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Tidewater Renewables Ltd (LCFS) reported a significant earnings beat for Q1 2025, with earnings per share (EPS) at 0.14, surpassing the forecast of -0.0652. Revenue also exceeded expectations, reaching $57.67 million against a forecast of $29.81 million. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, despite its market capitalization of $69.31 million. The stock saw a slight decline of 1.89%, closing at $2.65, continuing a trend that has seen the stock drop 14.52% in the past week. This volatility is characteristic of the company, as noted in InvestingPro’s comprehensive analysis, which includes 10 key investment tips available to subscribers.
Key Takeaways
- Tidewater Renewables surpassed both EPS and revenue forecasts for Q1 2025.
- The company reported a net income increase to $5.2 million, with a decrease in adjusted EBITDA.
- Regulatory changes in British Columbia support increased renewable fuel demand.
- Operational challenges included a minor fire and lower utilization rates.
- Stock price declined by 1.89% despite strong earnings performance.
Company Performance
Tidewater Renewables demonstrated strong financial performance in Q1 2025, with a notable increase in net income to $5.2 million, up by $8.6 million from Q4 2024. The company’s financial health receives a "FAIR" rating from InvestingPro, with particularly strong scores in relative value (4.05/5) and growth potential (3.37/5). While adjusted EBITDA decreased to $2.4 million from $6 million in the previous quarter, affected by lower margins from renewable diesel emissions credits and operational disruptions, the company maintains a solid EV/EBITDA ratio of 3.17x.
Financial Highlights
- Revenue: $57.67 million, up from the forecast of $29.81 million.
- Earnings per share: 0.14, exceeding the forecast of -0.0652.
- Net income: $5.2 million, a significant increase from Q4 2024.
Earnings vs. Forecast
Tidewater Renewables significantly outperformed expectations, with an EPS surprise of 0.2052 and a revenue surprise of $27.86 million. This marks a strong recovery from previous quarters and reflects positively on the company’s market position.
Market Reaction
Despite the earnings beat, Tidewater Renewables’ stock price fell by 1.89% to $2.65. This decline may be attributed to broader market conditions or specific concerns about operational challenges and future profitability.
Outlook & Guidance
The company remains confident in the positive trends within the renewable diesel market. With supportive regulatory changes and anticipated improvements in operational efficiency, Tidewater Renewables expects healthier margins in the remaining quarters of 2025.
Executive Commentary
CEO Jeremy Vance expressed confidence in the company’s future, stating, "We expect to be profitable and the remaining quarters of this year to be healthy." He highlighted the supportive regulatory environment and the company’s strategic positioning as key drivers of future growth.
Risks and Challenges
- Operational disruptions, such as the recent fire, could impact future performance.
- Lower adjusted EBITDA indicates potential profitability challenges.
- The stock’s proximity to its 52-week low suggests cautious investor sentiment.
Q&A
During the earnings call, analysts inquired about the impact of regulatory changes and the company’s competitive position. Tidewater Renewables emphasized the benefits of increased renewable fuel requirements and its unique position as a Canadian producer, while also addressing concerns about operational efficiency and market dynamics.
Full transcript - Tidewater Renewables Ltd (LCFS) Q1 2025:
Conference Operator: Good morning and afternoon, ladies and gentlemen, and welcome to the Tidewater Renewables twenty twenty five Q1 Financial Results Conference Call. At this time, all lines are in listen only mode. And following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Thursday, 05/08/2025.
I would now like to turn the conference call over to our CFO of Tidewater, Mr. Ian Cortley. Please go ahead.
Ian Cortley, CFO, Tidewater Renewables: Thank you, operator, and welcome, everyone, to Tidewater Renewables first quarter twenty twenty five results conference call. On the call with me today is our Chairman and CEO, Jeremy Vance, who will provide an update on operations and regulatory updates during the quarter. I will follow with our financial results, and then we’ll open the line for your questions. Before we get started, I’d 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 Cision.
This morning we reported results for the first quarter ended 03/31/2025. A copy of our news release, financial statements and MD and A may be accessed on CDAP plus or on our website. 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 express today are subject to risks and uncertainties, which may 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 our website and on SEDAR. I’ll now turn the call over to Jared.
Jeremy Vance, Chairman and CEO, Tidewater Renewables: Thank you, Ian, and thanks to everyone for joining our Q1 results conference call today. While the quarter was disappointing from a financial results point of view, our outlook is improving significantly, in spite of what is hopefully only a delay on our trade case. Regulatory changes in British Columbia and improvements in U. S. Import parity prices for renewable diesel coming into British Columbia are both supportive of our profitability go forward.
First let me start by providing an update on our ongoing trade action. On 05/05/2025, the Canadian International Trade Tribunal issued a decision to terminate its preliminary injury inquiry regarding Tidewater Renewables countervailing anti subsidy and anti dumping duty complaint concerning imports of renewable diesel from The United States. While we are disappointed with the tribunal’s decision, we want to be clear that Tidewater Renewables remains steadfast in its commitment to ensuring fair competition in Canada’s renewable diesel market. Our position remains unchanged. The evidence strongly supports the fact that unfair trade practices by The United States have led to a flood of subsidized dumped renewable diesel into Canada.
This influx has caused significant harm to Tidewater, who is currently the sole Canadian producer of renewable diesel. It is important to note that the CBSA initiated the investigation after confirming the validity of our concerns, recognizing that U. S. Subsidies and dumping practices have distorted the Canadian market. With the support of our external trade law council, we will thoroughly review the decision upon receiving the tribunal’s reasoning on 05/23/2025.
Based on that review, we will aggressively pursue all available legal remedies, including the possibility of filing an amended or new complaint with the CBSA. In spite of this hopefully temporary setback in our trade case, we are optimistic about the future of the Canadian renewable diesel market. On 02/27/2025, the Government of British Columbia announced changes to the Low Carbon Fuels Act, which increased the renewable fuel requirement for diesel from 4% to 8% for the 2025 compliance period, and effective 04/01/2025 mandates that renewable fuel content be produced in Canada. Since the announcement, there has been a significant increase in demand from customers who want to buy our Canadian renewable diesel in replacement of their volumes imported from The US. We’ve been having good success in selling our renewable diesel with the related emissions and Canadian content credits attached at reasonably profitable levels.
Additionally, US D4 written values have increased over 70% during 2025, and California LCFS values have remained strong, which increases the import parity price of the competing US renewable diesel that is imported into Canada. This ultimately sets the value of our Canadian emissions credits and these favorable market dynamics are leading to improved Tidewater Renewables margins throughout the remainder of 2025 and beyond. We are confident that these factors will drive significant value for our stakeholders and position us as a leader in Canada’s renewable diesel industry. Now turning to our operational performance at the HDRD Complex for Q1 twenty twenty five. For the three months ended 03/31/2025, the HDRD Complex had average throughput of 2,239 barrels per day or 75% of design capacity.
Utilization was lower during the first quarter as we managed inventory as there was an excess supply of diesel in Western Canadian markets, and somewhat muted demand and inclement weather which affected feedstock coming into the plant via rail. On April 1, there was a minor fire in the Bean Renewable Diesel process unit at the HDRD complex. The fire was swiftly extinguished by our operations team utilizing firefighting equipment at site. There were no injuries reported. The damage was minimal and could be repaired with spare parts on hand.
Operations resumed on April 14 and the HDRD complex has been operating as expected since the outage. Looking ahead, we estimate our maintenance capital expenditure for 2025 will be $8,000,000 between 8,000,000 and 10,000,000 A significant portion of this is allocated to the planned turnaround at HDRD Complex during the third quarter. The turnaround is expected to last approximately three weeks. We will continue to sell renewable diesel from inventory during the turnaround. The HDRD Complex is expected to have a regular two and four year turnaround cycle.
The year two turnaround is focused on the hydro deoxygenation catalyst replacement. The four year turnaround will be a more comprehensive including hydro deoxygenation and dewax catalyst replacements, vessel inspections and targeted equipment upgrades. As we progress through 2025, we are confident in the positive trends that are shaping the renewable diesel market. Regulatory changes, including the BC government’s commitment to increasing the renewable fuel mandate and requiring Canadian production, are expected to continue driving demand for domestic renewable diesel. Our continued focus on operational efficiency coupled with strategic investments in maintenance will support our ongoing efforts to maximize throughput and profitability in the year ahead.
I’ll now turn the call over to Ian who will provide a more detailed review of our financial results for Q1 twenty twenty five. Thanks Jeremy.
Ian Cortley, CFO, Tidewater Renewables: During the first quarter of twenty twenty five, Tidewater Renewables reported net income of $5,200,000 an increase of $8,600,000 from the fourth quarter of twenty twenty four. This higher net income was primarily due to unrealized gains on derivative contracts and a higher income contribution from the equity investment. Adjusted EBITDA of $2,400,000 for the first quarter of twenty twenty five was a slight decrease from the 6,000,000 adjusted EBITDA generated in the fourth quarter of twenty twenty four. The decrease in EBITDA is due to lower margins from the sale of renewable diesel emissions credits, as the majority of sales were contracted before the government of British Columbia announced the changes to the Low Carbon Fuels Act late February. Subsequent to the quarter, on 05/07/2025, we successfully extended the maturity date of the senior credit facility by one year to 02/28/2027.
In combination with the amendments made to the first and second lien credit facilities at the March, the refinancing significantly enhanced Tidewater Renewables’ flexibility, provide the additional capacity necessary to support the company’s ongoing financial stability, and extend the earliest debt maturity out to February 2027. Now I’ll ask the operator to open the call for questions.
Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. One moment, please, for your first question. And your first question comes from Robert from CIBC Capital Markets.
Please go ahead.
Robert, Analyst, CIBC Capital Markets: Hey, everyone. I wondered if you could first start by providing us with a more specific indication of what you’re seeing in the April LCFS credit market following the onset of the market reforms.
Jeremy Vance, Chairman and CEO, Tidewater Renewables: Yeah, it’s a little bit of a competitive piece of disclosure, but we’re seeing a full credit stack now that is in the, you know, when on an import parity based value, four fifty plus sort of at today’s market.
Robert, Analyst, CIBC Capital Markets: Okay. And then what do you understand of the reasoning behind the trade tribunal’s decision to terminate the inquiry? And did it consider The US bill that seemed at retroactively extending the biodiesel tax credits?
Jeremy Vance, Chairman and CEO, Tidewater Renewables: We’re not quite sure to be honest Rob, like it’s an awkward spot. We went through the, you know, the CBSA took up her case. Our understanding is it’s extremely rare when the CITT rejects that case as it happened. And we’re waiting for the reasoning. Sometimes it’s just a procedural thing and when this happens you refile and advance the claim.
But we don’t have any real insight to it because they don’t release that their actual reasoning and decision until what’s the date there? Twenty third or whatever it is, so we’re still two weeks out from kind of knowing what the reasoning is, but we actually are preparing to refile just so we don’t lose time here. So we’ll see what happens there.
Robert, Analyst, CIBC Capital Markets: Yeah, it’s understandable. Last question for me is how do you see support from the BC government changing following the tribunal determination? And has it done enough to ensure credit prices return to a level that can support the industry?
Jeremy Vance, Chairman and CEO, Tidewater Renewables: Yeah, so you know what the BC government has said publicly is that they’re monitoring the market, they will look at taking this up, the Canadian content as appropriate, and I think the reality is we think they’re supportive of renewable diesel production and the renewable diesel industry. They want to see the Canadian producers be successful and have a fair playing field to compete on, which it isn’t today. And we expect they likely will take that Canadian mandate up, there’s no guarantee of that, but we expect that. And ultimately in the long run, we see the Canadian market being balanced when you look at the amount of diesel that’s consumed in British Columbia, and the you know with the tightening CI requirements go forward. We think the you know what we expect the Canadian RD production to be at by the end of this year.
The BC market is balanced and we will back out the you know we’ll compete well with those imports and the market will be balanced and productive for Canadian produced renewable diesel.
Ian Cortley, CFO, Tidewater Renewables: Okay, thank you.
Conference Operator: Thank you. And just as a reminder, if you do have a question, please press 1. Your next question comes from Morris from RBC Capital Markets. Please go ahead.
Morris, Analyst, RBC Capital Markets: Thank you, and good morning, everyone. Just wanna come back to more of a big picture question here. So I think you mentioned that because of the BC government and because of, I guess, increased demand, some of the prices have actually recovered and to some extent the profit has returned. So when I think about this termination of the inquiry by the tribunal, if I one simple, do we actually need it? And and I’m sure it’d be nice to have it, but then in terms of the longevity of your business case, is this still necessary or can investors move on?
Jeremy Vance, Chairman and CEO, Tidewater Renewables: Well, we’re not ready to move on because we’ve been irreparably harmed. It’s been a challenge based on the unfair trade, but to your point, there is clearly, you know without it, with the support of the BC government, if they continue to do what they’ve said they’re going to do around the BC LCFS regulations, We do think that we’ve got a long and competitive profitable pathway, even if we’re not successful there. We still, you know we haven’t seen the ruling, so it’s hard for us to say, but we still will pursue a fair and level playing field, and that is an avenue that is there that we need to continue to pursue. But to your point, with the improvements in the import parity pricing, with the improvements in the BC government regulations, we expect to be profitable and you know the remaining quarters of this year to be you know healthy.
Morris, Analyst, RBC Capital Markets: That’s really good to hear. Just finishing up and sticking with the policy side of things. So when you think about the coming quarters, supposed it takes a few months for the federal government to be put in place and have mandate letters put out, Can you just broadly discuss what policy it maintained is good and perhaps what policy changes it proposed would be good for you and you’re watching out for?
Jeremy Vance, Chairman and CEO, Tidewater Renewables: Yeah, think there’s, you know, the federal front, know, anything that tightens the CI around the federal credits is supportive of our business, cause we generate a significant amount of those credits as well. You know depending what the ruling is from the trade outcome, I do think that you know sort of an equal and offsetting federal, know similar type tax credit that you know to mimic The US One to make for fair trade would be a good policy outcome from the RD side, and you know things around SAF could be supportive of our SAF project as well.
Morris, Analyst, RBC Capital Markets: Perfect, thank you very much.
Conference Operator: Thank you. And there are no further questions at this time. I will now turn the call back over to our CEO of Tidewater, Mr. Jeremy Baines. Please continue.
Jeremy Vance, Chairman and CEO, Tidewater Renewables: Thanks everyone for joining us on the call today. Please do not hesitate to reach out to me or the team if you have any questions. Thank you.
Conference Operator: -Ladies and gentlemen, this concludes your call for today. We thank you for your participation and ask that you do please disconnect. Have a great day.
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