Gibson Energy Announces 2018 Second Quarter Results

All financial figures are in Canadian dollars

CALGARY, Alberta, Aug. 08, 2018 (GLOBE NEWSWIRE) — Gibson Energy Inc. (“Gibson” or the “Company”), (TSX: GEI), announced today its operating and financial results for the three and six months ended June 30, 2018.

Financial Highlights:

  • Infrastructure segment profit of million, an million or 18% increase over the second quarter of 2017, primarily due to additional tankage entering service at the beginning of 2018 under take-or-pay, stable fee-based contracts
  • Segment profit from continuing operations of 0 million, a million or 51% increase relative to the second quarter of 2017, driven by stronger performance from Infrastructure, an increased contribution from Wholesale and the impact of the IFRS 16 adoption
  • Adjusted EBITDA from continuing operations(1) of 0 million, a million or 71% increase relative to the second quarter of 2017
  • Distributable cash flow from combined operations(2) of million, a million or 80% increase over the second quarter of 2017, and an increase of million or 20% relative to the first quarter of 2018
  • Distributable cash flow from combined operations(2) during the trailing twelve months increased to 0 million, resulting in a payout ratio of approximately 79%
  • Incurred million in growth capital expenditures, with nearly the entire amount attributable to the construction of new tankage and related infrastructure at the Hardisty and Edmonton Terminals

Strategic Developments and Highlights:

  • Achieved reduction of payout ratio to target range of between 70% and 80% within a timeframe well ahead of initial expectations of post 2019 as a result of continued stable performance from Infrastructure and a larger contribution from Wholesale
  • Similarly, Net Debt to Pro Forma Adjusted EBITDA reached the high end of the Company’s 3.0x – 3.5x target range on trailing twelve months basis, well ahead of initial expectations
  • Closed divestiture of U.S. energy services businesses, including U.S. Environmental Services and U.S. Seismic assets, for gross proceeds of 6 million, and continue to progress the remaining non-core sale processes
  • Continued to execute on the capital growth program, with the first phase of Hardisty Top of the Hill now expected to be in service, and providing incremental infrastructure cash flows, in the first quarter of 2019
  • Subsequent to the end of the quarter, announced an additional 0 million to 0 million of incremental growth opportunities, including two additional tanks at Hardisty, the acceleration of the U.S. strategy and the expansion of the Moose Jaw Facility, providing visibility to the infrastructure projects to exceed the top end of the Company’s growth capital target range through the end of 2019

“With our solid financial and operational results in the second quarter, we continued our momentum in 2018, reflecting our focus on delivering strong results each and every quarter,” said Steve Spaulding, President and Chief Executive Officer. “With stable cash flows from Infrastructure that continue to grow as we place additional projects into service, combined with an increased contribution from Wholesale, we have been able to reach our target payout ratio and leverage ranges much sooner than in the plan we outlined at the start of the year. Importantly, we also continue to deliver on our strategy, with infrastructure projects required to drive growth into 2020 now sanctioned and our non-core dispositions remain ahead of schedule with proceeds likely to be at or above the top end of our initial expectations.”

   
(1) Adjusted EBITDA from continuing operations is defined in Gibson’s Management’s Discussion and Analysis (“MD&A”). See MD&A section “Results of Continuing Operationsfor segment profit from continuing operations discussion, which is the most closely related GAAP measure and disclosed in note 1 of the condensed consolidated financial statements. 
(2) Distributable cash flow from combined operations is defined in Gibson’s MD&A. See MD&A sections “Liquidity and Capital Resources” and “Results of Discontinued Operations” for cash flow from operations discussion, which is the most closely related GAAP measure.
   

Management’s Discussion and Analysis and Financial Statements
The second quarter 2018 Management’s Discussion and Analysis and unaudited Condensed Consolidated Financial Statements provide a detailed explanation of Gibson’s operating results for the three and six months ended June 30, 2018, as compared to the three and six months ended June 30, 2017. These documents are available at www.gibsonenergy.com and at www.sedar.com.

2018 Second Quarter Results Conference Call
A conference call and webcast will be held to discuss the 2018 second quarter financial and operating results at 7:00am Mountain Time (9:00am Eastern Time) on Thursday, August 9, 2018.

The conference call dial-in numbers are:

  • 478-219-0003 / 844-358-6759
  • Participant Pass Code:   1792837

This call will also be broadcast live on the Internet and may be accessed directly at the following URL:

https://edge.media-server.com/m6/p/svt6bbat

The webcast will remain accessible for a 12-month period at the above URL. Additionally, a digital recording will be available for replay two hours after the call’s completion until August 15, 2018, using the following dial-in numbers:

  • 404-537-3406 / 855-859-2056
  • Participant Pass Code:   1792837

Supplementary Information
Gibson has also made available certain supplementary information regarding the second quarter operational and financial results, available at www.gibsonenergy.com

About Gibson
Gibson is a Canadian-based oil infrastructure company with its principal businesses consisting of the storage, optimization, processing, and gathering of crude oil and refined products. Headquartered in Calgary, Alberta, the Company’s operations are focused around its core terminal assets located at Hardisty and Edmonton, Alberta, and also include the Moose Jaw Facility and an infrastructure position in the U.S.

Gibson shares trade under the symbol GEI and are listed on the Toronto Stock Exchange. For more information, visit www.gibsonenergy.com.

Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking information and statements (collectively, “forward-looking statements”) including, but not limited to, statements concerning the future payment of dividends by Gibson and growth thereof, distributable cash flow and growth thereof, management’s expectations with respect to the business and financial prospects and opportunities of the Company, the transition of the Company to a focused oil infrastructure growth company, proposed divestitures by the Company, and the use of proceeds, closing and timing thereof, opportunities and areas for potential growth including the sanctioning of capital projects. All statements other than statements of historical fact are forward-looking statements. The use of any of the words ‘‘anticipate’’, ‘‘plan’’, ‘‘contemplate’’, ‘‘continue’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘propose’’, ‘‘might’’, ‘‘may’’, ‘‘will’’, ‘‘shall’’, ‘‘project’’, ‘‘should’’, ‘‘could’’, ‘‘would’’, ‘‘believe’’, ‘‘predict’’, ‘‘forecast’’, ‘‘pursue’’, ‘‘potential’’ and ‘‘capable’’ and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In addition, this news release may contain forward-looking statements and forward-looking information attributed to third party industry sources. The Company does not undertake any obligations to publicly update or revise any forward-looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in “Forward-Looking Statements” and “Risk Factors” included in the Company’s Annual Information Form dated March 5, 2018 as filed on SEDAR and available on the Gibson website at www.gibsonenergy.com.

Non-GAAP Measures
This news release refers to certain financial measures that are not determined in accordance with IFRS. Adjusted EBITDA from continuing operations and Distributable cash flow (“DCF”) from combined operations are not a measure recognized under IFRS and does not have standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures reported by other entities. Management considers these to be important supplemental measures of the Company’s performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in industries with similar capital structures. Adjusted EBITDA from continuing operations and Distributable cash flow are used to assess the level of cash flow generated and to evaluate the adequacy of internally generated cash flow to fund dividends. Additional information about reconciliation of historical distributable cash flow and Adjusted EBITDA to its most closely related IFRS measure, cash flow from operating activities and segment profit, respectively, can be found in our MD&A available on SEDAR at www.sedar.com and on our website at www.gibsonenergy.com.

For further information, please contact:

Mark Chyc-Cies
Vice President, Investor Relations
Phone: (403) 776-3146
Email:    mark.chyccies@gibsonenergy.com

       
Selected Financial Information
       
  Three months ended June 30   Six months ended June 30  
    2018     2017 1       2018     2017 1      
   
Continuing operations                  
Revenue $     1,758,421   $     1,421,003     $     3,495,040   $     2,819,826      
Segment profit   100,102     66,339       202,166     150,788      
Net income (loss)   14,558     (1,886 )     27,382     (5,003 )    
Basic and diluted income (loss) per share     0.10     (0.01 )     0.19     (0.04 )    
Adjusted EBITDA 3,4   100,413     58,694       193,741     129,646      
Distributable cash flow 3,4   77,976     37,663       137,466     78,132      
Dividends declared   47,562     47,075       95,034     93,829      
Cash flow from operating activities   26,615     49,998       153,803     149,147      
Growth capital expenditures $       49,372   $     23,426     $     75,751   $     48,351      
                   
Combined operations 2                  
Combined Adjusted EBITDA 2,3,4 $   101,499   $   66,387     $   202,978   $   153,293      
Distributable cash flow 3,4 $     78,494   $     43,524     $     143,787   $     87,238      
                   
   

Last twelve months – as at June 30,

 
  2018   2017  
Ratios5        
Total and senior debt leverage ratio 3.5   3.2  
Interest coverage ratio 4.8   3.2  
         

1     The current period results include the impacts from the adoption of new accounting standards as discussed on page 31. Comparative information has not been restated and, therefore, may not be comparable.
2     See definition of non-GAAP measures on pages 19 to 22 and 35 of the second quarter 2018 MD&A. Combined Adjusted EBITDA and Combined distributable cash flow, represents the aggregated results of both continuing and discontinued operations.
3     See pages 20 to 21 and 27 to 28 of the second quarter 2018 MD&A for a reconciliation of Adjusted EBITDA to segment profit and distributable cash flow to cash flow from operations, respectively.
4     Comparative period information has been restated to reflect the impact of discontinued operations.
5     Refer to page 26 and 31 of the second quarter 2018 MD&A for more information on the ratio calculation and impact of new accounting standards on covenant calculations.