CALGARY, AB, March 10, 2022 /CNW/ - Tidewater Renewables
Ltd. ("Tidewater Renewables" or the "Corporation")
(TSX: LCFS) is pleased to announce that it has filed its annual
consolidated financial statements and Management's Discussion and
Analysis ("MD&A") for the year ended
December 31, 2021.
FOURTH-QUARTER 2021 HIGHLIGHTS
- During its first full quarter of operations, Tidewater
Renewables generated strong Adjusted EBITDA(1) of
$10.6 million and net income of
$0.1 million which was ahead of
previous guidance. Net cash provided by operating activities
totaled $10.0 million for the fourth
quarter of 2021, with distributable cash flow(1) of
$7.9 million.
- On August 18, 2021, Tidewater
Renewables completed its initial public offering (the "Offering")
of approximately 10.7 million common shares, including the
over-allotment exercise, at a price of $15.00 per Common Share, for total gross proceeds
of approximately $161 million. Common
Shares of Tidewater Renewables, held by Tidewater Midstream and
Infrastructure Ltd. ("Tidewater Midstream"), represents
approximately 69% of the outstanding common shares. Tidewater
Renewables received approximately $150
million in cash consideration net of underwriter commissions
and legal expenses.
- Construction of Tidewater Renewables' 3,000 bbl/d Renewable
Diesel & Renewable Hydrogen Complex ("HDRD") Complex continues
to progress. The Corporation has reached several important
milestones and construction of the facility is well underway.
Tidewater Renewables expects production of Renewable Diesel in the
first quarter of 2023.
- On November 15, 2021, Tidewater
Renewables announced a multi-year agreement with an
investment-grade company to sell 125,000 British Columbia Low
Carbon Fuel Standard ("BC LCFS") credits at $425 per credit. Subsequent to December 31, 2021, the Corporation announced two
additional BC LCFS credit sales with two different investment-grade
companies for 25,000 BC LCFS credits at an average price of
$478 per credit and 10,000 BC LCFS
credits at $490 per credit,
respectively. These agreements extend to January 2024, and significantly reduce the price
exposure on BC LCFS credits that Tidewater Renewables is expected
to receive. Gross proceeds over the term of these agreements are
approximately $70 million. The
Corporation has now sold over 58% of the volume of its BC LCFS
credits granted under the Part 3 Agreement with the BC Government
on a forward basis at prices higher than the originally budgeted of
$375 per credit.
- During the year, Tidewater Renewables successfully commissioned
its Canola Co-Processing Project at the Prince George Refinery
("PGR") ahead of schedule and is currently producing and selling
renewable diesel and gasoline.
- On December 10, 2021, Tidewater
Renewables closed an acquisition of a used cooking oil supplier for
total consideration of $3.3 million,
consisting of cash and common shares of Tidewater Renewables. Used
cooking oil is a low carbon intensity renewable fuel feedstock that
the HDRD Complex will be capable of processing.
- Tidewater Renewables continues to progress its feedstock
business strategy and is in discussions with multiple
counterparties on potential partnerships and long-term arrangements
on discounted feedstock supply. The Corporation also continues to
make significant headway on its Renewable Natural Gas ("RNG")
business unit with various partnership discussions aimed at both
securing long term feedstock supply and investment grade offtake
agreements. Tidewater Renewables continues to see material
government support on various future renewable fuel
initiatives.
- Tidewater Renewables is expecting material growth as it
develops markets for feedstocks and clean fuels and anticipates
Adjusted EBITDA growth of over 20% into the end of 2022 as compared
to the fourth quarter of 2021. Tidewater Renewables remains
confident in its ability to deliver over 300% Adjusted EBITDA
growth over the next 14-18 months with the commissioning of the
HDRD Complex in the first quarter of 2023.
- Tidewater Renewables is pleased to announce a multi-year
partnership with the University of
Saskatchewan, which will focus on a variety of renewable
feedstocks, catalyst synthesis and conversion technologies to
produce clean fuels such as RNG, renewable diesel, and sustainable
aviation fuel.
- Joining the management team is Dr. Venu Babu Borugadda, Manager
Research and Development, who will oversee the development of next
generation feedstocks, catalysts, and conversion technologies for
clean fuels within Tidewater Renewables. Prior to joining Tidewater
Renewables, Dr. Borugadda was a MITACS Postdoctoral Fellow in the
Department of Chemical and Biological Engineering at the
University of Saskatchewan,
Saskatoon, Canada. He received his
Ph.D. in Chemical Engineering from the Indian Institute of
Technology Guwahati, India in 2016
and Master of Technology degree with Petroleum Refinery Engineering
specialization from the same University in 2011. Dr. Borugadda has
over ten years of research and development experience in
biomaterials processing, bio-lubricants and the production of
biofuels and biochemicals. Dr. Borugadda is currently advancing
several patents on catalysts relating to the production of
renewable fuels. Tidewater Renewables is in the process of
developing multiple patents related to feedstocks and catalysts in
the advancement of renewable fuels.
1
|
Adjusted EBITDA,
distributable cash flow, and run rate EBITDA used throughout this
press release are non-GAAP financial measures or ratios.
See the "Non-GAAP and Other Financial Measures" in this press
release and the Corporations MD&A for information on each
non-GAAP financial measure or ratio.
|
Selected financial and operating information is outlined below
and should be read with the Corporation's consolidated financial
statements and related MD&A as at and for the period from date
of incorporation, May 11, 2021 to
December 31, 2021 which are available
under the Corporation's profile on SEDAR at www.sedar.com and on
our website at www.tidewater-renewables.com.
Financial Highlights
|
|
Three months
ended
December 31,
|
|
For the period
from date
of incorporation, May 11,
2021, to December 31,
|
(in thousands of
Canadian dollars except per share
information)
|
|
2021
|
|
2021
|
Revenue
|
$
|
16,925
|
$
|
23,055
|
Net income
|
$
|
80
|
$
|
2,763
|
Net income per share
– basic and
diluted
|
$
|
0.00
|
$
|
0.14
|
Adjusted EBITDA
(1)
|
$
|
10,635
|
$
|
15,965
|
Net cash provided by
operating
activities
|
$
|
9,963
|
$
|
8,187
|
Distributable cash
flow (1)
|
$
|
7,880
|
$
|
11,820
|
Distributable cash
flow per common
share – basic and diluted (1)
|
$
|
0.23
|
$
|
0.59
|
Total common shares
outstanding
(000s)
|
|
34,712
|
|
34,712
|
Total
assets
|
$
|
730,992
|
$
|
730,992
|
Net debt
(1)
|
$
|
58,978
|
$
|
58,978
|
|
Notes:
|
|
1
|
See "Non-GAAP and
Other Financial Measures" in the Corporation's press release and
MD&A.
|
OUTLOOK AND CAPITAL PROGRAM
Tidewater Renewables is pleased to deliver its first full
quarter of operations, generating Adjusted EBITDA of $10.6 million and distributable cash flow of
$7.9 million. The Corporation is
expecting material growth as it develops markets for feedstocks and
clean fuels and anticipates Adjusted EBITDA growth of over 20% into
the end of 2022 as compared to the fourth quarter of 2021.
Tidewater Renewables remains confident in its ability to deliver
over 300% Adjusted EBITDA growth over the next 14-18 months with
the commissioning of the HDRD Complex in the first quarter of 2023.
During the fourth quarter of 2021, Tidewater Renewables achieved
several milestones on the 3,000 bbl/d HDRD Complex and continues to
produce renewable diesel through its Canola Co-Processing Project.
The HDRD Complex is Tidewater Renewables' flagship project and is
expected to generate $90 - 100
million of annual Run Rate EBITDA once operational in the first
quarter of 2023.
Tidewater Renewables continues to progress its feedstock
business strategy and is in discussions with multiple
counterparties on potential partnerships and long-term arrangements
on discounted feedstock supply. The Corporation also continues to
make significant headway on its Renewable Natural Gas ("RNG")
business unit with various partnership discussions aimed at both
securing long term feedstock supply and investment grade offtake
agreements. Tidewater Renewables continues to see material
government support for various future renewable fuel
initiatives.
Canola Co-processing and FCC Co-Processing
Project
During the fourth quarter of 2021, the Canola Co-Processing
Project successfully processed canola oil into renewable diesel and
renewable gasoline. The Corporation has entered into vegetable oil
based financial forward contracts to decrease commodity price
exposure and protect the project's cash flows. Tidewater Renewables
has also begun testing alternative low-cost feedstocks through its
FCC Co-Processing Project with initial encouraging results.
Renewable Diesel & Renewable Hydrogen Complex
("HDRD Complex")
During the fourth quarter the following significant project
milestones were achieved:
- achieved the second milestone under the executed Renewable
Diesel Project Part 3 Agreement with the Government of
British Columbia, resulting in the
receipt of 31,418 BC LCFS Credits subsequent to December 31, 2021;
- received rezoning covenant sign off by the City of Prince George and submitted it to land
titles;
- ordered medium lead items including compressors, pumps, heat
exchangers and flare system;
- completed rough grade, access road and approximately 70% of
site gravelling;
- finished three tank concrete foundations;
- commenced receiving materials for fabrication; and
- started on mechanical, process, and instrumentation
documents.
Management expects to achieve the following construction project
milestones within the next three to six months:
- start brownfield pipe rack construction to connect existing
refinery utilities, tanks and loading infrastructure to HDRD
Complex;
- commence brownfield piling and start on rail loading rack
fabrication;
- complete remaining concrete foundations in the tank farm and
begin erecting storage tanks;
- award short lead items including instrumentation, structural
steel, pipe, valves, and fittings;
- finish piping & instrumentation design and related
construction packages; and
- complete consultations with First Nations and Indigenous
organizations.
Tidewater Renewables expects gross capital costs to trend
at the higher-end of its previously disclosed $215 - 235 million due to ongoing global supply
chain and inflation factors, which the Corporation continues to
manage through procurement of medium and long-lead equipment. As
the global economic recovery continues, management is actively
monitoring and managing supply-chain disruptions as well as general
commodity related inflationary pressures. Proactive steps
were taken by management in third and fourth quarter of 2021 to
order long and medium-lead equipment as well as to lock-in material
costs where possible to help mitigate any potential supply-chain
disruptions.
Feedstock Strategy and Supply
Tidewater Renewables continues to progress its feedstock
strategy for both its HDRD Complex and its future RNG initiatives.
In the fourth quarter, the Corporation acquired, and plans to
aggressively grow, a local used cooking oil supplier to further
integrate its value chain and supply volumes to the HDRD Complex.
Tidewater Renewables is also in discussions with multiple feedstock
suppliers on potential partnerships and synergies related to
long-term feedstock supply for both renewable diesel production and
RNG production. The Corporation continues to assess various
alternative low-cost feedstock options and plans to run tests
throughout 2022 which will be targeted at its co-processing
operations.
FOURTH QUARTER 2021 EARNINGS CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater Renewables' senior
management review its fourth quarter 2021 results via conference
call on Thursday, March 10, 2022 at
10:00 am MDT (12:00 pm EDT).
To access the conference call by telephone, dial 416-764-8659
(local / international participant dial in) or
1-888-664-6392 (North American toll free participant dial in).
A question and answer session for analysts will follow management's
presentation.
A live audio webcast of the conference call will be available by
following this link:
https://produceredition.webcasts.com/starthere.jsp?ei=1527016&tp_key=5cba86b737
will also be archived there for 90 days.
For those accessing the call via Cision's investor website, we
suggest logging in at least 15 minutes prior to the start of the
live event. For those dialing in, participants should ask to be
joined into the Tidewater Renewables Ltd. earnings call.
ABOUT TIDEWATER RENEWABLES
Tidewater Renewables is traded on the TSX under the symbol
"LCFS". Tidewater Renewables is a multi-faceted, energy transition
company. The Corporation is focused on the production of low carbon
fuels, including renewable diesel, renewable hydrogen and renewable
natural gas, as well as carbon capture through future initiatives.
The Corporation was created in response to the growing demand for
renewable fuels in North America
and to capitalize on its potential to efficiently turn a wide
variety of renewable feedstocks (such as tallow, used cooking oil,
distillers corn oil, soybean oil, canola oil and other biomasses)
into low carbon fuels. Tidewater Renewables' objective is to become
one of the leading Canadian renewable fuel producers. The
Corporation is pursuing this objective through the ownership,
development, and operation of clean fuels projects and related
infrastructure, utilizing existing proven technologies.
Organically, Tidewater Renewables will seek to leverage the
existing infrastructure and engineering expertise of Tidewater
Midstream, its majority shareholder, regarding the development of
the Corporation's portfolio of greenfield and brownfield capital
projects as well as the expansion of the Corporation's product
offerings. Additional information relating to Tidewater
Renewables is available on SEDAR at www.sedar.com and at
www.tidewater-renewables.com.
NON-GAAP AND OTHER FINANCIAL MEASURES
Throughout this press release and in other materials disclosed
by the Corporation, Tidewater Renewables uses a number of financial
measures when assessing its results and measuring overall
performance. The intent of non-GAAP measures and ratios is to
provide additional useful information to investors and analysts.
Certain of these financial measures do not have a standardized
meaning prescribed by GAAP and are therefore unlikely to be
comparable to similar measures presented by other entities. As
such, these measures should not be considered in isolation or used
as a substitute for measures of performance prepared in accordance
with GAAP. For more information with respect to financial measures
which have not been defined by GAAP, including reconciliations to
the closest comparable GAAP measure, see the "Non-GAAP and Other
Financial Measures" section of Tidewater Renewables' most recent
MD&A which is available on SEDAR.
Non-GAAP Financial Measures
The non-GAAP financial measures used by the Corporation are
Adjusted EBITDA and distributable cash flow.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is
calculated as income (or loss) before finance costs, taxes,
depreciation, share-based compensation, unrealized gains/losses on
derivative contracts, non-cash items, transaction costs, lease
payments under IFRS 16 Leases and other items considered
non-recurring in nature.
The following table reconciles net income, the nearest GAAP
measure, to Adjusted EBITDA:
|
|
Three months
ended
December 31,
|
|
For the period
from date
of incorporation,
May 11, 2021,
to
December 31,
|
(in thousands of
Canadian dollars)
|
|
2021
|
|
2021
|
Net income
|
$
|
80
|
$
|
2,763
|
Deferred
income tax expense
|
|
175
|
|
1,234
|
Depreciation
|
|
4,592
|
|
6,707
|
Finance
costs
|
|
759
|
|
1,476
|
Share-based compensation
|
|
425
|
|
680
|
Unrealized loss on derivative contracts
|
|
4,322
|
|
1,552
|
Transaction costs
|
|
282
|
|
1,553
|
Adjusted
EBITDA
|
$
|
10,635
|
$
|
15,965
|
Distributable Cash Flow
Distributable cash flow is a non-GAAP measure. Management
believes distributable cash flow is a useful metric for investors
when assessing the amount of cash flow generated from normal
operations. These cash flows are relevant to the Corporation's
ability to internally fund growth projects, alter its capital
structure, or distribute returns to shareholders. Distributable
cash flow is calculated as net cash provided by operating
activities before changes in non-cash working capital plus cash
distributions from investments, transaction costs, non-recurring
expenses, and after any expenditures that use cash from operations.
Changes in non-cash working capital are excluded from the
determination of distributable cash flow because they are primarily
the result of seasonal fluctuations or other temporary changes and
are generally funded with short-term debt or cash flows from
operating activities. Deducted from distributable cash flow are
maintenance capital expenditures, including turnarounds, as they
are ongoing recurring expenditures which are funded from operating
cash flows. Transaction costs are added back as they vary
significantly quarter to quarter based on the Corporation's
acquisition and disposition activity. It also excludes
non-recurring transactions that do not reflect Tidewater
Renewables' ongoing operations.
The following table reconciles net cash provided by operating
activities, the nearest GAAP measure, to distributable cash
flow:
|
|
Three months
ended
December 31,
|
|
For the period
from date
of incorporation,
May 11, 2021,
to
December 31,
|
(in thousands of
Canadian dollars)
|
|
2021
|
|
2021
|
Net cash provided by
operating activities
|
$
|
9,963
|
$
|
8,187
|
Add
(deduct):
|
|
|
|
|
Changes in non-cash
working capital
|
|
60
|
|
5,895
|
Transaction
costs
|
|
282
|
|
1,553
|
Interest and
financing charges
|
|
(569)
|
|
(790)
|
Payment of lease
liabilities
|
|
(1,435)
|
|
(2,147)
|
Maintenance
capital
|
|
(421)
|
|
(878)
|
Distributable cash
flow
|
$
|
7,880
|
$
|
11,820
|
Non-GAAP Financial Ratios
Distributable Cash Flow Per Common Share
|
|
|
Three months
ended
December 31,
|
|
For the period
from date
of incorporation,
May 11, 2021,
to
December 31,
|
(in thousands of
Canadian dollars except per share
information)
|
|
2021
|
|
2021
|
Distributable cash
flow
|
$
|
7,880
|
$
|
11,820
|
Distributable cash
flow per
common share – basic and diluted
|
$
|
0.23
|
$
|
0.59
|
Capital Management Measures
Net Debt
Net debt is defined as bank debt, less cash. Net debt is used by
the Corporation to monitor its capital structure and financing
requirements. It is also used as a measure of the Corporation's
overall financial strength.
The following table reconciles net debt:
(in thousands of
Canadian dollars)
|
|
December 31,
2021
|
Senior credit
facility
|
$
|
60,000
|
Cash
|
|
(1,022)
|
Net
debt
|
$
|
58,978
|
Supplementary Financial Measures
"Run Rate EBITDA" is a non-GAAP financial measure and is
defined as the expected EBITDA to be generated by Tidewater
Renewables' specific Acquired Assets, or specific growth project,
that corresponds to a full year of operations at full capacity. Run
Rate EBITDA excludes non-cash items including depreciation and
share-based compensation. The calculation of Run Rate EBITDA is
based on certain estimates and assumptions. It should not be
regarded as a representation, by the Corporation or any other
person, that Tidewater Renewables will achieve such operating
results. Investors should not place undue reliance on the Run Rate
EBITDA and should make their own independent assessment of the
Corporation's future results or operations, cash flows and
financial condition.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute
forward-looking statements and forward-looking information
(collectively referred to herein as, "forward-looking statements")
within the meaning of applicable Canadian securities laws. Such
forward-looking statements relate to future events, conditions or
future financial performance of Tidewater Renewables based on
future economic conditions and courses of action. All statements
other than statements of historical fact may be forward-looking
statements. Such forward-looking statements are often, but not
always, identified by the use of any words such as "seek",
"anticipate", "budget", "plan", and similar expressions. These
statements involve known and unknown risks, assumptions,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. The Corporation believes the
expectations reflected in those forward-looking statements are
reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements
included in this press release should not be unduly relied
upon.
In particular, this press release contains forward-looking
statements pertaining to, but not limited to, the following: the
expected financial performance of the Corporation's proposed
capital projects and assets following the commencement of
operations, including underlying assumptions; estimates of EBITDA
and Run Rate EBITDA; guidance with respect to forecasted
consolidated Adjusted EBITDA and expected growth related thereto;
the Corporation's business plans and strategies, including the
underlying existing assets and capital projects, and the success
and timing of the projects and related milestones and capital
costs; the Corporation's operational and financial performance,
including expectations regarding generating revenue, revenues and
operating expenses; the ability to leverage existing infrastructure
and engineering expertise of Tidewater Midstream regarding
development of the Corporation's projects and product offerings;
anticipated revenue from future sales of BC LCFS Credits; the
ability of the Corporation to progress its feedstock strategy; the
future price and volatility of commodities; the future pricing of
BC LCFS Credits and credits issued pursuant to the CFS ("CFS
Credits"); expectations around the Corporation's receipt of BC LCFS
Credits and CFS Credits; and the availability, future price and
volatility of feedstocks and other inputs.
Although the forward-looking statements contained in this press
release are based upon assumptions which management of the
Corporation believes to be reasonable, the Corporation cannot
assure investors that actual results will be consistent with these
forward-looking statements. With respect to forward-looking
statements contained in this press release, the Corporation has
made assumptions regarding, but not limited to: Tidewater
Renewables' ability to execute on its business plan; the timely
receipt of all third party, governmental and regulatory approvals
and consents sought by the Corporation including with respect to
the Corporation's projects and applications; general economic and
industry trends, including the duration and effect of the COVID-19
pandemic; operating assumptions relating to the Corporation's
projects; the Corporation's projects may not generate
expected levels of output, including those resulting from a reduced
feedstock supply; expectations that the HDRD Complex will be in
service in the first quarter of 2023; the ownership and operation
of Tidewater Renewables' business; regulatory risks, including
changes or delay to the BC LCFS Credits or CFS Credits; the
expansion of production of renewable fuels by competitors; the
future pricing of BC LCFS Credits and CFS Credits; future commodity
prices; sustained or growing demand for renewable fuels;
ability for the Corporation to successfully turn a wide variety of
renewable feedstocks into low carbon fuels; that the HDRD
Complex will remain on budget and on schedule; and the other
assumptions set forth in the Corporation's most recent annual
information form available under the Corporation's profile on SEDAR
at www.sedar.com.
The Corporation's actual results could differ materially from
those anticipated in the forward-looking statements, as a result of
numerous known and unknown risks and uncertainties and other
factors including, but not limited to: changes in supply and demand
for low carbon products; general economic, political, market and
business conditions, including fluctuations in interest rates,
foreign exchange rates, stock market volatility and supply/demand
trends; risks of health epidemics, pandemics and similar outbreaks,
including COVID-19, which may have sustained material adverse
effects on the Corporation's business, financial position, results
of operations and/or cash flows; risks and liabilities inherent in
the operations related to renewable energy production and storage
infrastructure assets, including the lack of operating history and
risks associated with forecasting future performance; competition
for, among other things, third-party capital and acquisitions of
additional assets; risks related to the environment and changing
environmental laws in relation to the operations conducted with the
Acquired Assets; the other risks set forth in the Corporation's
most recent annual information form available under the
Corporation's profile on SEDAR at www.sedar.com.
The foregoing lists are not exhaustive. Additional information
on these and other factors which could affect the Corporation's
operations or financial results are included in the Corporation's
most recent AIF and in other documents on file with the Canadian
Securities regulatory authorities.
To the extent any forward-looking statement in this press
release constitutes "future-oriented financial information" or
"financial outlooks" within the meaning of applicable Canadian
securities laws, such information is being provided to demonstrate
the anticipated Run Rate EBITDA of certain of the Acquired Assets
and the reader is cautioned that this information may not be
appropriate for any other purpose and the reader should not place
undue reliance on such future-oriented financial information and
financial outlooks. Future-oriented financial information and
financial outlooks, as with forward-looking statements generally,
are, without limitation, based on the assumptions and subject to
the risks set out above. The Corporation's actual financial
position and results of operations may differ materially from
management's current expectations and, as a result, the
Corporation's revenue and expenses may differ materially from the
revenue and expenses profiles provided in this press release. Such
information is presented for illustrative purposes only and may
not be an indication of the Corporation's actual financial position
or results of operations.
The Corporation's actual results' performance or achievement
could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits the Corporation will derive therefrom. Readers are
therefore cautioned that the foregoing list of important factors is
not exhaustive, and they should not unduly rely on the
forward-looking statements included in this press release.
Tidewater Renewables forward-looking statements, whether as a
result of new information, future events or otherwise, other than
as required by applicable securities law. All forward-looking
statements contained in this press release are expressly qualified
by this cautionary statement. Further information about factors
affecting forward-looking statements and management's assumptions
and analysis thereof is available under the Corporation's profile
on SEDAR at www.sedar.com.
SOURCE Tidewater Renewables Ltd.