, $1.4 million on continuous improvement projects and the balance on expansion projects ($47.5 million). Expansion capital was spent on the continued development of our NATO site and hydrochloric acid expansions at our North Vancouver facility.
  

• Provision for Income Taxes: Provision for income taxes is lower in the first quarter of 2013, as compared to the same period in 2012, due to lower net income. As of March 31, 2013, the Corporation had approximately $552 million of future tax deductions resulting from capital expenditures which can be used to shelter future taxable income in Canada.
  

• Liquidity: As of March 31, 2013, total borrowings under committed credit facilities were $264 million with remaining available undrawn capacity of approximately $120 million. Cash on hand at March 31, 2013 was $4.3 million. On May 1, 2013, the US$50 million Senior Secured Notes were repaid from committed credit facilities which had no impact on liquidity.

Operating Results for the Three Months Ended March 31, 2013 and 2012

CAD thousands		2013		2012
Sales Revenue		141,235		148,978
Cost of Sales (1)		88,566		90,124
Gross Profit		52,669		58,854
Distribution, Selling and Marketing		25,311		21,106
General and Administrative (2)		9,493		9,470
Operating Profit		17,865		28,278
Finance Expense		(13,956	)	(11,929	)
Other Income		613		361
Income Before Income Taxes		4,522		16,710
Provision for (Recovery of) Income Taxes
	Current	1,236		1,912
	Deferred	(111	)	4,746
		1,125		6,658
Net Income		3,397		10,052

Notes:
(1)	Depreciation and amortization included in the three months ended March 31, 2013 - $11.5 million; Depreciation and amortization included for the three months ended March 31, 2012 - $10.8 million.
(2)	Depreciation and amortization included for the three months ended March 31, 2013 - $0.3 million; Depreciation and amortization included for the three months ended March 31, 2012 - $0.2 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 at 9 a.m. ET on May 9, 2013, to discuss the results. A Q1 2013 presentation will be available on our website to facilitate the conference call. Please call 416-644-3416 or 1-800-814-4861. The conference call will also be accessible via webcast at www.canexus.ca. A replay of the conference call will be available until midnight May 16, 2013. To access the replay, call 416-640-1917 or 1-877-289-8525, followed by passcode 4613570#.

Non-GAAP Measures

Cash Operating Profit, Cash Operating Profit Percentage, payout ratio, distributable cash and gross profit 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 2012 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: anticipated cash operating profit for the second half of 2013 and full year; caustic soda and hydrochloric acid prices in the third quarter of 2013; full year production of sodium chlorate from Canexus' Brandon plant; timing of the commissioning of the Bruderheim Terminal interconnection with the MEG Energy Stonefell Terminal; potential capacity constraints for unit train shipments based on anticipated incremental customer contracts and the feasibility and timing of staged unit train expansion opportunities as necessary; anticipated timing of completion of DBCO; the implementation of major capital projects and the delivery of cash flow; anticipated increases in the manifest business in the second half of 2013; hydrochloric acid expansions at Canexus' North Vancouver chlor-alkali facility; sodium chlorate demand and industry operating rates; hydrochloric acid demand and pricing in North America; cost of the pipeline connected unit train facility at Bruderheim; the impact of additional storage tanks and West rail yard capacity and bottlenecks on DBCO transload capacity and anticipated outages on transloading tracks required to implement; demand for pulp and its impact on inventories and prices; demand for and industry operating rates; chlor-alkali industry capacity utilization; North American hydrochloric acid supply; Canexus' North American chlor-alkali utilization rates; natural gas production, pricing and inventory expectations and expectations regarding drilling activity, oil prices and LNG projects and their impact on hydrochloric acid demand in Western Canada.

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. These 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, Canexus 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. Financial outlook information contained in this press 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. Such financial outlook information 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. Canexus' common shares (CUS) and debentures (Series I - CUS.DB; Series III - CUS.DB.A; Series IV - CUS.DB.B) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.