Tidewater Midstream and Infrastructure Ltd. Announces First Quarter 2019 Results and Operational Update
Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX:TWM.TO) 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-month period ended March 31, 2019.
FIRST-QUARTER 2019 FINANCIAL PERFORMANCE
-- Net loss attributable to shareholders was $7.1 million or $0.02 per share for the first quarter of 2019, compared to net income attributable to shareholders of $4.8 million or $0.01 per share for the first quarter of 2018. The loss during the first quarter of 2019 was mainly attributable to the unrealized loss on derivative contracts, a non-cash offset from the unrealized gain on derivative contracts recognized in the fourth quarter of 2018. -- Adjusted EBITDA was $22.4 million or $0.07 per share, compared to $20.0 million or $0.06 per share for the first quarter of 2018. -- Net cash used in operating activities totalled $3.3 million for the first quarter of 2019, with distributable cash flow of $16.3 million, yielding a conservative payout ratio of 20% for the quarter. -- Tidewater's 100 MMcf/day sour deep-cut gas processing complex (the "Pipestone Gas Plant") is fully contracted. Tidewater has received significant support for future gas processing and liquids handling expansions at Pipestone and is currently evaluating an expansion at the facility. The project remains on-time and on-budget. -- Tidewater expects to complete construction of the Pioneer Pipeline, a 120km natural gas pipeline connecting Tidewater's Brazeau River Complex ("BRC") to TransAlta Corporation's generating units at Sundance and Keephills in the second quarter of 2019, approximately four months ahead of schedule. Capital costs on the project have increased by approximately 10% as a result of schedule acceleration and evaluation of future expansion opportunities. -- On December 17, 2018, TransAlta Corporation, through its subsidiary TransAlta Generation Partnership ("TransAlta"), exercised its option to acquire a 50% ownership interest in the Pioneer Pipeline. The transaction is expected to close in the second quarter of 2019. -- During the first quarter of 2019, Tidewater expanded its gas storage operations at Pipestone (the "Pipestone Gas Storage Facility") and completed a 24km, 30-inch natural gas pipeline connecting the facility to both Alliance and TCPL. The pipeline allows for significant future optionality and egress at the Pipestone Gas Storage Facility and Pipestone Gas Plant. The Pipestone Storage Facility is now fully contracted with investment-grade counterparties over an average six-year contract term. Continued capital improvements to the facility during 2019, along with the completed 30-inch pipeline, will significantly increase future contracting capacity at the storage facility. The Pipestone Gas Storage Facility will be moved into a Limited Partnership with the pipeline and facility expansion financed primarily through a capital contribution from a joint-venture equity partner as well as a non-recourse project finance credit facility. -- The Brazeau River Fractionation facility, part of the BRC, is fully contracted for the first time in Tidewater's history, including signed agreements with two new investment-grade customers at the BRC to provide fractionation services. When Tidewater first acquired the BRC in 2014, it had one customer that accounted for the majority of Adjusted EBITDA at the facility. Tidewater transformed the BRC into a fractionation facility, with two new investment-grade counterparties in 2019, a gas storage facility with long-term contracts from multiple investment-grade counterparties and a new egress option with a 15-year take-or-pay contract with TransAlta. -- The Corporation divested of its 32MW cogeneration units at its Pipestone Gas Plant for cash proceeds of $85 million. In conjunction with the divestiture, the Corporation entered into a long-term energy services agreement whereby the purchaser will supply power to Tidewater's Pipestone Gas Plant once construction is complete in exchange for fixed energy fee payments. -- The Corporation increased its availability under its credit facility from $325 million to $350 million by accessing its accordion feature and amended its financial covenants. -- Tidewater remains confident in its ability to execute its previously disclosed strategic plan where fourth quarter 2019 and fiscal year 2020 net income and Adjusted EBITDA are expected to increase by greater than 50%, compared to the fourth quarter and fiscal year 2018, respectively, once the Pipestone Gas Plant and Pioneer Pipeline are operational. Tidewater continues to evaluate additional strategic projects that address customer needs and the increasing demand for natural gas, NGLs and crude oil in North America. The Corporation continues to look forward to seeing the completion of its two major projects as well as to execute and position its business for continued earnings growth during the second half of 2019 into 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-month period ended March 31, 2019 which are available at www.sedar.com and on our website at www.tidewatermidstream.com.
Consolidated Financial Highlights
Three months ended March 31, (in thousands of Canadian dollars except per share information) 2019 2018 --- Revenue $ 123,665 $ 84,214 Net income (loss) attributable to shareholders $ (7,135) $ 4,797 Basic and diluted net income (loss) attributable to shareholders per share $ (0.02) $ 0.01 Adjusted EBITDA (1) $ 22,404 $ 20,001 Adjusted EBITDA per common share - basic (1) $ 0.07 $ 0.06 Net cash used in operating activities $ (3,310) $ (20,921) Distributable cash flow (2) $ 16,310 $ 16,814 Distributable cash flow per common share - basic (2) $ 0.05 $ 0.05 Dividends declared $ 3,309 $ 3,291 Dividends declared per common share $ 0.01 $ 0.01 Total common shares outstanding (000s) 330,930 329,091 Payout ratio (3) 20% 20% Total assets $ 1,518,769 $ 960,058 Net debt (4) $ 353,363 $ 187,425 ---
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-month period March 31, 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-month period ended March 31, 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 plus 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 continues to position itself to provide producers with additional egress solutions and improved pricing for its products in a challenging commodity price environment by developing and connecting its infrastructure in order to access additional end markets.
During the first quarter of 2019, Tidewater achieved a number of milestones including the most capital-intensive period in its history with peak construction on the Pioneer Pipeline, Pipestone Gas Plant and Pipestone Gas Storage Facility and pipeline. Tidewater continues to execute successfully on its strategy by expanding its integrated network of assets with disciplined capital allocation.
Overall, while gas processing volumes remained under pressure, consistent with the fourth quarter of 2018, Tidewater moved significant NGL and crude oil volumes and continued to generate incremental fee-for-service revenue from its gas storage assets. Tidewater is also nearing completion of its largest ever capital program, with commissioning of its projects expected to occur in the second and third quarters of 2019, and has begun evaluating the next phase of growth to further complement its asset base. Tidewater remains confident in its ability to execute its previously disclosed strategic plan where fourth quarter 2019 and fiscal year 2020 net income and Adjusted EBITDA are expected to increase by greater than 50%, compared to the fourth quarter and fiscal year 2018, respectively, once the Pipestone Gas Plant and Pioneer Pipeline are operational.
Crude Oil Infrastructure
Tidewater continues to grow its crude oil infrastructure and refined products business and has delivered Canadian crude to approximately ten end markets at the end of the first quarter of 2019. Tidewater is well positioned in the crude oil space with three pipeline connected oil batteries at Valhalla, Brazeau and Acheson, including a large rail facility at Acheson. Tidewater continues to explore various market access opportunities including storage, terminals and pipelines. The majority of the agreements are for terms of less than 12 months; however, Tidewater intends to grow this business and negotiate longer term agreements with existing and new customers. Contribution from the crude oil infrastructure remains in-line with Tidewater's previously disclosed forecasts.
Brazeau River Complex
Throughput at the BRC was in-line with the fourth quarter of 2018 where Tidewater is working diligently with producers to improve netbacks by fully utilizing the BRC's facilities including its three NGL pipeline connections, truck loading and offloading facilities, fractionation and natural gas storage facilities.
The Brazeau River Fractionation facility is fully contracted for the first time in Tidewater's history, including two new investment-grade customers signed during the first quarter of 2019. Tidewater began accepting new volumes at the fractionation facility in April 2019.
The Brazeau River Complex remains a flagship asset for Tidewater, offering a full suite of services to producers, including C3, C4 and C5 pipeline connections, NGL fractionation capacity, sweet and sour deep-cut gas processing capability, and two gas egress solutions in TCPL and the Pioneer Pipeline.
Natural Gas Storage
Tidewater continued to inject customer gas under long-term fee-for-service contracts at the Pipestone Gas Storage Facility throughout the quarter, growing the cushion gas at the facility and increasing the injection and withdrawal capability of the storage reservoir.
Tidewater also commenced and completed construction of a 21km, 30-inch pipeline from its Pipestone Gas Storage Facility with both Alliance and TCPL, providing significant future egress and contracting optionality for the Pipestone Gas Plant and Pipestone Storage Facility. The project is more fully described below under Capital Program: Pipestone Gas Storage Facility.
Tidewater's gas storage projects remain well positioned to benefit from the low commodity price environment while acting as a natural hedge to Tidewater's core business, thereby achieving its goal of offering additional egress options and improved pricing to producers.
The Corporation's three large capital projects currently underway mainly focus on establishing a strong position in the Montney and Deep Basin development areas. It is expected the three capital programs will begin delivering incremental net cash provided by operating activities during the third and fourth quarters of 2019, launching the next phase in Tidewater's growth.
Pipestone Gas Plant
On October 18, 2018, Tidewater received approval from the Alberta Energy Regulator (the "AER") to construct and operate the Pipestone Gas Plant. The Pipestone Gas Plant is designed to process approximately 100 MMcf/day of natural gas. The total infrastructure project includes an acid gas injection well, salt water disposal well and pipelines directly connected to the Pipestone Gas Storage Facility, as well as connections to both Alliance and TCPL. The Pipestone Gas Plant is currently fully contracted, and Tidewater has significant support for future gas processing and liquids handling expansions at the facility. The Pipestone project remains on time and on budget.
In the first quarter of 2019, Tidewater divested the Pipestone Gas Plant's 32MW cogeneration units for cash proceeds of $85 million. In conjunction with the divestiture, the Corporation entered into a long-term energy services agreement whereby the purchaser, Kineticor Resource Corp. ("Kineticor"), will supply power to Tidewater's Pipestone Gas Plant once construction is complete in exchange for fixed energy fee payments. The Corporation also entered into an operating agreement, whereby Tidewater will manage the final construction of the cogeneration units and the day-to-day operations once in service. This will ensure that the cogeneration units, which will be highly integrated with the Pipestone Gas Plant, will be managed safely and efficiently for both Kineticor and Tidewater.
Tidewater expects approximately $50 - $55 million of capital remaining to be spent on the first phase of the Pipestone Gas Plant in 2019, with commissioning expected to occur in the third quarter of 2019. Total capital costs for the project, once complete, are expected to be approximately $210 million after disposition of the cogeneration units.
As a result of significant producer support, Tidewater is currently evaluating a condensate liquids hub at the Pipestone Gas Plant as well as an expansion to the processing capacity at the plant. Tidewater expects capital expenditures related to scoping an expansion as well as a liquids hub, including pre-spend on Phase II connections, to be approximately $15 - 30 million over the next 12 months.
Contribution to net income from the Pipestone Gas Plant is expected to be approximately $25 - $30 million per year based on plant throughput of approximately 100 MMcf/day of contracted volume at market rates over a 5 - 10 year period. Estimated annual operating costs are based on plants of similar size with sour gas processing capability and similar NGL handling capability. Adjusted EBITDA contribution is expected to be approximately $30 - $35 million per year after adding back depreciation, based on a 60-year useful life, finance costs and taxes.
On October 30, 2018, Tidewater received approval from the AER to construct and operate the 120km natural gas pipeline connecting Tidewater's BRC to TransAlta's generating units at Keephills, and subsequent approval for an 11km lateral connecting to Sundance. The Pioneer Pipeline will have 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 will allow 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 exercised its 50% working interest option in the Pioneer Pipeline in the fourth quarter of 2018 and has made advanced refundable payments of approximately $65 million to March 31, 2019 and a further $10.8 million subsequent to March 31, 2019.
Construction is near completion on the Pioneer Pipeline, which is approximately four months ahead of schedule. Capital costs on the project have increased by approximately 10% as a result of schedule acceleration and evaluation of future expansion opportunities.
Tidewater expects to flow gas on the Pioneer Pipeline in the second quarter of 2019. Contribution to Tidewater's net income from the Pioneer Pipeline is expected to be approximately $8 - $9 million per year based on throughput of approximately 130 MMcf/day of contracted volume at market rate tolls over a 15 year period. Estimated annual operating costs for the pipeline are based on other pipelines within Tidewater's currently owned infrastructure of similar size and flow rate capability. Adjusted EBITDA contribution is expected to be approximately $10 million per year after adding back depreciation, based on a 60-year useful life, finance costs and taxes.
Pipestone Gas Storage Facility
During 2017, Tidewater received regulatory approval to expand its existing Pipestone Gas Storage Facility as well as to construct and operate a 24km, 30-inch natural gas pipeline with connections to both Alliance and TCPL.
During the first quarter of 2019, Tidewater commenced and completed construction of the 24km, 30-inch natural gas pipeline to Alliance and TCPL as well as several pipeline connections to the Pipestone Gas Plant. Tidewater plans to complete the remaining facility expansion work, consisting of additional compression and injection/withdrawal wells, in the second and third quarters of 2019.
Total project costs are expected to be approximately $70 - $75 million, of which $55 million will be funded by way of $25 million preferred equity contribution from a joint venture partner, as well as a $30 million non-recourse project finance credit facility. As part of the financing arrangement, Tidewater will contribute its existing Pipestone Gas Storage Assets into a limited partnership whereby Tidewater will retain 85% of the cashflows after interest and preferred share payments while retaining operatorship. The transaction is expected to close in the second quarter of 2019.
The Pipestone Gas Storage Facility is now fully contracted on a six-year take-or-pay basis with all investment-grade counterparties. The project 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 now has three egress solutions in TCPL, Alliance and gas storage.
Tidewater expects $20 - $25 million in capital remaining to be spent on the project by the end of 2019, mostly related to the facility. At March 31, 2019, Tidewater has funded all capital costs and expects to receive capital contributions from its joint venture partner and the non-recourse credit facility upon closing of the transaction in the second quarter of 2019.
Tidewater remains fully funded with its existing credit facility and net cash provided by operations to fund its capital program through the end of 2019.
FIRST QUARTER, 2019 EARNINGS CALL
In conjunction with this earnings release, investors will have the opportunity to listen to Tidewater senior management review its first quarter results of fiscal 2019 via conference call on Tuesday, May 14th 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/1994662/EA84F748A4953F6CFD2F1FE4D2272F6A 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.
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") 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 and storage facilities.
Additional information relating to Tidewater is available on SEDAR at www.sedar.com and at www.tidewatermidstream.com.
Advisory Regarding Forward-Looking Statements
Certain statements contained in this news 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 news release should not be unduly relied upon by investors.
Specifically, this news release contains forward-looking statements relating to but not limited to:
-- planned commissioning of Tidewater's planned Pipestone Gas Plant and timing thereof as well as projections with respect to contracting capacity, net income to be derived therefrom, projected capital and operating costs and Adjusted EBITDA contribution estimates; -- future supply of power to the Pipestone Gas Plant; -- plans for future gas processing and liquids handling expansions at the Pipestone Gas Plant; -- planned commissioning of the Pioneer Pipeline and timing thereof, projected capital and operating costs and timing for Tidewater's incurrence of these costs, projected closing of TransAlta's option to acquire an ownership interest in the Pioneer Pipeline, future expansion opportunities and timing thereof, projected contribution to net income and Adjusted EBITDA; -- future optionality, egress and contracting capacity at the Pipestone Storage Facility and projected capital costs of such project; -- plans to move the Pipestone Gas Storage Facility into a limited partnership and financing plans for such project; -- expectations regarding funding of capital projects and that Tidewater's three major capital programs will begin delivering incremental cash flow during Q3 and Q4, 2019; -- projected net income and Adjusted EBITDA into the fourth quarter of 2019 and 2020; -- projections that Tidewater will meet its obligations and financial commitments and will have sufficient funding for anticipated capital expenditures and projections regarding sources of such funding; -- projections regarding future delivery of crude oil to end markets, impact of crude oil infrastructure business to net income and Adjusted EBITDA in 2019, plans to explore various market access opportunities including storage, terminals and pipelines; -- future growth of Tidewater's crude oil infrastructure business and expectations regarding longer term agreements with existing and new customers; and -- projected plans and benefits of the Corporation's crude oil and refined products infrastructure business including with respect to future earnings and incremental Adjusted EBITDA.
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; -- funds flow from operations and cash flow 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; -- 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; -- 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; -- 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 Annual Information Form 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.
Future Oriented Financial Information
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. 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.
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.
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.
View original content: http://www.newswire.ca/en/releases/archive/May2019/14/c3286.html
SOURCE: Tidewater Midstream and Infrastructure Ltd.
Joel MacLeod, Chairman, President and CEO, Tidewater Midstream & Infrastructure Ltd., Phone: 587.475.0210, Email: firstname.lastname@example.org