CALGARY, AB , May 7, 2026 /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, 2026.

FIRST QUARTER HIGHLIGHTS

• During the first quarter of 2026, the Corporation reported a net income of $10.0 million, compared to a net income of $5.3 million in the first quarter of 2025.
• Adjusted EBITDA^([1]) was $24.1 million during the first quarter of 2026, a 904% increase over the $2.4 million generated in the same period of 2025.
• The renewable diesel & renewable hydrogen complete ("HDRD Complex") achieved an average daily throughput of 2,837 bbl/d during the first quarter of 2026, representing a 95% utilization rate compared to 2,239 bbl/d, representing a 75% utilization rate from the first quarter of 2025.
• Commercial momentum continued with over 90% of 2026 forecasted renewable diesel production and over 40% of 2027 and 2028 forecasted renewable diesel production now committed under offtake agreements.
• The Corporation has secured strong gross margins for 2026 by hedging approximately 50% of forecasted renewable diesel sales and associated feedstock purchases to mitigate commodity price volatility.
• On March 27, 2026, the U.S. Environmental Protection Agency ("EPA") finalized the 2026 to 2027 Renewable Volume Obligations ("RVO"), establishing enhanced blending mandates that are expected to provide substantial structural support for the Corporation's realized margins.
• On March 30, 2026, the Corporation received conditional approval for the Biofuel Production Incentive ("BPI"), from Natural Resources Canada confirming total funding in line with the full annual production capacity of the HDRD Complex. The Corporation is currently finalizing the related contribution agreement with Natural Resources Canada, the final administrative requirement, which is expected to be executed in the second quarter of 2026.
• Increased full-year Adjusted EBITDA⁽¹⁾ guidance to $100.0 million to $110.0 million (from $80.0 million to $90.0 million). At the midpoint, this represents an 24% increase over the midpoint of the prior guidance, driven by a more constructive margin environment resulting from the continuation of the conflict in the Middle East and the favorable impact of the EPA finalized RVO on U.S. import parity benchmarks.

Selected financial and operating information are outlined below and should be read in conjunction with the Corporation's condensed interim consolidated financial statements and related MD&A for the three months ended March 31, 2026, 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

OUTLOOK AND CORPORATE UPDATE 

Financial performance review 

During the three months ended March 31, 2026, the Corporation reported net income of $10.0 million, compared to net income of $5.3 million for the same period of 2025. The increase was primarily driven by higher throughput at the HDRD Complex, resulting in increased sales volume, alongside higher realized pricing. The recognition of the BPI also contributed to the increase in net income. Offsetting these results were unfavourable movements in derivative contracts, lower contributions from the Corporation's joint venture investment in Rimrock Cattle Company Ltd., and the recognition of deferred income tax expense.

Tidewater Renewables generated Adjusted EBITDA⁽¹⁾of $24.1 million in the first quarter of 2026, a 904% increase over the $2.4 million generated during the same period in 2025. This increase was driven by strong facility throughput at the HDRD Complex, which led to a significant increase in production and sales volumes. The Corporation benefited from higher realized margins on these volumes and the recognition of the BPI.

U.S. regulatory developments 

On March 27, 2026, the U.S. EPA finalized the RVO for the 2026 and 2027 compliance years (the "Set 2 Rule"), establishing record-high blending mandates that exceed 27 billion RINs by 2027. While the Set 2 Rule is a U.S. federal action, management believes this regulatory framework could lead to tightness, in the D4 RIN market, which would be expected to provide substantial structural support for Tidewater's Renewables' realized margins in Canada.

The majority of the Corporation's offtake agreements utilize U.S. import benchmark pricing, which are structured to reflect the economic substitution cost of U.S. gallon of renewable diesel. The Set 2 Rule is expected to increase the intrinsic value of D4 RINs driven by a higher valuation for compliance credits amid stricter blending mandates. This pricing mechanism bolsters the benchmark pricing that Tidewater Renewables receives for its physical product sales in Canada. This allows the Corporation to capture environmental premiums reflective of North American market conditions without being a direct participant in the U.S. regulatory system.

Specific finalized components of the Set 2 Rule further underpin the Corporation's 2026 outlook:

• The 1.7x Multiplier - The EPA confirmed the maintenance of the 1.7x equivalence value for renewable diesel through 2026, ensuring a stable credit-generation baseline for the current planning cycle; and
  
  
• SRE Reallocation - The formal 70% reallocation of Small Refinery Exemptions ("SRE") is expected to reduce historical credit price volatility and strengthen the stability of the benchmarks that underpin the Corporation's revenue.

Management remains focused on navigating the evolving North American regulatory landscape to maximize the Corporation's realized pricing. The finalization of the Set 2 Rule provides a multi-year framework that ensures robust demand for renewable fuels within the U.S., thereby supporting the North American benchmarks to which Tidewater Renewables' sales are indexed. By leveraging offtake contracts that capture the replacement value inherent in the U.S., Tidewater Renewables is well-positioned to realize the elevated market value of its physical product and the associated Canadian environmental attributes. While the Corporation continues to monitor potential long-term shifts in regulatory multipliers and cross-border trade dynamics, the current RVO trajectory provides a transparent and supportive foundation for the Corporation's objective of generating strong cash flow and strengthening its overall financial position.

Canadian regulatory developments 

As previously disclosed in the Corporation's 2025 MD&A for the year ended December 31, 2025, Tidewater Renewables formally submitted its application for the BPI in January 2026.

The Corporation is pleased to report that on March 30, 2026, Tidewater Renewables received conditional approval for the BPI, and Natural Resources Canada has formally confirmed total available funds under the program. The confirmed funding is in line with the Corporation's initial requests and reflects the total annual production capacity of the HDRD Complex.

This milestone validates the Corporation's eligibility for the federal BPI, with the remaining condition for approval being the execution of a contribution agreement. These funds are expected to be received quarterly in arrears, providing a consistent and meaningful boost to the HDRD Complex's economics, liquidity, and overall profitability throughout the incentive window.

Commercial execution and hedging program

The Corporation's commercial activities remain focused on securing long-term demand and stabilizing offtake to provide multi-year cash flow certainty. This momentum has continued into 2026, with over 90% of forecasted renewable diesel production for 2026 currently committed under offtake agreements (inclusive of associated emission credits). Looking further ahead, the Corporation has successfully extended its commercial reach, with over 40% of forecasted renewable diesel production for each of 2027 and 2028 now under contract. Management believes these levels reflect sustained demand for domestic renewable fuels. The majority of these contracts are structured with U.S. import parity pricing benchmarks to align realized prices with market values. Remaining volumes are expected to be sold into the Canadian spot market, providing the Corporation with flexibility to respond to prevailing market dynamics.

To further protect the Corporation's financial position, management has implemented a proactive hedging program for 2026. As of the date of this press release, the Corporation has hedged approximately 50% of 2026 renewable diesel (and attached emission credit) sales and associated feedstock purchases. By utilizing these derivative instruments, the Corporation has locked in a strong gross margin on a significant portion of its 2026 production, effectively reducing exposure to commodity pricing volatility and ensuring more predictable cash flows.

2026 guidance update

Since the commencement of the Middle East conflict on February 28, 2026, the Corporation has observed significant pricing volatility and a notable strengthening in renewable diesel benchmarks, primarily driven by heightened geopolitical tensions in key energy-producing regions. This environment has resulted in realized pricing strength that has outpaced fluctuations in feedstock input costs, leading to a more constructive margin environment for the HDRD Complex than previously anticipated. Furthermore, the EPA finalized RVO is expected to increase the intrinsic value of D4 RINs and create broader market tightness. Given that a significant portion of the Corporation's offtake agreements utilize U.S. import parity benchmark pricing to reflect the economic substitution cost of U.S. product, this regulatory shift is expected to bolster the benchmarks that Tidewater Renewables uses to price its physical sales in Canada.

In light of these market dynamics, Tidewater Renewables is updating its full-year 2026 Adjusted EBITDA⁽¹⁾([3]) guidance to $100 million to $110 million (from $80 million to $90 million). All other operational guidance metrics, including sales volume and 2026 capital expenditure targets, remain unchanged as the Corporation continues to prioritize debt reduction and operational optimization.

HDRD Complex

The HDRD Complex is Canada's first standalone renewable diesel facility and is located adjacent to Tidewater Midstream and Infrastructure Ltd.'s PGR. The HDRD Complex is designed to process 3,000 bbl/d of renewable feedstock and utilizes renewable hydrogen to reduce the CI of the renewable fuel it produces.

During the first quarter of 2026, the HDRD Complex achieved an average utilization rate of 2,837 bbl/d, or 95% of design capacity. This compares to 2,239 bbl/d, or 75% of design capacity, during the same period in the prior year. The year over year increase in utilization was primarily driven by the absence of weather related rail logistics challenges and softer Canadian renewable diesel demand, that impacted the comparable period in 2025.

The facility's performance during the quarter was further highlighted by its successful full rate operation in winter mode, producing high-quality, low cloud point renewable diesel that meets rigorous Canadian cold-weather specifications. While this operating mode typically required minor throughput adjustments during high severity winter operations, the facility demonstrated significant operational resilience by maintaining near-nameplate utilization rates throughout the season. Management believes this ability to deliver specialized winter-spec fuel while maximizing throughput underscores the HDRD Complex's advanced design and the Corporation's ability to optimize operations across varying seasonal requirements.

CONFERENCE CALL

In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater Renewables' senior management review its first quarter 2026 results via a joint conference call with its controlling shareholder, Tidewater Midstream and Infrastructure Ltd., on Thursday, May 7, 2026 at 10:00 am MDT (12:00 pm EDT). A question and answer session for analysts will follow management's presentation.

To join the conference call without operator assistance, please register here approximately 5 minutes in advance to receive an automated call-back when the session begins. Alternatively, you can dial 888-510-2154 (toll-free in North America) or 437-900-0527 to reach a live operator who will place you into the call.

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 earnings call.

A live audio webcast of the conference call will be available here, and archived for 90 days. 

ABOUT TIDEWATER RENEWABLES

Tidewater Renewables is an energy transition company. The Corporation is focused on the production of low carbon fuels, primarily renewable diesel. 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 canola oil, tallow, used cooking oil, distillers corn oil, soybean oil, and other biomasses) into low carbon fuels. Tidewater Renewables' objective is to become a leading Canadian renewable fuel producer. The Corporation is pursuing this objective through the ownership, development, and operation of clean fuels projects and related infrastructure that utilize existing proven technologies. Additional information relating to Tidewater Renewables is available on SEDAR+ at www.sedarplus.ca 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 non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures when assessing its results and measuring overall performance. The intent of non-GAAP measures and non-GAAP ratios is to provide additional useful information to investors and analysts. These non-GAAP measures and non-GAAP ratios do not have standardized meanings 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. Except as otherwise indicated, these non-GAAP financial measures and non-GAAP ratios will be calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods. For more information with respect to the Corporation's non-GAAP measures, non-GAAP ratios, capital management measures and supplementary financial measures see the "Non-GAAP and Other Financial Measures" section of Tidewater Renewables' MD&A which is available on SEDAR+ at www.sedarplus.ca.

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 calculated as income (or loss) before finance costs, taxes, depreciation, share-based compensation, unrealized gains and losses on derivative contracts, transaction costs, 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. Tidewater Renewables also believes Adjusted EBITDA is a measure widely used by securities analysts, investors, lending institutions and others to evaluate the financial performance of the Corporation. From time to time, the Corporation issues guidance on this key measure. As a result, Adjusted EBITDA is presented as a relevant measure in this press release to assist analysts and readers in assessing 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 (loss) income, net cash provided by operating activities or other measures of financial results determined in accordance with GAAP as an indicator of the Corporation's performance and may not be comparable to companies with similar calculations.

The following table reconciles net income, the nearest GAAP measure, to Adjusted EBITDA:

Distributable Cash Flow

Distributable cash flow is calculated as net cash provided by (used in) operating activities before changes in non-cash working capital plus 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 Tidewater Renewables' ongoing operations.

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.

The following table reconciles net cash provided by (used in) operating activities, the nearest GAAP measure, to distributable cash flow:

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, a non-GAAP financial measure, over the weighted average number of common shares outstanding for the period.

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.

Capital Management Measures

Net Debt

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. Net debt is defined as amounts owing under the senior credit facility and second lien credit facility, less cash. Net debt excludes working capital, lease liabilities and derivative contracts as the Corporation monitors its capital structure based on net debt to Adjusted EBITDA.

The following table reconciles net debt:

Supplementary Financial Measures

Growth Capital

Growth capital expenditures are defined as expenditures which are recoverable, incrementally increase cash flow or the earning potential of assets, expand the capacity of current operations, or significantly extend the life of existing assets. This measure can be used by investors to assess the Corporation's discretionary capital spending.

Maintenance Capital

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 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", "continue", "forecast", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection", "outlook" 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 anticipated effects from the Set 2 Rule including resulting tightness, an increase in the intrinsic value of D4 RINs and its effect on the Corporation;
• an expected 1.7x multiplier through 2026;
• full-year 2026 Adjusted EBITDA, sales volume and capital expenditures guidance;
• the Corporation's priority of debt reduction and operational optimization;
• the reallocation of SRE and its anticipated effects;
• anticipated increase in local market share as a result of shifts in U.S. tax policy and British Columbia's updated domestic-content requirements;
• management's focus on maximizing realized pricing;
• the amount of annual Adjusted EBITDA expected to be generated by the Corporation in 2026 and the expected drivers of increases thereto; 
• the use of cash flow for debt reduction;
• the expected effect of the BPI on the Corporation;
• forecasted production at the HDRD Complex;
• the percentage of forecasted production subject to offtake agreements;
• the expected sale of volumes not sold under offtake agreements on the spot market;
• the amount of renewable diesel revenue and associated feedstock purchases hedged under derivative contracts and the expected effect of such hedging strategy;
• managements expectations regarding optimizing operations across varying seasonal requirements at the HDRD Complex; and
• the Corporation's objective to become a leading renewable fuel producer.

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;
• general economic and industry trends;
• 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;
• the ownership and operation of Tidewater Renewables' business;
• regulatory risks;
• the expansion of production of renewable fuels by competitors;
• future commodity and renewable energy prices;
• sustained or growing demand for renewable fuels;
• the ability for the Corporation to successfully turn a wide variety of renewable feedstocks into low carbon fuels;
• the continued alignment of U.S. import parity benchmark pricing with the Corporation's revenue generation;
• the ability of the Corporation to successfully execute offtake agreements with respect to expected production;
• changes in the credit-worthiness of counterparties;
• the Corporation's future debt levels, financial stability, future debt reduction initiatives, and its ability to repay its debt when due;
• the Corporation's ability to continue to satisfy the terms and conditions of its credit facilities;
• the continued availability of the Corporation's credit facilities;
• the Corporation's ability to obtain additional debt and/or equity financing on satisfactory terms;
• the Corporation's ability to manage liquidity by working with its current capital providers and other sources and through the sale of emissions credits;
• the market, demand and pricing for emissions credits;
• foreign currency, exchange, inflation and interest rate risks;
• the continued support of governments of various levels for current policy initiatives; 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.sedarplus.ca.

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, and the pricing of low carbon products and emissions credits;
• 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; 
• changes to U.S. and Canadian regulatory programs;
• 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 by the Corporation; 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.sedarplus.ca.

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 Canadian Securities Administrators available under the Corporation's profile on SEDAR+ at www.sedarplus.ca.

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. 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.sedarplus.ca.

The financial outlook information contained in this press release is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Additionally, the financial outlook information contained in this press release is subject to the risk factors described above in respect of forward-looking information generally as well as any other specific assumptions and risk factors in relation to such financial outlook noted in this press release. Accordingly, readers are cautioned that the financial outlook information contained in this press release should not be used for purposes other than for which it is disclosed herein. The financial outlook information contained in this press release was approved by management as of the date hereof and was provided for the purpose of providing further information about the Corporation's expectations and plans for the future.

SOURCE Tidewater Renewables Ltd