TIDEWATER RENEWABLES LTD ANNOUNCES THIRD QUARTER 2024 RESULTS.
Tidewater Renewables Ltd. (“Tidewater Renewables” or the “Company“) (TSX: LCFS) is happy to announce that it has filed its condensed interim consolidated monetary statements and Administration’s Dialogue and Evaluation (“MD&A“) for the three and 9 months ended September 30, 2024.
THIRD QUARTER HIGHLIGHTS
- On September 12, 2024, Tidewater Renewables accomplished a associated social gathering transaction with Tidewater Midstream, promoting its canola co-processing and fluid catalytic cracking infrastructure, varied refinery pursuits, and the pure fuel storage facility, together with the belief of sure liabilities, for money proceeds of $122.0 million. As a part of the asset sale, the contracted take-or-pay and working agreements had been terminated, efficient August 1, 2024. Moreover, Tidewater Midstream assigned the fitting to obtain sure British Columbia Low Carbon Gasoline Customary (“BC LCFS”) credit to the Company with a price of $7.7 million. The money proceeds had been used to repay quantities excellent on the Company’s first lien senior credit score facility.
- In reference to the associated social gathering property sale, the Company additionally entered into an settlement to promote BC LCFS credit to Tidewater Midstream, from July 2024 to March 2025, for minimal money proceeds of roughly $77.5 million, assuming the Company’s HDRD Complicated continues to function at over 90% utilization.
- On September 12, 2024, Tidewater Renewables closed the sale of property from its used cooking oil feedstock enterprise, producing complete proceeds of $10.6 million. The proceeds from this transaction had been used to scale back excellent debt on the primary lien senior credit score facility.
- Concurrent with the closing of the above transactions, the Firm efficiently accomplished the refinancing of its first and second lien credit score services. The mixture principal quantity of the primary lien credit score services was diminished from $175.0 million to $30.0 million, and the maturity date was prolonged to February 28, 2026. Moreover, the maturity of the $25.0 million tranche B second lien credit score facility was additionally prolonged to February 28, 2026.
- For the three months ended September 30, 2024, the Company reported a internet loss attributable to shareholders of $367.1 million, in comparison with internet loss attributable to shareholders of $9.4 million within the third quarter of 2023. The rise within the loss was pushed by losses incurred on the sale of property, and realized losses on spinoff contracts, in addition to larger financing prices, which had been partially offset by larger working earnings and deferred tax recoveries.
- Throughout the third quarter of 2024, Tidewater Renewables generated Adjusted EBITDA(1) of $13.6 million, a lower of 6% from the third quarter of 2023 and a lower of 54% from the second quarter of 2024. The lower was attributed to the sale of EBITDA producing property and the termination of the take-or-pay contracts efficient August 1, 2024, partially offset by the sale of emission credit within the third quarter that had been priced through the first half of 2024, earlier than the numerous decline in emission credit score costs.
- The HDRD Complicated achieved common each day throughput of two,849 bbl/d through the third quarter of 2024, representing a 95% utilization price. Over 140 million liters of renewable diesel has been produced and offered into the native British Columbia market because the HDRD Complicated commenced industrial operations in November 2023.
- Tidewater Renewables continues to make important progress on the front-end engineering design (“FEED”) of its proposed 6,500 bbl/d sustainable aviation gas mission. The mission stays contingent upon a closing funding resolution which is anticipated in 2025.
- Tidewater Renewables has been actively engaged in discussions with the Authorities of Canada and the Authorities of British Columbia concerning potential modifications to low carbon gas insurance policies that at the moment enable sponsored United States (“U.S.”) renewable diesel producers to make the most of overlapping U.S. and Canadian insurance policies.
- The Company has engaged exterior commerce legislation counsel for the needs of advising on and making ready a commerce treatment grievance in opposition to renewable diesel imports from the U.S. that administration believes are unfairly priced and having a major unfavourable affect on the competitiveness of our home operations. Primarily based on obtainable data and recommendation, administration believes {that a} commerce case in opposition to renewable diesel imports from the U.S. has a fairly excessive probability of success. Preparation of the Company’s commerce grievance is progressing at tempo. Submitting of a grievance might happen earlier than the shut of 2024 and, if a authorities investigation initiates and concludes that unfairly traded imports are harming Canadian manufacturing, responsibility reduction would then be obtainable in 2025.
| (1) | Non-GAAP monetary measure. See the “Non-GAAP and Different Monetary Measures” on this press launch and the Company’s MD&A for data on every non-GAAP monetary measure or ratio. |
Chosen monetary and working data are outlined beneath and ought to be learn with the Company’s condensed interim consolidated monetary statements and associated MD&A for the three and 9 months ended September 30, 2024, which can be found below the Company’s profile on SEDAR+ at www.sedarplus.ca and on its web site at www.tidewater-renewables.com.
Monetary Highlights
| Three months ended September 30, |
9 months ended September 30, |
|||||||
| (in hundreds of Canadian {dollars} besides per share data) | 2024 | 2023 | 2024 | 2023 | ||||
| Income | $ | 91,625 | $ | 24,244 | $ | 350,102 | $ | 57,303 |
| Web loss attributable to shareholders | $ | (367,116) | $ | (9,449) | $ | (354,461) | $ | (28,272) |
| Web loss attributable to shareholders per share – fundamental and diluted | $ | (10.46) | $ | (0.27) | $ | (10.15) | $ | (0.81) |
| Adjusted EBITDA (1) | $ | 13,630 | $ | 14,531 | $ | 68,470 | $ | 35,233 |
| Web money (utilized in) offered by working Actions | $ | 3,134 | $ | 1,522 | $ | 76,086 | $ | 5,623 |
| Distributable money circulate (1) | $ | 4,488 | $ | 3,209 | $ | 37,595 | $ | 605 |
| Distributable money circulate per share – fundamental (1) | $ | 0.13 | $ | 0.09 | $ | 1.08 | $ | 0.02 |
| Distributable money circulate per share – diluted (1) | $ | 0.13 | $ | 0.09 | $ | 1.04 | $ | 0.02 |
| Complete frequent shares excellent (000s) | 36,327 | 34,727 | 36,327 | 34,727 | ||||
| Complete property | $ | 420,228 | $ | 1,049,533 | $ | 420,228 | $ | 1,049,533 |
| Web debt (1) | $ | 183,318 | $ | 334,114 | $ | 183,318 | $ | 334,114 |
| (1) Check with “Non-GAAP and Different Monetary Measures”. | ||||||||
OUTLOOK AND CORPORATE UPDATE
Associated social gathering asset gross sales and ahead credit score gross sales
On September 12, 2024, the Company introduced the closing of the beforehand introduced associated social gathering asset sale transaction with Tidewater Midstream (the “Transaction”).
As a part of the Transaction, the Company and Tidewater Midstream entered into an Belongings Sale Settlement, pursuant to which the Company offered its canola co-processing infrastructure, the fluid catalytic cracking co-processing infrastructure, working pursuits in varied different Prince George refinery models, and a pure fuel storage facility co-located at Tidewater Midstream’s Brazeau River Complicated (collectively the “Divested Belongings”) to Tidewater Midstream for money proceeds of $122.0 million, plus the belief by Tidewater Midstream of sure of our liabilities regarding the Divested Belongings. As well as, as a part of the consideration, Tidewater Midstream assigned the fitting to obtain sure BC LCFS credit to the Company with a minimal worth of $7.7 million. The money proceeds for the Divested Belongings had been used to repay quantities excellent on the Company’s first lien senior credit score facility.
The Divested Belongings traditionally generated annual Adjusted EBITDA(1) of $40.0 million to $50.0 million by means of beforehand contracted take-or-pay or working agreements with Tidewater Midstream. As a part of the Transaction, the contracted take-or-pay and working agreements had been terminated efficient August 1, 2024. For the three and 9 months ended September 30, 2024, the Adjusted EBITDA(1) attributable to divested property was $5.0 million and $34.5 million, respectively.
In reference to the Transaction, Tidewater Midstream and Tidewater Renewables additionally entered into an Settlement for the Buy and Sale of Credit, pursuant to which Tidewater Midstream bought BC LCFS credit from Tidewater Renewables on September 12, 2024, for an combination buy worth of roughly $7.2 million, and also will buy further BC LCFS credit (topic to sure month-to-month common limits) from Tidewater Renewables till March 31, 2025, for complete money proceeds of roughly $77.5 million (assuming the HDRD Complicated continues to function at over 90% utilization). A portion of such BC LCFS credit are being bought topic to the train of a put possibility in favour of Tidewater Renewables and/or a name possibility in favour of Tidewater Midstream.
Refinancing and extension of credit score services
Concurrent with closing of the Transaction, Tidewater Renewables refinanced its first lien senior credit score facility (the “Senior Credit score Facility”). The mixture principal quantity was diminished from $175.0 million to $30.0 million, sure phrases had been amended and the maturity date was prolonged from September 18, 2024 to February 28, 2026. Additionally concurrent with the closing of the Transaction, the maturity of the $25.0 million tranche B second lien credit score facility has been prolonged from September 18, 2024 to February 28, 2026 (with the $150.0 million tranche A second lien credit score facility maturity date remaining unchanged at October 24, 2027). A brand new $33.0 million tranche C second lien credit score facility was additionally added, for the aim of refinancing the Senior Credit score Facility in sure circumstances. The phrases of the tranche A and B second lien services had been additionally amended in a fashion in keeping with the amended first lien facility.
| (1) | Non-GAAP monetary measure. See the “Non-GAAP and Different Monetary Measures” on this press launch and the Company’s MD&A for data on every non-GAAP monetary measure or ratio. |
At the side of the extension of Tidewater Renewables’ second lien credit score services, that are offered by an affiliate of the Alberta Funding Administration Company (“AIMCo”), the Company issued to an affiliate of AIMCo warrants (the “2024 Warrants”) to amass 1.0 million frequent shares of Tidewater Renewables at an train worth of $3.99 per share.
The completion of the Transaction improved Tidewater Renewables’ leverage profile and diminished money curiosity prices, thereby serving to to deal with short-term liquidity points attributable to the numerous decline in BC LCFS credit score costs attributed to the overlapping U.S. and Canadian low carbon gas insurance policies, and the ensuing influx of U.S. renewable diesel from the oversupplied U.S. renewable gas market into the upper worth British Columbia market.
Whereas the transactions instantly enhanced Tidewater Renewables’ leverage profile and diminished money curiosity prices, uncertainty stays concerning the longer term market demand for, and costs of BC LCFS and CFR emission credit. If such emission credit score costs and the demand for such emission credit don’t get well earlier than the second quarter of 2025, the Company’s ongoing operations, monetary place and liquidity can be considerably and adversely impacted.
Within the longer-term, Tidewater Renewables believes that the mixture of provide and demand fundamentals forcing the shut-in of high-cost U.S. renewable gas manufacturing, tightening California LCFS compliance obligations, and tightening BC LCFS compliance obligations, ought to ease the pricing strain on, and improve the demand for, BC LCFS credit and renewable diesel. As well as, chilly climate diesel specs are anticipated to restrict bodily imports of renewable diesel into BC within the fourth quarter of 2024 and first quarter of 2025 which also needs to help in rising demand and easing pricing pressures.
Regulatory engagement and commerce actions to assist aggressive and sustainable development within the Canadian renewable diesel market
Tidewater Renewables has engaged in discussions with the Authorities of Canada and the Authorities of British Columbia to debate potential modifications the Governments might make to the low carbon gas laws in an effort to enhance liquidity and pricing stability for emissions credit. Additional, the Company has engaged exterior commerce legislation counsel for the aim of advising on and making ready a commerce treatment grievance in opposition to renewable diesel imports from U.S. that administration believes are unfairly priced and having a major unfavourable affect the competitiveness of our home operations. We’re looking for truthful competitors to assist the viability and additional development of the Canadian renewable diesel business, which can even improve Canadian power safety. If a authorities investigation initiates and concludes that unfairly traded imports are harming Canadian manufacturing, responsibility reduction would then be obtainable in 2025.
Different plans and dangers
Trying forward, if no substantive modifications to the laws have been applied by the top of the primary quarter of 2025, and if no regulatory reduction is forthcoming in response to the Company’s anti-dumping and anti-subsidization grievance, Tidewater Renewables can be compelled to think about various methods to deal with the challenges dealing with the enterprise. Moreover, if there aren’t any indications of demand and worth restoration within the emissions credit score market by that point, the Company might must take actions to make sure its monetary stability and sustainability.
In such circumstances, the Company might discover choices together with, however not restricted to, additional asset inclinations, company restructuring, various debt and fairness financing, and refinancing preparations. Ought to these efforts in the end show inadequate or unsuccessful, the Company’s skill to proceed as a going concern could also be in jeopardy. The Company is totally conscious of the potential dangers and challenges inherent in these programs of motion and can take all mandatory steps to guard the pursuits of its stakeholders whereas navigating these tough market situations and choices.
HDRD Complicated
Tidewater Renewables continues to concentrate on sustaining a excessive and constant utilization price on the HDRD Complicated. For the 9 months ended September 30, 2024, the HDRD Complicated has achieved common utilization of two,630 bbl/d, representing 88% of design capability, and the Company expects full 12 months utilization to exceed the beforehand introduced goal of two,550 bbl/d, representing 85% of design capability.
CONFERENCE CALL
At the side of the earnings launch, traders could have the chance to hearken to Tidewater Renewables’ senior administration overview its third quarter 2024 outcomes through a convention name on Thursday, November 14, 2024 at 10:00 am MDT (12:00 pm EDT). A query and reply session for analysts will observe administration’s presentation.
To affix the convention name with out operator help, please register right here roughly 5 minutes upfront to obtain an automatic call-back when the session begins.
Alternatively, you possibly can dial 888-510-2154 (toll-free in North America) or 437-900-0527 to succeed in a dwell operator who will place you into the decision.
For these accessing the decision through Cision’s investor web site, we advise logging in no less than quarter-hour previous to the beginning of the dwell occasion. For these dialing in, contributors ought to ask to be joined into the Tidewater Renewables Ltd. earnings name.
A dwell audio webcast of the convention name can be obtainable right here, and archived for 90 days.
READ the newest information shaping the biofuels market at Biofuels Central
TIDEWATER RENEWABLES LTD ANNOUNCES THIRD QUARTER 2024 RESULTS. supply
