- Tervita Corporation (TSX:TEV) has announced sweeping reductions across its annual fixed costs and 2020 capital budget
- The changes come in the wake of a declining energy market and a subsequent decline in customer activity
- The company’s capital budget for the year has been cut from C$85 million to $60 million
- Annual fixed costs have also been reduced by $30 million to $34 million
- Tervita Corporation (TEV) is currently steady at $3.47 per share, with a market cap of $397.03 million
Tervita Corporation (TSX:TEV) has announced sweeping reductions across its annual fixed costs and 2020 capital budget.
The company offers a range of waste management and environmental solutions to customers in the energy, mining and industrial sectors.
However, the recent market downturn caused by COVID-19, which was compounded by the Russia-Saudi Arabia oil price war, has resulted in a decline in business for Tervita.
Subsequently, the company has announced that it will cut its capital budget for 2020 by C$60 million. The revised plan represents a 20 per cent reduction to its previously announced budget of $85 million, and a 56 per cent reduction compared to its budget for 2019.
The new budget will be split evenly between expansion projects and maintenance capital.
Tervita’s expansion program will be primarily geared towards the completion of projects that were started last year, with a small amount focused on high-return projects within the Industrial Services business.
In addition, Tervita has said that it will reduce its annual fixed costs by $30 million to $34 million.
These reductions are expected to include a 15 per cent cut to Board and CEO cash retainers and salaries, and a 10 per cent cut to the salaries of executive personnel.
Tervita also reported a reduction in its employee headcount, including a 20 per cent workforce cutback in its Industrial Services segment.
John Cooper, President and CEO of Tervita, thanked the company’s employees for their hard work and dedication under these unusual conditions.
“At Tervita, the health and safety of our employees and the communities where we work is of utmost importance and we have implemented proactive measures to ensure their safety is not compromised.
“Our Energy Services business is heavily weighted toward the traditionally more stable production volumes and our Industrial Services business provides diversification from the energy market,” he said.
Cooper also noted that Tervita had been working to cut unnecessary operational costs for the last three years. He added that, with the company’s diversified business lines, Tervita is in a strong position to navigate the currently challenging environment.
Tervita (TEV) is currently steady at $3.47 per share, as of 10:37am EST.