Tidewater Midstream and Infrastructure Q3 Earnings Call Highlights

Key Points

• Tidewater raised its 2026 adjusted EBITDA forecast to CAD 300 million–CAD 320 million, 29% above the midpoint of prior guidance, after record quarterly EBITDA and stronger refinery margins. Its renewable diesel complex averaged 3,411 barrels per day, or 114% of design capacity.
• Proposed federal fuel-rule changes could add an estimated CAD 30 million–CAD 40 million in 2027 EBITDA from credits tied to 2026 production, plus CAD 40 million–CAD 50 million from expected 2027 production, if the rules and key assumptions hold.
• The companies are seeking approval for an all-share combination, which management expects to close around December 18 and estimates could deliver CAD 30 million–CAD 40 million in synergies. Tidewater also reduced consolidated net debt by CAD 97.4 million in the quarter.

Tidewater Midstream and Infrastructure TSE: TWM raised its 2026 earnings forecast after reporting record third-quarter consolidated adjusted EBITDA, as its renewable diesel complex ran above design capacity and refinery margins strengthened.

On a joint earnings call with Tidewater Renewables on November 12, CFO Ian Quartly said consolidated adjusted EBITDA reached CAD 96.9 million in the quarter ended September 30, up CAD 8 million from the second quarter. The company also reported a CAD 97.4 million reduction in consolidated net debt during the quarter.

The results come as the companies seek shareholder approval for a proposed all-share combination. Management expects the transaction to close on or about December 18, subject to applicable closing conditions.

Higher guidance follows strong fuel margins

Tidewater now forecasts 2026 consolidated adjusted EBITDA of CAD 300 million to CAD 320 million, a 29% increase over the midpoint of its previous guidance. Quartly attributed the increase to higher utilization at the Prince George Refinery and renewable diesel complex, along with sustained strength in forward prices for crack spreads, renewable diesel and emissions credits.

The company also reduced its consolidated capital expenditure forecast by CAD 5 million to a range of CAD 15 million to CAD 20 million. Quartly said the guidance includes growth and maintenance spending, net of expected British Columbia Low Carbon Fuel Standard credits under executed initiative agreements.

Tidewater Renewables generated third-quarter adjusted EBITDA of CAD 54.6 million. Tidewater Midstream generated deconsolidated adjusted EBITDA of CAD 42.3 million, up CAD 9.4 million from the second quarter, as stronger refinery crack spreads were partially offset by realized hedging losses.

CEO Jeremy Baines said the renewable diesel complex processed a record average of 3,411 barrels per day, or 114% of its design capacity. Low-cost debottlenecking work enabled the higher rates, which the company expects to maintain through the winter except during short periods of scheduled maintenance.

Throughput at the conventional Prince George Refinery averaged 11,798 barrels per day, representing 98% utilization. The Prince George crack spread averaged CAD 160 per barrel, up 35% from the second quarter. Approximately half of Tidewater Midstream’s 2026 crack spread exposure was hedged, limiting its participation in higher third-quarter market prices.

Proposed fuel rules could add to 2027 earnings

Management said the increased 2026 guidance excludes potential benefits from proposed federal Clean Fuel Regulations amendments. If finalized as proposed, the changes would generate an expected CAD 30 million to CAD 40 million of additional adjusted EBITDA in 2027 from credits tied to 2026 production and sales, Quartly said. Credits on expected 2027 production and sales could add a further CAD 40 million to CAD 50 million.

Those estimates depend on assumptions including unchanged final regulations, receipt of retrospective credits in the first half of 2027, credit prices averaging CAD 300 to CAD 400 during 2027 and production and sales levels consistent with 2026. The proposed amendments are subject to a consultation period ending January 14, 2027.

In response to an analyst’s question, Baines said the current forward curve for crack spreads indicated 2027 results would materially exceed those of 2026, with the proposed regulatory amendments potentially adding further upside if implemented. He said the company expects the rules to be implemented substantially as proposed, although changes remain possible.

Tidewater has extended its target for a potential final investment decision on its sustainable aviation fuel project to the first half of 2027. Baines said final federal amendments, a successful agreement for provincial support and potentially some other regulatory refinements were needed. He said the company did not need to wait for British Columbia’s proposed provincial bioenergy strategy before making the decision.

Combination and debt reduction

Under the proposed combination, Tidewater Midstream would acquire the Tidewater Renewables shares it does not already own, exchanging 0.88 of a Midstream share for each Renewables share. Management estimates transaction synergies at CAD 30 million to CAD 40 million on a net present value basis, including reduced public-company costs, financing savings and an extended tax horizon.

Quartly said the transaction’s expected accretion for Tidewater Midstream shareholders was small but meaningful, with 2028 as the key year for assessing it. Baines said holders of approximately 49% of Renewables shares eligible for the minority vote and approximately 44% of outstanding Midstream shares had signed voting and support agreements.

Consolidated net debt fell CAD 139 million over the first nine months of 2026. Quartly said the consolidated debt-to-adjusted EBITDA ratio was 1.3 times, below the company’s target run-rate net debt-to-adjusted EBITDA range of 1.5 to 2.5 times.

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 closing. Tidewater expects to issue 2027 financial guidance after the combination closes.

About Tidewater Midstream and Infrastructure (TSE:TWM)

Tidewater Midstream and Infrastructure Ltd. is traded on the TSX under the symbol 'TWM'. Midstream's business objective is to build a diversified midstream and infrastructure company across the North American gas processing, natural gas liquids ('NGL'), petroleum refining, and renewables markets. Midstream's strategy is to profitably grow and create shareholder value by acquiring and building high quality, strategically located infrastructure. To achieve its business objective, Midstream is focused on providing customers with a full service, vertically integrated value chain through the acquisition and development of energy infrastructure, including downstream facilities, natural gas processing facilities, NGL infrastructure, pipelines, storage, and various renewable initiatives.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.