CALGARY, AB, Nov. 4, 2021 /CNW/ - Tidewater Renewables Ltd.
("Tidewater Renewables" or the "Corporation") (TSX:
LCFS) is pleased to announce that it has filed its condensed
interim financial statements and Management's Discussion and
Analysis ("MD&A") for the three months
ended September 30, 2021. The
Corporation filed a supplemented PREP prospectus dated August 12, 2021 (the "Prospectus"), an electronic
copy of which is available on Tidewater Renewables SEDAR profile at
www.sedar.com.
FINANCIAL PERFORMANCE
Highlights
- On August 18, 2021, Tidewater
Renewables completed its initial public offering (the "Offering")
of 10 million common shares at a price of $15.00 per common share (the "Offering Price"),
for total gross proceeds of $150
million. On September 15,
2021, the underwriters partially exercised the
over-allotment option and issued an additional 735,000 common
shares at the Offering Price for additional gross proceeds of
$11 million. The partial exercise of
the over-allotment option increased the total gross proceeds of the
Offering to $161 million. Underwriter
commissions were 6% of the total gross proceeds raised from the
Offering. Following the closing of the over-allotment option there
were 34,635,000 Common Shares outstanding, of which Tidewater
Midstream and Infrastructure Ltd. ("Tidewater Midstream") held
approximately 69%. In total, Tidewater Renewables received
approximately $150 million in cash
consideration net of underwriter commissions and legal
expenses.
- Tidewater Renewables generated $5.3
million of Adjusted EBITDA in its first 44 days of
operations. Net income was $3.4
million for the third quarter of 2021. Net cash used in
operating activities totaled $1.8
million for the third quarter of 2021, with distributable
cash flow of $3.9 million.
- With the closing of the Offering, Tidewater Renewables
announced a positive final investment decision on the Corporation's
3,000 bbl/d Renewable Diesel and Renewable Hydrogen Complex (as
defined and described in the Prospectus), which is expected to
enter into service in the first quarter of 2023. Subsequent to
September 30, 2021, the Corporation
received its first milestone and plans to submit its second
milestone in November 2021, under the
executed Renewable Diesel Project Part 3 Agreement, as described
in the Prospectus. Management anticipates the Renewable Diesel
& Renewable Hydrogen Complex will generate approximately
$90 - $95
million of Adjusted EBITDA in 2023 on a full year run-rate
basis based on certain operating assumptions that are fully
described in the Prospectus.
- The Canola Co-Processing project achieved successful
commissioning and start-up, slightly ahead of its planned schedule,
and production of renewable diesel has commenced.
Selected financial and operating information is outlined below
and should be read with the Corporation's condensed interim
financial statements and related MD&A as at and for the three
months ended September 30, 2021 and
the period from date of incorporation, May
11, 2021 to September 30, 2021
which are available at www.sedar.com and on our website at
www.tidewater-renewables.com.
Financial Highlights
|
|
|
|
|
|
|
Three months
ended
September 30,
2021
|
|
For the period
from date of
incorporation,
May 11, 2021 to
September 30,
2021
|
Revenue
|
$
|
6,130
|
$
|
6,130
|
Net income
|
$
|
3,418
|
$
|
2,683
|
Net income per share
– basic and diluted
|
$
|
0.21
|
$
|
0.26
|
Adjusted EBITDA
(1)
|
$
|
5,330
|
$
|
5,330
|
Net cash used in
operating activities
|
$
|
(1,776)
|
$
|
(1,776)
|
Distributable cash
flow (2)
|
$
|
3,940
|
$
|
3,940
|
Distributable cash
flow per common share – basic and diluted (2)
|
$
|
0.25
|
$
|
0.38
|
Total common shares
outstanding (000s)
|
|
34,635
|
|
34,635
|
Total
assets
|
$
|
709,571
|
$
|
709,571
|
Net debt
(3)
|
$
|
33,926
|
$
|
33,926
|
|
Notes:
|
1
|
Adjusted EBITDA is
calculated as net income before interest, taxes, depreciation,
share-based compensation, unrealized gains/losses, non-cash items,
transaction costs and items that are considered non-recurring in
nature Adjusted EBITDA is not a standard measure under GAAP. See
"Non-GAAP Measures" in the Corporation's MD&A for a
reconciliation of Adjusted EBITDA to its most closely related GAAP
measure.
|
2
|
Distributable cash
flow is calculated as net cash used in operating activities before
changes in non-cash working capital and after any expenditures that
use cash from operations. Distributable cash flow per common share
is calculated as distributable cash flow over the weighted average
number of common shares outstanding for the periods ended September
30, 2021. Distributable cash flow and distributable cash flow per
common share are not standard measures under GAAP. See "Non-GAAP
Measures" in the Corporation's MD&A for a reconciliation of
distributable cash flow and distributable cash flow per common
share to their most closely related GAAP measures.
|
3
|
Net debt is
defined as bank debt less cash. Net Debt is not a standard measure
under GAAP. See "Non-GAAP Measures" in the Corporation's MD&A
for a reconciliation of Net Debt to its most closely related GAAP
measure.
|
OUTLOOK AND CAPITAL PROGRAM
During the third quarter of 2021, Tidewater Renewables achieved
several milestones including the closing of the Offering on
August 18, 2021, reaching a positive
final investment decision of the 3,000 bbl/d Renewable Diesel and
Renewable Hydrogen Complex, and successfully commissioning the
Canola Co-Processing Project. Tidewater Renewables continues to
execute successfully on its strategy by expanding its integrated
network of assets with disciplined capital allocation.
Canola Co-processing Project
During the third quarter of 2021, the Canola Co-Processing
project achieved successful commissioning and start-up, slightly
ahead of its planned schedule and first production of renewable
diesel was monetized. Canola Co-Processing achieved an average and
maximum rate of 200 and 250 bbl/d, respectively, during the third
quarter while commissioning was ongoing.
Renewable Diesel and Renewable Hydrogen
Complex
The Renewable Diesel and Hydrogen Complex project remains on
time and on budget. The 3,000 bbl/d facility is expected to enter
service in Q1 2023.
During the third quarter following significant project
milestones were achieved:
- submitted and received the first milestone (14,276 BC LCFS
credits) under the executed Renewable Diesel Project Part 3
Agreement with the Government of British
Columbia;
- received rezoning covenant sign off by the City of Prince George and submitted it to land
titles;
- ordered long-lead equipment such as reactors, stripping towers,
storage tanks, pressure swing adsorption unit, boiler equipment,
electrical buildings, and pre-treatment equipment;
- completed surface preparation including tree clearing and
removal;
- completed geotechnical study, rough grade, access road and
approximately 50% of site gravelling;
- underground fire water lines and oily water drains
installation; and
- submitted Ministry of Environment & Climate Change Strategy
application.
Management expects to achieve the following construction project
milestones within the next three to six months:
- complete underground line installation;
- start brownfield pipe rack construction to connect existing
refinery utilities, tanks and loading infrastructure to HDRD
construction site;
- finish tank concrete foundations and begin erecting storage
tanks;
- award medium lead items including compressors, pumps, heat
exchangers and flare system; and
- start piping and instrumentation design and issue related
construction packages.
QUARTER 2021 EARNINGS CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater Renewables' senior
management review its quarter 2021 results via conference call on
Thursday, November 4, 2021 at
10:00 am MDT (12:00 pm EDT).
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://produceredition.webcasts.com/starthere.jsp?ei=1506688&tp_key=85fe2617f2
and 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 Tidewater Renewables Ltd. earnings call.
ABOUT TIDEWATER RENEWABLES
Tidewater Renewables is traded on the TSX under the symbol
"LCFS". Tidewater Renewables is a multi-faceted, energy transition
company. The Corporation is focused on the production of low carbon
fuels, including renewable diesel, renewable hydrogen and renewable
natural gas, as well as carbon capture through future initiatives.
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 tallow, used cooking oil,
distillers corn oil, soybean oil, canola oil and other biomasses)
into low carbon fuels. Tidewater Renewables' objective is to become
one of the leading Canadian renewable fuel producers. The
Corporation is pursuing this objective through the ownership,
development, and operation of clean fuels projects and related
infrastructure, utilizing existing proven technologies.
Organically, Tidewater Renewables will seek to leverage the
existing infrastructure and engineering expertise of Tidewater
Midstream, its majority shareholder, regarding the development of
the Corporation's portfolio of greenfield and brownfield capital
projects as well as the expansion of the Corporation's product
offerings. Additional information relating to Tidewater Renewables
is available on SEDAR at www.sedar.com and at
www.tidewater-renewables.com.
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 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 expected financial performance of the Corporation's
proposed capital projects and assets following the commencement of
operations, including underlying assumptions;
- estimates of EBITDA and Run Rate EBITDA;
- the Corporation's business plans and strategies, including
the underlying existing assets and capital projects, the success
and timing of the projects;
- the Corporation's operational and financial performance,
including expectations regarding generating revenue, revenues and
operating expenses;
- the Corporation's objective to become the one of the leading
Canadian renewable fuel producers;
- ability of proven technologies to be applied to generate
clean fuels;
- ability to leverage existing infrastructure and engineering
expertise of Tidewater Midstream regarding development of the
Corporation's projects and product offerings;
- ability to supply low carbon fuels to investment grade
offtakers, existing customers, government entities, First Nations
groups and others;
- changes in governmental programs, policymaking and
requirements or encouraged use of biofuels, including renewable
fuel policies in Canada and
the United States and Europe, and government level programs, such as
BC LCFS and Canada's CFS;
- the future pricing of BC LCFS Credits and CFS
Credits;
- expectations around the Corporation's receipt of BC LCFS
Credits and CFS Credits;
- the availability, future price and volatility of feedstocks
and other inputs;
- the future price and volatility of commodities;
- the Acquired Assets ability to generate operating cash
flows;
- the expectation that the Corporation will be able to grow
its revenue, actively maintain and manage its Acquired Assets and
achieve external growth by selectively pursuing strategic business
development opportunities;
- the amount and timing of anticipated payments of revenue to
be received from Tidewater Midstream and other counterparties, and
that revenues from the Acquired Assets will provide a significant
portion of the Corporation's revenue;
- the performance and creditworthiness of the Corporation's
counterparties;
- the anticipated operating costs, capital costs,
environmental liabilities and reclamation obligations associated
with owning and operating renewable energy production and
infrastructure assets to be incurred by the Corporation;
- utilization rates and throughputs of the Acquired
Assets;
- operational matters, including potential hazards inherent in
the Corporation's operations and the effectiveness of third-party
health, safety, environmental and integrity programs;
- decommissioning, abandonment and reclamation costs;
- the Corporation's ability to grow through capital
projects;
- the long-term impact of COVID-19 on the Corporation's
business, financial position, results of operations and/or cash
flows;
- supply and demand for commodities and services;
- budgets, including future capital, operating or other
expenditures and projected costs;
- the Corporation's continuing evaluation of opportunities to
develop future low-carbon fuel and renewable energy projects and
expansion and optimization opportunities at the PGR;
- timing, impact and capital requirements of the projects at
PGR;
- the Corporation's focus on generating cash flow;
- the Corporation's ESG strategy, including the ability of
renewable products to deliver CI reduction alternatives;
and
- expectations that net cash provided by operating activities,
cash flow generated from growth projects and cash available from
Tidewater Renewables' Senior Credit Facility and other sources of
financing will be sufficient to meet its obligations and financial
commitments and will provide sufficient funding for anticipated
capital expenditures.
Although the forward-looking statements contained in this
MD&A 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 MD&A, 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
including with respect to the Corporation's projects and
applications;
- general economic and industry trends, including the duration
and effect of the COVID-19 pandemic;
- operating assumptions relating to the Corporation's
projects;
- the Corporation's projects may not generate expected levels
of output, including those resulting from a reduced feedstock
supply;
- the ownership and operation of Tidewater Renewables'
business;
- regulatory risks, including changes or delay to the BC LCFS
Credits or CFS Credits;
- the expansion of production of renewable fuels by
competitors;
- the future pricing of BC LCFS Credits and CFS
Credits;
- future commodity prices;
- sustained or growing demand for renewable fuels;
- ability for the Corporation to successfully turn a wide
variety of renewable feedstocks into low carbon fuels;
- continuing government support for existing policy
initiatives;
- processing and marketing margins;
- future capital expenditures to be made by the
Corporation;
- foreign currency, exchange and interest rates;
- that there are no unforeseen events preventing the
performance of contracts;
- that formal agreements with counterparties will be
honored;
- the Corporation's ability to obtain and retain qualified
staff and equipment in a timely and cost-effective manner;
- assumptions regarding amount of operating costs for the
Corporation's projects;
- that there are no unforeseen material costs relating to the
projects which are not recoverable;
- distributable cash flow and net cash provided by operating
activities are consistent with expectations;
- the ability to obtain additional financing on satisfactory
terms;
- the ability of Tidewater Renewables to successfully market
its products;
- timely receipt of equipment and goods ordered by the
Corporation to conduct its operations;
- impact of planned annual maintenance on the Corporation's
facilities;
- forecasts with respect to future environmental and climate
change compliance obligation costs, and success of same;
and
- satisfaction of covenants under the Corporation's Senior
Credit Facility;
- the Corporation's future debt levels and the ability of the
Corporation to repay its debt when due.
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 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 and
acquisitions of additional assets;
- risks related to the environment and changing environmental
laws in relation to the operations conducted with the Acquired
Assets;
- geological, technical, drilling, processing and handling
issues associated with renewable energy production and storage
development activities by third parties;
- risks arising from co-ownership of facilities including
reliance on third-party operators;
- changes in the performance or creditworthiness of
counterparties;
- risks and liabilities associated with the processing and
handling of dangerous goods;
- risks relating to supply chain disruptions;
- inadvertent non-compliance with applicable
regulations;
- climate change risks, including the effects of unusual
weather and natural catastrophes, costs associated with regulatory
and market compliance, and potential changes in climate change
initiatives and policies or increased environmental
regulation;
- reputational risks;
- technology and security risks, including
cybersecurity;
- First Nations and landowner consultation
requirements;
- disruptions in production, including work stoppages or other
labour difficulties, or disruptions in the transportation network
on which the Corporation is reliant;
- technical and processing problems, including the
availability of equipment and access to properties;
- claims made or legal actions brought or realized against the
Corporation or its properties or assets;
- a failure by the Corporation to hire or retain key
personnel, and reliance on key personnel;
- changes in tax or environmental laws or credit or incentive
programs relating to the renewable oil and natural gas
industry;
- general economic, political, market and business conditions,
including fluctuations in interest rates, foreign exchange rates
stock market volatility and supply/demand trends;
- activities of producers and customers and overall industry
activity levels;
- failure to negotiate and conclude any required commercial
agreements;
- non-performance of agreements in accordance with their
terms;
- failure to execute formal agreements with counterparties in
circumstances where letters of intent or similar agreements have
been executed and announced by Tidewater Renewables;
- that the resolution of any particular legal proceedings
could have an adverse effect on the Corporation's operating results
or financial performance;
- competition for, among other things, business capital,
acquisition opportunities, requests for proposals, materials,
equipment, labour, and skilled personnel;
- the ability to secure land and water, including obtaining
and maintaining land access rights;
- operational matters, including potential hazards inherent in
the Corporation's operations and the effectiveness of health,
safety, environmental and integrity programs;
- actions by governmental authorities, including changes in
government regulation, tariffs and taxation;
- changes in operating and capital costs, including
fluctuations in input costs;
- legal, transportation and environmental risks and hazards,
which may create liabilities to the Corporation in excess of the
Corporation's insurance coverage, if any;
- actions by joint venture partners or other partners which
hold interests in certain of the Corporation's assets;
- reliance on key relationships and agreements, including with
Tidewater Midstream;
- construction and engineering variables associated with
capital projects, including the availability of services, accuracy
of estimates and schedules, and the performance of
contractors;
- the availability of capital on acceptable terms;
- risks and liabilities resulting from derailments;
- changes in gas composition; and
- failure to realize the anticipated benefits of recently
completed acquisitions.
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 Prospectus and in other documents on file with the
Canadian Securities regulatory authorities.
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 so, what benefits the Corporation will derive therefrom.
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
filings made by the Corporation with Canadian provincial securities
commissions available on the System for Electronic Document
Analysis and Retrieval ("SEDAR") at
www.sedar.com.
Non-GAAP Measures
This press release refers to "Adjusted EBITDA" which does not
have any standardized meaning prescribed by generally accepted
accounting principles in Canada
("GAAP"). Adjusted EBITDA is calculated as income or loss
before interest, taxes, depreciation, share-based compensation,
unrealized gains/losses, non-cash items, transaction cost and items
that are considered non-recurring in nature.
Tidewater Renewables' management believes that Adjusted
EBITDA provides useful information to investors as it provides an
indication of results generated from the Corporation's operating
activities prior to financing, taxation and non-recurring/non-cash
impairment charges occurring outside the normal course of
business. 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, Tidewater Renewables' also believes
Adjusted EBITDA is a measure widely used by security analysts,
investors and others to evaluate the financial performance of the
Corporation and other companies in the renewable industry.
Investors should be cautioned that Adjusted EBITDA should not be
construed as alternatives to earnings, cash flow from 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.
"Distributable cash flow" is a non-GAAP financial measure and
is calculated as net cash used in 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. 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 Tidewater
Renewables' ongoing operations.
Management of the Corporation believes distributable cash
flow is a useful metric for investors when assessing the amount of
cash flow generated from normal operations and to evaluate the
adequacy of internally generated cash flow to fund dividends
(however the Corporation currently does not pay a
dividend).
For more information with respect to financial measures which
have not been defined by GAAP, including reconciliations to the
closest comparable GAAP measure, see the "Non-GAAP Measures"
section of Tidewater Renewables' most recent MD&A which is
available on SEDAR.
SOURCE Tidewater Renewables Ltd.