TIDEWATER RENEWABLES LTD. ANNOUNCES THIRD QUARTER 2024 RESULTS

Canada NewsWire

CALGARY, AB, Nov. 14, 2024

CALGARY, AB, Nov. 14, 2024 /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 months ended September 30, 2024.

THIRD QUARTER HIGHLIGHTS

   -- On September 12, 2024, Tidewater Renewables completed a related party 
      transaction with Tidewater Midstream, selling its canola co-processing 
      and fluid catalytic cracking infrastructure, various refinery interests, 
      and the natural gas storage facility, along with the assumption of 
      certain liabilities, for cash proceeds of $122.0 million. As part of the 
      asset sale, the contracted take-or-pay and operating agreements were 
      terminated, effective August 1, 2024. Additionally, Tidewater Midstream 
      assigned the right to receive certain British Columbia Low Carbon Fuel 
      Standard ("BC LCFS") credits to the Corporation with a value of $7.7 
      million. The cash proceeds were used to repay amounts outstanding on the 
      Corporation's first lien senior credit facility. 
 
   -- In connection with the related party assets sale, the Corporation also 
      entered into an agreement to sell BC LCFS credits to Tidewater Midstream, 
      from July 2024 to March 2025, for minimum cash proceeds of approximately 
      $77.5 million, assuming the Corporation's HDRD Complex continues to 
      operate at over 90% utilization. 
 
   -- On September 12, 2024, Tidewater Renewables closed the sale of assets 
      from its used cooking oil feedstock business, generating total proceeds 
      of $10.6 million. The proceeds from this transaction were used to reduce 
      outstanding debt on the first lien senior credit facility. 
 
   -- Concurrent with the closing of the above transactions, the Company 
      successfully completed the refinancing of its first and second lien 
      credit facilities. The aggregate principal amount of the first lien 
      credit facilities was reduced from $175.0 million to $30.0 million, and 
      the maturity date was extended to February 28, 2026. Additionally, the 
      maturity of the $25.0 million tranche B second lien credit facility was 
      also extended to February 28, 2026. 
 
   -- For the three months ended September 30, 2024, the Corporation reported a 
      net loss attributable to shareholders of $367.1 million, compared to net 
      loss attributable to shareholders of $9.4 million in the third quarter of 
      2023. The increase in the loss was driven by losses incurred on the sale 
      of assets, and realized losses on derivative contracts, as well as higher 
      financing costs, which were partially offset by higher operating income 
      and deferred tax recoveries. 
 
   -- During the third quarter of 2024, Tidewater Renewables generated Adjusted 
      EBITDA(1) of $13.6 million, a decrease of 6% from the third quarter of 
      2023 and a decrease of 54% from the second quarter of 2024. The decrease 
      was attributed to the sale of EBITDA generating assets and the 
      termination of the take-or-pay contracts effective August 1, 2024, 
      partially offset by the sale of emission credits in the third quarter 
      that were priced during the first half of 2024, before the significant 
      decline in emission credit prices. 
 
   -- The HDRD Complex achieved average daily throughput of 2,849 bbl/d during 
      the third quarter of 2024, representing a 95% utilization rate. Over 140 
      million liters of renewable diesel has been produced and sold into the 
      local British Columbia market since the HDRD Complex commenced commercial 
      operations in November 2023. 
 
   -- Tidewater Renewables continues to make significant progress on the 
      front-end engineering design ("FEED") of its proposed 6,500 bbl/d 
      sustainable aviation fuel project. The project remains contingent upon a 
      final investment decision which is anticipated in 2025. 
 
   -- Tidewater Renewables has been actively engaged in discussions with the 
      Government of Canada and the Government of British Columbia regarding 
      potential modifications to low carbon fuel policies that currently allow 
      subsidized United States ("U.S.") renewable diesel producers to take 
      advantage of overlapping U.S. and Canadian policies. 
 
   -- The Corporation has engaged external trade law counsel for the purposes 
      of advising on and preparing a trade remedy complaint against renewable 
      diesel imports from the U.S. that management believes are unfairly priced 
      and having a significant negative impact on the competitiveness of our 
      domestic operations. Based on available information and advice, 
      management believes that a trade case against renewable diesel imports 
      from the U.S. has a reasonably high likelihood of success. Preparation of 
      the Corporation's trade complaint is progressing at pace. Filing of a 
      complaint may occur before the close of 2024 and, if a government 
      investigation initiates and concludes that unfairly traded imports are 
      harming Canadian production, duty relief would then be available in 2025. 
 
(1)  Non-GAAP financial measure. 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 and nine months ended September 30, 2024, which are available under the Corporation's profile on SEDAR+ at www.sedarplus.ca and on its website at www.tidewater-renewables.com.

Financial Highlights

 
                        Three months ended      Nine months ended 
                         September 30,           September 30, 
(in thousands of         2024        2023        2024        2023 
Canadian dollars 
except per share 
information) 
Revenue                 $   91,625  $   24,244  $  350,102  $   57,303 
Net loss attributable 
 to shareholders        $(367,116)  $  (9,449)  $(354,461)  $ (28,272) 
Net loss attributable 
 to shareholdersper 
 share -- basic and 
 diluted                $  (10.46)  $   (0.27)  $  (10.15)  $   (0.81) 
Adjusted EBITDA (1)     $   13,630  $   14,531  $   68,470  $   35,233 
Net cash (used in) 
 provided by 
 operatingActivities    $    3,134  $    1,522  $   76,086  $    5,623 
Distributable cash 
 flow (1)               $    4,488  $    3,209  $   37,595  $      605 
Distributable cash 
 flow per share -- 
 basic (1)              $     0.13  $     0.09  $     1.08  $     0.02 
Distributable cash 
 flow per share -- 
 diluted (1)            $     0.13  $     0.09  $     1.04  $     0.02 
Total common shares 
 outstanding (000s)         36,327      34,727      36,327      34,727 
Total assets            $  420,228  $1,049,533  $  420,228  $1,049,533 
Net debt (1)            $  183,318  $  334,114  $  183,318  $  334,114 
(1) Refer to "Non-GAAP and Other Financial Measures". 
 

OUTLOOK AND CORPORATE UPDATE

Related party asset sales and forward credit sales

On September 12, 2024, the Corporation announced the closing of the previously announced related party asset sale transaction with Tidewater Midstream (the "Transaction").

As part of the Transaction, the Corporation and Tidewater Midstream entered into an Assets Sale Agreement, pursuant to which the Corporation sold its canola co-processing infrastructure, the fluid catalytic cracking co-processing infrastructure, working interests in various other Prince George refinery units, and a natural gas storage facility co-located at Tidewater Midstream's Brazeau River Complex (collectively the "Divested Assets") to Tidewater Midstream for cash proceeds of $122.0 million, plus the assumption by Tidewater Midstream of certain of our liabilities relating to the Divested Assets. In addition, as part of the consideration, Tidewater Midstream assigned the right to receive certain BC LCFS credits to the Corporation with a minimum value of $7.7 million. The cash proceeds for the Divested Assets were used to repay amounts outstanding on the Corporation's first lien senior credit facility.

The Divested Assets historically generated annual Adjusted EBITDA(1) of $40.0 million to $50.0 million through previously contracted take-or-pay or operating agreements with Tidewater Midstream. As part of the Transaction, the contracted take-or-pay and operating agreements were terminated effective August 1, 2024. For the three and nine months ended September 30, 2024, the Adjusted EBITDA(1) attributable to divested assets was $5.0 million and $34.5 million, respectively.

In connection with the Transaction, Tidewater Midstream and Tidewater Renewables also entered into an Agreement for the Purchase and Sale of Credits, pursuant to which Tidewater Midstream purchased BC LCFS credits from Tidewater Renewables on September 12, 2024, for an aggregate purchase price of approximately $7.2 million, and will also purchase additional BC LCFS credits (subject to certain monthly average limits) from Tidewater Renewables until March 31, 2025, for total cash proceeds of approximately $77.5 million (assuming the HDRD Complex continues to operate at over 90% utilization). A portion of such BC LCFS credits are being purchased subject to the exercise of a put option in favour of Tidewater Renewables and/or a call option in favour of Tidewater Midstream.

Refinancing and extension of credit facilities

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