Tidewater Renewables (TSE:LCFS) reported third-quarter adjusted EBITDA of CAD 54.6 million as its renewable diesel complex operated above its design capacity and benefited from favorable pricing. On a joint earnings call with Tidewater Midstream and Infrastructure, management also raised consolidated 2026 earnings guidance and outlined the potential impact of proposed federal clean-fuel regulations.
The two companies are pursuing an all-share combination expected to close on or about December 18, 2026, subject to shareholder approvals and other closing conditions. Tidewater Midstream would acquire the Tidewater Renewables shares it does not already own.
Renewable Diesel Output and Refining Margins
CEO Jeremy Baines said the renewable diesel complex averaged a record 3,411 barrels per day in the third quarter, equal to 114% of its 3,000-barrel-per-day design capacity. He attributed the higher rate to low-cost debottlenecking work and said the company expects elevated utilization to continue through the winter, apart from short periods of scheduled maintenance.
Baines said record renewable diesel margins, with sales priced at U.S. import parity, and an additional CAD 0.16 per liter from the Biofuels Production Incentive contributed to the results.
At the conventional Prince George refinery, throughput averaged 11,798 barrels per day, or 98% utilization. The Prince George crack spread averaged CAD 160 per barrel, up 35% from the second quarter, amid high refined-product margins. Tidewater Midstream had hedged approximately half of its 2026 crack spread exposure, limiting the benefit from higher market prices on that portion of sales.
CFO Ian Quartly said consolidated adjusted EBITDA was a record CAD 96.9 million, up CAD 8 million from the second quarter. Tidewater Midstream’s deconsolidated adjusted EBITDA was CAD 42.3 million, an increase of CAD 9.4 million, as stronger refinery crack spreads were partly offset by realized hedging losses.
Higher Guidance and Lower Debt
Management raised its consolidated 2026 adjusted EBITDA forecast to CAD 300 million–CAD 320 million, a 29% increase over the midpoint of its previous guidance. Quartly cited higher utilization at the refinery and renewable diesel complex, along with sustained strength in forward prices for crack spreads, renewable diesel and emissions credits.
The companies also reduced their consolidated capital spending forecast by CAD 5 million to CAD 15 million–CAD 20 million. That range includes growth and maintenance spending and is net of expected British Columbia Low Carbon Fuel Standard credits under executed initiative agreements.
Consolidated net debt declined CAD 97.4 million during the third quarter and CAD 139 million over the first nine months of 2026, Quartly said. He reported a consolidated debt-to-adjusted EBITDA ratio of 1.3 times, below the company’s run-rate target range of 1.5 to 2.5 times.
During the question-and-answer session, Baines said that, based on the current forward curve for crack spreads, 2027 results would materially exceed those of 2026. He said the proposed federal regulatory changes, if implemented, would add to that outlook. Management plans to issue 2027 financial guidance after the proposed combination closes.
Clean-Fuel Proposals and SAF Decision
Proposed amendments to Canada’s Clean Fuel Regulations include credit multipliers of 1.8 times for sustainable aviation fuel, or SAF, and 1.5 times for renewable diesel. They also include multipliers for co-processed fuels and other biofuels. The proposals are subject to a federal consultation period running through January 14, 2027, and could change before they become final.
Quartly said the 2026 guidance excludes benefits from the proposed amendments. If finalized as proposed, the company expects CAD 30 million–CAD 40 million of additional adjusted EBITDA to be recorded in 2027 for credits generated from 2026 production and sales, and a further CAD 40 million–CAD 50 million for credits associated with expected 2027 production and sales.
Those estimates depend on assumptions including unchanged regulations, receipt of retrospective credits in the first half of 2027, credit prices averaging CAD 300–CAD 400 in 2027, and production and sales levels consistent with 2026, Quartly said.
Tidewater has extended the targeted timeline for a potential final investment decision on its SAF project to the first half of 2027. Baines said the proposed 1.8-times multiplier was close to what the company had sought, but that Tidewater also needs a successful support agreement with British Columbia and potentially other regulatory refinements. He said the company does not need to wait for the province’s broader bioenergy strategy before making a decision.
Combination and Financing
Under the proposed transaction, Tidewater Renewables shareholders would receive 0.88 of a Tidewater Midstream share for each Renewables share. Management estimates transaction synergies at CAD 30 million–CAD 40 million on a net-present-value basis, including reduced public-company costs, financing savings and a later cash-tax obligation.
Quartly said the combination is expected to produce “small, but still meaningful” accretion for Tidewater Midstream shareholders, with 2028 the key year for that assessment.
National Bank of Canada and ATB Financial have committed to underwrite up to CAD 400 million in senior secured credit facilities for the combined company, subject to the transaction closing. Quartly said the proposed financing, together with lower debt, is expected to reduce cash interest costs significantly in 2027 compared with 2026.
About Tidewater Renewables (TSE:LCFS)
Tidewater Renewables is a multi-faceted, energy transition company. The Corporation is focused on the production of low carbon fuels, including renewable diesel and sustainable aviation fuel. The Corporation was created in response to the growing demand for renewable fuels in North America and to capitalize on its potential to efficiently turn a wide variety of renewable feedstocks (such as canola oil, soybean oil, used cooking oil, distillers corn oil, tallow, and other biomasses) into low carbon fuels.
