“Gibson continued to deliver strong, consistent operational and financial results in the third quarter, with the continued growth of long-term, high-quality cash flows from our Infrastructure segment while the contribution from Marketing meaningfully exceeded our expectations,” said Steve Spaulding, President and Chief Executive Officer. “We remain confident in our ability to keep executing our strategy, most notably our ability to continue to sanction tankage at our two to four tanks per year outlook, while in the U.S., we recently doubled the dedicated acreage around our Pyote East Pipeline, which we placed into service in October. We continue to advance several commercial opportunities on both sides of the border and remain confident we will be within our $200 million to $300 million target range for infrastructure growth capital in 2020, and beyond, while being fully-funded for all sanctioned capital.”
- Infrastructure segment profit of $82 million in the third quarter, a $6 million increase over the third quarter of 2018, primarily due to additional tankage at Hardisty, the expansion of the HURC Facility, the expansion of the Moose Jaw Facility and the Viking Pipeline entering service
- Marketing segment profit of $50 million in the third quarter, a $17 million decrease from the third quarter of 2018, due to lower margins earned in both the Refined Products and Crude Marketing businesses
- Adjusted EBITDA from continuing operations(1) of $121 million in the third quarter inclusive of an $11 million credit related to the amendment of the Company’s retirement benefits plan, or $110 million before the gain
- Distributable cash flow from combined operations(2) of $72 million in the third quarter, resulting in a payout ratio on a trailing twelve-month basis of approximately 60%, well below the Company’s 70% to 80% target range
- Continue to maintain a strong balance sheet, with Net Debt to Pro Forma Adjusted EBITDA at September 30, 2019 of 2.6x, below the Company’s 3.0x – 3.5x target range, and remain fully-funded for all sanctioned capital
Strategic Developments and Highlights:
- Subsequent to the end of the quarter, placed the Pyote East Pipeline into service and secured the dedication of an additional 65,000 acres, increasing dedicated acreage in the Wink area to over 135,000 acres
- S&P Global Ratings raised its long-term issuer rating for Gibson to Investment Grade at “BBB–” with a “Stable” outlook, representing a second Investment Grade rating of the Company
- Issued $500 million Senior Unsecured Medium Term Notes with a fixed coupon of 3.6% per annum and maturing September 17, 2029. A portion of the proceeds were used to redeem the Company’s outstanding $300 million 5.375% notes due 2022 in full on October 17, 2019
- Closed the sale of the Canadian Truck Transportation business for proceeds of approximately $70 million prior to customary closing adjustments and contingent bonus payments to Gibson, and expect to close the associated sale of a field office and shop facilities for additional proceeds of approximately $30 million in the first quarter of 2020, resulting in aggregate proceeds from the divestiture of approximately $100 million
(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 Operations” for 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 2019 third quarter Management’s Discussion and Analysis and unaudited Condensed Consolidated Financial Statements provide a detailed explanation of Gibson’s financial and operating results for the three and nine months ended September 30, 2019, as compared to the three and nine months September 30, 2018. These documents are available at www.gibsonenergy.com and at www.sedar.com.
2019 Third Quarter Results Conference Call
A conference call and webcast will be held to discuss the 2019 third quarter financial and operating results at 7:00am Mountain Time (9:00am Eastern Time) on Tuesday, November 5, 2019.
The conference call dial-in numbers are:
- 478-219-0003 / 844-358-6759
- Participant Pass Code: 1994214
This call will also be broadcast live on the Internet and may be accessed directly at the following URL:
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 November 13, 2019, using the following dial-in numbers:
- 404-537-3406 / 855-859-2056
- Participant Pass Code: 1994214
Gibson has also made available certain supplementary information regarding the third quarter financial and operating results, available at www.gibsonenergy.com
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.