CALGARY, May 11, 2023 - 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 for the period ended March 31, 2023.

FIRST QUARTER 2023 HIGHLIGHTS & OPERATIONAL UPDATE

• The HDRD Complex is expected to reach commercial production by the end of Q2 2023. The gross project cost forecast remains in line with previous guidance (approximately $342 million) and the project’s economics remain attractive with payback expected within 2 - 3 years.
• In the first quarter of 2023, Tidewater Renewables generated $12.6 million of Adjusted EBITDA(1), consistent with $12.7 million in the first quarter of 2022. Net loss attributable to shareholders was $21.5 million for the first quarter of 2023, compared to net income attributable to shareholders of $17.5 million in the first quarter of 2022. The principal cause of the Q1 2023 net loss attributable to shareholders was $37.0 million of non-cash unrealized losses on derivative contracts associated with decreases in forward feedstock pricing.
• The Corporation is forecasting a gradual production ramp-up of the HDRD Complex in the second half of 2023, with an average utilization rate between 75 – 80% of its design capacity. Based on this utilization, second-half 2023 corporate Adjusted EBITDA(1) is expected to range between $50 – 60 million, inclusive of $35 – 45 million of Adjusted EBITDA(1) from the HDRD Complex. When the HDRD Complex is operating at its design capacity, annualized corporate run rate EBITDA(1) is expected to range between $130 – 155 million.
• On May 10, 2023, the Corporation amended its Senior Credit Facility and its AIMCo Facility, providing a temporary increase of $25.0 million each, for a combined total of $50.0 million. These amounts are repayable in variable quarterly installments based on the Corporation's cash flows following the commissioning of the HDRD Complex. Funding remains subject to customary closing procedures.
• On April 13, 2023, the Corporation announced that it had obtained additional capital emissions credits related to the HDRD Complex, which were sold to third parties for proceeds of $43.2 million. These proceeds, combined with the $50.0 million of additional debt capacity, provide Tidewater Renewables with ample liquidity to complete the commissioning of its HDRD Complex.
• On April 24, 2023, Tidewater Renewables published its inaugural Environmental, Social and Governance (“ESG”) report. The report highlights the Corporation’s commitment to responsible energy development, its approach to sustainability, recent accomplishments and other material items that will drive the success of Tidewater Renewables’ long-term ESG goals. The report is available on the Corporation’s website at www.tidewater-renewables.com.

“We are excited to be approaching the start-up of Canada’s first renewable diesel facility and proud that we have hit the 95% complete mark on the project with an impeccable safety record. The additional $93.2 million of debt capacity and emissions credits secured by the team in the past two months will provide the Corporation with significant cushion as we move through start-up and sets up future growth projects.” 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 March 31, 2023, which are available under the Corporation’s profile on SEDAR at www.sedar.com and on its website at www.tidewater-renewables.com.

Financial Highlights

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 credits and federal clean fuel regulation (“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 for the remainder of 2023. 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 first quarter 2023 results via conference call on Thursday, May 11, 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: Webcast URL 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.sedar.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, the nearest GAAP measure, to Adjusted EBITDA:

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 operating activities, the nearest GAAP measure, to distributable cash flow:

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

Capital Management Measures

Net Debt

Net debt is defined as bank debt, less cash. 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:

For additional information, please see the full press release.

Robert Colcleugh,
Chairman and Interim CEO
Tidewater Renewables Ltd.
Phone: 587.475.0210
Email: rcolcleugh@tidewatermidstream.com

Ray Kwan,
CFO
Tidewater Renewables Ltd.
Phone: 587.776.0042
Email: rkwan@tidewater-renewables.com