TIDEWATER RENEWABLES LTD. ANNOUNCES FOURTH QUARTER 2023 RESULTS
FOURTH-QUARTER AND YEAR-END 2023 HIGHLIGHTS
- During the fourth quarter of 2023,
Tidewater Renewables generated Adjusted EBITDA(1) of$10.7 million and a net loss attributable to shareholders of$12.7 million , inclusive of$19.6 million of losses on derivative contracts. Net cash provided by operating activities totaled$17.2 million , with distributable cash flow(1) of$2.1 million . - In the fourth quarter of 2023,
Tidewater Renewables achieved a transformational milestone with the commencement of commercial operations atCanada's first standalone renewable diesel facility. The Renewable Diesel & Renewable Hydrogen (the "HDRD") Complex reached its design capacity inearly-December 2023 before encountering some initial operational challenges. The most significant of these challenges related to compressor failures, which the Corporation has since resolved.The HDRD Complex returned to design capacity production inlate-February 2024 . These operational issues impacted theHDRD Complex's daily throughput which averaged approximately 1,700 bbl/d, between the commencement of commercial operations andDecember 31, 2023 .
Tidewater Renewables' primary focus is the maintenance of a high and consistent utilization rate at theHDRD Complex . The Corporation expects theHDRD Complex to run at design capacity (3,000 bbl/d) with industry standard refinery reliability go-forward. Despite the operational challenges theHDRD Complex is expected to achieve a utilization rate of approximately 65% in the first quarter of 2024. Accordingly, the Corporation has secured purchasers for theHDRD Complex's operating emission credit production through the second quarter of 2024. - In 2023, Tidewater Renewables completed a feasibility assessment for an expansion of its renewable fuel facilities in
British Columbia . In the first quarter of 2024,Tidewater Renewables and Tidewater Midstream and Infrastructure Ltd. ("Tidewater Midstream") entered into a joint development agreement related to a new 6,500 bbl/d renewable diesel and sustainable aviation fuel ("SAF") project, whereby both parties have the right to participate in up to 50% of the project upon a final investment decision. The SAF facility is expected to leverage many of the same processes used in the operatingHDRD Complex . - The front-end engineering design ("FEED") and regulatory applications are expected to be completed in 2025 and be fully funded through the sale of capital emissions credits issued under an executed incentive agreement. To manage price exposure on the emissions credits the Corporation has secured a purchase commitment with an investment-grade counterparty for the capital emissions credits it expects to receive.
- The Corporation is pleased to welcome Mr.
Jeffery Hamilton to its Board of Directors.Mr. Hamilton brings over 25 years of experience as a business leader and strategic advisor to Tidewater Renewables, with previous roles including senior leadership positions atBank of America Securities (Head, Investment Banking -Canada ) and J.P. Morgan (Head, Energy & Power Investment Banking –Asia Pacific ). He is currently the Founder and CEO ofLongwing Capital Advisors , where he provides strategic and financial advisory services to businesses focused on energy, clean-tech, and renewables.Mr. Hamilton holds an MBA fromColumbia Business School and a Juris Doctor from theUniversity of Toronto , Faculty of Law. - On
March 13, 2024 , Jeremy Baines was appointed as Chairman ofTidewater Renewables' Board of Directors.
"I am thrilled to join the
(1) |
Adjusted EBITDA, distributable cash flow, and net debt 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 consolidated financial statements and related MD&A for the year ended
Financial Highlights
( in thousands of Canadian dollars except per share information) |
|
Three months ended |
Year ended |
|||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Revenue |
$ |
40,376 |
$ |
19,422 |
$ |
97,679 |
$ |
76,099 |
Net income (loss) attributable to shareholders |
$ |
(12,747) |
$ |
14,132 |
$ |
(41,019) |
$ |
25,942 |
Net income (loss) attributable to shareholders per share – basic |
$ |
(0.37) |
$ |
0.41 |
$ |
(1.18) |
$ |
0.75 |
Net income (loss) attributable to shareholders per share – diluted |
$ |
(0.37) |
$ |
0.40 |
$ |
(1.18) |
$ |
0.74 |
Adjusted EBITDA (1) |
$ |
10,708 |
$ |
16,717 |
$ |
45,941 |
$ |
62,440 |
Net cash provided by operating activities |
$ |
17,161 |
$ |
29,095 |
$ |
22,784 |
$ |
67,444 |
Distributable cash flow (1) |
$ |
2,142 |
$ |
9,433 |
$ |
2,747 |
$ |
38,060 |
Distributable cash flow per share – basic (1) |
$ |
0.06 |
$ |
0.27 |
$ |
0.08 |
$ |
1.10 |
Distributable cash flow per share – diluted (1) |
$ |
0.06 |
$ |
0.27 |
$ |
0.08 |
$ |
1.09 |
Total common shares outstanding (000s) |
|
34,763 |
|
34,719 |
|
34,763 |
|
34,719 |
Total assets |
$ |
1,086,698 |
$ |
993,321 |
$ |
1,086,698 |
$ |
993,321 |
Net debt (1) |
$ |
346,644 |
$ |
211,232 |
$ |
346,644 |
$ |
211,232 |
|
(1) Refer to "Non-GAAP and Other Financial Measures" |
OUTLOOK AND CORPORATE UPDATE
In line with its objectives,
The Corporation continues to see strong industry fundamentals in
CONFERENCE CALL
In conjunction with the earnings release, investors will have the opportunity to listen to
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/m6M0E40EJ2V 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
ABOUT
NON-GAAP AND OTHER FINANCIAL MEASURES
Throughout this press release and in other materials disclosed by the Corporation,
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 plus the Corporation's proportionate share of Adjusted EBITDA in its equity investment.
Adjusted EBITDA is used by management to set objectives, make operating and capital investment decisions, monitor debt covenants and assess performance. The Corporation issues guidance on Adjusted EBITDA and believes that it is useful for analysts and investors to assess the performance of the Corporation as seen from management's perspective. Investors should be cautioned that Adjusted EBITDA should not be construed as an alternative to net income, net cash provided by operating activities or other measures of financial results determined in accordance with GAAP. Investors should also be cautioned that Adjusted EBITDA as used by the Corporation may not be comparable to financial measures used by other companies with similar calculations.
The following table reconciles net income (loss), the nearest GAAP measure, to Adjusted EBITDA:
|
|
Three months ended |
Year ended |
||||||
(in thousands of Canadian dollars) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Net income (loss) |
$ |
(12,747) |
$ |
14,132 |
$ |
(41,019) |
$ |
25,942 |
|
Deferred income tax expense (recovery) |
|
(12,782) |
|
5,982 |
|
(22,834) |
|
9,966 |
|
Depreciation |
|
9,454 |
|
5,062 |
|
25,587 |
|
19,443 |
|
Finance costs |
|
4,440 |
|
2,666 |
|
21,009 |
|
7,547 |
|
Share-based compensation |
|
903 |
|
740 |
|
4,811 |
|
3,217 |
|
Unrealized loss (gain) on derivative contracts |
|
12,952 |
|
(17,203) |
|
53,350 |
|
(9,071) |
|
Loss (gain) on warrant liability revaluation |
|
(1,090) |
|
1,995 |
|
(9,250) |
|
1,995 |
|
Transaction costs |
|
- |
|
304 |
|
111 |
|
964 |
|
Non-recurring transactions (1) |
|
3,428 |
|
- |
|
7,971 |
|
- |
|
Adjustment to share of profit from equity accounted investments |
|
6,150 |
|
3,039 |
|
6,205 |
|
2,437 |
|
Adjusted EBITDA |
$ |
10,708 |
$ |
16,717 |
$ |
45,941 |
$ |
62,440 |
(1) Non-recurring transactions for the year ended |
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 the Corporation's 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. Maintenance capital expenditures, including turnarounds, are deducted from distributable cash flow 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. Distributable cash flow also excludes non-recurring transactions that do not reflect
The following table reconciles net cash provided by operating activities, the nearest GAAP measure, to distributable cash flow:
|
|
Three months ended |
Year ended |
|||||||
(in thousands of Canadian dollars) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||
Net cash provided by operating activities |
$ |
17,161 |
$ |
29,095 |
$ |
22,784 |
$ |
67,444 |
||
Add (deduct): |
|
|
|
|
|
|
|
|
||
Changes in non-cash working capital |
|
(12,992) |
|
(13,537) |
|
7,834 |
|
(8,713) |
||
Transaction costs |
|
- |
|
304 |
|
111 |
|
964 |
||
Non-recurring transactions (1) |
|
3,428 |
|
- |
|
7,971 |
|
- |
||
Interest and financing charges |
|
(3,447) |
|
(1,487) |
|
(13,931) |
|
(3,650) |
||
Payment of lease liabilities |
|
(1,757) |
|
(1,588) |
|
(6,710) |
|
(5,982) |
||
Maintenance capital |
|
(251) |
|
(3,354) |
|
(15,312) |
|
(12,003) |
||
Distributable cash flow |
$ |
2,142 |
$ |
9,433 |
$ |
2,747 |
$ |
38,060 |
||
|
|
|
|
|
|
|
|
|
|
|
(1) Non-recurring transactions for the year ended |
Non-GAAP Financial Ratios
Distributable cash flow per common share (basic and diluted)
Distributable cash flow per common share is calculated as distributable cash flow over the weighted average number of common shares outstanding for the three months and year ended
Distributable cash flow is a non-GAAP financial measure. Management believes that distributable cash flow per common share provides investors an indicator of funds generated from the business that could be allocated to each shareholder's equity position.
|
Three months ended |
Year ended |
||||||
(in thousands of Canadian dollars except per share information) |
2023 |
2022 |
2023 |
2022 |
||||
Distributable cash flow |
$ |
2,142 |
$ |
9,433 |
$ |
2,747 |
$ |
38,060 |
Weighted average shares outstanding– basic |
|
34,754 |
|
34,713 |
|
34,731 |
|
34,712 |
Weighted average shares outstanding– diluted |
|
34,754 |
|
34,972 |
|
34,731 |
|
34,888 |
Distributable cash flow per share– basic |
$ |
0.06 |
$ |
0.27 |
$ |
0.08 |
$ |
1.10 |
Distributable cash flow per share– diluted |
$ |
0.06 |
$ |
0.27 |
$ |
0.08 |
$ |
1.09 |
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) |
|
|
Senior credit facility |
$ |
171,749 |
Term debt |
|
175,000 |
Cash |
|
(105) |
Net debt |
$ |
346,644 |
Supplementary Financial Measures
Maintenance capital expenditures are generally defined as expenditures that support and/or maintain the current capacity/cash flow or earning potential of existing assets without the characteristic benefits associated with growth capital expenditures. These expenditures include major inspections and overhaul costs that are required on a periodic basis. This measure can be used by investors to assess the Corporation's non-discretionary capital spending.
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
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 Renewable Assets; the Corporation's continued ability to convert feedstock into low carbon fuels; the Corporation's ability to negotiate and enter into offtake agreements with investment grade counterparties; the expectation that the Corporation will be able to grow its revenue, actively maintain and manage its capital projects and assets, including the Renewable Assets, 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 the projects and related milestones and capital costs; expectations related to the SAF facility including costs and regulatory approval thereof, timing of construction thereof and anticipated production therefrom; the Corporation's operational and financial performance, including expectations regarding generating revenue, revenues and operating expenses; the expectation that the
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:
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 Corporation's ability to refinance its senior credit facility on acceptable terms; the risk that the Corporation's senior credit facility may not be renewed or extended beyond the
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, its MD&A and in other documents on file with the
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.
Financial Outlook
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about expectations regarding financial results for 2024 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.
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