TIDEWATER MIDSTREAM AND INFRASTRUCTURE LTD. ANNOUNCES FOURTH QUARTER AND YEAR-END 2024 RESULTS AND OPERATIONAL UPDATE
(TSX: TWM)
CALGARY, AB, March 27, 2025 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX:TWM) has filed its consolidated financial statements and Management Discussion and Analysis ("MD&A") for the year ended December 31, 2024.
Fourth Quarter 2024 Highlights
Consolidated net loss attributable to shareholders was $3.3 million during the fourth quarter of 2024, compared to a net loss attributable to shareholders of $331.8 million during the fourth quarter of 2023. The decrease in net loss attributable to shareholders is largely due to the reversal of certain non-cash impairment charges previously taken in 2023, offset in part by the gain on sale of the Pipestone natural gas plant, expansion project at the Pipestone natural gas plant, the Dimsdale natural gas storage assets, and associated gathering and other infrastructure to AltaGas Ltd. in the fourth quarter of 2023 (the "Pipestone Transaction").
Consolidated adjusted EBITDA(1) was $20.0 million during the fourth quarter of 2024, compared to $21.4 million during the fourth quarter of 2023. The decrease was primarily due to higher adjusted EBITDA from equity investments and lower realized losses on derivative contracts in the comparative period, offset in part by lower general and administrative costs in the current quarter.
During the quarter, the Corporation's offtake agreement with Cenovus Energy Inc. (the "Offtake Agreement") expired and the Corporation successfully transitioned to marketing its refined products in-house. However, refining margins for the company's products have been negatively impacted by the dumping of subsidized U.S. renewable diesel into the BC market causing the market to become oversupplied. On December 30, 2024, Tidewater Renewables Ltd. ("Tidewater Renewables") filed a trade complaint (the "Complaint") with the Canada Border Services Agency ("CBSA") which management of the Corporation believes will result in duties being imposed that will remedy and offset the significant impact of U.S. subsidies, which enable U.S. producers to export renewable diesel to Canada at artificially low prices.
During the quarter, the Corporation recorded $24.3 million of net reversals of previously recorded impairment charges on its midstream assets in the Deep Basin cash generating unit. The increase in the net estimated recoverable amount was primarily due to the elimination of the take-or-pay fees paid to Tidewater Renewables as a result of the Transaction (as defined below), and the review of the recoverable amount of the Brazeau River Complex roadway network (the "BRC Roadway Network") which, subsequent to the period, Tidewater Midstream sold to Canadian Roadways LP ("CRR"), for total proceeds of $24 million.
Full-Year 2024
Full year 2024 consolidated net loss attributable to shareholders was $26.6 million compared to net loss attributable to shareholders of $385.9 million during the year ended December 31, 2023. The improvement is largely due to the reversal of non-cash impairment charges previously taken in 2023 and higher operating income, offset in part by the gain on sale on the Pipestone Transaction in 2023 and lower deferred income tax recoveries in the current year.
Full year 2024 consolidated adjusted EBITDA(1) was $134.3 million, compared to $162.9 million during 2023. The decrease was largely due to losses on the settlement of vegetable oil derivative contracts and lower adjusted EBITDA from equity investments in the current year, partially offset by higher operating income and lower general and administrative costs in 2024.
In early May 2024, Tidewater successfully completed the three-week turnaround at the Brazeau River Complex and Fractionation Facility (the "BRC") safely, on time and approximately $5.0 million below initial cost expectations.
During the third quarter of 2024, Tidewater Midstream completed the issuance of $100 million of convertible unsecured subordinated debentures (the "Convertible Debentures") at a price of $1,000 per debenture. The Convertible Debentures mature on June 30, 2029, and accrue interest at 8% per annum, payable semi-annually, on the last day of June and December, commencing December 31, 2024. Proceeds from the issuance were used to satisfy and discharge Tidewater Midstream's $75 million convertible debentures due September 30, 2024, with the remaining proceeds used for general corporate purposes.
During the third quarter of 2024, Tidewater Midstream completed the Transaction, 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 ("PGR") units, a natural gas storage facility located at the BRC (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 emission credits ("BC LCFS 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 BC LCFS credits (the "BC LCFS Credit Purchase Agreement"), under which Tidewater Midstream agreed to purchase BC LCFS Credits from Tidewater Renewables for an aggregate purchase price of $7.2 million, and agreed to purchase additional BC LCFS Credits (subject to certain monthly average limits) from Tidewater Renewables until March 31, 2025, for cash proceeds of approximately $77.5 million (assuming the HDRD Complex continues to operate at over 90% utilization).
Concurrent with the close of the 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 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 its used cooking oil feedstock assets, generating total proceeds of $10.6 million. The proceeds from this transaction were used to reduce outstanding debt on Tidewater Renewables' senior credit facility.
Throughout 2024, Tidewater Midstream implemented general and administrative cost cutting initiatives that resulted in over $5 million in cost savings.
_________________________________
(1)
Non-GAAP financial measure. See the "Non-GAAP Measures" section of this news release.
Subsequent Events
On January 10, 2025, Tidewater Renewables completed the sale of its interest in the Rimrock Renewables Partnership ("RNG LP") to Biocirc Canada Holdings Inc., an affiliate of Biocirc Group ApS for total proceeds of $7.8 million, of which $4.7 million was received on close and a further $3.1 million could be received upon the satisfaction of certain post-closing conditions on or before December 30, 2025. The net proceeds of this transaction were used to repay outstanding indebtedness.
On February 27, 2025, the Government of British Columbia announced changes to the Low Carbon Fuels Act (the "Amendments"), specifically to increase to the renewable fuel requirement for diesel from 4% to 8% for the 2025 compliance period, together with, effective April 1, 2025, requiring such renewable fuel content to be produced in Canada. Management believes that the Amendments represent a good first step in levelling the unfair trade environment and supporting the economic viability of Tidewater Renewables and the broader Canadian biofuels industry.
On March 6, 2025 Tidewater Midstream announced it had entered into a definitive agreement with CRR, for the sale of its BRC Roadway Network for total proceeds of $24 million. The BRC Roadway Network is a non-core asset of Tidewater Midstream and the disposition of the BRC Roadway Network is expected to have an immaterial impact to Tidewater Midstream's 2025 operating results. The sale closed on March 24, 2025. Of the $24 million in total proceeds, $22.5 million was received upon closing, with the balance expected to be received on or before December 31, 2025.
In early March 2025, the CBSA formally initiated a countervailing (anti-subsidy) and anti-dumping duty investigation into imports of renewable diesel from the United States (the "Investigation"). In initiating the Investigation, the CBSA confirms that Tidewater Renewables provided satisfactory evidence to support its allegations that U.S. renewable diesel imports were subsidized and dumped, causing harm to Tidewater Renewables. A decision by the CBSA regarding whether provisional duties will be imposed at the Canada-U.S. border is anticipated by June 2025. Final duties, which would be in place for five years and can be renewed every five years thereafter, could be imposed by September 2025 following a ruling by the Canadian International Trade Tribunal. If final duties are imposed at the levels expected by management, valued between $0.50 and $0.80 per litre of renewable diesel imported from the United States, these duties would support long-term market stability for Tidewater Renewables' renewable diesel production and its related emission credits.
On March 26, 2025, with the support of its lenders, Tidewater Midstream amended the financial covenant requirements within the Fifth Amended and Restated Credit Agreement effective January 1, 2025 until March 31, 2026, to increase the first lien senior debt to adjusted EBITDA covenant up to 4.50:1 (from 3.50:1) , and decrease the adjusted EBITDA to interest coverage ratio to 1.50:1 (from 2.50:1) during the period. These amendments will assist in providing financial flexibility as Tidewater navigates current market conditions.
On March 26, 2025, Tidewater Renewables, with the support of its lenders, successfully amended its senior credit facility and second lien credit facility. The amendments provide over $15.0 million of additional capacity to the Tidewater Renewables credit facilities and extends the maturity date of the second lien tranche B and tranche C facilities from February 28, 2026, to October 24, 2027. The amendments also waive the requirements to comply with the quarterly financial covenants until March 31, 2026, previously waived until September 30, 2025, at which time the Tidewater Renewables will be required to maintain certain financial covenants on an annualized basis.
CEO Quote:
2024 was a busy year for Tidewater,
Before I enumerate our accomplishments over the year, I wanted to take a step back to when I joined in January 2024. At that time, the Company had just completed a strategic review which culminated in the sale of the Pipestone natural gas plant, Pipestone expansion project and the Dimsdale natural gas storage facility and associated gathering and other infrastructure assets in December 2023.
Since that time, we have continued making progress towards improving our operations and optimizing our asset portfolio. Our strategy is supported by three key initiatives: maintaining safe and reliable operations, driving ongoing operational efficiencies, and optimizing our asset portfolio to ensure we have the right mix of assets that are generating appropriate returns.
In 2024, Tidewater Midstream achieved several key milestones as we continue to progress on our strategy.
Completed the refinancing of our convertible debentures
Implemented significant operational and administrative costs savings
Completed the Transaction with Tidewater Renewables and simplified our business and our reporting
Finalized the sale of the BRC Roadway Network and repaid $22.5 million of debt
Completed a major turnaround at the BRC below our initial cost estimates
Built an in-house marketing organization following the expiration of the Offtake Agreement
At Tidewater Renewables we:
Commissioned HDRD and got it running reliably
Completed several non-core asset sales, including Eco Dine in September 2024 and Rimrock Renewable Ltd. Partnership in January 2025
Made significant progress on required regulatory policy changes
Strengthened Tidewater Renewables' balance sheet by completing the Transaction with Tidewater Midstream, which reduced debt and lowered financing costs. In addition, the forward sale of BC LCFS Credits to Tidewater Midstream until March 2025 provided Tidewater Renewables with a reliable source of cash flow, allowing the Company to continue to focus on its renewable fuels business
Completed refinancing
I'm very proud of our Tidewater team and am very confident in our ability to continue to progress on our plan and achieve our goal of delivering sustainable free cash flow and growth."
-Stated CEO Jeremy Baines
CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS
Three months ended December 31
Tidewater
Deconsolidated (2)
Tidewater
Consolidated
(in millions of Canadian dollars except per share information)
2024
2023
2024
2023
Net income (loss) attributable to shareholders
$
2.4
$
(329.4)
$
(3.3)
$
(331.8)
Net income (loss) attributable to shareholders per
share - basic
$
0.01
$
(0.77)
$
(0.01)
$
(0.78)
Adjusted EBITDA (1)
$
14.0
$
10.7
$
20.0
$
21.4
Distributable cash flow attributable to shareholders (1)
$
(6.6)
$
(37.4)
$
(11.7)
$
(36.0)
Distributable cash flow per share, basic (1)
$
(0.02)
$
(0.09)
$
(0.03)
$
(0.08)
Net debt (3)
$
381.8
$
397.3
$
577.6
$
744.0
Total capital expenditures
$
5.5
$
19.4
$
11.2
$
51.2
(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.
Year ended December 31
Tidewater
Deconsolidated (2)
Tidewater
Consolidated
(in millions of Canadian dollars except per share information)
2024
2023
2024
2023
Net loss attributable to shareholders
$
(40.7)
$
(371.3)
$
(26.6)
$
(385.9)
Net loss attributable to shareholders per
share - basic
$
(0.09)
$
(0.87)
$
(0.06)
$
(0.91)
Adjusted EBITDA (1)
$
59.8
$
117.0
$
134.3
$
162.9
Distributable cash flow attributable to shareholders (1)
$
(22.7)
$
(66.1)
$
(3.1)
$
(64.3)
Distributable cash flow per share, basic (1)
$
(0.05)
$
(0.16)
$
(0.01)
$
(0.15)
Net debt (3)
$
381.8
$
397.3
$
577.6
$
744.0
Total capital expenditures
$
23.4
$
87.1
$
44.9
$
292.6
(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.
CAPITAL EXPENDITURES
Three months endedDecember 31,
Year ended
December 31,
(in millions of Canadian dollars)
2024
2023
