THIRD QUARTER 2023 HIGHLIGHTS
- In the third quarter of 2023, Tidewater Renewables generated Adjusted EBITDA(1) of
$14.5 million and a net loss attributable to shareholders of$9.4 million , inclusive of$12.6 million of unrealized losses on derivative contracts. Net cash provided by operating activities totaled$1.5 million , with distributable cash flow(1) of$3.2 million . - In
July 2023 , Tidewater Renewables' co-processing projects were approved for credit generation under the Canadian Clean Fuel Regulations ("CFR"). Through its co-processing projects and theHDRD Complex , the Corporation expects to maintain its position as one ofCanada's largest generators of emissions credits.
OPERATIONAL UPDATE
- The HDRD Complex produced its first renewable diesel on
October 22 and, as ofNovember 7 , has progressed to commercial operations. The facility is currently producing approximately 1,500 bbl/d of on-spec cold weather diesel and the Corporation is actively working on safely increasing production rates towards the facility's 3,000 bbl/d design capacity.
Gross project costs are expected to increase by$10.2 million , due to increased man hours resulting from the delay in commercial operations and the addition of incremental insulation and heat tracing. However, the project's economics remain attractive, with payback expected within two to three years.The HDRD Complex makesTidewater Renewables the first standalone producer of renewable diesel inCanada . - On
November 8, 2023 , Robert Colcleugh was appointed Chief Executive Officer of bothTidewater Renewables and Tidewater Midstream and Infrastructure Ltd. ("Tidewater Midstream").Mr. Colcleugh joined Tidewater Midstream's board of directors in 2017 and was appointed Interim Chief Executive Officer of both Tidewater Midstream andTidewater Renewables inNovember 2022 . During his tenure as Interim Chief Executive Officer, he successfully led the commissioning of theHDRD Complex and Tidewater Midstream's strategic asset review.
"The launching of 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 condensed interim consolidated financial statements and related MD&A for the period ended
Financial Highlights
(in thousands of Canadian dollars except per share | Three months ended | Nine months ended | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Revenue | $ | 24,244 | $ | 19,697 | $ | 57,303 | $ | 56,677 | |
Net income (loss) attributable to shareholders | $ | (9,449) | $ | (10,067) | $ | (28,272) | $ | 11,810 | |
Net income (loss) attributable to shareholders per | $ | (0.27) | $ | (0.29) | $ | (0.81) | $ | 0.34 | |
Adjusted EBITDA (1) | $ | 14,531 | $ | 16,084 | $ | 35,233 | $ | 45,723 | |
Net cash provided by operating activities | $ | 1,522 | $ | 5,161 | $ | 5,623 | $ | 38,349 | |
Distributable cash flow (1) | $ | 3,209 | $ | 9,437 | $ | 605 | $ | 28,627 | |
Distributable cash flow per share – basic & diluted (1) | $ | 0.09 | $ | 0.27 | $ | 0.02 | $ | 0.82 | |
Total common shares outstanding (000s) | 34,727 | 34,712 | 34,727 | 34,712 | |||||
Total assets | $ | 1,049,533 | $ | 915,211 | $ | 1,049,533 | $ | 915,211 | |
Net debt (1) | $ | 334,114 | $ | 124,311 | $ | 334,114 | $ | 124,311 | |
(1) Refer to "Non-GAAP and Other Financial Measures" in this press release and the Corporation's MD&A. | |||||||||
OUTLOOK AND CORPORATE UPDATE
With the
Due to 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/E5pAY6y7Ldw 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, gains/ losses on warrant liability revaluation, 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.
Adjusted EBITDA is used by management to set objectives, make operating and capital investment decisions, monitor debt covenants and assess performance. In addition to its use by management,
The following table reconciles net income (loss), the nearest GAAP measure, to Adjusted EBITDA:
Three months ended | Nine months ended | ||||||||
(in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | |||||
Net income (loss) | $ | (9,449) | $ | (10,067) | $ | (28,272) | $ | 11,810 | |
Deferred income tax expense (recovery) | (3,495) | (4,378) | (10,052) | 3,984 | |||||
Depreciation | 5,945 | 4,878 | 16,133 | 14,381 | |||||
Finance costs | 6,620 | 2,697 | 16,569 | 4,881 | |||||
Share-based compensation | 553 | 1,123 | 3,908 | 2,477 | |||||
Unrealized loss on derivative contracts | 12,558 | 22,441 | 40,398 | 8,132 | |||||
Gain on warrant liability revaluation | (190) | - | (8,160) | - | |||||
Transaction costs | 10 | 260 | 111 | 660 | |||||
Non-recurring transactions (1) | 279 | - | 4,543 | - | |||||
Adjustment to share of profit from equity | 1,700 | (870) | 55 | (602) | |||||
Adjusted EBITDA | $ | 14,531 | $ | 16,084 | $ | 35,233 | $ | 45,723 |
(1) Non-recurring transactions for the nine months 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 | Nine months ended | |||||||
(in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 | ||||
Net cash provided by operating activities | $ | 1,522 | $ | 5,161 | $ | 5,623 | $ | 38,349 |
Add (deduct): | ||||||||
Changes in non-cash working capital | 10,077 | 9,588 | 20,826 | 4,824 | ||||
Transaction costs | 10 | 260 | 111 | 660 | ||||
Non-recurring transactions (1) | 279 | - | 4,543 | - | ||||
Interest and financing charges | (3,916) | (1,161) | (10,484) | (2,163) | ||||
Payment of lease liabilities | (1,737) | (1,489) | (4,953) | (4,394) | ||||
Maintenance capital | (3,026) | (2,922) | (15,061) | (8,649) | ||||
Distributable cash flow | $ | 3,209 | $ | 9,437 | $ | 605 | $ | 28,627 |
Non-GAAP Financial Ratios
Distributable Cash Flow Per Common Share
Distributable cash flow per common share is calculated as distributable cash flow over the weighted average number of common shares outstanding for the three and nine months 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 | Nine months ended | |||||||
(in thousands of Canadian dollars except per share information) | 2023 | 2022 | 2023 | 2022 | ||||
Distributable cash flow | $ | 3,209 | $ | 9,437 | $ | 605 | $ | 28,627 |
Weighted average shares outstanding– basic | 34,727 | 34,712 | 34,723 | 34,712 | ||||
Weighted average shares outstanding– diluted | 34,727 | 34,712 | 34,723 | 34,824 | ||||
Distributable cash flow per share– basic & diluted | $ | 0.09 | $ | 0.27 | $ | 0.02 | $ | 0.82 |
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 | $ | 159,410 |
Term debt | 175,000 | |
Cash | (296) | |
Net debt | $ | 334,114 |
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 operational and financial performance of the Corporation's Renewable Assets, including 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 the 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; risks relating to the BC LCFS Credit or CFR Credit systems; general economic, political, market and business conditions, including fluctuations in interest rates, foreign exchange rates, commodity prices, Consumer Price Index, supply chain pressures and restrictions, inflation, stock market volatility and supply/demand trends; risks related to changes in feedstock prices and revenues from offtakes; economic uncertainties, further cost increases, or unexpected delays with the Corporation's projects; 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; and the other risks set forth in the Corporation's most recent AIF available under the Corporation's profile on SEDAR+ at www.sedarplus.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 AIF and in other documents on file with the Canadian securities regulatory authorities under the Corporation's profile on SEDAR+ at www.sedarplus.com.
Management of the Corporation has included the above summary of assumptions and risks related to forward-looking statements provided in the 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 the press release.
Financial Outlook
The press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about expectations regarding financial results for 2023 and 2024, including Adjusted 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 the 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 the 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 the press release should not be used for purposes other than for which it is disclosed herein.
SOURCE
© Canada Newswire, source