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 |
For the period |
|||
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.