Tidewater Midstream And Infrastructure ((TSE:TWM)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Tidewater Midstream and Infrastructure’s recent earnings call painted a picture of a challenging quarter marked by significant financial losses and operational hurdles. Despite these difficulties, the company highlighted positive strides, including strategic acquisitions and improved margins in the renewable diesel segment. The management remains committed to enhancing liquidity and optimizing cost structures to navigate through these turbulent times.
Acquisition of Western Pipeline
Tidewater announced a strategic move to acquire the North segment of Pembina’s Western Pipeline. This acquisition is anticipated to provide a more reliable and cost-effective feedstock supply for the Prince George Refinery, which could be a pivotal step in improving the company’s operational efficiency and reducing costs.
Increased Margins for Renewable Diesel
The company reported an improvement in margins for renewable diesel, driven by Canadian renewable blend requirements, BC LCFS regulations, and increased prices for California LCFS and D4 RIN. These regulatory and market conditions have positively impacted Tidewater’s renewable diesel segment, providing a silver lining amid broader financial challenges.
Non-Core Asset Sales and Debt Repayment
Tidewater completed the sale of the BRC Roadway network for $24 million, allocating $22.5 million of the proceeds towards debt repayment. This move is part of a broader strategy to divest non-core assets, thereby enhancing liquidity and reducing financial leverage.
Consolidated Net Loss
The company reported a consolidated net loss of $31.8 million attributable to shareholders, a significant increase from the $11.3 million net loss recorded in the same period of the previous year. This underscores the financial challenges Tidewater is currently facing.
Negative EBITDA
Tidewater’s consolidated adjusted EBITDA was negative $3.7 million, a stark contrast to the $39.8 million positive EBITDA in the same quarter of the previous year. This decline is primarily attributed to lower refined product sales and margins.
Lower Throughput and Margins
The Prince George Refinery experienced a 9% decrease in throughput compared to Q4 2024 and a 20% drop from Q1 2024. This was accompanied by lower refined product sales and margins, further compounding the company’s financial difficulties.
Challenges in Renewable Diesel Market
Tidewater faced a setback with the Canadian International Trade Tribunal’s decision against its complaint regarding subsidized imports from the United States. This decision poses additional challenges for the company’s renewable diesel market strategy.
Forward-Looking Guidance
Looking ahead, Tidewater outlined several strategic initiatives to address its current challenges. The company plans to leverage the acquisition of the Western Pipeline to reduce feedstock costs and enhance operational efficiency. Despite the setback with the Canadian International Trade Tribunal, Tidewater remains focused on improving its cost structure and utilization. The company is also advancing its non-core asset sales program to boost liquidity and reduce leverage.
In conclusion, Tidewater Midstream and Infrastructure’s earnings call highlighted a quarter fraught with financial and operational challenges. However, the company’s strategic acquisitions and focus on improving margins in the renewable diesel segment offer a glimmer of hope. As Tidewater navigates these turbulent waters, its commitment to enhancing liquidity and optimizing cost structures will be crucial in steering towards a more stable financial future.