Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tidewater Renewables Ltd (TDWRF, Financial) has been actively engaged with the Canadian and British Columbia governments to address regulatory challenges, resulting in positive amendments to the Low Carbon Fuels Act.
- The company achieved strong operational performance in Q4 2024, with the HDRD complex exceeding its daily throughput target, reflecting improved operational efficiency.
- Tidewater Renewables Ltd (TDWRF) successfully completed the sale of its interest in the Rimrock Renewables Partnership, generating $7.8 million in proceeds.
- The company received final LCFS credits from the BC government, recognizing its operational milestone at the HDRD complex.
- Amendments to credit facilities have increased liquidity, providing financial stability and extending maturity dates, which supports long-term financial viability.
Negative Points
- Adjusted EBITDA for Q4 2024 decreased by 44% from the previous year, primarily due to the sale of EBITDA-generating assets.
- The company faces competitive disadvantages due to US subsidies and emission credits, impacting the competitiveness of Canadian operations.
- There is ongoing uncertainty regarding the outcome of the trade remedy complaint filed with Canada Border Services, which could affect future profitability.
- The termination of take-or-pay contracts and realized losses on derivative contracts negatively impacted financial performance.
- The company previously raised concerns about its ability to continue as a going concern, although recent developments have alleviated some of these concerns.
Q & A Highlights
Q: Can you quantify the impact of the potential duties of $0.50 to $0.80 per liter on US imports in terms of your EBITDA? Will you provide EBITDA guidance for 2025 if these duties are implemented?
A: Jeremy Baines, CEO: The $0.50 to $0.80 per liter tariff translates into the equivalent value of LCFS and CFR credits. If successful, it would bring credit prices back to levels seen in the first half of the year, significantly impacting our EBITDA positively. We typically provide guidance after our Q1 release, so we will decide on guidance based on operational performance and market conditions.
Q: Regarding the $0.50 to $0.80 duty range, where does this scenario fit among potential outcomes?
A: Jeremy Baines, CEO: The $0.50 is based on US subsidies, while the $0.80 considers economic analysis of product dumping. We believe these duties will level the playing field and allow us to generate expected cash flows.
Q: Given the potential duties, will you provide guidance if they are implemented in June?
A: Jeremy Baines, CEO: We are monitoring the situation and typically provide guidance after our Q1 release. We expect to maintain high utilization rates and have provided enough information for the market to estimate our performance.
Q: How do you assess the risk of going concern, considering past concerns about the company's ability to continue?
A: Jeremy Baines, CEO: We believe the risk is no longer present. We are optimistic about the BC regulatory changes, increased liquidity, and the expected success of the trade complaint, which collectively strengthen our position.
Q: What more is needed to ensure financial stability and avoid alternative strategies for liquidity?
A: Jeremy Baines, CEO: The changes in the Low Carbon Fuels Act have significantly supported demand for Canadian-produced renewable diesel. We believe we are through the worst, and the trade complaint's success will further enhance our position.
Q: What market changes have you observed since the Canada Border Service Agency's investigation?
A: Jeremy Baines, CEO: We have seen significant interest in Canadian-produced renewable diesel due to the BC mandate. We are selling fully-loaded barrels that include compliance credits, and we have diversified our customer base.
Q: What prompted the increase in available liquidity under your credit facility?
A: Jeremy Baines, CEO: We wanted to ensure sufficient liquidity to navigate political uncertainties and market volatility. The timing of regulatory changes and trade case developments influenced our decision to secure additional liquidity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
