Gibson Energy Inc. announced its financial and operating results for the three and nine months ended September 30, 2020.
“In what remains a challenging environment for our industry, the resilient nature of our Infrastructure segment’s long-term, contracted cash flows continued to underpin our strong quarterly operating and financial results as well as our solid financial position,” said Steve Spaulding, President and Chief Executive Officer. “Despite the challenges brought on by COVID-19, during the third quarter we placed additional gathering and terminalling infrastructure in the U.S. into service ahead of schedule and expect to put three additional tanks at Hardisty into service in the fourth quarter. This reflects our ability to continue to grow our Infrastructure cash flows even in the current environment, and looking into 2021, with the resumption of commercial discussions, our outlook remains that we will sanction additional high-quality infrastructure growth opportunities through next year.”
- Distributable cash flow(1) of $65 million in the third quarter, a $7 million or 10% decrease over the third quarter of 2019, due to a decreased contribution from the Marketing segment being only partly offset by an increase in the Infrastructure segment
- Infrastructure segment profit of $93 million in the third quarter, a $12 million or 14% increase over the third quarter of 2019, due to additional tankage in service at Hardisty and the expansion of the HURC Facility
- Marketing segment profit of $23 million in the third quarter, a $26 million or 53% decrease over the third quarter of 2019, driven by reduced margins as well as both limited opportunities with the Crude Marketing business and reduced sales volumes in the Refined Products business in the current quarter
- Adjusted EBITDA(2) of $96 million in the third quarter, a $14 million or 13% decrease over the third quarter of 2019 on a comparable basis(3), a result of a reduced contribution from the Marketing Segment as noted above
- Maintained a strong financial position, with Net Debt to Pro Forma Adjusted EBITDA at September 30, 2020 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:
- Continued its advance Gibson’s sustainability and ESG initiatives, including through the:
° Submission of its inaugural climate change questionnaire to CDP (formerly Carbon Disclosure Project), providing increased transparency regarding Gibson’s environmental and climate-related performance
° Establishment of a stand-alone Sustainability and ESG Committee chaired by Judy Cotte, a recognized expert on ESG and responsible investment, to ensure appropriate Board oversight
° Donation of $1 million, the largest in Gibson’s history, to Trellis (formerly the Boys & Girls Clubs of Calgary and Aspen Family & Community Network Society) to improve mental health support to youth in the community through a five-year partnership
Announced the addition of Ms. Peggy Montana to the Company’s Board of Directors effective August 31, 2020. Ms. Montana’s experience includes various board and senior executive roles within the midstream and refined products sectors, and brings a wealth of knowledge of global best practices in health, safety and the successful implementation of processes across an organization
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
Announced the initiation of a Normal Course Issuer Bid, enabling the Company to purchase and cancel up to 10% of the public float for the issued and outstanding common shares through August 30, 2021
(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.
(3) Comparisons made after adjusting for a $10.8 million credit related to the amendment of the Company’s retirement benefits plan.