FOURTH QUARTER 2022 HIGHLIGHTS
Tidewater Renewables completed its first full year of operations with net income attributable to shareholders of$25.9 million , Adjusted EBITDA(1) of$62.4 million and distributable cash flow(1) of$38.1 million . The Corporation exited 2022 with strong fourth quarter results, including net income attributable to shareholders or$14.1 million , compared to$0.1 million in the fourth quarter of 2021. Adjusted EBITDA(1) also increased to$16.7 million in the fourth quarter of 2022, compared to$10.6 million in the fourth quarter of 2021, representing a 57% increase. Net cash provided by operating activities was$29.1 million for the fourth quarter of 2022, with distributable cash flow(1) of$9.4 million .- On
December 16, 2022 , the Corporation executed a renewable diesel offtake agreement with an investment grade partner to sell approximately 50% of theHDRD Complex's production through to the end of 2024. - The Corporation anticipates that the
HDRD Complex will scale up production gradually in the second half of 2023, with an average utilization rate between 75 - 80% of its design capacity. Based on this utilization, second-half 2023 corporate Adjusted EBITDA(1) is expected to range between$50 – 60 million, inclusive of$35 – 45 million of Adjusted EBITDA(1) from theHDRD Complex . When theHDRD Complex is operating at its design capacity, annualized corporate run rate EBITDA(1) is expected to range between$130 – 155 million. - On
October 17, 2022 , the Corporation announced that it entered a 20-year RNG offtake agreement withFortisBC Energy Inc. ("FortisBC"), whereby FortisBC expects to purchase up to 100% of the Corporation's production from its announced RNG Facility in Foothills County,Alberta (the "RNG Facility").Tidewater Renewables continues to advance the facility's engineering design and regulatory applications. - On
October 24, 2022 , the Corporation announced the closing of a$150 million five-year senior secured second lien credit facility (the "AIMCo Facility") with an affiliate ofAlberta Investment Management Corporation ("AIMCo"). The AIMCo Facility initially bears interest of 6.50% per annum, increases by 37.5 basis points in year four & year five and is subject to certain inflation escalators. 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 ofTidewater Renewables at a price of$14.84 , subject to certain adjustments, for a term of five years.
HDRD COMPLEX UPDATE
Tidewater Renewables has safely completed an active year of construction on itsHDRD Complex . Completion is expected bymid-April 2023 , with commissioning beginning at the end of the first quarter and commencement of operations in the second quarter of 2023.
- As the
HDRD Complex ramps-up in the second half of 2023, it is expected to operate at between 75 – 80% of its design capacity and contribute approximately$35 – 45 million of Adjusted EBITDA ($70 – 90 million annualized). When theHDRD Complex is operating at its design capacity, it is expected to generate annualized run rate EBITDA of between$90 – 115 million.
(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 consolidated financial statements and related MD&A for the year ended
Financial Highlights
Three months ended | Year ended | |||||||||
(in thousands of Canadian dollars except per share | 2022 | 2021 | 2022 | 2021(1) | ||||||
Revenue | $ | 19,422 | $ | 16,925 | $ | 76,099 | $ | 23,055 | ||
Net income attributable to shareholders | $ | 14,132 | $ | 80 | $ | 25,942 | $ | 2,763 | ||
Basic net income (loss) attributable to | $ | 0.41 | $ | 0.00 | $ | 0.75 | $ | 0.14 | ||
Diluted net income (loss) attributable to | $ | 0.40 | $ | 0.00 | $ | 0.74 | $ | 0.14 | ||
Adjusted EBITDA (2,3) | $ | 16,717 | $ | 10,635 | $ | 62,440 | $ | 15,965 | ||
Net cash provided by operating activities | $ | 29,095 | $ | 9,963 | $ | 67,444 | $ | 8,187 | ||
Distributable cash flow (2) | $ | 9,433 | $ | 7,880 | $ | 38,060 | $ | 11,820 | ||
Distributable cash flow per common share | $ | 0.27 | $ | 0.23 | $ | 1.10 | $ | 0.59 | ||
Distributable cash flow per common share | $ | 0.27 | $ | 0.23 | $ | 1.09 | $ | 0.59 | ||
Total common shares outstanding (000s) | 34,719 | 34,712 | 34,719 | 34,712 | ||||||
Total assets | $ | 993,321 | $ | 730,992 | $ | 993,321 | $ | 730,992 | ||
Net debt (2) | $ | 211,232 | $ | 58,978 | $ | 211,232 | $ | 58,978 | ||
Notes: | |
(1) | The comparable period presented is from the date of incorporation, |
(2) | See "Non-GAAP and Other Financial Measures" in the Corporation's press release and MD&A. |
(3) | For the three months and year ended |
ANNUAL OUTLOOK AND CORPORATE UPDATE
For 2023,
During the first half of 2023, the Corporation plans to concentrate its capital program on the commissioning of the
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/wPl5R0OLOB4 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, 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 | Year ended | ||||||||
(in thousands of Canadian dollars) | 2022 | 2021 | 2022 | 2021(1) | |||||
Net income | $ | 14,132 | $ | 80 | $ | 25,942 | $ | 2,763 | |
Deferred income tax expense | 5,982 | 175 | 9,966 | 1,234 | |||||
Depreciation | 5,062 | 4,592 | 19,443 | 6,707 | |||||
Finance costs | 2,666 | 759 | 7,547 | 1,476 | |||||
Share-based compensation | 740 | 425 | 3,217 | 680 | |||||
Unrealized loss (gain) on derivative contracts | (15,208) | 4,322 | (7,076) | 1,552 | |||||
Transaction costs | 304 | 282 | 964 | 1,553 | |||||
Adjustment to share of profit from equity | 3,039 | - | 2,437 | - | |||||
Adjusted EBITDA | $ | 16,717 | $ | 10,635 | $ | 62,440 | $ | 15,965 |
Notes: | |
(1) | The comparable period presented is from the date of incorporation, |
(2) | For the three months and 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 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
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) | 2022 | 2021 | 2022 | 2021(1) | ||||||
Net cash provided by operating activities | $ | 29,095 | $ | 9,963 | $ | 67,444 | $ | 8,187 | ||
Add (deduct): | ||||||||||
Changes in non-cash working capital | (13,537) | 60 | (8,713) | 5,895 | ||||||
Transaction costs | 304 | 282 | 964 | 1,553 | ||||||
Interest and financing charges | (1,487) | (569) | (3,650) | (790) | ||||||
Payment of lease liabilities | (1,588) | (1,435) | (5,982) | (2,147) | ||||||
Maintenance capital | (3,354) | (421) | (12,003) | (878) | ||||||
Distributable cash flow | $ | 9,433 | $ | 7,880 | $ | 38,060 | $ | 11,820 |
Notes: | |
(1) | The comparable period presented is from the date of incorporation, |
Run Rate EBITDA
Run rate EBITDA is defined as the expected Adjusted EBITDA to be generated by
Run rate EBITDA guidance related to the
Non-GAAP Financial Ratios
Distributable Cash Flow Per Common Share
Three months ended | Year ended | ||||||||||
(in thousands of Canadian dollars except per share | 2022 | 2021 | 2022 | 2021(1) | |||||||
Distributable cash flow | $ | 9,433 | $ | 7,880 | $ | 38,060 | $ | 11,820 | |||
Distributable cash flow per share– basic | $ | 0.27 | $ | 0.23 | $ | 1.10 | $ | 0.59 | |||
Distributable cash flow per share– diluted | $ | 0.27 | 0.23 | 1.09 | $ | 0.59 |
Notes: | |
(1) | The comparable periods presented is from the date of incorporation, |
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 | $ | 72,611 |
Term Debt | 150,000 | |
Cash | (11,379) | |
Net debt | $ | 211,232 |
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
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 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; estimates of, and guidance with respect to forecasted, Adjusted EBITDA and run rate EBITDA; 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 regarding development of the Corporation's projects and product offerings; 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 issued pursuant to the CFR; expectations around the Corporation's receipt of BC LCFS credits and CFR credits; anticipated revenue from future sales 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:
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 documents on file with the
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; risks related to 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
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 MD&A contains future-oriented financial information and financial outlook information (collectively, "FOFI") about expectations regarding financial results for 2023 and 2024, 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.
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