All financial figures are in Canadian dollars unless otherwise noted
“Gibson continued to deliver strong, consistent operational and financial results throughout 2019, while also executing on the strategy and completing the transformation we outlined at the start of 2018,” said Steve Spaulding, President and Chief Executive Officer. “Over the course of 2019, we continued to grow our long-term, stable infrastructure cash flows, placing seven new tanks as well as pipelines on both sides of the border into service. In addition, we provided visibility to growth through to 2021 with the sanction of three additional tanks and the DRU at Hardisty, while remaining fully-funded with both leverage and payout well below target levels. In 2020, we will remain focused on the delivery of our strategy, including the continued advancement of ESG principles in all our activities, and are excited to announce that we will issue our inaugural Sustainability Report in the second quarter.”
- Distributable cash flow from combined operations(1) of $76 million in the fourth quarter contributed to 2019 full year performance of $309 million, a $27 million or 9% increase over full year 2018
- Infrastructure segment profit of $86 million in the fourth quarter contributed to 2019 full year performance of $314 million before a $15 million future remediation provision recorded in the second quarter, a $31 million or 11% increase over full year 2018, primarily due to additional tankage in service 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 $46 million in the fourth quarter contributed to 2019 full year performance of $195 million, a $8 million decrease over full year 2018, due to lower margins in the Refined Products business
- Adjusted EBITDA from continuing operations(2) of $126 million in the fourth quarter contributed to 2019 full year performance of $459 million, a $2 million increase over full year 2018
- Continue to maintain a strong balance sheet, with Net Debt to Pro Forma Adjusted EBITDA at December 31, 2019 of 2.7x, below the Company’s 3.0x – 3.5x target range, and remain fully-funded for all sanctioned capital
- Payout ratio on a trailing twelve-month basis of 62%, well below the Company’s 70% to 80% target range
Strategic Developments and Highlights:
- Placed seven tanks, representing 3.1 million barrels of storage, into service at the Top of the Hill portion of the Hardisty Terminal ahead of schedule with capital in-line with budget, increasing Gibson’s tankage in service at the Hardisty Terminal to approximately 12 million barrels, an increase of nearly 35%
- Put the Viking Pipeline, the HURC expansion, the Moose Jaw expansion and the Pyote East Pipeline into service
- Sanctioned the construction of three new tanks, representing 1.5 million barrels of storage, at Top of the Hill and, as part of a joint venture with U.S. Development Group, a DRU at Hardisty with 50,000 barrels per day of inlet capacity, underpinned by long-term, take-or-pay and stable fee-based agreements
- Received two Investment Grade credit ratings, with DBRS Morningstar assigning an Issuer Rating of “BBB (low)” with a “Stable” trend and S&P Global Ratings raising its long-term issuer rating to “BBB–” with a “Stable” outlook
- Successfully completed all of the non-core divestitures announced at the January 2018 Investor Day on schedule and for total proceeds at the midpoint of the initial target range
- Subsequent to the quarter, Gibson’s Board of Directors approved a quarterly dividend of $0.34 per common share, an increase of $0.01 per common share, beginning with the dividend payable in April
(1) Distributable cash flow from combined operations is defined in Gibson’s Management’s Discussion and Analysis (“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.
(2) Adjusted EBITDA from continuing operations is defined in Gibson’s 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 consolidated financial statements.
Management’s Discussion and Analysis and Financial Statements
The 2019 fourth quarter and year-end Management’s Discussion and Analysis and audited Consolidated Financial Statements provide a detailed explanation of Gibson’s financial and operating results for the three and twelve months ended December 31, 2019, as compared to the three and twelve months ended December 31, 2018. These documents are available at www.gibsonenergy.com and at www.sedar.com.
Sustainability and ESG
Gibson recognizes the importance of sustainability and ESG principles in how it operates and in evaluating the Company’s business strategy. During 2019, the Company formalized oversight by the Board of Directors for sustainability under the Environment, Social, Governance / Health and Safety Committee. The Board of Directors also adopted a Diversity and Inclusion policy and the Company formed a Diversity and Inclusion Council to champion various diversity initiatives throughout the organization.
Gibson had previously incorporated safety and certain environment metrics into its compensation programs for management and employees, and in 2019, was able to expand its Moose Jaw Facility with a design that resulted in a net decrease in carbon intensity per barrel. Also in 2019, Gibson’s community investment spending increased by 70% relative to 2018 and is expected to reach $1 million for 2020. As part of the continued evolution of its sustainability and ESG efforts, Gibson is in the later stages of preparing its inaugural Sustainability Report, which it anticipates releasing along with 2020 first quarter results in early May.
Board of Directors
The Company has announced that Susan Jones has stepped down from the Board of Directors effective February 24, 2020.
2019 Fourth Quarter and Year-End Results Conference Call
A conference call and webcast will be held to discuss the 2019 fourth quarter and year-end financial and operating results at 7:00am Mountain Time (9:00am Eastern Time) on Tuesday, February 25, 2020.
The conference call dial-in numbers are:
- 478-219-0003 / 844-358-6759
- Participant Pass Code: 3697468
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 March 3, 2020, using the following dial-in numbers:
- 404-537-3406 / 855-859-2056
- Participant Pass Code: 3697468
Gibson has also made available certain supplementary information regarding the fourth quarter and full year 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.