Tidewater Renewables Ltd. has reported impressive financial results for the second quarter of 2024. The company achieved significant growth in net income, adjusted EBITDA, and distributable cash flow, driven by improvements in throughput and reliability at its Renewable Diesel & Renewable Hydrogen Complex. Additionally, Tidewater Renewables made notable progress on its sustainable aviation fuel project and entered into a related party transaction with Tidewater Midstream, which is expected to enhance its liquidity and leverage profile.
Financial Performance Highlights
Tidewater Renewables Ltd. reported a net income of $4.9 million for the second quarter of 2024, a substantial increase from $2.7 million in the same period last year. The company’s adjusted EBITDA reached a record $29.6 million, reflecting a 17% growth from the previous quarter. This remarkable performance was attributed to the enhanced operational efficiency and increased throughput at the Renewable Diesel & Renewable Hydrogen Complex.
The company’s net cash provided by operating activities totaled $32.5 million, further underscoring its strong financial health. Tidewater Renewables also generated a record distributable cash flow of $20.3 million during the quarter. These financial achievements highlight the company’s robust business model and its ability to generate consistent cash flow.
The improvements in throughput and reliability at the Renewable Diesel & Renewable Hydrogen Complex were key drivers of this financial success. The complex achieved an average daily throughput of 2,925 barrels per day, representing a 98% utilization rate. This high utilization rate underscores the efficiency and reliability of Tidewater Renewables’ operations.
Progress on Sustainable Aviation Fuel Project
Tidewater Renewables continued to make significant strides in the development of its sustainable aviation fuel (SAF) project. The company advanced the front-end engineering design (FEED) of the project, which is expected to have a capacity of 6,500 barrels per day. The SAF project is a critical component of Tidewater Renewables’ strategy to diversify its product offerings and capitalize on the growing demand for sustainable fuels.
The final investment decision for the SAF project is anticipated in 2025. Once operational, the project is expected to contribute significantly to the company’s revenue and profitability. Tidewater Renewables’ commitment to sustainable fuel production aligns with global efforts to reduce carbon emissions and promote environmental sustainability.
The progress on the SAF project demonstrates Tidewater Renewables’ ability to innovate and adapt to changing market dynamics. The company’s focus on sustainable fuel production positions it well to meet the evolving needs of its customers and stakeholders.
Strategic Transaction with Tidewater Midstream
In a strategic move to enhance its liquidity and leverage profile, Tidewater Renewables entered into a related party transaction with Tidewater Midstream. The transaction involves the sale of Tidewater Renewables’ canola co-processing infrastructure, fluid catalytic cracking co-processing infrastructure, and working interests in various refinery units to Tidewater Midstream. The total consideration for the transaction is $129.7 million in cash, along with a commitment to purchase $80.7 million worth of BC LCFS credits over the next nine months.
The proceeds from this transaction will be used to repay amounts on Tidewater Renewables’ Senior Credit Facility, providing an immediate improvement to the company’s liquidity position. This strategic transaction is expected to close in the third quarter of 2024, pending regulatory and lender approvals.
The transaction underscores Tidewater Renewables’ proactive approach to managing its financial health and optimizing its asset portfolio. By divesting non-core assets, the company can focus on its core operations and strategic growth initiatives.
