CALGARY,
AB, May 12, 2022 /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 three
months ended March 31, 2022.
FIRST-QUARTER 2022
HIGHLIGHTS
- Tidewater Renewables generated strong Adjusted
EBITDA(1) of $12.7 million
and net income of $17.5 million
during the first quarter of 2022. Net cash provided by operating
activities totaled $19.3 million for
the first quarter of 2022, with distributable cash
flow(1) of $7.9
million.
- The Corporation has reached several important milestones on its
3,000 bbl/d Renewable Diesel & Renewable Hydrogen Complex
("HDRD Complex") with significant construction set to take place
during the summer months of 2022. Tidewater Renewables expects
production of Renewable Diesel in the first quarter of 2023.
- During the three months ended March 31,
2022, the Corporation was awarded $5.4 million of British Columbia Low Carbon Fuel
Standard ("BC LCFS") credits for achieving construction milestones
on its HDRD Complex. As at March 31,
2022, the Corporation has forward agreements, with
investment-grade counterparties, to sell 150,000 BC LCFS credits at
an average price of $434 per credit.
The forward agreement proceeds of $65.1
million significantly reduces the Corporation's credit price
exposure under the executed Part 3 Agreement with the Government of
British Columbia. The Corporation
continues to realize higher credit prices than the originally
budgeted $375 per credit.
- Subsequent to March 31, 2022, the
Corporation announced its investment in two strategic partnerships
with Rimrock RNG Inc. and the Rimrock Cattle Company Ltd. aimed to
advance the Corporation's Renewable Natural Gas ("RNG") business
and secure long-term feedstock supply for both its RNG and
renewable fuels businesses. The investment includes the planned
construction of the Corporation's first RNG facility which is
expected to be backstopped by 10 to 20 year offtake agreements with
an investment grade counterparty and opportunity for additional RNG
facilities in the future. The partnerships also provide a long-term
feedstock supply for the RNG projects as well as access to
significant volumes of beef tallow that would meet approximately
half the feedstock requirements of the HDRD Complex. Tidewater
Renewables continues to see material government support for various
future renewable fuel initiatives.
- The Corporation is pleased with the outperformance in its base
business and expects continued Adjusted EBITDA(1) growth
with 2022 Adjusted EBITDA expected to be in the range of
$50 - $55
million. Tidewater Renewables remains confident in its
ability to deliver annualized Adjusted EBITDA(1) of
$140 – $150
million upon the commissioning of the HDRD Complex in
2023.
(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 Corporations 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
three months ended March 31, 2022
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, 2022
|
Revenue
|
$
|
17,250
|
Net income
|
$
|
17,514
|
Net income per share –
basic and diluted
|
$
|
0.50
|
Adjusted EBITDA
(1)
|
$
|
12,737
|
Net cash provided by
operating activities
|
$
|
19,285
|
Distributable cash
flow (1)
|
$
|
7,916
|
Distributable cash flow
per common share – basic and diluted (1)
|
$
|
0.23
|
Total common shares
outstanding (000s)
|
|
34,712
|
Total assets
|
$
|
788,795
|
Net debt
(1)
|
$
|
66,415
|
Notes:
|
|
(1)
|
See "Non-GAAP and Other
Financial Measures" in the Corporation's press release and
MD&A.
|
OUTLOOK AND CORPORATE
UPDATE
Tidewater Renewables is pleased to deliver its second full
quarter of operations, generating record Adjusted EBITDA of
$12.7 million and distributable cash
flow of $7.9 million. The Corporation
is pleased with the outperformance in its base business and expects
continued Adjusted EBITDA growth with 2022 Adjusted EBITDA expected
to be $50 - $55 million. Tidewater Renewables remains
committed to delivering annualized Adjusted EBITDA of $140 – $150 million
upon the commissioning of the HDRD Complex in the first quarter of
2023.
Tidewater Renewables expects the HDRD Complex to deliver
$90 - $100
million of annual Run Rate EBITDA once it is
commissioned in the first quarter of 2023. The Corporation's gross
capital cost expectations remain unchanged from previous guidance,
at approximately $235 million. The
Corporation continues to monitor macro-economic conditions,
including those that affect the global supply chain, and has
proactively accelerated the ordering of certain long and
medium-lead equipment to lock-in material costs and help mitigate
any potential supply-chain disruptions.
The Corporation remains hedged on approximately 50% and 30% of
the HDRD Complex's feedstock requirements through 2023 and 2024
respectively, as well as the majority of its Canola Co-Processing
feedstock.
FIRST QUARTER 2022 EARNINGS CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater Renewables' senior
management review its first quarter 2022 results via conference
call on Thursday, May 12, 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=1538826&tp_key=9e9600923d
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:
(in thousands of
Canadian dollars)
|
Three months
ended
March 31, 2022
|
Net income
|
$
|
17,514
|
Deferred income tax
expense
|
|
6,443
|
Depreciation
|
|
4,688
|
Finance
costs
|
|
774
|
Share-based
compensation
|
|
450
|
Unrealized gain on
derivative contracts
|
|
(17,185)
|
Transaction
costs
|
|
53
|
Adjusted
EBITDA
|
$
|
12,737
|
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:
(in thousands of
Canadian dollars)
|
|
Three months
ended
March 31, 2022
|
Net cash provided by
operating activities
|
$
|
19,285
|
Add
(deduct):
|
|
|
Changes in non-cash
working capital
|
|
(6,660)
|
Transaction
costs
|
|
53
|
Interest and financing
charges
|
|
(556)
|
Payment of lease
liabilities
|
|
(1,471)
|
Maintenance
capital
|
|
(2,735)
|
Distributable cash
flow
|
$
|
7,916
|
Non-GAAP Financial
Ratios
Distributable Cash Flow Per Common Share
(in thousands of
Canadian dollars except per share information)
|
|
Three months
ended
March 31, 2022
|
Distributable cash
flow
|
$
|
7,916
|
Distributable cash
flow per common share – basic
and diluted
|
$
|
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,
2022
|
Senior credit
facility
|
$
|
70,000
|
Cash
|
|
(3,585)
|
Net
debt
|
$
|
66,415
|
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 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.
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"); the expected Adjusted EBITDA to the Corporation from the
RNG Partnership; 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; the Corporation's plans to
evaluate additional RNG projects; the expectation that the Feedlot
Partnership will control a volume of beef tallow that would meet
half of the feedstock required of the HDRD Complex; 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, 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 and acquisitions of additional assets; risks related to the
environment and changing environmental laws in relation to the
operations conducted with the Renewable 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 Required 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.