(TSX: TWM)
CALGARY,
AB, March 9, 2023 /CNW/ - Tidewater Midstream
and Infrastructure Ltd. ("Tidewater" or the
"Corporation", "us", "we", or "our") (TSX: TWM) has filed
its annual consolidated financial statements and Management's
Discussion and Analysis ("MD&A") for the year ended
December 31, 2022.
FOURTH-QUARTER AND YEAR-END 2022 HIGHLIGHTS
- Net income attributable to shareholders was $8.5 million for the year ended December 31, 2022. The fourth quarter of 2022 had
a net loss attributable to shareholders of $30.0 million.
- Driven by strong margins and operating performance, Tidewater
earned record consolidated adjusted EBITDA(1) in 2022 of
$249.8 million, an increase of 19%
over the previous year. Fourth quarter 2022 consolidated adjusted
EBITDA was $60.4 million representing
a 12% increase over the fourth quarter of 2021.
- Annual distributable cash flow attributable to
shareholders(1) ("DCF") increased by 18% to $75.5 million compared to 2021, as strong
refining crack spreads offset increased maintenance capital during
2022. Fourth quarter 2022 DCF was $13.1
million, representing a decrease of 6% compared to the
fourth quarter of 2021, due to the planned maintenance capital
program within its midstream assets.
- Tidewater safely and successfully completed planned turnarounds
at its Pipestone, Brazeau River and Ram River natural gas
processing plants in 2022. Deconsolidated maintenance capital of
$41.5 million was within the
previously guided budget of $40 to
$45 million. With the 2022
maintenance activities now complete, Tidewater's core natural gas
processing plants are not due for major turnarounds until
2024.
- At December 31, 2022, Tidewater
reached its targeted deconsolidated debt levels with net
debt(1) to adjusted EBITDA(1) of 2.9x, which
is within the Corporation's target of 2.5x to 3.0x. During 2022,
Tidewater successfully completed a significant refinancing,
repaying its senior unsecured notes and second lien term loan
maturing in 2022, which simplified the Corporation's capital
structure, extended its debt maturity profile and reduced overall
financing expenses.
"Tidewater closed out a record 2022 with solid fourth quarter
results. We are now focused on driving shareholder value by
maximizing cash flow generation. This process will involve a
renewed focus on disciplined capital allocation as well as cost
control. Part of this effort also includes a structured
review of our assets and may result in partnerships, sales or other
options" comments Interim CEO, Rob
Colcleugh. "As we approach the major turnaround of our
Prince George refinery in early
Q2, we will also be reaching completion of our renewable diesel
facility which, while experiencing further cost inflation, has
recorded 598,467 manhours to date without any lost time work
days. This HDRD project will drive significant growth in the
coming quarters for Tidewater Midstream and Tidewater
Renewables."
(1)
|
Adjusted EBITDA,
distributable cash flow, payout ratio and consolidated net debt
used throughout this press release are non-GAAP financial measures,
non-GAAP financial ratios and capital management measures. The most
directly comparable GAAP measure for adjusted EBITDA is net income
(loss) and for distributable cash flow is net cash provided by
operating activities. See the "Non-GAAP and other
Financial Measures" in the Corporation's press release and MD&A
at page 27 for information on each non-GAAP financial measure or
ratio.
|
CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS
|
Three months ended
December 31
|
(in millions of
Canadian dollars except per share
information)
|
|
Tidewater
Deconsolidated(1)
|
Tidewater
Consolidated
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net loss attributable
to shareholders
|
$
|
(44.3)
|
$
|
(5.9)
|
$
|
(30.0)
|
$
|
(3.0)
|
Net loss attributable
to shareholders per
share - basic
|
$
|
(0.10)
|
$
|
(0.02)
|
$
|
(0.07)
|
$
|
(0.01)
|
Adjusted EBITDA
(2)
|
$
|
43.7
|
$
|
43.3
|
$
|
60.4
|
$
|
53.9
|
Distributable cash flow
attributable to
shareholders (2)
|
$
|
6.6
|
$
|
8.6
|
$
|
13.1
|
$
|
14.0
|
Distributable cash flow
per share – basic (2)
|
$
|
0.02
|
$
|
0.03
|
$
|
0.03
|
$
|
0.04
|
Dividends
declared(3)
|
$
|
4.2
|
$
|
3.4
|
$
|
4.2
|
$
|
3.4
|
Dividends declared per
share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
Total capital
expenditures
|
$
|
33.6
|
$
|
16.9
|
$
|
110.5
|
$
|
44.5
|
|
|
(1)
|
Deconsolidated results
exclude the results of Tidewater Renewables Ltd. ("Tidewater
Renewables"). See the "Non-GAAP Measures" section of our
MD&A at page 27 for information on deconsolidated
measures.
|
(2)
|
Adjusted EBITDA, DCF
attributable to shareholders, and DCF per common share are non-GAAP
measures and non-GAAP financial ratios. See the "Non-GAAP Measures"
section of our MD&A at page 27 for information on each non-GAAP
measure.
|
(3)
|
Dividends declared are
based on Tidewater's outstanding common shares that are publicly
traded on the TSX under the symbol "TWM".
|
|
Year ended December
31
|
(in millions of
Canadian dollars except per share
information)
|
|
Tidewater
Deconsolidated(1)
|
Tidewater
Consolidated
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net (loss) income
attributable to
shareholders
|
$
|
(19.2)
|
$
|
64.8
|
$
|
8.5
|
$
|
71.5
|
Net (loss) income
attributable to
shareholders per share - basic
|
$
|
(0.05)
|
$
|
0.19
|
$
|
0.02
|
$
|
0.21
|
Adjusted EBITDA
(2)
|
$
|
187.4
|
$
|
194.4
|
$
|
249.8
|
$
|
210.4
|
Distributable cash flow
attributable to
shareholders (2)
|
$
|
49.3
|
$
|
55.9
|
$
|
75.5
|
$
|
64.0
|
Distributable cash flow
per share – basic (2)
|
$
|
0.13
|
$
|
0.16
|
$
|
0.20
|
$
|
0.19
|
Dividends
declared
|
$
|
15.3
|
$
|
13.6
|
$
|
15.3
|
$
|
13.6
|
Dividends declared per
share
|
$
|
0.04
|
$
|
0.04
|
$
|
0.04
|
$
|
0.04
|
Net debt
(3)
|
$
|
539.6
|
$
|
619.0
|
$
|
750.8
|
$
|
678.0
|
Total capital
expenditures
|
$
|
104.7
|
$
|
85.8
|
$
|
349.3
|
$
|
116.8
|
|
|
(1)
|
Deconsolidated results
exclude the results of Tidewater Renewables. See the "Non-GAAP
Measures" section of our MD&A at page 27 for information on
deconsolidated measures.
|
(2)
|
Adjusted EBITDA, DCF
attributable to shareholders, DCF per common share, and net debt
are non-GAAP measures, non-GAAP financial ratios and capital
management measures. See the "Non-GAAP Measures" section of our
MD&A at page 27 for information on each non-GAAP
measure.
|
(3)
|
Dividends declared are
based on Tidewater's outstanding common shares that are publicly
traded on the TSX under the symbol "TWM".
|
OPERATIONS - DOWNSTREAM
During the fourth quarter of 2022, total throughput at the
Corporation's Prince George Refinery ("PGR") was approximately
11,715 bbl/day, consistent with the previous three quarters. With
record refining margins and strong demand in 2022, downstream gross
margin increased by more than 100% compared to 2021 and contributed
approximately 60% of total gross margin for the full year and
fourth quarter of 2022.
PGR Historical Performance:
|
Q1
2021
|
Q2
2021
|
Q3
2021
|
Q4
2021
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Daily throughput
(bbl)
|
12,095
|
11,459
|
12,209
|
12,245
|
11,745
|
11,810
|
11,860
|
11,715
|
Refinery Yield
(1)
|
|
|
|
|
|
|
|
|
Diesel
|
49 %
|
45 %
|
45 %
|
47 %
|
48 %
|
44 %
|
45 %
|
47 %
|
Gasoline
|
39 %
|
43 %
|
42 %
|
40 %
|
40 %
|
42 %
|
41 %
|
42 %
|
Other
(2)
|
12 %
|
12 %
|
13 %
|
13 %
|
12 %
|
14 %
|
14 %
|
11 %
|
|
(1)
Refinery yield includes crude, canola and intermediates.
|
(2)
Other refers to heavy fuel oil (HFO), liquified petroleum gas and
feedstock consumed to fuel the refinery.
|
Prince George crack spreads
averaged more than $100/bbl during
the fourth quarter of 2022, a 4% increase from the previous
quarter, mainly driven by higher diesel pricing. The increased
refining margins were partially offset by reduced seasonal demand
for both gasoline and diesel during the fourth quarter of 2022.
During the second quarter of 2023, Tidewater has a planned
turnaround at the Prince George
refinery, that is currently scheduled for an approximate 6 week
period starting in early Q2. Consistent with historical
practices, both the broader refinery team and the specialized
turnaround team have completed various pre turnaround activities,
including the procurement of long lead items, scheduling deliveries
and securing subcontractors.
OPERATIONS – MIDSTREAM
Operations at each of Tidewater's core facilities benefitted
from planned turnaround activity at its Pipestone, Brazeau River Complex and
Fractionation Facility ("BRC") and Ram River Gas natural gas
processing facilities. As a result of the 2022 investments in its
core facilities, Tidewater is forecasting significantly less
planned downtime for the next three years. During the fourth
quarter of 2022, total throughput volumes at the Corporation's
midstream facilities were approximately 369 MMcf/day, an increase
of 9% over the previous quarter. Midstream gross margin increased
by 9% for the full year of 2022 compared to 2021, contributing to
approximately 40% of the total gross margin for 2022. The increase
is primarily due to growth in third-party throughput volumes at its
core facilities.
Midstream Gas Plant Inlet Volumes:
|
Q1
2021
|
Q2
2021
|
Q3
2021
|
Q4
2021
|
Q1
2022
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Gross throughput
(MMcf/day)
|
333
|
356
|
382
|
364
|
346
|
351
|
340
|
369
|
Pipestone
|
83
|
93
|
94
|
95
|
94
|
98
|
69
|
89
|
BRC
(1)
|
109
|
121
|
135
|
131
|
119
|
141
|
146
|
159
|
Ram River
|
115
|
111
|
122
|
105
|
101
|
78
|
102
|
104
|
Other
|
33
|
31
|
31
|
32
|
32
|
34
|
23
|
17
|
|
(1)
BRC Inlet volumes include volumes at the BRC straddle
plant.
|
Pipestone Natural Gas Plant
During the fourth quarter of 2022, the Pipestone Natural Gas
Plant completed its first turnaround and processed an average
volume of 89 MMcf/day, a 10% decrease from the fourth quarter of
2021 and a 30% increase from the third quarter of 2022. Due to the
planned turnaround, fourth quarter facility availability averaged
87% with plant availability and processing capacity returning to
expected levels following the turnaround event.
Brazeau River Complex and Fractionation Facility
The BRC natural gas processing facility averaged throughput of
158 MMcf/day for the fourth quarter of 2022, a 9% increase compared
to the third quarter of 2022 and an increase of 18% relative to the
fourth quarter of 2021. Tidewater Midstream continues to look
for opportunities to increase third-party throughput by working
with upstream partners to improve netbacks that would increase the
utilization of the BRC's facilities.
The BRC fractionation facility was able to maintain steady
operations during the fourth quarter of 2022 by maintaining stable
plant production and truck in volumes. The fractionation facility
utilization averaged 72% which was in line with the third quarter
of 2022 and the fourth quarter of 2021. The fractionation
facility continues to serve as a key asset for Tidewater's natural
gas liquids marketing business.
Ram River Gas Plant
The Ram River gas processing facility averaged throughput of 104
MMcf/day for the fourth quarter of 2022, which is in line with both
the previous quarter and the fourth quarter of 2021.
Tidewater has recently seen increases to third party volumes
processed at the plant and is actively working with local third
parties to increase throughput volumes, enhance overall regional
processing efficiencies and maximize contracted revenues with the
plant's sulphur handling infrastructure.
CAPITAL PROGRAM
During 2022, Tidewater safely and successfully completed three
large, planned turnarounds at its Ram River Gas Plant, Pipestone
Natural Gas Plant and at the BRC. Tidewater's 2022 deconsolidated
maintenance capital of $41.5 was at
the lower end of 2022's latest guidance of $40 to $45
million.
Tidewater's 2022 growth projects were focused on the
construction of its propylene splitter at Acheson, accretive growth projects to maximize
producer netbacks, increasing blending capacity at its core
facilities and other minor debottlenecking projects.
OUTLOOK
2022 deconsolidated adjusted EBITDA of $187.4 million was at the upper end of the
$180 - $190
million guidance and consolidated adjusted EBITDA of
$249.8 million was also at the upper
end of the $235 - $255 million guidance. Following the
completion of the PGR turnaround and the successful HDRD
commissioning expected in the second quarter of 2023, Tidewater
expects to provide adjusted EBITDA guidance for the second half of
2023 with Q2 2023 results.
Following its three successful turnarounds in 2022, Tidewater's
maintenance capital program for 2023 will focus primarily on the
Prince George refinery turnaround,
which will contribute to a total expected deconsolidated
maintenance budget of $55 to
$65 million. Tidewater's disciplined
approach to growth in 2023 will be limited to Tidewater Renewables'
HDRD facility and the successful completion and commissioning of
this facility.
Tidewater Renewables, in which Tidewater Midstream holds a 69%
ownership stake, has made significant progress on the construction
of its HDRD Complex. The facility will be Canada's first standalone renewable diesel
refinery and is now over 90% complete and is expected to complete
construction in April 2023 and
commence operations during the second quarter of 2023. Like many
recent capital projects, the HDRD Complex has experienced
significant inflationary cost pressures. The current estimated
gross project cost, including commissioning, are approximately
$342 million which compares to the
previous estimate of $260
million. Tidewater Renewables expects to fund the
remaining project costs through the sale of BC LCFS credits and
with the support of its current capital providers among other
sources. During the first half of 2023, Tidewater Renewables
expects to receive proceeds of approximately $53 million for the sale of BC LCFS credits under
executed agreements. Despite the cost pressures, the project's
economics remain attractive, and payback is expected within the
first three years of operations.
The Corporation continues to evaluate financing alternatives to
support its Pipestone Gas Plant expansion ("Pipestone Phase 2")
that would add 100 MMcf/day of sour natural gas processing to the
facility. The expansion will enlarge the Corporation's
footprint in the liquids rich Montney region with its existing capacity and
gas storage assets.
FOURTH QUARTER 2022 EARNINGS CALL
In conjunction with the earnings release, Tidewater's senior
management will hold a joint call with Tidewater Renewables to
review its fourth quarter 2022 results via conference call on
Thursday, March 9, 2023 at
11:00 am MDT (1:00 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://app.webinar.net/wPl5R0OLOB4
and will also be archived there for 90 days.
For those accessing the call via Cession'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 Midstream and Infrastructure Ltd.
earnings call.
ABOUT TIDEWATER MIDSTREAM
Tidewater is traded on the TSX under the symbol "TWM".
Tidewater's business objective is to build a diversified midstream
and infrastructure company in the North American natural gas,
natural gas liquids, crude oil, refined product and renewable
energy value chain. Its strategy is to profitably grow and create
shareholder value Though the acquisition and development of
conventional and renewable energy infrastructure.
To achieve its business objective, Tidewater is focused on
providing customers with a full service, vertically integrated
value chain through the acquisition and development of energy
infrastructure, including downstream facilities, natural gas
processing facilities, natural gas liquids infrastructure,
pipelines, railcars, export terminals, storage, and various
renewable initiatives. To complement its infrastructure asset base,
the Corporation also markets crude, refined product, natural gas,
natural gas liquids and renewable products and services to
customers across North
America.
Tidewater is a majority shareholder in Tidewater
Renewables, a multi-faceted, energy transition company
focusing on the production of low carbon fuels. Tidewater
Renewables' common shares are publicly traded on the TSX under the
symbol "LCFS".
Rob Colcleugh
|
Brian Newmarch
|
Interim Chief
Executive Officer
|
Chief Financial Officer
|
Tidewater Midstream
& Infrastructure Ltd.
|
Tidewater Midstream
& Infrastructure Ltd
|
NON-GAAP MEASURES
Throughout this press release, Tidewater uses a number of
non-GAAP financial measures when assessing its results and
measuring overall performance. The intent of these non-GAAP
measures and ratios is to provide additional useful information to
investors and analysts. These non-GAAP financial measures do not
have a standardized meaning prescribed by GAAP and are therefore
unlikely to be comparable to similar measures presented by other
entities. As such, these non-GAAP 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 financial measures 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 financial measures which have not been defined by GAAP,
see the "Non-GAAP Measures" section of Tidewater's most recent
MD&A which is available on SEDAR at www.sedar.com.
Non-GAAP Financial Measures
The non-GAAP financial measures used by the Corporation are
Adjusted EBITDA and distributable cash flow.
Consolidated and Deconsolidated Adjusted EBITDA
Consolidated adjusted EBITDA is calculated as income before
finance costs, taxes, depreciation, impairment, share-based
compensation, unrealized gains and losses on derivative contracts,
transaction costs, gains and losses on the sale of assets, and
other items considered non-recurring in nature plus the
Corporation's proportionate share of EBITDA in its equity
investments. Deconsolidated adjusted EBITDA is calculated as
consolidated adjusted EBITDA less the portion of consolidated
adjusted EBITDA attributable to Tidewater Renewables.
In accordance with IFRS, Tidewater's jointly controlled
investments are accounted for using equity accounting. Under equity
accounting, net earnings from investments in equity accounted
investees are recognized in a single line item in the consolidated
statement of net income and comprehensive income. The adjustments
made to net income, as described above, are also made to share of
profit from investments in equity accounted investees.
The following table reconciles net (loss) income, the nearest
GAAP measure, to adjusted EBITDA:
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
|
|
|
|
|
|
|
(in millions of
Canadian dollars)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net (loss)
income
|
$
|
(24.9)
|
$
|
(2.0)
|
$
|
18.9
|
$
|
73.9
|
Deferred
income tax (recovery) expense
|
|
(8.9)
|
|
0.1
|
|
7.6
|
|
20.3
|
Depreciation
|
|
23.6
|
|
20.6
|
|
84.4
|
|
81.8
|
Finance
costs and other
|
|
18.6
|
|
11.4
|
|
69.9
|
|
68.4
|
Share-based compensation
|
|
2.8
|
|
2.1
|
|
13.5
|
|
6.7
|
Impairment
expense
|
|
55.0
|
|
-
|
|
55.0
|
|
-
|
(Gain)
loss on sale of assets
|
|
(4.0)
|
|
0.1
|
|
5.4
|
|
(26.1)
|
Unrealized
(gain) loss on derivative
contracts
|
|
(21.8)
|
|
19.4
|
|
(32.0)
|
|
(25.0)
|
Transaction costs
|
|
2.8
|
|
0.9
|
|
6.5
|
|
3.4
|
Non-recurring transactions
|
|
0.7
|
|
0.1
|
|
2.1
|
|
1.6
|
Adjustment
to share of profit from equity
accounted
investments
|
|
16.5
|
|
1.2
|
|
18.5
|
|
5.4
|
Consolidated
adjusted EBITDA
|
$
|
60.4
|
$
|
53.9
|
$
|
249.8
|
$
|
210.4
|
Less: Consolidated
adjusted EBITDA
attributable to Tidewater Renewables
|
|
(16.7)
|
|
(10.6)
|
|
(62.4)
|
|
(16.0)
|
Deconsolidated
adjusted EBITDA
|
$
|
43.7
|
$
|
43.3
|
$
|
187.4
|
$
|
194.4
|
Distributable cash flow attributable to shareholders
Distributable cash flow attributable to shareholders 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 and to evaluate the adequacy of
internally generated cash flow to fund dividends. 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
transactions, and less other expenditures that use cash from
operations. Also deducted is the distributable cash flow of
Tidewater Renewables that is attributed to non-controlling interest
shareholders.
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. Transaction costs are added back as they can
vary significantly based on the Corporation's acquisition and
disposition activity. Non-recurring transactions that do not
reflect Tidewater's ongoing operations are also excluded. Lease
payments, interest and financing charges, and maintenance capital
expenditures, including turnarounds, are deducted as they are
ongoing recurring expenditures which are funded from operating cash
flows.
Deconsolidated distributable cash flow is calculated by
subtracting the portion of Tidewater Renewables' distributable cash
flow that is attributed to shareholders of Tidewater from
distributable cash flow attributable to shareholders.
The following table reconciles net cash provided by operating
activities, the nearest GAAP measure, to distributable cash flow
and deconsolidated distributable cash flow:
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
|
|
(in millions of
Canadian dollars)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
|
66.7
|
$
|
32.7
|
$
|
242.9
|
$
|
126.7
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
(19.4)
|
|
13.5
|
|
(19.8)
|
|
61.3
|
Transaction
costs
|
|
2.8
|
|
0.9
|
|
6.5
|
|
3.4
|
Non-recurring
transactions
|
|
0.7
|
|
0.1
|
|
2.1
|
|
1.6
|
Interest and financing
charges
|
|
(11.7)
|
|
(9.6)
|
|
(43.0)
|
|
(50.8)
|
Payment of lease
liabilities and other, net of
sublease payments
|
|
(11.7)
|
|
(12.5)
|
|
(47.8)
|
|
(51.7)
|
Maintenance
capital
|
|
(11.4)
|
|
(8.7)
|
|
(53.5)
|
|
(22.8)
|
Tidewater Renewables'
distributable cash flow to
non-controlling interest shareholders
|
|
(2.9)
|
|
(2.4)
|
|
(11.9)
|
|
(3.7)
|
Distributable cash
flow attributable to
shareholders
|
$
|
13.1
|
$
|
14.0
|
$
|
75.5
|
$
|
64.0
|
Tidewater Renewables'
distributable cash flow
attributed to shareholders of Tidewater
|
$
|
(6.5)
|
$
|
(5.4)
|
$
|
(26.2)
|
$
|
(8.1)
|
Deconsolidated
distributable cash flow
attributable to shareholders
|
$
|
6.6
|
$
|
8.6
|
$
|
49.3
|
$
|
55.9
|
Non-GAAP Financial Ratios
Distributable cash flow per share
Distributable cash flow and deconsolidated distributable cash
flow are non-GAAP financial measures. Management believes that
these measures provide investors an indicator of funds generated
from the business that could be allocated to each shareholder's
equity position.
Distributable cash flow per share is calculated as distributable
cash flow attributable to shareholders divided by the basic or
diluted weighted average number of common shares outstanding for
the period.
Deconsolidated distributable cash flow per share is calculated
as deconsolidated distributable cash flow attributable to
shareholders divided by the basic or diluted weighted average
number of common shares outstanding for the period.
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
(in millions of
Canadian dollars except per share
information)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Distributable cash flow
attributable to
shareholders
|
$
|
13.1
|
$
|
14.0
|
$
|
75.5
|
$
|
64.0
|
Deconsolidated
distributable cash flow
attributable to shareholders
|
$
|
6.6
|
$
|
8.6
|
$
|
49.3
|
$
|
55.9
|
Weighted average common
shares outstanding
– basic
|
|
423.5
|
|
339.8
|
|
372.1
|
|
339.8
|
Weighted average common
shares outstanding
– diluted
|
|
423.5
|
|
340.9
|
|
380.4
|
|
411.8
|
Distributable cash flow
per share – basic
|
$
|
0.03
|
$
|
0.04
|
$
|
0.20
|
$
|
0.19
|
Deconsolidated
distributable cash flow per
share – basic
|
$
|
0.02
|
$
|
0.03
|
$
|
0.13
|
$
|
0.16
|
Distributable cash flow
per share – diluted
|
$
|
0.03
|
$
|
0.04
|
$
|
0.20
|
$
|
0.16
|
Deconsolidated
distributable cash flow per
share – diluted
|
$
|
0.02
|
$
|
0.03
|
$
|
0.13
|
$
|
0.14
|
Capital Management Measures
Consolidated and Deconsolidated Net Debt
Consolidated net debt is defined as bank debt, notes payable and
convertible debentures, less cash. In addition to reviewing
consolidated net debt, management reviews deconsolidated net debt
to highlight the Corporation's financial flexibility, balance sheet
strength and leverage. Deconsolidated net debt is calculated as
consolidated net debt less the portion attributable to Tidewater
Renewables.
Consolidated and deconsolidated net debt exclude working
capital, lease liabilities and derivative contracts as the
Corporation monitors its capital structure based on deconsolidated
net debt to deconsolidated adjusted EBITDA, consistent with its
credit facility covenants as described in the LIQUIDITY AND
CAPITAL RESOURCES section of the MD&A.
The following table reconciles consolidated and deconsolidated
net debt:
(in millions of
Canadian dollars)
|
|
December 31,
2022
|
|
December 31,
2021
|
Tidewater Midstream
Senior Credit Facility
|
$
|
470.2
|
$
|
414.6
|
Tidewater Renewables
Senior Credit Facility
|
|
72.6
|
|
60.0
|
Tidewater Renewables
AIMCo Facility
|
|
150.0
|
|
-
|
Second Lien Term Loan -
principal
|
|
-
|
|
20.0
|
Notes
payable
|
|
-
|
|
124.2
|
Convertible debentures
- principal
|
|
75.0
|
|
75.0
|
Cash
|
|
(17.0)
|
|
(15.8)
|
Consolidated net
debt
|
$
|
750.8
|
$
|
678.0
|
Less: Tidewater
Renewables Senior Credit Facility
|
|
(72.6)
|
|
(60.0)
|
Less: Tidewater
Renewables AIMCo
Facility
|
|
(150.0)
|
|
-
|
Add: Tidewater
Renewables cash
|
|
11.4
|
|
1.0
|
Deconsolidated net
debt
|
$
|
539.6
|
$
|
619.0
|
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 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:
- Tidewater's development of Pipestone Phase 2;
- Tidewater's ability to benefit from the combination of
growth opportunities and the ability to grow through capital
projects;
- Tidewater's commercial plans at the PGR and connectivity to
the Pipestone Gas Plant;
- The Corporation's ability to raise capital on acceptable
terms;
- Expected project schedules, regulatory timelines,
completion/in-service dates, planned turnarounds, capital
expenditures and capacities associated with capital
projects;
- The development of the HDRD complex including the
construction costs, project timing and the benefits resulting from
the completion of the HDRD complex;
- The economic benefits of the HDRD complex;
- The amount of planned downtime that will be required at each
of Tidewater's core facilities;
- the BRC continues to serve as a key asset for
Tidewater's NGL marketing business;
- the allocation of growth capital to the higher returning
projects; the evaluation of the Corporation's asset base and its
partnership options;
- Tidewater continues to evaluate and execute smaller capital
projects in the $5 million to
$25 million capital cost range with
strong short-term returns on investment;
- Expectations regarding maintenance requirements and
maintenance capital expenditures;
- Budgets, including future capital, operating or other
expenditures and projected costs;
- The expected costs of project development including the HDRD
project;
- Continued consistent performance of the Corporation's
facilities;
- The timing of updated financial guidance;
- Tidewater's priorities and its ability to increase
shareholder value through EBITDA growth, maximizing distributable
cash flow per share and optimization of its asset
portfolio;
- Tidewater's focus on driving shareholder value by maximizing
cash flow generation and focus on disciplined capital allocation as
well as cost control;
- the timing and results of a structured review of Tidewater's
assets; and
- guidance with respect to forecasted net debt to adjusted
EBITDA.
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
assumptions regarding, but not limited to:
- Tidewater's ability to execute on its business
plan;
- the timely receipt of all governmental and regulatory
approvals sought by the Corporation;
- that PGR crack spreads remain strong and refined product
demand continues to increase;
- general economic and industry trends, including the duration
and effect of the COVID-19 pandemic;
- future commodity prices, including natural gas, crude oil,
NGL and renewable energy prices;
- impacts of commodity prices and demand on the Corporation's
working capital requirements;
- continuing government support for existing policy
initiatives;
- processing and marketing margins;
- impacts of seasonality and climate disruptions;
- future capital expenditures to be made by the
Corporation;
- foreign currency, exchange and interest rates, and
expectations relating to inflation;
- that there are no unforeseen events preventing the
performance of contracts;
- the amount of future liabilities relating to lawsuits and
environmental incidents and the availability of coverage under the
Corporation's insurance policies;
- Cenovus volume demands from the PGR are consistent with
forecasts;
- successful negotiation and execution of agreements with
counterparties;
- oil and gas industry expectation and development activity
levels and the geographic region of such activity;
- 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 to be
incurred;
- that there are no unforeseen material costs relating to the
facilities which are not recoverable from customers;
- distributable cash flow and net cash provided by operating
activities are consistent with expectations;
- the ability to obtain additional financing on satisfactory
terms;
- the availability of capital to fund future capital
requirements relating to existing assets and projects;
- the ability of Tidewater to successfully market its
products;
- credit rating changes;
- the successful integration of acquisitions and projects into
the Corporation's existing business; and
- 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 demand for refined and renewable
products;
- general economic, political, market and business conditions,
including fluctuations in interest rates, foreign exchange rates,
stock market volatility, supply/demand trends and inflationary
pressures;
- 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;
- failure to close transactions as contemplated and in
accordance with negotiated terms;
- risks of health epidemics, pandemics, public health
emergencies, quarantines, 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;
- the regulatory environment and decisions, and First Nations
and landowner consultation requirements;
- climate change initiatives or policies or increased
environmental regulation;
- that receipt of third party, regulatory, environmental and
governmental approvals and consents relating to Tidewater's capital
projects can be obtained on the necessary terms and in a timely
manner;
- 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 risks and environmental risks and hazards, including
risks inherent in the transportation of NGLs and refining of light
crude oils 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;
- construction and engineering variables associated with
capital projects, including the availability of contractors,
engineering and construction services, accuracy of estimates and
schedules, and the performance of contractors;
- the availability of capital on acceptable terms;
- changes in the credit-worthiness of counterparties;
- changes in the credit rating of the Corporation, and the
impacts of this on the Corporation's access to private and public
credit markets in the future and increase the costs of borrowing;
- adverse claims made in respect of the Corporation's
properties or assets;
- risks and liabilities associated with the transportation of
dangerous goods and derailments;
- effects of weather conditions;
- reliance on key personnel;
- technology and security risks, including
cybersecurity;
- potential losses which would stem from any 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;
- changes in gas composition; and
- failure to realize the anticipated benefits of
acquisitions.
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.
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 shareholders
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 off
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 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.
SOURCE Tidewater Midstream and Infrastructure Ltd.