TIDEWATER MIDSTREAM AND INFRASTRUCTURE LTD. ANNOUNCES THIRD QUARTER 2024 RESULTS AND OPERATIONAL UPDATE
Canada NewsWire
CALGARY, AB, Nov. 14, 2024
(TSX: TWM)
CALGARY, AB, Nov. 14, 2024 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX: TWM) has filed its interim consolidated financial statements and Management Discussion and Analysis ("MD&A") for the three and nine month period ended September 30, 2024.
THIRD QUARTER 2024 HIGHLIGHTS
-- Net income attributable to shareholders increased by $15.6 million to a
net loss of $7.3 million in the third quarter 2024, from a net loss of
$22.9 million in the same period of 2023. The improvement was largely due
to higher operating income offset by higher costs on renewable feedstock
contracts.
-- Consolidated adjusted EBITDA(1)[1]was $29.2 million for the third quarter
of 2024, compared to $37.5 million in the third quarter of 2023, proforma
for Pipestone and Dimsdale, which were divested in December 2023.
-- During the third quarter of 2024, Tidewater Midstream completed a related
party transaction (the "Transaction") with Tidewater Renewables Ltd.
("Tidewater Renewables"), in which Tidewater Midstream acquired various
assets from Tidewater Renewables, including the canola co-processing and
fluid catalytic cracking co-processing infrastructure, working interests
in various other Prince George Refinery units, a natural gas storage
facility located at the Brazeau River Complex (collectively, the
"Acquired Assets"), for cash consideration of $122.0 million, plus the
assumption of certain liabilities related to the Acquired Assets.
Additionally, as part of the consideration, Tidewater Midstream assigned
the right to receive certain British Columbia Low Carbon Fuel Standard
("BC LCFS") emission credits with a minimum value of $7.7 million to
Tidewater Renewables.
-- Tidewater Midstream and Tidewater Renewables also entered into an
agreement for the purchase and sale of credits dated September 12, 2024,
under which Tidewater Midstream agreed to purchase BC LCFS emission
credits from Tidewater Renewables for an aggregate purchase price of $7.2
million, and also agreed to purchase additional BC LCFS emission credits
(subject to certain monthly average limits) from Tidewater Renewables
until March 31, 2025, for cash proceeds of approximately $77.5 million
(assuming the Renewable Diesel and Renewable Hydrogen Complex ("HDRD
Complex") continues to operate at over 90% utilization).
-- Concurrent with the close of the above Transaction, the Corporation
successfully amended and restated its senior credit facility, increasing
the aggregate revolving capacity by $25 million, from $150 million to
$175 million, and extending the maturity date from February 10, 2026 to
September 12, 2026. The Corporation has also added a three-year delayed
draw term loan tranche of $150 million to finance the Acquired Assets and
the portion of the BC LCFS credits mentioned above.
-- On September 12, 2024, Tidewater Renewables closed the sale of assets
from its used cooking oil feedstock business, generating total proceeds
of $10.6 million. The proceeds from this transaction were used to reduce
outstanding debt on its first lien senior credit facility.
(1) Non-GAAP financial measure. See the "Non-GAAP Measures"
section of this news release.
CEO Message:
"Subsequent to quarter end, in November, our contracted offtake agreement with Cenovus ended and we have made significant progress establishing new customer relationships. However, our refining margins continue to be under pressure due to increased supply of refined products, including renewable diesel, across North America and slowing demand due to a relatively stagnant Canadian economy. Tidewater Renewables has engaged external trade law counsel for the purposes of advising on and preparing a trade remedy complaint against renewable diesel imports from the U.S. that management believes are unfairly priced and having a significant negative impact on the competitiveness on domestic operations. Based on available information and advice, management believes that a trade case against renewable diesel imports from the U.S. has a reasonably high likelihood of success. Preparation of the Tidewater Renewables' trade complaint is progressing at pace. Filing of a complaint may occur before the close of 2024 and, if a government investigation initiates and concludes that unfairly traded imports are harming Canadian production, duty relief would then be available in 2025.
As we previously disclosed during the third quarter, we completed the related party Transaction between Tidewater Midstream and Tidewater Renewables. The Transaction benefits both Tidewater Midstream and Tidewater Renewables. Tidewater Midstream benefits from acquiring a significant amount of deconsolidated adjusted EBITDA and cash flow that was previously dropped down to Tidewater Renewables during its initial public offering. Tidewater Renewables used the proceeds from the Transaction to repay its first lien debt and also established a contracted purchaser for the BC LCFS emission credits it produces. The Transaction allows Tidewater Renewables to focus its energies on its renewable fuels business.
Looking forward to the fourth quarter, while we remain optimistic about the opportunities for natural gas processing, as LNG Canada and other LNG export terminals start to ramp up next year, in the short term AECO natural gas pricing is at a five year low and producers continue to shut in production, creating near term challenges.
As a result, of the above, we expect to be at the low end of our previously issued consolidated adjusted EBITDA(1) guidance for 2024 of $130 million to $150 million. We are also revising our full-year 2024 consolidated maintenance capital forecast which is now expected to be in the range of $25 million to $30 million, down from previous guidance, of $35 million to $40 million. As a result, the combined revisions have a net positive impact on anticipated free cash flow."
(1) Non-GAAP financial measure. See the "Non-GAAP Measures"
section of this news release.
CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS
Three months ended September 30
TidewaterDeconsolidated (2) TidewaterConsolidated
(in millions of 2024 2023 2024 2023
Canadian dollars
except per share
information)
Net loss
attributable to
shareholders $ (13.2) $ (18.8) $ (7.3) $ (22.9)
Net loss
attributable to
shareholders
per share -
basic $ (0.03) $ (0.04) $ (0.02) $ (0.05)
Adjusted EBITDA
(1) $ 15.5 $ 34.1 $ 29.2 $ 48.6
Distributable
cash flow
attributable to
shareholders
(1) $ (3.2) $ (0.2) $ (1.2) $ 2.0
Distributable
cash flow per
share -- basic
(1) $ (0.01) $ - $ - $ -
Net debt (3) $ 383.2 $ 618.9 $ 566.5 $ 953.0
Total capital
expenditures $ 2.4 $ 5.7 $ 3.9 $ 39.3
(1) Non-GAAP financial measures. See the "Non-GAAP
Measures" section of this news release.(2) Deconsolidated results exclude
the results of
Tidewater Renewables. See the "Non-GAAP Measures"
section of this news release for information on deconsolidated
measures.(3) Capital management measure. See the "Non-GAAP
Measures" section of this news release.
Nine months ended September 30
TidewaterDeconsolidated (2) TidewaterConsolidated
(in millions of 2024 2023 2024 2023
Canadian dollars
except per share
information)
Net loss
attributable to
shareholders $ (43.1) $ (41.9) $ (23.3) $ (54.1)
Net loss
attributable to
shareholders
per share -
basic $ (0.10) $ (0.10) $ (0.05) $ (0.13)
Adjusted EBITDA
(1) $ 45.8 $ 106.3 $ 114.3 $ 141.5
Distributable
cash flow
attributable to
shareholders
(1) $ (16.1) $ (28.7) $ 8.6 $ (28.3)
Distributable
cash flow per
share -- basic
(1) $ (0.03) $ (0.07) $ 0.02 $ (0.07)
Net debt (3) $ 383.2 $ 618.9 $ 566.5 $ 953.0
Total capital
expenditures $ 17.9 $ 67.7 $ 33.7 $ 241.4
(1) Non-GAAP financial measures. See the "Non-GAAP
Measures" section of this news release.(2) Deconsolidated results exclude
the results of
Tidewater Renewables. See the "Non-GAAP Measures"
section of this news release for information on deconsolidated
measures.(3) Capital management measure. See the "Non-GAAP
Measures" section of this news release.
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