CALGARY, Nov. 13, 2019 /CNW/ - Tidewater Midstream and
Infrastructure Ltd. ("Tidewater" or the
"Corporation") (TSX: TWM) is pleased to announce that it has
filed its condensed interim consolidated financial statements and
Management's Discussion and Analysis
("MD&A") for the three and nine-month
period ended September 30, 2019.
THIRD-QUARTER 2019 FINANCIAL PERFORMANCE
Recent Highlights
- Tidewater generated strong Adjusted EBITDA in the third quarter
of 2019 of $25.5 million or
$0.08 per share, compared to
$17.3 million or $0.05 per share in the third quarter of
2018.
- Net income attributable to shareholders increased to
$11.0 million or $0.03 per share for the third quarter of 2019,
compared to a net loss attributable to shareholders of $1.0 million or $0.00 per share for the third quarter of
2018.
- Net cash used in operating activities totaled $2.4 million for the third quarter of 2019, with
distributable cash flow of $12.1
million and a payout ratio of 28% for the quarter and 25%
for the nine months ended September 30,
2019.
- Tidewater successfully commissioned the 100 MMcf/day sour
deep-cut gas processing complex (the "Pipestone Gas Plant") on time
and on budget, and began processing customer gas in September 2019. The Pipestone Gas Plant is
currently processing over 60 MMcf/day of natural gas and throughput
continues to increase. Full capacity has been impacted due to
construction delays on downstream third-party infrastructure.
- Throughput on the Pioneer Pipeline continued to increase
through the third quarter of 2019, with volumes reaching
approximately 130 MMcf/day in the first week of November 2019 under the 15-year take-or-pay
commitment with TransAlta. Tidewater and TransAlta continue to work
together on additional volume commitments on the pipeline.
- With the commissioning of the Pipestone Gas Plant, the
Pipestone Gas Storage Facility saw its first injections from the
gas plant in the quarter, as well as its first flows to
Chicago through the recently
commissioned Saskatoon Mountain meter station via Alliance
Pipeline. The Pipestone Gas Storage Facility continues to exceed
expectations and is poised for an active withdrawal season into a
recently strengthened winter AECO market.
- On August 8, 2019, Tidewater
closed the previously announced $75
million bought-deal financing (the "Convertible Debenture
Financing") of five-year convertible unsecured subordinated
debentures (the "Debentures") with a syndicate of underwriters. The
Debentures have a coupon of 5.5 percent per annum.
- On November 1, 2019, Tidewater
closed the previously announced acquisition of the Prince George
Refinery for cash consideration of $215
million and approximately $53
million related to the acquisition of crude inventory at the
Prince George Refinery and approximately $9
million in taxes and closing costs. The Prince George
Refinery continues to demonstrate attractive operating
economics.
- In conjunction with the closing of the Prince George Refinery
acquisition, Tidewater closed an increase to its existing Credit
Facility from $350 million to
$600 million as well as a
$100 million second lien term loan
maturing October 31, 2022.
- With the commissioning of the Pioneer Pipeline and Pipestone
Gas Plant, expansion of the Pipestone Gas Storage facility, and the
acquisition of the Prince George Refinery, Tidewater has
transformed its customer and contract base through the addition of
over ten new take-or-pay contracts ranging in term from five to
fifteen years and including over five new investment-grade
counterparties.
- With the substantial completion of the Corporation's 2019
capital program and forecasted increase in cash flows, Tidewater is
committed to reducing overall leverage through 2020 back to its
historical levels with a target of 3.0x to 3.5x Net Debt to
Adjusted EBITDA by the end of 2020.
Selected financial and operating information is outlined below
and should be read with Tidewater's consolidated financial
statements and related MD&A as at and for the three and
nine-month period ended September 30,
2019 which are available at www.sedar.com and on our website
at www.tidewatermidstream.com.
Financial Overview
Consolidated Financial Highlights
|
|
|
|
|
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(in thousands of
Canadian dollars except per share
information)
|
2019
|
2018
|
2019
|
2018
|
Revenue
|
$
|
147,045
|
$
|
80,102
|
$
|
426,021
|
$
|
233,550
|
Net income (loss)
attributable to
shareholders
|
$
|
11,045
|
$
|
(988)
|
$
|
(176)
|
$
|
7,033
|
Basic and diluted net
income (loss)
attributable to shareholders per share
|
$
|
0.03
|
$
|
(0.00)
|
$
|
(0.00)
|
$
|
0.02
|
Adjusted EBITDA
(1)
|
$
|
25,496
|
$
|
17,283
|
$
|
69,686
|
$
|
56,499
|
Adjusted EBITDA per
common share -
basic (1)
|
$
|
0.08
|
$
|
0.05
|
$
|
0.21
|
$
|
0.17
|
Net cash provided by
(used in) operating
activities
|
$
|
(2,404)
|
$
|
7,251
|
$
|
23,301
|
$
|
(1,017)
|
Distributable cash
flow (2)
|
$
|
12,141
|
$
|
12,715
|
$
|
39,329
|
$
|
39,887
|
Distributable cash
flow per common share
– basic (2)
|
$
|
0.04
|
$
|
0.04
|
$
|
0.12
|
$
|
0.12
|
Dividends
declared
|
$
|
3,349
|
$
|
3,293
|
$
|
9,969
|
$
|
9,876
|
Dividends declared
per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.03
|
$
|
0.03
|
Total common shares
outstanding (000s)
|
|
334,866
|
|
329,313
|
|
334,866
|
|
329,313
|
Payout
ratio (3)
|
|
28%
|
|
26%
|
|
25%
|
|
25%
|
Total
assets
|
$
|
1,585,551
|
$
|
1,093,936
|
$
|
1,585,551
|
$
|
1,093,936
|
Net
debt (4)
|
$
|
526,174
|
$
|
288,464
|
$
|
526,174
|
$
|
288,464
|
|
Notes:
|
|
|
1
|
Adjusted EBITDA is
calculated as net income before interest, taxes, depreciation,
share-based compensation, unrealized gains/losses, non-cash
items, transaction costs and items that are considered
non-recurring in nature. Adjusted EBITDA per common share is
calculated as Adjusted
EBITDA divided by the weighted average number of common shares
outstanding for the three and nine-month period ended September
30,
2019. Adjusted EBITDA and Adjusted EBITDA per common share are not
standard measures under GAAP. See "Non-GAAP Measures" in
the Corporation's MD&A for a reconciliation of Adjusted EBITDA
and Adjusted EBITDA per common share to their most closely
related
GAAP measures.
|
2
|
Distributable cash
flow is calculated as net cash used in operating activities before
changes in non-cash working capital and after any
expenditures that use cash from operations. Distributable cash flow
per common share is calculated as distributable cash flow over the
weighted
average number of common shares outstanding for the three and
nine-month period ended September 30, 2019. Distributable cash flow
and
distributable cash flow per common share are not standard measures
under GAAP. See "Non-GAAP Measures" in the Corporation's
MD&A
for a reconciliation of distributable cash flow and distributable
cash flow per common share to their most closely related GAAP
measures.
|
3
|
Payout Ratio is
calculated by expressing dividends declared to shareholders for the
period as a percentage of distributable cash flow attributable
to shareholders. This measure, in combination with other measures,
is used by the investment community to assess the sustainability of
the
current dividends. Payout Ratio is not a standard measure under
GAAP. See "Non-GAAP Financial Measures" in the Corporation's
MD&A
for a reconciliation of Payout Ratio to its most closely related
GAAP measure.
|
4
|
Net debt is defined
as bank debt, convertible debentures and notes payable, less cash.
Net Debt is not a standard measure under GAAP. See
"Non-GAAP Measures" in the Corporation's MD&A for a
reconciliation of Net Debt to its most closely related GAAP
measure.
|
OUTLOOK AND CORPORATE UPDATE
Tidewater has significantly transformed its business over the
past 24 months with the successful sanctioning, completion and
commissioning of the Pipestone Gas Plant, Pipestone Gas Storage
Facility and Pioneer Pipeline, and the acquisition of the Prince
George Refinery. Tidewater continues to build an integrated and
connected midstream infrastructure network from the well head to
the end consumer in order to increase value for its customers and
itself. Over the past two years, Tidewater has added over ten new
take-or-pay contracts ranging in term from five to fifteen years
and including over five new investment-grade counterparties which
now account for a significant portion of the Corporation's cash
flows. Tidewater continues to work to offer premium service to its
customers through multiple egress options at its facilities
(including its Alliance, TC Energy and Storage connections at
Pipestone, and its Pioneer, TC
Energy and Storage connections at Brazeau) and exposure to premium
markets through access to its rail infrastructure and refined
product markets.
The completion of the Pipestone Gas Plant, Pipestone Gas Storage
Facility, Pioneer Pipeline and the acquisition of the Prince George
Refinery have further strengthened Tidewater's asset mix. With its
diverse asset mix, Tidewater is able to generate cash flow in
varying commodity price environments and provide its customers
opportunities to capitalize on high and low commodity prices.
Over the next 12 to 24 months, Tidewater will be focused on
deleveraging and utilizing its anticipated significant increase in
cash flows to reduce the Corporation's leverage ratios back to
historic levels with a target of 3.0x to 3.5x Net Debt to Adjusted
EBITDA by the end of 2020.
Natural Gas Storage
Tidewater operates three natural gas storage reservoirs at two
different facilities; Dimsdale Paddy A (Pipestone Gas Storage
Facility), Brazeau Nisku F, and Brazeau Nisku A (Brazeau River Gas
Storage Facility).
The third quarter of 2019 saw heightened AECO natural gas price
volatility which incented high injection volumes, coupled with
withdrawal opportunities, to yield strong quarterly
performance.
During the third quarter of 2019, Tidewater completed the
facility expansion at the Pipestone Gas Storage Facility, which
included the addition of compression and one new well. The
Pipestone Gas Storage Facility saw its first injections from the
Pipestone Gas Plant in the quarter, as well as its first flows to
Chicago through the recently
commissioned Saskatoon Mountain meter station via Alliance
Pipeline.
The Pipestone Gas Storage Facility is fully contracted with
take-or-pay contracts spanning as long as eight-years with multiple
investment-grade counterparties. The facility is a significant step
forward in Tidewater's fee-for-service gas storage business and
offers producers at the Pipestone Gas Plant significant optionality
where the plant has three egress solutions including connections to
the TC Energy and Alliance systems, and gas storage.
At Brazeau, both Nisku A and Nisku F facilities have enjoyed
connectivity to the newly in-service Pioneer Pipeline, allowing
TransAlta to withdraw gas from storage during higher priced periods
in October, and are scheduled to continue throughout the upcoming
winter.
The Pipestone Gas Storage Facility continues to exceed
expectations with all three storage facilities benefiting from
volatility in AECO prices. Tidewater gas storage facilities are
poised for an active withdrawal season into a recently strengthened
winter AECO market.
Pipestone Gas Plant
The Pipestone Gas Plant is designed to process approximately 100
MMcf/day of natural gas. The project includes an acid gas injection
well, saltwater disposal well, and pipelines directly connected to
the Pipestone Gas Storage Facility, as well as connections to both
Alliance and TC Energy pipelines.
Tidewater began processing raw natural gas and natural gas
liquids in mid-September 2019. All process units are online
and continue to be optimized with reliability and uptime being the
key deliverables through the fourth quarter of 2019. The
Pipestone Gas Plant is currently processing over 60 MMcf/day of
natural gas and throughput continues to increase. Full capacity has
been impacted due to construction delays on downstream third-party
infrastructure. In addition to the gas plant and gas gathering
systems, both TC Energy and Alliance connections are commissioned
and are accepting gas flows from both the Pipestone Gas Plant and
the Pipestone Gas Storage Facility. Hydrocarbon liquid handling is
currently being managed through trucking operations. Egress
pipelines for both condensate and NGLs are expected to come online
in January 2020, allowing the
facility to increase raw volumes and optimize liquid
recoveries.
Pioneer Pipeline
The Pioneer Pipeline is a 120km natural gas pipeline connecting
Tidewater's BRC to TransAlta's generating units at Keephills, and an 11km lateral connecting to
Sundance. The Pioneer Pipeline has
an initial capacity of 130 MMcf/day supported by a 15 year
take-or-pay commitment from TransAlta, which may be expanded to
approximately 440 MMcf/day. The pipeline has allowed TransAlta to
increase the amount of natural gas it co-fires at its Sundance and Keephills coal-fired units, resulting in lower
carbon emissions and costs. TransAlta is a 50% working interest
owner in the pipeline.
The Pioneer Pipeline was fully commissioned in the second
quarter of 2019 and had average throughput of approximately 40
MMcf/day of natural gas through the start-up phase in the third
quarter of 2019. Throughput of approximately 130 MMcf/day of
natural gas commenced flowing through the Pioneer Pipeline in the
first week of November in conjunction with the 15 year take-or-pay
agreement with TransAlta.
Brazeau River Complex and Fractionation Facility
Throughput at the BRC was in-line with the second quarter of
2019 where Tidewater is working diligently with producers to
improve netbacks by fully utilizing the BRC's facilities, including
its two NGL pipeline connections, condensate pipeline connection,
truck loading and offloading facilities, fractionation, natural gas
storage facilities and two natural gas sales pipeline
connections.
The Brazeau River Fractionation facility is fully contracted
until March 2020, with two
investment-grade customers and remained at maximum capacity through
the third quarter of 2019.
The Brazeau River Complex remains a flagship asset for
Tidewater, offering a full suite of services to producers,
including C2, C3, C4 and C5 pipeline connections, NGL fractionation
capacity, sweet and sour deep-cut gas processing capability, and
two natural gas egress solutions given the BRC's connection to the
NGTL system, and the Pioneer Pipeline.
Prince George Refinery
On November 1, 2019, Tidewater
closed the previously announced acquisition of the Prince George
Refinery from Husky Energy Inc. ("Husky"), approximately one month
ahead of schedule. The Prince George Refinery is a 12.0 Mbbl/day
light oil refinery that predominantly produces low sulfur diesel
and gasoline, in addition to other products, to supply the greater
Prince George region. The Prince
George Refinery has significant onsite storage capacity of greater
than 1.0 MMbbl and flexible logistics, with pipeline, rail and
truck connectivity in place. The Prince
George region is generally in short supply of refined
products and the Prince George Refinery's location within the
Prince George region makes it a
critical piece of infrastructure with a significant logistical
advantage to address the demand for these products.
Tidewater also entered into a 5-year offtake agreement with
Husky for 90% of the nameplate capacity on diesel and gasoline
volumes produced at the Prince George Refinery. The offtake
agreement reflects committed volumes that Husky has agreed to
purchase, and contains pricing review mechanisms.
CAPITAL PROGRAM
Tidewater has substantially completed its 2019 capital program
with the commissioning of three of the largest capital projects in
the Corporation's history related to the Pioneer Pipeline,
Pipestone Gas Plant and Pipestone Gas Storage Facility. The Pioneer
Pipeline construction is complete and it is fully commissioned and
delivering gas to TransAlta's generating units at Sundance and Keephills at contracted capacity rates.
Tidewater's expansion of its Pipestone Gas Storage Facility is also
operational with its 30-inch sales pipeline fully commissioned and
sending gas to both Alliance and TC Energy. These three projects
are a milestone in Tidewater's history and will contribute
significantly to Tidewater's cash flow profile, as well as its
customer and contract base.
Tidewater's focus over the next 6 to 12 months is to employ the
related cashflow from our large capital projects and the Prince
George Refinery acquisition towards deleveraging. Tidewater has
decided to delay the expansion at Pipestone (Pipestone Plant 2) until further
notice and plans to deploy limited growth capital in 2020 and focus
on optimization and small capital projects with 2 to 3 year
payouts. Tidewater is committed to reducing overall leverage
through 2020 back to its historical levels with a target of 3.0x to
3.5x Net Debt to Adjusted EBITDA by the end of 2020.
Pipestone East Battery Acquisition and Construction
During the quarter, Tidewater announced it had entered into an
agreement with Pipestone Energy to acquire a 100% working interest
in the Pipestone East Battery which will be located approximately
24 km east of the Pipestone Gas Plant. The total cash
consideration payable under the agreement is up to $30 million, which consisted of an initial cash
payment of approximately $14 million
to purchase existing infrastructure and facility equipment, with a
commitment to fund up to $16 million
to finalize the design, construction and commissioning of the
Pipestone East Battery, which is expected to be completed over the
next 12 to 18 months.
Concurrently with the Pipestone East Battery acquisition,
Pipestone Energy entered into a 10-year take-or-pay agreement for
compression, separation and liquids handling at the Pipestone East
Battery and extended its existing 30 MMcf/day take-or-pay
commitment at the Pipestone Gas Plant from a 5-year term to a
10-year term.
THIRD QUARTER 2019 EARNINGS CALL
In conjunction with Tidewater's third quarter 2019 earnings
release, investors will have the opportunity to listen to Tidewater
senior management review its third quarter results of fiscal 2019
via conference call on Wednesday November
13, 2019 at 11:00 am MDT.
To access the conference call by telephone, dial 647-427-7450
(local / international participant dial in) or 1-888-231-8191
(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:
https://event.on24.com/wcc/r/2129551/E76DFDC5C3C8C478FDCA5BE939FA6442
and 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 Midstream and Infrastructure Ltd.
earnings call.
ABOUT TIDEWATER
Tidewater is traded on the TSX under the symbol "TWM".
Tidewater's business objective is to build a diversified midstream
and infrastructure company in the North American natural gas and
natural gas liquids ("NGL") and crude oil space. Its
strategy is to profitably grow and create shareholder value through
the acquisition and development of oil and gas infrastructure.
Tidewater plans to achieve its business objective by providing
customers with a full service, vertically integrated value chain
through the acquisition and development of oil and gas
infrastructure including: gas plants, pipelines, railcars, trucks,
export terminals storage facilities and downstream facilities.
Additional information relating to Tidewater is available on
SEDAR at www.sedar.com and at www.tidewatermidstream.com.
Advisory Regarding Forward-Looking Statements
FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute
forward-looking statements and forward-looking information
(collectively, "forward-looking statements"). Such forward-looking
statements relate to possible events, conditions or financial
performance of the Corporation based on future economic conditions
and courses of action. All statements other than statements of
historical fact are forward-looking statements. The use of any
words or phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe", "will likely result", "are expected to", "will
continue", "is anticipated", "believes", "estimated", "intends",
"plans", "projection", "outlook" and similar expressions are
intended to identify forward-looking statements. These statements
involve known and unknown risks, assumptions, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. The Corporation believes there is a reasonable basis
for the expectations reflected in the forward-looking statements,
however no assurance can be given that these expectations will
prove to be correct and the forward-looking statements included in
this press release should not be unduly relied upon by
investors.
Specifically, this press release contains forward-looking
statements relating to but not limited to:
- projections regarding attainment of full capacity at
Tidewater's Pipestone Gas Plant;
- anticipated increase to cash flows in a variety of commodity
price environments and projected use of such cash flow to reduce
the Corporation's leverage ratios;
- anticipated continued withdrawals from the Nisku A and Nisku
F storage facilities throughout the upcoming winter;
- reliability and uptime deliverables from the Pipestone Gas
Plant;
- projections regarding growth capital to be deployed by the
Corporation in 2020;
- estimated timeline to finalize the design, construction and
commissioning of the Pipestone East Battery;
- the Corporation's plans to satisfy debt obligations through
net cash provided by operating activities and its credit facility;
and
- future optionality, egress and contracting capacity at the
Pipestone Gas Storage Facility and projected capital costs of such
project.
Such forward-looking statements of information are based on a
number of assumptions which may prove to be incorrect. In
addition to other assumptions identified in this document,
assumptions have been made regarding, among other things:
- general economic and industry trends;
- oil and gas industry expectation and development activity
levels and the geographic region of such activity;
- the success of the Corporation's operations;
- anticipated timelines and budgets being met in respect of
the Corporation's projects and operations;
- future natural gas, crude oil and NGL prices;
- the Corporation's ability to obtain and retain qualified
staff and equipment in a timely and cost-effective manner;
- assumptions regarding amount of operating costs to be
incurred;
- that proposed transactions will close as expected;
- that counterparties will comply with contracts in a timely
manner;
- that there are no unforeseen material costs relating to the
facilities which are not recoverable from customers;
- distributable cash flow and net cash provided by operating
activities consistent with expectations;
- the ability to obtain additional financing on satisfactory
terms;
- the availability of capital to fund future capital
requirements relating to existing assets and projects;
- the ability of Tidewater to successfully market its
products;
- the Corporation's future debt levels and the ability of the
Corporation to repay its debt when due;
- foreign currency, exchange and interest rates;
- that any third-party projects relating to the Corporation's
growth projects will be sanctioned and completed as
expected;
- the amount of future liabilities relating to lawsuits and
environmental incidents and the availability of coverage under the
Corporation's insurance policies;
- the ability of the Corporation to obtain equipment,
services, supplies and personnel in a timely manner and at an
acceptable cost to carry out its evaluations and activities;
and
- that all required regulatory and environmental approvals for
capital projects can be obtained on the necessary terms and in a
timely manner.
Actual results achieved will vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors including but not limited
to:
- general economic, political, market and business conditions,
including fluctuations in interest rates, foreign exchange rates
and stock market volatility;
- activities of producers and customers and overall industry
activity levels;
- the regulatory environment and decisions and First Nations
and landowner consultation requirements;
- that receipt of third party, regulatory, environmental and
governmental approvals and consents relating to the Prince George
Refinery acquisition and Tidewater's other capital projects can be
obtained on the necessary terms and in a timely manner;
- the ability to secure land and water, including obtaining
and maintaining land access rights;
- operational matters, including potential hazards inherent in
the Corporation's operations and the effectiveness of health,
safety, environmental and integrity programs;
- fluctuations in commodity prices, inventory levels and
supply/demand trends;
- actions by governmental authorities, including changes in
government regulation, tariffs and taxation;
- changes in operating and capital costs, including
fluctuations in input costs;
- changes in environmental and other regulations;
- activities of other facility owners, including access to
third-party facilities;
- competition for, among other things, business, capital,
acquisition opportunities, requests for proposals, materials,
equipment, labour and skilled personnel;
- environmental risks and hazards, including risks inherent in
the transportation of NGLs which may create liabilities to the
Corporation in excess of the Corporation's insurance coverage, if
any;
- failure of third parties' reviews, reports and projections
to be accurate;
- the possibility that the Corporation fails to formalize
agreements with counterparties;
- non-performance or default by counterparties to agreements
which the Corporation or one or more of its subsidiaries has
entered into in respect of its business;
- actions by joint venture partners or other partners which
hold interests in certain of the Corporation's assets;
- construction and engineering variables associated with
capital projects, including the availability of contractors,
engineering and construction services, accuracy of estimates and
schedules, and the performance of contractors;
- the availability of capital on acceptable terms;
- changes in the credit-worthiness of counterparties;
- adverse claims made in respect of the Corporation's
properties or assets;
- changes in the political environment and public
opinion;
- risks and liabilities associated with the transportation of
dangerous goods;
- risks and liabilities resulting from derailments;
- competitive action by other companies;
- effects of weather conditions;
- reputational risks;
- reliance on key personnel;
- technology and security risks, including
cybersecurity;
- potential losses which would stem from any disruptions in
production, including work stoppages or other labour difficulties,
or disruptions in the transportation network on which the
Corporation is reliant;
- technical and processing problems, including the
availability of equipment and access to properties;
- changes in gas composition; and
- failure to realize the anticipated benefits of recently
completed acquisitions.
The foregoing lists are not exhaustive. Additional
information on these and other factors which could affect the
Corporation's operations or financial results are included in the
Corporation's most recent AIF and in other documents on file with
the Canadian Securities regulatory authorities.
The above summary of assumptions and risks related to
forward-looking statements in this press release is intended to
provide shareholders and potential investors with a more complete
perspective on Tidewater's current and future operations and such
information may not be appropriate for other purposes. There is no
representation by Tidewater that actual results achieved will be
the same in whole or in part as those referenced in the
forward-looking statements and Tidewater does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable
securities law.
Any financial outlook or future-oriented financial
information, as defined by applicable securities legislation, has
been approved by management of Tidewater as of May 13, 2019. A financial outlook or
future-oriented financial information is provided for the purpose
of providing information about management's current expectations
and goals relating to the future of Tidewater. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes. The purpose of the future-oriented financial
information contained herein including but not limited to future
periods of net income and Adjusted EBITDA is to assist investors,
shareholders, and others in understanding certain financial metrics
relating to expected future financial results for the purpose of
evaluating the performance of Tidewater's business for future
periods. This information may not be appropriate for other
purposes. The results and conclusions of these assessments, along
with the known and unknown risks, uncertainties and other factors
referred to above, could impact Tidewater's estimates and the
information related to such future periods contained herein and any
such impact could be material.
Non-GAAP Measures
This news release refers to "Adjusted EBITDA" which do not
have any standardized meaning prescribed by generally accepted
accounting principles in Canada
("GAAP"). Adjusted EBITDA is calculated as income or loss
before interest, taxes, depreciation, share-based compensation,
unrealized gains/losses, non-cash items, transaction costs and
items that are considered non-recurring in nature.
Tidewater Management believes that Adjusted EBITDA provide
useful information to investors as they provide an indication of
results generated from the Corporation's operating activities prior
to financing, taxation and non-recurring/non-cash impairment
charges occurring outside the normal course of business.
Management utilizes Adjusted EBITDA to set objectives and as a key
performance indicator of the Corporation's success. In
addition to its use by Management, Tidewater also believes Adjusted
EBITDA is a measure widely used by security analysts, investors and
others to evaluate the financial performance of the Corporation and
other companies in the midstream industry. Investors should
be cautioned that Adjusted EBITDA should not be construed as
alternatives to earnings, cash flow from operating activities or
other measures of financial results determined in accordance with
GAAP as an indicator of the Corporation's performance and may not
be comparable to companies with similar calculations.
"Distributable cash flow" is a non-GAAP financial measure and
is calculated as net cash used in operating activities before
changes in non-cash working capital plus 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. 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's
ongoing operations. Distributable cash flow also excludes
cash outflows related to the purchase of linefill on pipelines and
tank bottoms for storage tanks, whereby Tidewater transports oil on
third-party pipelines for which it is required to supply linefill
or tank bottoms for storage. As these pipelines/storage tanks are
owned by third parties, the linefill is not considered to be a
component of the Corporation's property and equipment. The linefill
is classified as a non-current inventory asset and an operating
cash outflow, however linefill is not a principal revenue-producing
activity and therefore is considered an investment to gain access
as a shipper on the pipeline.
Management of the Corporation believes distributable cash
flow is a useful metric for investors when assessing the amount of
cash flow generated from normal operations and to evaluate the
adequacy of internally generated cash flow to fund
dividends.
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 Measures"
section of Tidewater's most recent MD&A which is available on
SEDAR.
SOURCE Tidewater Midstream and Infrastructure Ltd.