Tidewater Renewables Ltd. (“Tidewater Renewables” or the “Corporation”) (TSX: LCFS) is pleased to announce that it has filed its annual consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2022.

FOURTH QUARTER 2022 HIGHLIGHTS

• Tidewater Renewables completed its first full year of operations with net income attributable to shareholders of $25.9 million, Adjusted EBITDA(1) of $62.4 million and distributable cash flow(1) of $38.1 million. The Corporation exited 2022 with strong fourth quarter results, including net income attributable to shareholders or $14.1 million, compared to $0.1 million in the fourth quarter of 2021. Adjusted EBITDA(1) also increased to $16.7 million in the fourth quarter of 2022, compared to $10.6 million in the fourth quarter of 2021, representing a 57% increase. Net cash provided by operating activities was $29.1 million for the fourth quarter of 2022, with distributable cash flow(1) of $9.4 million.
• On December 16, 2022, the Corporation executed a renewable diesel offtake agreement with an investment grade partner to sell approximately 50% of the HDRD Complex’s production through to the end of 2024.
• The Corporation anticipates that the HDRD Complex will scale up production gradually 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 October 17, 2022, the Corporation announced that it entered a 20-year RNG offtake agreement with FortisBC Energy Inc. (“FortisBC”), whereby FortisBC expects to purchase up to 100% of the Corporation’s production from its announced RNG Facility in Foothills County, Alberta (the “RNG Facility”). Tidewater Renewables continues to advance the facility’s engineering design and regulatory applications.
• On October 24, 2022, the Corporation announced the closing of a $150 million five-year senior secured second lien credit facility (the “AIMCo Facility”) with an affiliate of Alberta Investment Management Corporation (“AIMCo”). The AIMCo Facility initially bears interest of 6.50% per annum, increases by 37.5 basis points in year four & year five and is subject to certain inflation escalators. In conjunction with the AIMCo Facility, Tidewater Renewables issued 3.375 million warrants to AIMCo. Each warrant entitles the holder to purchase one common share of Tidewater Renewables at a price of $14.84, subject to certain adjustments, for a term of five years.

HDRD COMPLEX UPDATE

• Tidewater Renewables has safely completed an active year of construction on its HDRD Complex. Completion is expected by mid-April 2023, with commissioning beginning at the end of the first quarter and commencement of operations in the second quarter of 2023.

The HDRD Complex has endured material cost pressures, including a challenging labour market, supply chain issues, specialty metal shortages, select contractor underperformance and general cost inflation. The current estimated gross project cost, including commissioning, is approximately $342 million (vs. the previous estimate of $260 million). Gross project costs are expected to be offset by an estimated $125 million of BC LCFS credits issued by the Government of British Columbia, under a Part 3 agreement, for achieving certain construction milestones.

Tidewater Renewables expects to fund the remaining project costs through the sale of BC LCFS credits and with the support of its current capital providers, among other sources. During the first half of 2023, the Corporation expects to receive proceeds of approximately $53 million for the sale of BC LCFS credits, under executed agreements. Despite the cost pressures, the project’s economics remain attractive, and payback is expected in less than three years of operations.

• As the HDRD Complex ramps-up in the second half of 2023, it is expected to operate at between 75 – 80% of its design capacity and contribute approximately $35 – 45 million of Adjusted EBITDA ($70 – 90 million annualized). When the HDRD Complex is operating at its design capacity, it is expected to generate annualized run rate EBITDA of between $90 – 115 million.

(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.

For additional information, please see the full press release.

Selected financial and operating information are outlined in the full press release and should be read with the Corporation's consolidated financial statements and related MD&A for the year ended December 31, 2022, which are available under the Corporation's profile on SEDAR at www.sedar.com and on its website at www.tidewater-renewables.com.