All financial figures are in Canadian dollars unless otherwise noted
“In a very challenging quarter for our industry, Gibson delivered strong operational and financial results, highlighting the resilient nature of our Infrastructure segment’s long-term, contracted cash flows as well as the ability of our Marketing organization to effectively realize available opportunities,” said Steve Spaulding, President and Chief Executive Officer. “Our first priority continues to be our COVID-19 response, including protecting our people and our customers, and ensuring the safe, reliable operation of our assets. With the economy reopening and the partial recovery in oil prices, we have seen the return of a more normalized business environment, including the resumption of discussions with several potential customers for both additional tankage and future phases at the DRU. Reflective of our commitment to maintain a very strong financial position, both leverage and payout are well below target levels, our capital program is fully-funded and we have access to significant liquidity.”
- Distributable cash flow(1) of $94 million in the second quarter, a $14 million or 18% increase over the second quarter of 2019, due an increased contribution from both the Infrastructure and Marketing segments
- Infrastructure segment profit of $90 million in the second quarter, a $17 million or 24% increase over the second quarter of 2019 on a comparable basis(2), primarily due to additional tankage in service at Hardisty as well as from the expansion of both the HURC Facility and the Moose Jaw Facility
- Marketing segment profit of $44 million in the second quarter, a $6 million or 16% increase over the second quarter of 2019, driven by a strong contribution from Crude Marketing primarily due to time-based opportunities created by significant volatility in commodity markets during the quarter
- Adjusted EBITDA(3) of $143 million in the second quarter, a $34 million or 32% increase over the second quarter of 2019 on a comparable basis(2), leading to Net Debt to Pro Forma Adjusted EBITDA at June 30, 2020 of 2.4x, well below the Company’s 3.0x – 3.5x target range and reflective of Gibson’s strong financial position
- Fully-funded for all sanctioned capital and continue to maintain ample liquidity through a $750 million Revolving Credit Facility that remained effectively undrawn net of cash at the end of the second quarter
- Payout ratio on a trailing twelve-month basis of 60%, well below the Company’s 70% to 80% target range
Strategic Developments and Highlights:
- Recognizing the importance of transparency and continuing to embed sustainability and ESG principles into the Company’s strategy and operations, Gibson published its inaugural Sustainability Report
- Performed a thorough review of all capital projects and continue to expect total growth capital in 2020 of approximately $300 million, reflecting the highly contracted nature of Gibson’s sanctioned capital program
- Subsequent to the end of the quarter, issued $650 million of Senior Unsecured Medium Term Notes, comprised of $325 million of 2.45% notes due July 14, 2025 and $325 million of 2.85% notes due July 14, 2027. A portion of the proceeds were used to redeem the Company’s outstanding $600 million 5.25% notes due 2024 in full on July 22, 2020, resulting in annualized interest savings of approximately $16 million over the remaining term of the redeemed notes
(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) Comparisons made after adjusting for a $15 million future environmental remediation provision in the prior period and on a continuing operations basis.
(3) 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.
Sustainability and ESG
Gibson released its inaugural Sustainability Report during the second quarter. The Company believes that sustainability and ESG are a journey and plans to make meaningful progress each year. Gibson has taken the following steps:
- Formalized oversight of sustainability by the Board of Directors
- Appointed Judy Cotte, a recognized expert on ESG and responsible investing, to the Company’s Board of Directors
- Expanded the number of ESG related targets/metrics in certain incentive compensation programs as well as increased the overall weighting of such targets/metrics in determining such incentives
- Established an internal carbon and climate change working group to focus on, among other things, identifying carbon reduction and optimization opportunities such as the expansion of its Moose Jaw Facility with a design that resulted in a net decrease in carbon intensity on a per throughput barrel basis
- Adopted a Diversity and Inclusion Policy and formed a Diversity and Inclusion Council to champion various diversity initiatives throughout the organization
- Increased community investment spending to $1 million for 2020
To provide another platform for transparency with the Company’s stakeholders regarding its environmental information, Gibson is finalizing its inaugural CDP (formerly the Carbon Disclosure Project) submission to be made public later this month. The learnings from the CDP process will further allow the Company to identify opportunities for action and further integrate sustainability into its strategic planning, operations and capital allocation processes.
Management’s Discussion and Analysis and Financial Statements
The 2020 second 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 six months ended June 30, 2020, as compared to the three and six months ended June 30, 2019. These documents are available at www.gibsonenergy.com and at www.sedar.com.
2020 Second Quarter Results Conference Call
A conference call and webcast will be held to discuss the 2020 second quarter financial and operating results at 7:00am Mountain Time (9:00am Eastern Time) on Wednesday, August 5, 2020.
The conference call dial-in numbers are:
- 478-219-0003 / 844-358-6759
- Participant Pass Code: 2298236
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 August 13, 2020, using the following dial-in numbers:
- 404-537-3406 / 855-859-2056
- Participant Pass Code: 2298236
Gibson has also made available certain supplementary information regarding the second 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.