Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tidewater Renewables Ltd (TDWRF, Financial) completed a significant transaction with Tidewater Midstream, generating $122 million in cash proceeds to reduce outstanding debt.
- The HDRD Complex achieved a 95% utilization rate, with an average daily throughput of 2,849 barrels per day, exceeding operational guidance.
- The company successfully sold BC LCFS credits for minimum cash proceeds of approximately $77.5 million, contingent on maintaining high utilization rates.
- Tidewater Renewables Ltd (TDWRF) is actively engaging with Canadian and BC governments to advocate for policy changes that could enhance competitiveness against US producers.
- The company is progressing on a sustainable aviation fuel project, with the front-end engineering design funded through BC LCFS credits, indicating potential future growth opportunities.
Negative Points
- Adjusted EBITDA for Q3 2024 was $13.6 million, a significant decrease from $29.6 million in Q2 2024, primarily due to the sale of EBITDA-generating assets.
- The demand for and price of emission credits remain weak, impacting the company's financial performance.
- Regulatory changes are needed to allow Canadian renewable fuels to compete on a level playing field with subsidized US producers.
- The company faces uncertainty regarding the outcome and timing of a trade remedy complaint against US renewable diesel imports.
- Tidewater Renewables Ltd (TDWRF) has extended its credit facilities' maturity to February 2026, but compliance with financial covenants has been waived until September 2025, indicating financial strain.
Q & A Highlights
Q: What is the best outcome Tidewater Renewables would like to see from the trade complaint, and what is the expected timing?
A: The best outcome would be the imposition of countervailing duties on subsidized US products entering the market. If the case is taken up and moved forward, a decision could be reached by late Q2 2025. (Jeremy Baines, CEO)
Q: How does the recent BC election impact government support for Tidewater Renewables?
A: The government remains a majority, and their commitment to decarbonization and support for the renewable fuel industry is expected to continue. The company anticipates ongoing support and solutions to level the playing field. (Jeremy Baines, CEO)
Q: How long might the trade remedy investigation take if initiated in Q2?
A: The investigation could conclude as early as late Q2, but the timeline depends on the complexity of the issue. The subsidy aspect is straightforward, while the dumping part is more complex. (Jeremy Baines, CEO)
Q: What are the core assets Tidewater Renewables would not consider selling?
A: The HDRD plant is considered the core asset. Other assets are non-core and could be considered for sale. (Jeremy Baines, CEO)
Q: What would be the ideal policy changes for the LCFS market in BC?
A: Ideal changes would include measures to prevent US producers from benefiting from both US subsidies and Canadian emissions credits, or introducing a similar production subsidy in Canada. (Jeremy Baines, CEO)
Q: What is the status and expected outcome of the SAF FEED study?
A: The study is underway, with design and capital estimates being developed. Funding is in place, and there is interest in commercial partnerships. The project is seen as a free option for future growth. (Jeremy Baines, CEO)
Q: How much EBITDA was deferred from Q2 to Q3 due to credit prices?
A: Approximately $12 million of EBITDA was deferred from Q2 into Q3 due to higher credit prices earlier in the year. (Ian Quartly, CFO)
Q: What is the current debt situation and liquidity outlook for Tidewater Renewables?
A: Debt maturities have been extended to February 2026, with sufficient liquidity expected to continue. Future liquidity will depend on trade complaint outcomes, regulatory changes, and emission credit prices. (Ian Quartly, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
