All financial figures are in Canadian dollars unless otherwise noted
“Gibson delivered strong operational and financial results in the first quarter, driven by the continued growth of stable, long-term cash flows from our Infrastructure segment, which have increased over 40% in the last two years and are expected to represent roughly 80% of our business in 2020,” said Steve Spaulding, President and Chief Executive Officer. “During the quarter, we witnessed a profound shift in the near to medium-term outlook for the global energy industry with the outbreak of COVID-19. Most importantly, I am proud of the Gibson Energy team, and the numerous efforts we made, and continue to advance, to protect our people and ensure the safe, reliable operation of our assets.”
Mr. Sean Brown, Senior Vice President and Chief Financial Officer added, “From a financial perspective, though these are very challenging times for our customers, and our industry as a whole, I am comforted by the fact that by re-focusing the Company around high-quality oil-infrastructure businesses we are positioned well. We have built significant resiliency into our business with long-term, stable cash flows from predominantly investment grade counterparties and maintaining a conservative balance sheet with a fully-funded model for growth capital.”
- Distributable cash flow from combined operations(1) of $86 million in the first quarter, a $3 million or 4% increase over the first quarter of 2019 due a meaningful increase in contribution from the Infrastructure segment more than offsetting the decrease in the Marketing segment from a robust quarter in 2019
- Infrastructure segment profit of $98 million in the first quarter, a $23 million or 31% increase over the first quarter of 2019, primarily due to additional tankage in service at Hardisty as well as the expansion of the HURC Facility and the expansion of the Moose Jaw Facility
- Marketing segment profit of $36 million in the first quarter, a $25 million or 41% decrease over the first quarter of 2019, with the comparative quarter having benefitted from opportunities created by volatility in crude differentials and a stronger market for Refined Products
- Adjusted EBITDA from continuing operations(2) of $129 million in the first quarter, a $10 million or 9% increase over the first quarter of 2019, leading to Net Debt to Pro Forma Adjusted EBITDA at March 31, 2020 of 2.7x, below the Company’s 3.0x – 3.5x target range and reflective of Gibson’s strong financial position
- Remain fully-funded for all sanctioned capital and continue to maintain ample liquidity through a $750 million Revolving Credit Facility that was effectively undrawn net of cash at the end of the first quarter
- Payout ratio on a trailing twelve-month basis of 62%, well below the Company’s 70% to 80% target range
Strategic Developments and Highlights:
- Subsequent to the end of the quarter, recognizing the importance of sustainability and ESG principles in how the Company operates and in its business strategy, Gibson published its inaugural Sustainability Report
- Finalized all required commercial agreements with ConocoPhillips Canada to fully underpin and sanction the construction of the initial phase of the DRU at 50,000 barrels per day of inlet bitumen capacity under long-term, take-or-pay agreements, and also received all required regulatory approvals from the Government of Alberta to proceed with the construction of the DRU
- Amended the Company’s Revolving Credit Facility to increase the capacity from $560 million to $750 million and extended the maturity date from March 2024 to February 2025
- Announced that Ms. Judy Cotte joined the Company’s Board of Directors effective March 17, 2020
- Subsequent to the end of the quarter, DBRS Morningstar reaffirmed its Issuer Rating of “BBB (low)” with a “Stable” trend, citing Gibson’s contracted cash flows, competitive position and reasonable financial metrics
|(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 condensed consolidated financial statements.|
COVID-19 Response Update
The COVID-19 pandemic has prompted the Government of Alberta to declare a state of public health emergency. Alongside government and public health officials, Gibson is actively monitoring COVID-19 updates and following the latest guidance. As the COVID-19 pandemic continues to evolve, Gibson is prioritizing the health and safety of its workforce by directing employees to work remotely from home wherever possible pursuant to the Company’s business continuity plan. For employees at the Company’s facilities, Gibson has implemented “business minimum” staffing levels in combination with stringent safety and hygiene protocols to both protect employees and ensure the continued delivery of critical services to meet the needs of customers and other stakeholders.
Gibson believes that preparation, along with a dedicated team, has led to a seamless transition. The Company would like to recognize the continued efforts of all Gibson employees during this time and would also thank all its stakeholders for their ongoing support.
Management’s Discussion and Analysis and Financial Statements
The 2020 first 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 months ended March 31, 2020, as compared to the three months ended March 31, 2019. These documents are available at www.gibsonenergy.com and at www.sedar.com.
2020 First Quarter Results Conference Call
A conference call and webcast will be held to discuss the 2020 first quarter financial and operating results at 7:00am Mountain Time (9:00am Eastern Time) on Tuesday, May 5, 2020.
The conference call dial-in numbers are:
- 478-219-0003 / 844-358-6759
- Participant Pass Code: 6299604
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 Wednesday, May 13, 2020, using the following dial-in numbers:
- 404-537-3406 / 855-859-2056
- Participant Pass Code: 6299604
Annual General Meeting & Webcast Details
Gibson is holding its annual meeting of shareholders on Tuesday, May 5, 2020 at 10:00am Mountain Time (12:00 noon Eastern Time). In light of public health concerns regarding COVID-19, shareholders will not be able to attend the meeting in person as it will be held as a virtual-only meeting conducted via live audio webcast. Shareholders will have an equal opportunity to participate at the virtual-only meeting regardless of their geographic location. Participants are encouraged to register for the live audio webcast at least 10 minutes prior to the presentation start time.
Following the conclusion of the formal proceedings of Gibson’s annual shareholder meeting, Mr. Steve Spaulding, President and Chief Executive Officer, will address shareholders and provide brief remarks on the current state of the business and discuss highlights of the Company’s key initiatives (including the launch of the Company’s Sustainability Report).
The live audio webcast can be accessed using the following URL:
The webcast will remain accessible for a 12-month period on Gibson’s website, www.gibsonenergy.com.
Gibson has also made available certain supplementary information regarding the first quarter financial and operating results, available on the Company’s website (as noted above).
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.