Tidewater Renewables (LCFS) Q3 2024 earnings summary

Executive summary

• Completed major asset sales, including canola co-processing and refinery interests, to Tidewater Midstream for CAD 122 million, generating $7.7 million in BC LCFS credits and reducing senior credit facility debt.

• Sold non-core used cooking oil feedstock business for CAD 10.6 million, further reducing debt and allowing focus on core HDRD complex.

• Refinanced and extended credit facilities, reducing first lien facility from CAD 175 million to CAD 30 million and extending maturities to February 2026.

• Reported a net loss of $367.1 million for Q3 2024, mainly due to asset sale losses and derivative contract losses.

• HDRD Complex operated at 95% utilization in Q3 2024, producing over 140 million liters of renewable diesel since November 2023.

Financial highlights

• Q3 2024 Adjusted EBITDA was CAD 13.6 million, down from CAD 29.6 million in Q2 and 6% year-over-year, mainly due to asset sales and contract terminations.

• Q3 2024 revenue was $91.6 million, up from $24.2 million in Q3 2023.

• Distributable cash flow for Q3 2024 was $4.5 million, up from $3.2 million in Q3 2023.

• Net debt reduced to $183.3 million as of September 30, 2024, from $334.1 million a year earlier.

• Sale of emission credits at fixed prices earlier in the year partially offset EBITDA decline.

Outlook and guidance

• Optimizing feedstock mix to reduce costs and maximize emission credits.

• Final investment decision on 6,500 bbl/d sustainable aviation fuel project expected in 2025, pending regulatory and commercial milestones.

• Ongoing regulatory engagement and trade complaint preparation to address U.S. renewable diesel imports impacting credit prices; trade complaint filing anticipated before year-end, with possible duty relief by late Q2 2025.

• If emission credit prices and demand do not recover by Q2 2025, operations and liquidity could be significantly impacted.

• Exploring alternative strategies, including further asset sales or restructuring, if market conditions do not improve.