CALGARY,
AB, Nov. 10, 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 and
nine month periods ended September 30,
2022.
THIRD QUARTER 2022 HIGHLIGHTS
- Tidewater Renewables delivered another solid quarter with
Adjusted EBITDA(1) of $16.1
million in the third quarter of 2022. Net cash provided by
operating activities totaled $5.2
million for the third quarter of 2022, with distributable
cash flow(1) of $9.4
million.
- The Corporation's base business continues to exceed previous
guidance, with 2022 Adjusted EBITDA(1) now expected to
be between $55 – 65 million.
Tidewater Renewables remains confident in its ability to deliver
2023 Run Rate EBITDA(1) of $140 - 150 million, before any additional value
from Clean Fuel Regulation ("CFR") credits. Management
estimates that the Renewable Diesel & Renewable Hydrogen
("HDRD") Complex has the potential to generate an
incremental $30 million of Run Rate
EBITDA(1) from CFR credits, assuming pricing of
$95 -100 per credit.
- The Corporation has made significant progress on its 3,000
bbl/d HDRD Complex, including completion of construction on
multiple refinery modules. The HDRD Complex remains on schedule to
commission in Q1 2023 with production increasing through Q2
2023.
- Consistent with the global economic environment, the
Corporation is experiencing capital cost inflationary pressures, as
it resolves supply chain disruptions while adhering to the
construction timeline. The Corporation expects gross capital costs
to be approximately 10% higher than the previously announced
$235 million. The incremental gross
capital is expected to be partially offset by the increased value
of the British Columbia Low Carbon Fuel Standard ("BC LCFS")
credits issued under the Renewable Diesel Project Part 3 Agreement
with the Government of British
Columbia as compared to budget. Capital costs net of BC LCFS
credits are expected to be approximately $130 - 140 million. The project's economics
remain attractive, and payback is expected in less than two
years.
- During the third quarter of 2022, the Corporation made
significant progress on its renewable natural gas ("RNG")
business, including the completion of preliminary engineering &
design on the announced RNG Facility located in Foothills County
near High River, Alberta (the
"RNG Facility"). On October 17,
2022, the Corporation announced it had entered into a
20-year RNG offtake agreement with FortisBC Energy Inc.
("FortisBC"), whereby FortisBC expects to purchase up to
100% of the RNG Facility's design capacity. The Corporation has
also secured a long-term feedstock supply from the Corporation's
strategic partnership with Rimrock Cattle Company Ltd.
("RCC").
- In August 2022, Phase 1 of the
fluid catalytic cracking ("FCC") co-processing project was
successfully commissioned and began refining various renewable
feedstocks, including those provided by the Corporation's feedstock
collection business, into renewable diesel and renewable gasoline.
Full commissioning of the FCC co-processing project is expected in
2023.
- On October 24, 2022, the
Corporation announced the closing of a $150.0 million five-year senior secured second
lien credit facility (the "AIMCo Facility") with an
affiliate of Alberta Investment Management Corporation
("AIMCo"). The AIMCo Facility initially bears interest of
6.50% but is subject to scheduled escalations in year four and year
five as well as inflation-based adjustments. In conjunction with
the AIMCo Facility, Tidewater Renewables issued 3.375 million
warrants to AIMCo. Each warrant entitles the holder to purchase one
common share of Tidewater Renewables at a price of $14.84, subject to certain adjustments, for a
term of five years.
(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
three month and nine month periods ended September 30, 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
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(in thousands of
Canadian dollars except per share
information)
|
|
2022
|
|
2021
|
|
2022
|
|
2021(1)
|
Revenue
|
$
|
19,697
|
$
|
6,130
|
$
|
56,677
|
$
|
6,130
|
Net income (loss)
attributable to
shareholders
|
$
|
(10,067)
|
$
|
3,418
|
$
|
11,810
|
$
|
2,683
|
Basic and diluted net
income (loss)
attributable to shareholders per share
|
$
|
(0.29)
|
$
|
0.21
|
$
|
0.34
|
$
|
0.26
|
Adjusted EBITDA
(2,3)
|
$
|
16,084
|
$
|
5,330
|
$
|
45,723
|
$
|
5,330
|
Net cash provided by
operating activities
|
$
|
5,161
|
$
|
(1,776)
|
$
|
38,349
|
$
|
(1,776)
|
Distributable cash
flow (2)
|
$
|
9,437
|
$
|
3,940
|
$
|
28,627
|
$
|
3,940
|
Distributable cash flow
per common share
– basic and diluted (2)
|
$
|
0.27
|
$
|
0.25
|
$
|
0.82
|
$
|
0.38
|
Total common shares
outstanding (000s)
|
|
34,712
|
|
34,635
|
|
34,712
|
|
34,635
|
Total assets
|
$
|
915,211
|
$
|
709,571
|
$
|
915,211
|
$
|
709,571
|
Net debt
(2)
|
$
|
124,311
|
$
|
33,926
|
$
|
124,311
|
$
|
33,926
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
The comparable period
presented is from the date of incorporation, May 11, 2021, to
September 30, 2021.
|
(2)
|
See "Non-GAAP and Other
Financial Measures" in the Corporation's press release and
MD&A.
|
(3)
|
For the three and nine
months ended September 30, 2022, Adjusted EBITDA includes $867 and
$1,509 from its proportionate share of RCC's Adjusted EBITDA,
respectively.
|
ANNUAL OUTLOOK AND CORPORATE UPDATE
Robust prices for renewable fuels and BC LCFS credits, along
with growth in the Corporation's feedstock collection business into
the fourth quarter of 2022, has increased the 2022 Adjusted EBITDA
forecast, which is now expected to be between $55 – 65 million. Tidewater Renewables remains
confident in its ability to deliver 2023 Run Rate EBITDA of
$140 - 150 million, before any
additional value from CFR credits. Management estimates that the
HDRD Complex has the potential to generate an incremental
$30 million of Run Rate
EBITDA from CFR credits, assuming pricing of $95 -100 per credit.
During the third quarter of 2022, the Corporation made
significant progress on its 3,000 bbl/d HDRD Complex, including
completion of construction on multiple refinery modules. The HDRD
Complex remains on schedule to commission in Q1 2023 with
production increasing through Q2 2023. Renewable diesel
margins remain favorable, and Tidewater Renewables continues to
progress its renewable feedstock strategy to secure low-cost
feedstock for its HDRD Complex.
CONFERENCE CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater Renewables' senior
management review its third quarter 2022 results via conference
call on Thursday, November 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://app.webinar.net/D1RMJMlepgo 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 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
September 30,
|
Nine months
ended
September 30,
|
(in thousands of
Canadian dollars)
|
|
2022
|
|
2021
|
|
2022
|
|
2021(1)
|
Net income
(loss)
|
$
|
(10,067)
|
$
|
3,418
|
$
|
11,810
|
$
|
2,683
|
Deferred
income tax expense (recovery)
|
|
(4,378)
|
|
1,324
|
|
3,984
|
|
1,059
|
Depreciation
|
|
4,878
|
|
2,115
|
|
14,381
|
|
2,115
|
Finance
costs
|
|
2,697
|
|
717
|
|
4,881
|
|
717
|
Share-based compensation
|
|
1,123
|
|
255
|
|
2,477
|
|
255
|
Unrealized
loss (gain) on derivative contracts
|
|
22,441
|
|
(2,770)
|
|
8,132
|
|
(2,770)
|
Transaction costs
|
|
260
|
|
271
|
|
660
|
|
1,271
|
Adjustment
to share of profit from equity
accounted investments (2)
|
|
(870)
|
|
-
|
|
(602)
|
|
-
|
Adjusted
EBITDA
|
$
|
16,084
|
$
|
5,330
|
$
|
45,723
|
$
|
5,330
|
Notes:
|
(1)
|
The comparable period
presented is from the date of incorporation, May 11, 2021 to
September 30, 2021.
|
(2)
|
For the three and nine
months ended September 30, 2022, Adjusted EBITDA includes $867 and
$1,509 from its proportionate share of RCC's Adjusted EBITDA,
respectively.
|
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
September 30,
|
Nine months
ended
September 30,
|
(in thousands of
Canadian dollars)
|
|
2022
|
|
2021
|
|
2022
|
|
2021(1)
|
Net cash provided by
operating activities
|
$
|
5,161
|
$
|
(1,776)
|
$
|
38,349
|
$
|
(1,776)
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Changes in non-cash
working capital
|
|
9,588
|
|
6,835
|
|
4,824
|
|
5,835
|
Transaction
costs
|
|
260
|
|
271
|
|
660
|
|
1,271
|
Interest and financing
charges
|
|
(1,161)
|
|
(221)
|
|
(2,163)
|
|
(221)
|
Payment of lease
liabilities
|
|
(1,489)
|
|
(712)
|
|
(4,394)
|
|
(712)
|
Maintenance
capital
|
|
(2,922)
|
|
(457)
|
|
(8,649)
|
|
(457)
|
Distributable cash
flow
|
$
|
9,437
|
$
|
3,940
|
$
|
28,627
|
$
|
3,940
|
Notes:
|
(1)
|
The comparable period
presented is from the date of incorporation, May 11, 2021 to
September 30, 2021.
|
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 includes
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 50% and 40% hedged through 2023
and 2024 respectively, current diesel strip pricing and average BC
LCFS credits sale prices over the past 12-months. The renewable
refinery margin currently excludes any incremental value from CFR
credits.
Run Rate EBITDA guidance related to CFR credits, which is
excluded from other guidance, assumes that CFR credits can be sold
at an average price of $95 -
100/credit, based on the Corporation's previously announced forward
sales.
Run Rate EBITDA guidance related to the RNG Facility contains
various assumptions related to throughput, sales prices, feedstock
pricing and operating expenses. Throughput and operating expense
assumptions are derived from the facility design. Sales and
feedstock pricing is derived from existing and prospective
agreements.
Non-GAAP Financial Ratios
Distributable Cash Flow Per Common Share
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(in thousands of
Canadian dollars except per share
information)
|
|
2022
|
|
2021
|
|
2022
|
|
2021(1)
|
Distributable cash
flow
|
$
|
9,437
|
$
|
3,940
|
$
|
28,627
|
$
|
3,940
|
Distributable cash flow
per share– basic
and diluted
|
$
|
0.27
|
$
|
0.25
|
$
|
0.82
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
The comparable periods
presented is from the date of incorporation, May 11, 2021 to
September 30, 2021.
|
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)
|
|
September 30,
2022
|
Senior Credit
Facility
|
$
|
110,143
|
RNG Credit
Facility
|
|
15,550
|
Cash
|
|
(1,382)
|
Net
debt
|
$
|
124,311
|
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 capital
projects and assets including, the Renewables Assets; the
expectation that the Corporation will be able to grow its revenue,
actively maintain and manage its capital projects and assets,
including the Renewables Assets, and achieve growth by selectively
pursuing strategic business development opportunities; 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 and
Infrastructure Ltd. 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 CFR credits;
expectations around the Corporation's receipt of BC LCFS credits
and CFR 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 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 credits
or CFR credits; 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; ability for the Corporation to
successfully turn a wide variety of renewable feedstocks into low
carbon fuels; 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 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 Annual Information Form and in other
document in 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; and
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 Annual Information Form 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 statement 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 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 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 Annual Information Form 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
2022 and 2023, 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.