CALGARY,
AB, May 11, 2023 /CNW/ - Tidewater Renewables
Ltd. ("Tidewater Renewables" or the "Corporation")
(TSX: LCFS) is pleased to announce that it has filed its condensed
interim consolidated financial statements and Management's
Discussion and Analysis ("MD&A") for the for the period
ended March 31, 2023.
FIRST QUARTER 2023 HIGHLIGHTS & OPERATIONAL
UPDATE
- The HDRD Complex is expected to reach commercial production by
the end of Q2 2023. The gross project cost forecast remains in line
with previous guidance (approximately $342
million) and the project's economics remain attractive with
payback expected within 2 - 3 years.
- In the first quarter of 2023, Tidewater Renewables generated
$12.6 million of Adjusted
EBITDA(1), consistent with $12.7
million in the first quarter of 2022. Net loss attributable
to shareholders was $21.5 million for
the first quarter of 2023, compared to net income attributable to
shareholders of $17.5 million in the
first quarter of 2022. The principal cause of the Q1 2023 net loss
attributable to shareholders was $37.0
million of non-cash unrealized losses on derivative
contracts associated with decreases in forward feedstock
pricing.
- The Corporation is forecasting a gradual production ramp-up of
the HDRD Complex in the second half of 2023, with an average
utilization rate between 75 – 80% of its design capacity. Based on
this utilization, second-half 2023 corporate Adjusted
EBITDA(1) is expected to range between $50 – 60 million, inclusive of $35 – 45 million of Adjusted EBITDA(1)
from the HDRD Complex. When the HDRD Complex is operating at its
design capacity, annualized corporate run rate EBITDA(1)
is expected to range between $130 –
155 million.
- On May 10, 2023, the Corporation
amended its Senior Credit Facility and its AIMCo Facility,
providing a temporary increase of $25.0
million each, for a combined total of $50.0 million. These amounts are repayable in
variable quarterly installments based on the Corporation's cash
flows following the commissioning of the HDRD Complex. Funding
remains subject to customary closing procedures.
- On April 13, 2023, the
Corporation announced that it had obtained additional capital
emissions credits related to the HDRD Complex, which were sold to
third parties for proceeds of $43.2
million. These proceeds, combined with the $50.0 million of additional debt capacity,
provide Tidewater Renewables with ample liquidity to complete the
commissioning of its HDRD Complex.
- On April 24, 2023, Tidewater
Renewables published its inaugural Environmental, Social and
Governance ("ESG") report. The report highlights the Corporation's
commitment to responsible energy development, its approach to
sustainability, recent accomplishments and other material items
that will drive the success of Tidewater Renewables' long-term ESG
goals. The report is available on the Corporation's website at
www.tidewater-renewables.com.
"We are excited to be approaching the start-up of Canada's first renewable diesel facility and
proud that we have hit the 95% complete mark on the project with an
impeccable safety record. The additional $93.2 million of debt capacity and emissions
credits secured by the team in the past two months will provide the
Corporation with significant cushion as we move through start-up
and sets up future growth projects." states Interim CEO
Rob Colcleugh.
(1)
Adjusted EBITDA, distributable cash
flow, net debt 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 Corporation's MD&A for information on each non-GAAP
financial measure or ratio.
|
Selected financial and operating information are outlined below
and should be read with the Corporation's condensed interim
consolidated financial statements and related MD&A for the
period ended March 31, 2023, which
are available under the Corporation's profile on SEDAR at
www.sedar.com and on its website at
www.tidewater-renewables.com.
Financial Highlights
(in thousands of
Canadian dollars except per share information)
|
Three months ended
March 31,
|
|
2023
|
|
2022
|
Revenue
|
$
|
19,896
|
$
|
17,250
|
Net income (loss)
attributable to shareholders
|
$
|
(21,477)
|
$
|
17,514
|
Net income (loss)
attributable to shareholders per share – basic and
diluted
|
$
|
(0.62)
|
$
|
0.50
|
Adjusted EBITDA
(1,2)
|
$
|
12,635
|
$
|
12,737
|
Net cash provided by
operating activities
|
$
|
11,449
|
$
|
19,285
|
Distributable cash
flow(1)
|
$
|
5,273
|
$
|
7,916
|
Distributable cash flow
per common share – basic and diluted (1)
|
$
|
0.15
|
$
|
0.23
|
Total common shares
outstanding (000s)
|
|
34,721
|
|
34,712
|
Total assets
|
$
|
1,024,265
|
$
|
788,795
|
Net
debt(1)
|
$
|
278,552
|
$
|
66,415
|
(1)
|
See "Non-GAAP and Other
Financial Measures" in the Corporation's press release and
MD&A.
|
(2)
|
For the three months
ended March 31, 2023, Adjusted EBITDA includes $294 from its
proportionate share of RCC's Adjusted EBITDA.
|
OUTLOOK AND CORPORATE UPDATE
The Corporation's immediate focus remains on the safe and
successful commissioning of Canada's first standalone renewable diesel
facility. Following the commissioning of the HDRD Complex,
Tidewater Renewables will be among Canada's first sizable producers of BC LCFS
credits and federal clean fuel regulation ("CFR") credits. The
Corporation continues to see strong industry fundamentals,
including robust prices for renewable fuels and strong demand for
environmental credits. This demand is supported by escalating
compliance requirements and voluntary environmental commitments.
Tidewater Renewables continues to work with various counterparties
to achieve their compliance requirements, fulfill their ESG
commitments and meet their energy needs.
After the HDRD Complex is successfully commissioned, the
Corporation is dedicated to strengthening its financial position,
repaying debt and progressing the development of the RNG Facility
for the remainder of 2023. Tidewater Renewables continues to
observe robust social and government support for the energy
transition and the incremental Adjusted EBITDA from the HDRD
Complex is expected to launch the next phase of the Corporation's
growth.
CONFERENCE CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater Renewables' senior
management review its first quarter 2023 results via conference
call on Thursday, May 11, 2023, 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://app.webinar.net/qem6WBdKQ2n 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 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. Organically,
Tidewater Renewables seeks to leverage the existing infrastructure
and engineering expertise of Tidewater Midstream and Infrastructure
Ltd., 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, distributable cash flow and run rate EBITDA.
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 plus the Corporation's proportionate share
of EBITDA in its equity investment.
The following table reconciles net income, the nearest GAAP
measure, to Adjusted EBITDA:
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars)
|
|
2023
|
|
2022
|
Net income
(loss)
|
$
|
(21,477)
|
$
|
17,514
|
Deferred
income tax expense (recovery)
|
|
(7,662)
|
|
6,443
|
Depreciation
|
|
4,924
|
|
4,688
|
Finance
costs
|
|
5,407
|
|
774
|
Share-based compensation
|
|
1,720
|
|
450
|
Unrealized
loss (gain) on derivative contracts
|
|
37,035
|
|
(17,185)
|
Loss
(gain) on warrant liability revaluation
|
|
(7,250)
|
|
-
|
Transaction costs
|
|
80
|
|
53
|
Non-recurring transactions
|
|
337
|
|
-
|
Adjustment
to share of profit from equity accounted investments
(1)
|
|
(479)
|
|
-
|
Adjusted
EBITDA
|
$
|
12,635
|
$
|
12,737
|
(1)
|
For the three months
ended March 31, 2023, Adjusted EBITDA includes $294 from its
proportionate share of RCC's Adjusted EBITDA.
|
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
March 31,
|
(in thousands of
Canadian dollars)
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
$
|
11,449
|
$
|
19,285
|
Add
(deduct):
|
|
|
|
|
Changes in non-cash
working capital
|
|
(288)
|
|
(6,660)
|
Transaction
costs
|
|
80
|
|
53
|
Non-recurring
transactions
|
|
337
|
|
-
|
Interest and financing
charges
|
|
(3,004)
|
|
(556)
|
Payment of lease
liabilities
|
|
(1,613)
|
|
(1,471)
|
Maintenance
capital
|
|
(1,688)
|
|
(2,735)
|
Distributable cash
flow
|
$
|
5,273
|
$
|
7,916
|
Run Rate EBITDA
Run rate EBITDA is defined as the expected Adjusted EBITDA to be
generated by Tidewater Renewables' specific Renewable 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.
Run rate EBITDA guidance related to the HDRD Complex contains
various assumptions including a renewable refinery margin of
$90/bbl. The renewable refinery
margin is derived from vegetable oil strip pricing for the
Corporation's feedstocks, which are approximately 50% hedged
through 2023 and 2024, current diesel strip pricing, the
Corporation's previously announced CFR credit sales and average BC
LCFS credits sale prices over the past 12-months.
Non-GAAP Financial Ratios
Distributable Cash Flow Per Common Share
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars except per share information)
|
|
|
2023
|
|
2022
|
Distributable cash
flow
|
|
$
|
5,273
|
$
|
7,916
|
Weighted average common
shares outstanding– basic & diluted
|
|
|
34,720
|
|
34,712
|
Distributable cash flow
per share– basic & diluted
|
|
$
|
0.15
|
$
|
0.23
|
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)
|
|
March 31,
2023
|
Senior Credit
Facility
|
$
|
129,491
|
Term Debt
|
|
150,000
|
Cash
|
|
(939)
|
Net
debt
|
$
|
278,552
|
FORWARD-LOOKING INFORMATION
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 operational and financial performance of the Corporation's
Renewable Assets, including the HDRD Complex and the RNG Facility,
as well as expectations regarding generating revenue, revenues and
operating expenses; the expectation that the Corporation will be
able to grow its revenue, actively maintain and manage its
Renewable Assets, including the HDRD Complex and the RNG Facility,
and achieve growth by selectively pursuing strategic business
development opportunities; the Corporation's business plans and
strategies, including the underlying existing assets and capital
projects, and the success and timing of its projects and related
milestones and capital costs; the expectation that the Corporation
will continue to see strong industry fundamentals, including robust
prices for renewable fuels and strong demand for environmental
credits, driven by escalating compliance requirements and new
voluntary commitments; the expectation that the HDRD Complex will
be, when commissioned, Canada's
first standalone renewable diesel facility; the expectation that
the HDRD Complex is approaching commercial production by the end of
Q2 2023; the expectation that the HDRD Complex will undergo a
gradual production ramp-up in the second half of 2023, with an
average utilization rate between 75 – 80% of its design capacity;
the expectation that the gross project costs for the HDRD Complex
will be approximately $342 million
and the project's payback is expected within two to three years;
estimates of, and guidance with respect to forecasted run rate
EBITDA for the HDRD Complex and Adjusted EBITDA for both the
Corporation and the HDRD Complex, including (i) the expectation
that the HDRD Complex will contribute approximately $35 – 45 million of Adjusted EBITDA ($70 – 90 million annualized) in the second half
of 2023, (ii) the expectation that second-half 2023 corporate
Adjusted EBITDA will range between $50 – 60 million, inclusive of $35 – 45 million of Adjusted EBITDA from the HDRD
Complex, and (iii) the expectation that the HDRD Complex will
generate annualized run rate EBITDA of between $90 – 115 million when the it is operating at its
design capacity; the ability to leverage existing infrastructure,
regulatory frameworks, and engineering expertise of Tidewater
Midstream regarding development of the Corporation's projects and
product offerings; the ability of the Corporation to progress its
feedstock strategy; the future price and volatility of commodities,
including that majority of the underserved regional demand will
continue to be served by the PGR; expectations around the
Corporation's receipt of BC LCFS credits and CFR credits;
anticipated revenue from future sales of BC LCFS credits and CFR
credits, including future pricing thereof; the expectation that
both (i) the combined $50.0 million
of additional debt capacity with its existing creditors and (ii)
the receipt of $43.2 million of
proceeds from the sale of incremental capital emissions credits,
will be sufficient to complete and commission the HDRD Complex; the
expectation that the Corporation will continue to make payments
under, and comply with the covenants in, both its Senior Credit
Facility and the AIMCo Facility; the expectation that the combined
$50.0 million of additional debt
capacity with its existing creditors will be repaid within the next
12 months; 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 approval related to the RNG Facility and other
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;
expectations around level of output from the Corporation's
projects, including assumptions relating to feedstock supply
levels; timing and cost of completion of the HDRD Complex,
including that the project will remain on budget and on schedule;
the ownership and operation of Tidewater Renewables' business;
regulatory risks, including changes or delay to the BC LCFS credit
or CFR credit systems; the expansion of production of renewable
fuels by competitors; the future pricing of BC LCFS credits and CFR
credits; future commodity and renewable energy prices; sustained or
growing demand for renewable fuels; the ability for the Corporation
to successfully turn a wide variety of renewable feedstocks into
low carbon fuels; changes in the credit-worthiness of
counterparties; the Corporation's future debt levels and its
ability to repay its debt when due; the Corporation's ability to
continue to satisfy the terms and conditions of its credit
facilities; the continued availability of the Corporation's credit
facilities; the Corporation's ability to obtain additional debt
and/or equity financing on satisfactory terms; the Corporation's
ability to manage liquidity by working with its current capital
providers and other sources and through the sale of BC LCFS credits
and CFR credits; foreign currency, exchange, inflation and interest
rate risks; and the other assumptions set forth in the
Corporation's most recent AIF 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 set forth in the Corporation's
most recent AIF and in other documents on file with the Canadian
Securities regulatory authorities 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, supply chain pressures, inflation, 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, acquisition opportunities,
requests for proposals, materials, equipment, labour, and skilled
personnel; risks related to the environment and changing
environmental laws in relation to the operations conducted with the
Renewable Assets and the Corporation's other capital projects;
risks related to and the other risks set forth in the Corporation's
most recent AIF 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 at www.sedar.com.
Management of the Corporation has included the above summary of
assumptions and risks related to forward-looking statements
provided in this press release in order to provide holders of
common shares in the capital of the Corporation with a more
complete perspective on the Corporation's current and future
operations and such information may not be appropriate for other
purposes. 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 occur, what benefits the Corporation will derive from them.
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 does not undertake any obligation to
update publicly or to revise any of the included 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 in the
Corporation's most recent AIF and other filings made by the
Corporation with Canadian provincial securities commissions
available under the Corporation's profile on SEDAR at
www.sedar.com.
Financial Outlook
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about expectations regarding financial results for 2023 and
2024, including Adjusted EBITDA and annual run rate EBITDA, which
are subject to the same assumptions, risk factors, limitations and
qualifications as set out under the heading "Forward-Looking
Information". The actual financial results of the Corporation may
vary from the amounts set out herein and such variation may be
material. The Corporation and its management believe that the
financial outlook has been prepared on a reasonable basis,
reflecting management's best estimates and judgments and the FOFI
contained in this press release was approved by management as of
the date hereof. However, because this information is subjective
and subject to numerous risks, it should not be relied on as
necessarily indicative of future results. Except as required by
applicable securities laws, the Corporation undertakes no
obligation to update such FOFI. FOFI contained in this press
release was made as of the date hereof and was provided for the
purpose of providing further information about the Corporation's
anticipated future business operations on an annual basis. Readers
are cautioned that the FOFI contained in this press release should
not be used for purposes other than for which it is disclosed
herein.
SOURCE Tidewater Renewables Ltd.