TIDEWATER RENEWABLES LTD. ANNOUNCES SECOND QUARTER 2023 RESULTS & OPERATIONAL UPDATE

CALGARY, AB, Aug. 10, 2023 /CNW/ - Tidewater Renewables Ltd. ("Tidewater Renewables" or the "Corporation") (TSX: LCFS) is pleased to announce that it has filed its condensed interim consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2023.

SECOND QUARTER 2023 HIGHLIGHTS & OPERATIONAL UPDATE

• The HDRD Complex is quickly approaching commercial operations with a recent commissioning highlight being the pretreatment unit activation. The first production of renewable hydrogen is expected within days and the start-up of the renewable diesel unit is anticipated in late August, with commercial operations beginning shortly thereafter. The Renewable Diesel & Renewable Hydrogen ("HDRD") Complex is expected to be one of the first sizable producers of BC LCFS and federal CFR credits.
  The HDRD Complex is mechanically complete and most of the commissioning milestones have been achieved. Commercial operations are now expected to commence in late August 2023 (previously June 2023) due to resource challenges and minor commissioning issues. This delay is expected to raise gross project costs by approximately $8 million; however, this is anticipated to be entirely offset by the higher realized value of capital emissions credits. Net project costs and run rate EBITDA⁽¹⁾ expectations are in line with previous guidance and the project's economics remain attractive with payback expected within two to three years.
• In the second quarter of 2023, during the scheduled turnaround at the Prince George Refinery ("PGR"), Tidewater Renewables earned net income attributable to shareholders of $2.7 million, compared to $4.4 million in the second quarter of 2022. Adjusted EBITDA⁽¹⁾ was $8.1 million, which was impacted by scheduled downtime at PGR and realized losses on feedstock hedges, compared to $16.9 million in the second quarter of 2022.
• On June 6, 2023, the Corporation executed a Credit Offtake Agreement with a Canadian investment-grade counterparty to sell all the operating emissions credits once generated by the HDRD Complex through November 2023. This Credit Offtake Agreement is expected to work in conjunction with the Corporation's previously announced U.S. Renewable Diesel Offtake Agreement.
• During the second quarter of 2023, the Corporation successfully completed a turnaround maintenance program at the Prince George Refinery. The program was focused on the operating assets, including the Fluid Catalytic Cracking ("FCC") and canola co-processing projects. The turnaround was executed safely, on budget and within the expected timelines.
• The Corporation is pleased to welcome Ms. Andrea Decore as Executive Vice President, Strategy & Corporate Development. Tidewater Renewables stands to benefit from Ms. Decore's significant commercial and leadership experience within the renewable energy industry. Before joining Tidewater Renewables, Ms. Decore spent over 19 years at Suncor Energy, most recently as Vice President, Low Carbon Fuels & GHG Offsets. Additionally, she has served as a board member for several low carbon fuel technology development companies across North America. Ms. Decore holds a Bachelor of Laws degree from the University of Calgary.
• The Corporation is pleased to welcome Mr. Simon Bregazzi to its Board of Directors. Simon brings 30 years of finance and industry experience to Tidewater Renewables. Simon spent the first half of his career in finance, ultimately establishing and leading Goldman Sachs' Calgary investment banking office. He spent the second half of his career in energy and energy transition, as a co-founder and CEO of Jupiter Resources, which grew to become Canada's ninth largest natural gas producer, and more recently as co-founder and CEO of Carbon Alpha, a leading provider of carbon capture and storage solutions. Mr. Bregazzi holds a Bachelor of Science in Actuarial Science from Western University and began his career as a Chartered Accountant.

"Tidewater Renewables is only weeks away from first production at the HDRD Complex. We take great pride in completing the construction of this innovative facility within two years while maintaining our impeccable safety record. The HDRD Complex is Canada's first standalone renewable diesel facility, and its cash flow is expected to launch the next stage of Tidewater Renewables' growth." states Interim CEO Rob Colcleugh.

(1)     Adjusted EBITDA, distributable cash flow, net debt and run rate EBITDA used throughout this press release are non-GAAP financial measures or ratios. See the "Non-GAAP and Other Financial Measures" in this press release and the Corporation's MD&A for information on each non-GAAP financial measure or ratio.

Selected financial and operating information are outlined below and should be read with the Corporation's condensed interim consolidated financial statements and related MD&A for the period ended June 30, 2023, which are available under the Corporation's profile on SEDAR+ at www.sedarplus.com and on its website at www.tidewater-renewables.com.

Financial Highlights

	Three months ended June 30,				Six months ended June 30,
(in thousands of Canadian dollars except per share information)		2023		2022		2023		2022
Revenue	$	13,163	$	19,730	$	33,059	$	36,980
Net income (loss) attributable to shareholders	$	2,654	$	4,363	$	(18,823)	$	21,877
Net income (loss) attributable to shareholders per share - Basic	$	0.08	$	0.13	$	(0.54)	$	0.63
Net income (loss) attributable to shareholders per share - Diluted	$	0.07	$	0.13	$	(0.54)	$	0.63
Adjusted EBITDA^(1,2)	$	8,067	$	16,902	$	20,702	$	29,639
Net cash provided by (used in) operating activities	$	(7,348)	$	13,903	$	4,101	$	33,188
Distributable cash flow^(1)	$	(7,877)	$	11,274	$	(2,604)	$	19,190
Distributable cash flow per share – basic ^(1)	$	(0.23)	$	0.32	$	(0.07)	$	0.55
Distributable cash flow per share –diluted ^(1)	$	(0.22)	$	0.32	$	(0.07)	$	0.55
Total common shares outstanding (000s)		34,724		34,712		34,724		34,712
Total assets	$	1,032,896	$	876,497	$	1,032,896	$	876,497
Net debt^(1)	$	293,088	$	107,829	$	293,088	$	107,829

(1) Refer to "Non-GAAP and Other Financial Measures" in this press release and the Corporation's MD&A.

(2) For the three and six months ended June 30, 2023, Adjusted EBITDA includes $647 and $941 from its share of RCC's Adjusted EBITDA, respectively.

OUTLOOK AND CORPORATE UPDATE

The Corporation's immediate focus remains on the safe and successful commissioning of Canada's first standalone renewable diesel facility. Following the commissioning of the HDRD Complex, Tidewater Renewables will be among Canada's first sizable producers of BC LCFS and CFR credits. The Corporation continues to see strong industry fundamentals, including robust prices for renewable fuels and strong demand for environmental credits. This demand is supported by escalating compliance requirements and voluntary environmental commitments. Tidewater Renewables continues to work with various counterparties to achieve their compliance requirements, fulfill their ESG commitments and meet their energy needs.

After the HDRD Complex is successfully commissioned, the Corporation is dedicated to strengthening its financial position, repaying debt and progressing the development of the RNG Facility. Tidewater Renewables continues to observe robust social and government support for the energy transition, and the incremental Adjusted EBITDA from the HDRD Complex is expected to launch the next phase of the Corporation's growth.

CONFERENCE CALL

In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater Renewables' senior management review its second quarter 2023 results via conference call on Thursday, August 10, 2023, 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://app.webinar.net/KQyDE20VP7m 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 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. Organically, Tidewater Renewables seeks to leverage the existing infrastructure and engineering expertise of Tidewater Midstream and Infrastructure Ltd., 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.sedarplus.com and at www.tidewater-renewables.com.

NON-GAAP AND OTHER FINANCIAL MEASURES

Throughout this press release and in other materials disclosed by the Corporation, Tidewater Renewables uses a number of financial measures when assessing its results and measuring overall performance. The intent of non-GAAP measures and ratios is to provide additional useful information to investors and analysts. Certain of these 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 measures should not be considered in isolation or used as a substitute for measures of performance prepared in accordance with GAAP. 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 and Other Financial Measures" section of Tidewater Renewables' most recent MD&A which is available on SEDAR+.

Non-GAAP Financial Measures

The non-GAAP financial measures used by the Corporation are Adjusted EBITDA, distributable cash flow and run rate EBITDA.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is calculated as income (or loss) before finance costs, taxes, depreciation, share-based compensation, unrealized gains/losses on derivative contracts, non-cash items, transaction costs, lease payments under IFRS 16 Leases and other items considered non-recurring in nature plus the Corporation's proportionate share of EBITDA in its equity investment.

The following table reconciles net income (loss), the nearest GAAP measure, to Adjusted EBITDA:

	Three months ended June 30,				Six months ended June 30,
(in thousands of Canadian dollars)	2023		2022		2023		2022
Net income (loss)	$	2,654	$	4,363	$	(18,823)	$	21,877
Deferred income tax expense (recovery)		1,105		1,919		(6,557)		8,362
Depreciation		5,264		4,815		10,188		9,503
Finance costs		4,542		1,410		9,949		2,184
Share-based compensation		1,635		904		3,355		1,354
Unrealized loss (gain) on derivative contracts		(9,195)		2,876		27,840		(14,309)
Gain on warrant liability revaluation		(720)		-		(7,970)		-
Transaction costs		21		347		101		400
Non-recurring transactions ^(1)		3,927		-		4,264		-
Adjustment to share of profit from equity    accounted investments ^(2)		(1,166)		268		(1,645)		268
Adjusted EBITDA	$	8,067	$	16,902	$	20,702	$	29,639

(1)	Non-recurring transactions for the three and six months ended June 30, 2023, includes $3.9 million of feedstock rescheduling costs.
(2)	For the three and six months ended June 30, 2023, Adjusted EBITDA includes $647 and $941 from its share of RCC's Adjusted EBITDA, respectively.

Distributable Cash Flow

Distributable cash flow 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. These cash flows are relevant to the Corporation's ability to internally fund growth projects, alter its capital structure, or distribute returns to shareholders. 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 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 which are funded from operating cash flows. 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.

The following table reconciles net cash provided by (used in) operating activities, the nearest GAAP measure, to distributable cash flow:

	Three months ended June 30,					Six months ended June 30,
(in thousands of Canadian dollars)	2023			2022		2023				2022
Net cash provided by (used in) operating activities	$		(7,348)	$	13,903	$		4,101		$	33,188
Add (deduct):
Changes in non-cash working capital			11,037		1,896			10,749			(4,764)
Transaction costs			21		347			101			400
Non-recurring transactions ^(1)			3,927		-			4,264			-
Interest and financing charges			(3,564)		(446)			(6,568)			(1,002)
Payment of lease liabilities			(1,603)		(1,434)			(3,216)			(2,905)
Maintenance capital ^(2)		(10,347)			(2,992)				(12,035)			(5,727)
Distributable cash flow	$	(7,877)		$	11,274		$		(2,604)	$		19,190

(1)	Non-recurring transactions for the three and six months ended June 30, 2023, includes $3.9 million of feedstock rescheduling costs.
(2)	Maintenance capital includes expenditures incurred on the scheduled Q2 2023 turnaround at PGR.

Run Rate EBITDA

Run rate EBITDA is defined as the expected Adjusted EBITDA to be generated by Tidewater Renewables' specific Renewable Assets, or specific growth project, that corresponds to a full year of operations at full capacity. Run rate EBITDA excludes non-cash items including depreciation and share-based compensation. ‎The calculation of run rate EBITDA is based on certain estimates and assumptions. It should not be regarded as a representation, by the Corporation or any other person, that Tidewater Renewables will achieve such operating results. Investors should not place undue reliance on the run rate EBITDA and should make their own independent assessment of the Corporation's future results or operations, cash flows and financial condition.

Run rate EBITDA guidance related to the HDRD Complex contains various assumptions including a renewable refinery margin of $90/bbl. The renewable refinery margin is derived from vegetable oil strip pricing for the Corporation's feedstocks, which are approximately 50% hedged through 2023 and 2024, current diesel strip pricing, the Corporation's previously announced CFR credit sales and average BC LCFS credits sale prices over the past 12-months.

Non-GAAP Financial Ratios

Distributable Cash Flow Per Common Share

	Three months ended June 30,				Six months ended June 30,
(in thousands of Canadian dollars except per share information)	2023		2022		2023		2022
Distributable cash flow	$	(7,877)	$	11,274	$	(2,604)	$	19,910
Weighted average shares outstanding - basic		34,722		34,712		34,721		34,712
Weighted average shares outstanding - diluted		35,613		34,712		34,721		34,712
Distributable cash flow per share– basic	$	(0.23)	$	0.32	$	(0.07)	$	0.55
Distributable cash flow per share– diluted	$	(0.22)	$	0.32	$	(0.07)	$	0.55

Capital Management Measures

Net Debt

Net debt is defined as bank debt and term debt, less cash and cash equivalents. Net debt is used by the Corporation to monitor its capital structure and financing requirements. It is also used as a measure of the Corporation's overall financial strength.

The following table reconciles net debt:

(in thousands of Canadian dollars)			June 30, 2023
Senior credit facility		$	140,000
Term debt			175,000
Cash and cash equivalents			(21,912)
Net debt		$	293,088

FORWARD-LOOKING INFORMATION 

Certain statements contained in the 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", "expect", "will" 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 the Press Release should not be unduly relied upon.

In particular, the Press Release contains forward-looking statements pertaining to, but not limited to, the following: the expected operational and financial performance of the Corporation's Renewable Assets, including the HDRD Complex and the RNG Facility, the Corporation's business plans and strategies, including the underlying existing assets and capital projects, and the success and timing of its projects and related milestones and capital costs; the expectation that the Corporation will continue to see strong industry fundamentals, including robust prices for renewable fuels and strong demand for environmental credits, driven by escalating compliance requirements and new voluntary commitments; the expectation that the HDRD Complex will be, when commissioned, Canada's first standalone renewable diesel facility and one of the first sizable producers of BC LCFS and CFR credits; the expectation that commercial operations on the HDRD Complex are imminent; the expectation that the HDRD Complex is expected to reach commercial production in the third quarter of 2023; expectations regarding project costs, project paybacks and the timing thereof; expectations regarding the feedstock supply agreement and RCC contributing a substantial amount of the feedstock requirements for the RNG Facility; estimates of, and guidance with respect to forecasted run rate EBITDA for the HDRD Complex and Adjusted EBITDA for both the Corporation and the HDRD Complex, including (i) the expectation that second-half 2023 corporate Adjusted EBITDA will range between $35 – 45 million, inclusive of $15 – 25 million of Adjusted EBITDA from the HDRD Complex, and (ii) the expectation that the HDRD Complex will generate annualized corporate run rate EBITDA of between $130 – 155 million when it is operating at its design capacity; expectations regarding receipt of regulatory approvals, and timing of construction on the RNG Facility; timing of construction on the RNG Facility; expectations regarding Rimrock's access to feedstocks; expectations regarding HDRD Complex major commissioning milestones and the timing thereof; expected proceeds from the sale of capital emission credits under executed forward agreements; expected proceeds from forward agreements to sell operating emissions credits; expectations regarding the future market for capital emissions credits and operating emissions credits and counterparty risks associated with such markets; beliefs regarding the minimal credit risk associated with Tidewater Midstream; the future price and volatility of commodities, including that majority of the underserved regional demand will continue to be served by the PGR; and expectations regarding the Corporation's ability to fulfill its financial commitments, obligations, and anticipated capital expenditures.

Although the forward-looking statements contained in the 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 the Press Release, 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 approval related to the RNG Facility and other projects and applications; general economic and industry trends, including the effect of the COVID-19 pandemic; operating assumptions relating to the Corporation's projects; expectations around the start up of and level of output from the Corporation's projects, including assumptions relating to feedstock supply levels and costs; timing and cost of completion of the HDRD Complex, including that the project will remain on budget and on schedule; the ownership and operation of Tidewater Renewables' business; regulatory risks, including changes or delay to the BC LCFS credit or CFR credit systems; the expansion of production of renewable fuels by competitors; the future pricing of BC LCFS credits and CFR credits; demand for offtake and offtake prices; future commodity and renewable energy prices; sustained or growing demand for renewable fuels; the ability for the Corporation to successfully turn a wide variety of renewable feedstocks into low carbon fuels for which there is a market; changes in the credit-worthiness of counterparties; the Corporation's future debt levels and its ability to repay its debt when due; the Corporation's ability to continue to satisfy the terms and conditions of its credit facilities; the continued availability of the Corporation's credit facilities; the Corporation's ability to obtain additional debt and/or equity financing on satisfactory terms; the Corporation's ability to manage liquidity by working with its current capital providers and other sources and through the sale of BC LCFS credits and CFR credits; foreign currency, exchange, inflation and interest rate risks; and the other assumptions set forth in the Corporation's most recent AIF available under the Corporation's profile on SEDAR+ at www.sedarplus.com.

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 relating to the BC LCFS credit or CFR credit systems; general economic, political, market and business conditions, including fluctuations in interest rates, foreign exchange rates, commodity prices, Consumer Price Index, supply chain pressures and restrictions, inflation, stock market volatility and supply/demand trends; risks related to changes in feedstock prices and revenues from offtakes; economic uncertainties, further cost increases, or unexpected delays with the Corporation's projects; 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, acquisition opportunities, requests for proposals, materials, equipment, labour, and skilled personnel; risks related to the environment and changing environmental laws in relation to the operations conducted with the Renewable Assets and the Corporation's other capital projects; and the other risks set forth in the Corporation's most recent AIF available under the Corporation's profile on SEDAR+ at www.sedarplus.com.

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 most recent AIF and in other documents on file with the Canadian Securities regulatory authorities under the Corporation's profile on SEDAR+ at www.sedarplus.com.

Management of the Corporation has included the above summary of assumptions and risks related to forward-looking statements provided in the 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 occur, what benefits the Corporation will derive from them. 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 the 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 the 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 the Corporation's most recent AIF and other filings made by the Corporation with Canadian provincial securities commissions available under the Corporation's profile on SEDAR+ at www.sedarplus.com.

Financial Outlook

This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about expectations regarding financial results for 2023 and 2024, including Adjusted EBITDA and annual run rate EBITDA, which are subject to the same assumptions, risk factors, limitations and qualifications as set out under the heading "Forward-Looking Information". The actual financial results of the Corporation may vary from the amounts set out herein and such variation may be material. The Corporation and its management believe that the financial outlook has been prepared on a reasonable basis, reflecting management's best estimates and judgments and the FOFI contained in this press release was approved by management as of the date hereof. However, because this information is subjective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, the Corporation undertakes no obligation to update such FOFI. FOFI contained in this press release was made as of the date hereof and was provided for the purpose of providing further information about the Corporation's anticipated future business operations on an annual basis. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein.

SOURCE Tidewater Renewables Ltd.

Robert Colcleugh, Chairman and Interim CEO, Tidewater Renewables Ltd., Phone: [phone], Email: [email protected]; Ray Kwan, CFO, Tidewater Renewables Ltd., Phone: [phone], Email: [email protected]