Earnings call transcript: Tidewater Midstream’s Q2 2025 results disappoint

Tidewater Midstream and Infrastructure Ltd reported a disappointing second quarter for 2025, with earnings and revenue falling short of expectations. The company posted an earnings per share (EPS) of -$0.04, slightly missing the forecast of -$0.0389. Revenue came in significantly lower than expected at $60.81 million, compared to the forecasted $370.81 million. The market reacted negatively, with the stock price dropping 4.26% to $0.225 in pre-market trading. According to InvestingPro data, the company’s market capitalization stands at $35.86 million, with the stock showing a significant -25.45% return over the past year. InvestingPro analysis identifies concerning trends, including rapid cash burn and weak gross profit margins.

Key Takeaways

• Tidewater Midstream reported a consolidated net loss of $16.3 million for Q2 2025.
• Revenue and EPS both missed forecasts, with revenue showing a large shortfall.
• Stock price fell by 4.26% following the earnings announcement.
• Tidewater Renewables showed a net income of $13 million, contrasting with Midstream’s losses.
• The company is advancing its sustainable aviation fuel (SAF) project in British Columbia.

Company Performance

Tidewater Midstream’s performance in Q2 2025 was marked by a consolidated net loss of $16.3 million, a stark contrast to the previous year’s adjusted EBITDA of $45.3 million. Tidewater Renewables, however, reported a net income of $13 million, highlighting a segment of resilience within the broader company structure. The company has been focusing on reducing debt, having repaid approximately $20 million of consolidated debt.

Financial Highlights

• Revenue: $60.81 million (significantly lower than forecast)
• EPS: -$0.04 (slightly below forecast)
• Consolidated net loss: $16.3 million
• Adjusted EBITDA for Renewables: $10.7 million (up $8 million from the previous quarter)

Earnings vs. Forecast

Tidewater Midstream’s EPS of -$0.04 was slightly below the forecast of -$0.0389, representing a 2.83% negative surprise. Revenue fell short by a substantial 83.6%, coming in at $60.81 million against the expected $370.81 million. This significant miss highlights challenges the company faces in meeting market expectations.

Market Reaction

The stock price of Tidewater Midstream dropped by 4.26% to $0.225 following the earnings release. This decline reflects investor disappointment in the company’s financial performance and its failure to meet revenue forecasts. The stock’s performance is currently closer to its 52-week low of $0.105, indicating bearish sentiment.

Outlook & Guidance

Tidewater Midstream aims to sell non-core assets worth $100 million, with approximately $38 million achieved to date. The company is also advancing its SAF project in British Columbia, with a final investment decision expected by 2026. Full-year throughput guidance remains between 2,200 and 2,400 barrels per day.

Executive Commentary

CEO Jeremy Baines expressed optimism about future growth, stating, "We believe the building blocks are in place for revenue growth and margin expansion in 2025 and beyond." He also highlighted efforts to balance the market by reducing U.S. renewable diesel imports.

Risks and Challenges

• Supply Chain Issues: Ongoing challenges in securing materials for renewable projects.
• Market Saturation: Oversupply in the diesel market could pressure margins.
• Regulatory Changes: Amendments to the Low Carbon Fuels Act could impact operations.
• Debt Levels: Despite recent repayments, debt remains a concern.
• Competitive Pressure: Increasing competition in the clean fuels sector.

Q&A

During the earnings call, analysts inquired about the company’s strategy to expand its customer base and the potential development of the Atchison site for data center purposes. The management emphasized the importance of diversifying its customer base and exploring new opportunities for growth.

Full transcript - Tidewater Midstream and Infrastructure Ltd (TWM) Q2 2025:

Chloe, Conference Call Operator: Morning, ladies and gentlemen, and welcome to the Tidewater Midstream and Infrastructure Limited and Tidewater Renewables Limited Second Quarter twenty twenty five Financial Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 08/14/2025. I would now like to turn the conference over to Michael Pratcher, Manager of Investor Relations.

Please go ahead, sir.

Michael Grasher, Manager, Investor Relations, Tidewater: Thank you, Chloe, and welcome everyone to the joint conference call for the second quarter twenty twenty five results for both Tidewater Midstream and Infrastructure and Tidewater Renewables. I’m Michael Grasher, Manager, Investor Relations. Joining me today are our CEO, Jeremy Baines, who will provide an update on operations during the quarter, and our CFO, Ian Portley, who will provide an update on our financial results. We will then open the line for Jeremy and Ian and other members of the Tidewater management team to take your questions. Before I get started, I would like to note that today’s call is being recorded for the benefit of individual shareholders, the media and other interested parties who may want to review the call at a later time.

The recorded call will be available through Cydia. This morning, both Tidewater Midstream and Tidewater Renewables reported results for the second quarter ended 06/30/2025. A copy of the news release, financial statements and MD and As will be available on SEDAR plus or the respective company websites. Before passing the call over to Jeremy, I’ll remind you that some of the comments made today may be forward looking in nature and are based on Tidewater’s current expectations, judgments and projections. Forward looking statements we may express today are subject to risks and uncertainties, which can cause actual results to differ from expectations.

Further, some of the information provided refers to non GAAP measures. To know more about these forward looking statements, non GAAP measures and risk factors, please see the company’s various financial reports, which are available on the respective company websites and on SEDAR plus I will now turn the call over to Jeremy.

Jeremy Baines, CEO, Tidewater: Thanks Michael, and thanks to everyone for joining us today. I will divide my remarks into two sections. First, I’ll provide an update on Tidewater Renewable’s commercial strategy, and then I will walk through the operational performance and project progress for both Tidewater Midstream and Tidewater Renewables. Tidewater Renewables continues to see strong momentum following the Government of British Columbia’s amendments to the Low Carbon Fuels Act, which doubled the renewable fuel requirement for diesel to 8% for the 2025 compliance period. The amendments also mandated that the renewable fuel content be produced within Canada from 04/01/2025.

These policy changes have been a catalyst for increased market activity, reinforcing our view that the demand for low carbon Canadian produced fuels is not only sustainable but accelerating. As a result of this more favorable environment, I’m pleased to report that during the second quarter Tidewater Renewables successfully contracted offtakes for over 70% of forecasted production from the HDRD facility for the 2025. Most of these contracts are for the sale of R100, which is renewable diesel with the environmental attributes included. These contracts are priced based on US import parity benchmarks, which aligns the contract pricing with prevailing US market values, positioning us competitively in the North American renewable fuel market. This commercial success is a direct outcome of our strategic focus and supports our belief that Tidewater Renewables becoming a critical and reliable supplier within the Canadian clean fuels value chain.

I will now provide an update of our operational performance for the quarter. At Tidewater Renewables HDRD complex, average throughput for the quarter was 2,164 barrels per day, or approximately 72% of design capacity. Utilization was relatively stable quarter over quarter, as we continued to ramp up following the minor fire incident that temporarily suspended operations in early April. As we shared last quarter, that event was managed safely and repairs were completed using on hand spare parts. After restarting on April 14, the utilization rates steadily improved up to 2,850 barrels per day, which is 95% of design capacity by the June.

With continued strong performance, remain on track to achieve our full year throughput guidance of 2,200 to 2,400 barrels per day, which is inclusive of our scheduled Q3 turnaround. Turning to Tidewater Midstream’s Prince George refinery, throughput averaged 9,942 barrels per day in Q2 twenty twenty five, which was consistent with 9,936 barrels per day during the 2025, but 17% lower than the 2024. The 2025 had lower throughput compared to the 2024, largely due to operational and feedstock composition adjustments that were required to process higher density feedstock entering the refinery. Over the last few months, we’ve been able to source lower density feedstocks and expect that throughput at the refinery will return to normal levels following the semi annual heat exchanger cleaning and crude heater decoking that is scheduled for October. VGR continues to be impacted by lower refined product margins driven by wider commercial wholesale discounts, which stems from an oversupply of diesel in Western Canada, largely due to U.

S. Renewable diesel imports at five year high Western Canadian refinery utilizations. As we’ve previously disclosed, our offtake agreement with Snowvis expired in November 2024, and we have successfully transitioned to marketing our refined products in house. Our team has been actively expanding our customer base and we are pleased to report steady quarter over quarter growth in sales volumes. As discussed on our first quarter conference call on 05/06/2025, we announced the planned acquisition of the North segment of Pembina’s Western Pipeline.

Integration planning is well underway and we remain on track to close the transaction in the third quarter. Once complete, this acquisition is expected to generate meaningful cost reductions and operational synergies by enhancing our ability to optimize feedstock procurement and integrating pipeline operations and maintenance within our downstream platform. At our midstream assets, Tidewater Midstream’s Brazil River Complex had throughput of 95,000,000 cubic feet per day in the 2025, relatively consistent with 94,000,000 cubic feet per day during the 2025, and 5,000,000 cubic feet per day higher than the 2024. As previously disclosed, Plant 3 of the BRC facility was temporarily shut down for maintenance and repairs resulting in lower straddle volumes coming through the facility during the second quarter. The repair work was completed and Plant 3 was restarted as expected in late June.

With Plant 3 restarted, we expect the facility to be stronger in the second half of the year. At Tidewater Midstream’s Ram River Gas Plant, gas processing remains curtailed with sulfur handling operations continuing. We are focused on cost control of the facility and remain prepared to restart operations as AECO prices improve and upstream producer activity resumes. Moving to project progress, the front end engineering design at Tidewater Renewable 6,500 barrel per day SAF project in British Columbia is now complete and we continue to progress further optimization, commercial and regulatory work. As part of this ongoing development, am pleased to report that Tidewater Renewables recently received approval to amend its initiative agreement with the Government of British Columbia.

The amendment will provide further support in the form of additional BCLCFS credits, which will partially fund the advancement of the optimization and development efforts as we advance toward a final investment decision, which is now targeted for 2026. Continue to focus on increasing liquidity at Tidewater Midstream and Tidewater Renewables, and are making good progress on non core asset sales. Following the end of the second quarter, Tidewater Midstream announced that it had successfully entered into an agreement to sell the Sylvan Lake gas plant and associated gas gathering infrastructure for total proceeds of approximately 5,500,000.0 expect the sale to close during the 2025 subject to customary closing conditions and regulatory approvals. Inclusive of this transaction, we have successfully closed or executed agreements for the sale of approximately 38,000,000 of non core assets sales during 2025. We will continue to update the market as we progress with additional asset sales.

Looking ahead, we remain focused on maximizing operational efficiency at the PGR and HDR and E complex, enhancing netbacks on conventional and renewable refined products, strengthening our commercial platforms, increasing throughput at our Tidewater Midstream facilities and controlling costs, increasing our liquidity and focusing the business by progressing our non core asset sale program, advancing our staff initiative while prudently managing capital costs, and continuing to advocate for a fair regulatory environment that supports energy security, supports existing domestic energy industry and operations, and attracts investment across Canada’s low carbon and conventional energy sectors. We believe the building blocks are in place for revenue growth and margin expansion in the 2025 and beyond. With that, I’ll now turn it to Ian for the financial review.

Ian Portley, CFO, Tidewater: Thanks Jeremy. I’ll begin with Tidewater Renewables financial results, and then we’ll discuss Tidewater Midstream’s consolidated financial results. Tidewater Renewables delivered strong financial results for the 2025. The Corporation reported net income of $13,000,000 and adjusted EBITDA of $10,700,000 which represents an $8,000,000 improvement in both metrics compared to the 2025. This quarter over quarter growth was primarily driven by the new R100 sales contracts Jeremy mentioned previously, which allowed Tidewater Renewables to sell the majority of its second quarter renewable diesel and the associated emissions credits at U.

S. Import parity benchmark prices. From a liquidity standpoint, we also took important steps to further strengthen our financial position during the quarter. We increased the available capacity under the Tidewater Renewable Senior Credit Facility by 7,000,000 driven primarily by the improved cash flows from the newly contracted offtakes and more favorable Canadian federal emission credit economics. As previously disclosed, Tidewater Renewables also extended the maturity of its senior credit facility to 02/28/2027.

This extension pushes Tidewater Renewables’ earliest debt maturity out by another year, enhancing our financial stability and providing us with greater flexibility as we execute on our strategic priorities. Turning to Tidewater Midstream, the company reported a consolidated net loss attributable to shareholders of $16,300,000 during the 2025 compared to a net loss attributable to shareholders of $4,700,000 during the 2024. Consolidated adjusted EBITDA was $16,000,000 during the 2025 compared to $45,300,000 during the 2024. The change in both net loss and adjusted EBITDA was largely due to lower refined product margins, the corporation’s downstream assets, offset in part by favorable changes in the fair value of derivative contracts and lower general and administrative costs. During the 2025, Tidewater repaid approximately $20,000,000 of consolidated debt on its senior credit facilities, resulting in $55,000,000 of combined available capacity on these facilities at 06/30/2025.

I’ll now ask the operator to open up the call for questions.

Chloe, Conference Call Operator: Thank you. Our first question comes from the line of Maurice Choi from RBC Capital Markets. Line is open.

Maurice Choi, Analyst, RBC Capital Markets: Thank you, and good morning, everyone. Just want to start with the renewables side. You noted that there has been a significant increase in commercial activity, reflecting the rising demand and improved emissions credit economics. Just looking at the LCFS prices, we are still at about $200 or so. Given encouraging commercial and demand activity that you highlighted, how do you see the credit prices over the remainder of this year and into next year?

Jeremy Baines, CEO, Tidewater: Thanks for the question, Maurice. When we look through the rest of the year, we’ve seen a number of positive developments in The US market around their RVO obligations, and as well with some of the changes in 45Z, we have seen some supply come out of the market and obviously with the changes the BC government made, people are looking to meet their LCFS and CFR obligations with Canadian produced renewable diesel, which has really been supportive in the quarter. Right now we’re seeing that forward combined stack of LCFS and CFR credits better than what I guided to last quarter when I think I’d said four fifty to 500, we’re actually seeing it right now in that 500 to five fifty range based on some strength that with the CFR credit in particular.

Maurice Choi, Analyst, RBC Capital Markets: I was gonna follow-up to that is whether or not you see the credit prices staying at those high levels into next year, Or do you feel like it might wean

Patrick Kenny, Analyst, National Bank Financial: a little bit from here?

Jeremy Baines, CEO, Tidewater: We feel actually like LCFS credits that you’re seeing the reported prices in BC are a little bit, you know soft right now, and we actually expect the LCFF side to probably improve. As we look forward into future years, with the increasing CI standards we actually see that market tightening up, so we think the markets are pretty supportive. Another kind of interesting outcome of our strategy where we’re basically backing out U. S. Imports, the pricing mechanism gives us an ability to price all of the pieces of those transactions, which is a nice feature.

So we might look at doing a little bit of revenue stabilization on some margins on that front as well as we go forward.

Maurice Choi, Analyst, RBC Capital Markets: Understood. And if I could just finish up on a question on the midstream side, specifically on PGR. You mentioned that you’ve expanded your customer base now that you’ve transitioned to marketing refined products in house. Can you unpack that comment a little bit on the customer base side and whether or not you feel like you are now a better place to have your products in Western Canada versus elsewhere?

Jeremy Baines, CEO, Tidewater: Yeah. Thanks for the question, Maurice. So recall, and I think everyone will recall, we had basically one customer last year that was taking 90 plus percent of our product being the Synovus offtake that came with the original purchase of the refinery. Over the first half of this year, and I mean we started preparing for this last year as well, we started going out to the market because we knew we were going to be selling direct and marketing all that product. We took the customer list from basically one to a significant number of diversified customers, and we’re getting better and better at adding customers and finding the various customers.

It’s a mix, sell into you know we try to focus and get as much product in Prince George as we can. We sell into downstream retail networks as larger industrial customers, we’ve had some success particularly on the mining side as their supply management programs come up and their fuel contracts come up, we’re having some success bidding into those and getting successful there. And you know we continue to look at various independent distributors, we also at times have found opportunities to do some product swaps in markets outside of Prince George that are you know attractive to us, and so we continue to build and add more and more customers and optimize price that we’re able to sell at. So we’re feeling you know like we said last quarter, we’re getting better every quarter and you can see that in this quarter. So it’s been a process obviously as we went through the first quarter you’re all aware, you know we built a bunch of inventory, we’ve been able to clear all of that out in this quarter and generate liquidity, reduce our working capital we’re carrying, and I think that’s a testament to the team, and now with our inventory levels, know, sort of operationally optimized, we’re looking, you know, we’re continuing to optimize that sales book to the customers and try to pull margins up as we move forward a bit.

Maurice Choi, Analyst, RBC Capital Markets: And when you look at the contract terms or or length of the contracts, are are they somewhat short term for now and and and kind of test out the relationship, or do you envision that this is going to get longer in term over time?

Jeremy Baines, CEO, Tidewater: Sorry, Maurice. We couldn’t hear you there. I hear

Maurice Choi, Analyst, RBC Capital Markets: The the the question was whether or not when you look at the contract terms of some of these potential customers, do they tend to be on a shorter end for now and as you test out the relationships or is it more ones that will slowly get longer over time?

Jeremy Baines, CEO, Tidewater: Yeah, we’ve talked about this before, like in the conventional refined products market the contracts typically roll between you know one to two years out and so we continue to roll those obviously certain people have entered into various contracts, particularly the industrials like the mines where maybe they’ll do a couple years or more, and so you know as those come up we we bid into them and and we continue to work. We are having some very interesting discussions on the renewables front on some longer term RD offtakes and you know we’ll make an announcement as we progress there, assuming we get something across the line there. But you know typically conventional, I would call it one to two, I think there’s maybe some potential to do a little longer with RD.

Maurice Choi, Analyst, RBC Capital Markets: Understood. Thank you very much.

Jeremy Baines, CEO, Tidewater: Thanks, Maurice.

Chloe, Conference Call Operator: Our next question comes from the line of Rob Hope from Scotiabank. Your line is open.

Rob Hope, Analyst, Scotiabank: Thanks, everyone. In the prepared remarks, you mentioned that the commercial supply discount is still relatively wide. But can you maybe speak to how that changed through Q2 as well as Q3 as well? You know it does look like a number of the factors that we’re really weighing on Q1 are starting to abate and kind of you know move in the right direction.

Jeremy Baines, CEO, Tidewater: Yeah, I mean obviously we don’t give this commercially sensitive but what we’re seeing as we go through, we moved a lot of inventory that puts a bit of pressure on the discount in Q2, but we’re starting to optimize the sales, we’re working to find those fuel buyers closer to Prince George as their contracts and supply management pieces come up, and you know we’re looking for the market to balance backing out imports with our RD sales I think is helpful on the amount of fuel in the market, looking for a home, and so all of those things combined like this is always going to be an ongoing you know we’re looking for the best netbacks, we’ve obviously seen some pretty high fuel runs in Western Canada, obviously we’re hoping for some economic growth and some demand that come with some of the big projects the country’s talking about, and some development of new mines in British Columbia. So it’s an ongoing battle and we continue to optimize it, we’re obviously getting better we went from basically you know one off taker to we’ve got to be selling to many customers and finding the best customers, the best logistical cost from our refinery, and we have to fight for those customers a bit too.

So you know, it’s an ongoing battle, but quarter over quarter I think we’ve done better.

Rob Hope, Analyst, Scotiabank: I appreciate that and then the MD and A also continue to reference an oversight over supplied diesel market. Can you speak to how that’s improving as well? We’re seeing less U. S. Imports maintenance on some of the other facilities out there as well and some lower runs.

You know, how close are we to a more normalized environment?

Jeremy Baines, CEO, Tidewater: I mean, we’re hopeful we’ve turned the corner from the worst of the supply over supply in the market, but you know there’s still you know we need some economic activity to take up that diesel, but you’re right all of those things you referenced, there has been a reduced supply of RD in The US, our ability to back them out with the changes made by the BC government, all of these things are making small impacts and progress.

Michael Grasher, Manager, Investor Relations, Tidewater: All right, thank you.

Chloe, Conference Call Operator: Our next question is from Patrick Kenny from National Bank Financial. Your line is open.

Patrick Kenny, Analyst, National Bank Financial: Thank you. Good morning, guys. Just maybe on the asset sale program, it sounds like there’s some interest in the Atchison site. Can you just remind us if this site is being sought after by potential data center customers or other energy infrastructure or producer customers, perhaps all of the above? Just curious the dynamics around the site at this point.

Jeremy Baines, CEO, Tidewater: Yeah, thanks for the question Patrick. It’s an interesting site. We are in discussions with multiple parties. Would say most of those parties are interested in it from a data center site, as you know everybody knows Alberta’s bring your own power. There’s the potential for us to, we’ve got gas at the site right now, we’ve got water at the site, we’ve got, it’s got very dense and overlapping fiber networks at the site, it’s industrial zoned, and people can move quickly to put data centers in there.

We have also done some expressions of interest on ways to bring a significantly increased amount of gas to the site with some of the things that are happening, Yellowhead mainline in particular around there, and we could see us reposition some idled extraction equipment to the site and do additional extraction there. That’s one stream, and we’ve got multiple parties that were in advanced commercial discussions around that use of the site, there’s also been some reach out of some other industrial potential buyers, but I would say the lead horse we’re focusing on is on block sale of the land data center with us having a gas supply agreement and expanded extraction straddling at the site.

Patrick Kenny, Analyst, National Bank Financial: Okay, got it. And I guess now that we’re more than halfway through the year, you’ve executed on a few transactions, but maybe you can just update us on what your target level of asset sale proceeds might be for the remainder of the year just to ensure a healthy liquidity position exiting the year?

Jeremy Baines, CEO, Tidewater: Yeah, there’s a couple of big ones obviously that we’re focusing on. You’ve mentioned one of them, there’s a couple other pieces of equipment that are fairly large that we’re working on, and then a bunch of smaller ones. So we’re still trying to get to our target of 100, we’re almost 40% done on that. It’s a bit of a stretch, but I think we’ve got the team and the assets that can get that done, so we hope to be able to announce some stuff fairly soon in the back half of the year here.

Patrick Kenny, Analyst, National Bank Financial: Okay, and then I guess last one for me, just on the back of I guess combining the conference calls today, might be a good time to for an update on potentially looking at I know you looked at it in the past, collapsing the structures and maybe to help simplify the story and and improve the cost of capital for both entities going forward.

Jeremy Baines, CEO, Tidewater: I’m not sure we’ve mentioned that in the past. It’s really something we can’t comment on. And you know, are focused on two business lines, fuels transitioning to renewable, clean fuels and midstream, and you know, we’re always looking to optimize it. We’ll continue to do that.

Patrick Kenny, Analyst, National Bank Financial: Okay, great. That’s it for me. Thanks guys.

Jeremy Baines, CEO, Tidewater: Thanks, Patrick.

Chloe, Conference Call Operator: There are no further questions at this time. I would now like to turn the conference back to Mr. Grascher. Please go ahead.

Michael Grasher, Manager, Investor Relations, Tidewater: Thanks, everyone, for joining the call. The team is available to address any outstanding items with our contact information at the bottom of each company’s press release.

Chloe, Conference Call Operator: This concludes today’s conference call. Thank you for participating. You may now

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