Gibson Energy Inc.
TSX : GEI

Gibson Energy Inc.

August 02, 2016 16:15 ET

Gibsons Reports Financial Results for Second Quarter 2016 and Confirms Growth Capital Spending Guidance for 2016 and 2017

CALGARY, ALBERTA--(Marketwired - Aug. 2, 2016) -

All financial figures are in Canadian dollars

Gibson Energy Inc. ("Gibsons" or the "Company") (TSX:GEI) announced today operating and financial results for the three months ended June 30, 2016.

Highlights:

  • Adjusted EBITDA(1) of $44 million in the second quarter of 2016 was supported by strong performance of the Infrastructure segment despite overall results being negatively impacted by a management estimated $10 million related to certain non-recurring headwinds resulting from forest fire production curtailments and a longer than expected annual turnaround at the Moose Jaw processing facility;
  • Capital expenditures were $63 million in the second quarter of 2016, of which $53 million was related to the on-going terminal infrastructure expansions at Hardisty and Edmonton;
  • The Company expects 2016 growth capital spending, excluding acquisitions, to be approximately $225 million of which 95% will be allocated to construction projects currently underway within the Infrastructure segment. All of these projects remain on track for scheduled in-service dates. Additionally, the Company confirms its preliminary estimate for growth capital spending in 2017 of between $200 and $300 million as well as its confidence in securing additional projects to underpin this level of investment; and
  • On July 20, 2016, the Company announced it had engaged a financial advisor to assist with a potential sale of the Company's Industrial Propane segment.

"In the continued challenging operating environment, Gibsons has made significant strides to manage our businesses more cost efficiently and has doubled efforts to simplify the business and focus investment capital on our highest risk-adjusted return growth projects," said Stewart Hanlon, Gibsons' President and Chief Executive Officer. "The decision to explore the potential sale of our Industrial Propane segment fits with this strategy."

Mr. Hanlon added, "While we remain confident in an eventual recovery, we will continue to focus organic growth capital towards infrastructure projects which further underpins our long-term strategy to transition investment away from activity sensitive businesses towards stable, fixed fee infrastructure projects. These projects provide good visibility to cash flow growth in 2016 and construction is well underway in support of 2017 cash flow growth. Furthermore, we are confident that we will be securing additional projects shortly which will provide cash flow growth for 2018 as well. Accordingly, in step with the commissioning schedule of our infrastructure projects, we expect our payout ratio to move back into a more sustainable range."

(1) Adjusted EBITDA is defined in Gibsons' Management's Discussion and Analysis.

Management's Discussion and Analysis and Financial Statements

The Second Quarter 2016 Management's Discussion and Analysis and Consolidated Financial Statements provide a detailed explanation of Gibsons' operating results for the three and six months ended June 30, 2016, as compared to the three and six months ended June 30, 2015. These documents are available at www.gibsons.com and at www.sedar.com.

2016 Second Quarter Results Conference Call

A conference call to discuss Gibsons' first quarter results will be held at 9:00 a.m. MT (11:00 a.m. ET) on Wednesday, August 3, 2016, for interested investors, analysts and media representatives.

The conference call dial-in numbers are:

  • 866-696-5910 from Canada and the US
  • 416-340-2217 from Toronto and International
  • Participant Pass Code: 9822539

Shortly after the call, an audio archive will be posted on the Investor/News section at www.gibsons.com. The call will also be recorded and available for playback 60 minutes after the meeting end time, until November 2, 2016, using the following dial in process:

  • 905-694-9451 / 800-408-3053
  • Pass code: 6754251

About Gibsons

Gibsons is a Canadian-based midstream energy company with operations in most of the key hydrocarbon-rich basins in North America. For over 60 years, Gibsons has delivered integrated midstream solutions to customers in the oil and gas industry. With headquarters in Calgary, Alberta, the Company's North American operations include the storage, blending, processing, transportation, marketing and distribution of crude oil, liquids and refined products. The Company also provides oilfield waste and water management services. Gibsons is the second largest industrial propane distribution company in Canada operating under the Canwest Propane and Stittco Energy brands.

Gibson Energy Inc. shares trade under the symbol GEI and are listed on the Toronto Stock Exchange. For more information, visit www.gibsons.com.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information and statements (collectively, "forward-looking statements") including, but not limited to, statements concerning the Company's growth capital spending, the timing and completion of construction projects, future additional projects, the potential sale of the Company's Industrial Propane segment and management's expectation with respect to the Company's business and financial prospects and opportunities. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "shall", "project", "should", "could", "would", "believe", "predict", "forecast", "pursue", "potential" and "capable" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In addition, this news release may contain forward-looking statements and forward-looking information attributed to third party industry sources. The Company does not undertake any obligations to publicly update or revise any forward looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in "Forward-Looking Statements" and "Risk Factors" included in the Company's Annual Information Form dated March 1, 2016 as filed on SEDAR and available on the Gibsons website at www.gibsons.com.

This news release refers to certain financial measures that are not determined in accordance with International Financial Reporting Standards ("IFRS"). Adjusted EBITDA and Pro Forma Adjusted EBITDA are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Management considers these to be important supplemental measures of the Company's performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industries with similar capital structures. See "Summary of Quarterly Results" in the Company's MD&A for a reconciliation of EBITDA to net income, the IFRS measure most directly comparable to EBITDA, and for a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to EBITDA. Distributable cash flow is used to assess the level of cash flow generated from ongoing operations and to evaluate the adequacy of internally generated cash flow to fund dividends. See "Distributable Cash Flow" in the Company's MD&A for a reconciliation of distributable cash flow to cash flow from operations, the IFRS measure most directly comparable to distributable cash flow. Investors are encouraged to evaluate each adjustment and the reasons the Company considers it appropriate for supplemental analysis. Investors are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with IFRS as an indication of the Company's performance.

Selected Financial Highlights

(Thousands)

Three months ended
June 30
Six months ended
June 30
2016 2015 2016 2015
Segment Profit*:
Infrastructure $ 43,864 $ 44,479 $ 92,225 $ 87,997
Logistics 3,163 21,043 12,846 49,828
Wholesale 780 8,358 5,945 39,287
Industrial Propane 2,728 4,247 19,202 23,640
Other (178 ) 3,544 360 3,705
Total Segment Profit $ 50,357 $ 81,671 $ 130,578 $ 204,457
Adjusted EBITDA $ 44,281 $ 75,643 $ 118,324 $ 190,216
Capital Expenditures, excluding acquisitions:
Growth Capital $ 52,530 $ 74,198 $ 108,448 $ 153,626
Upgrade and Replacement Capital 10,664 7,613 16,130 19,478
Total $ 63,194 $ 81,811 $ 124,578 $ 173,104
Trailing Twelve Month Metrics:
June 30, 2016
Pro Forma Adjusted EBITDA 314,392
Distributable Cash Flow 135,366
Dividends Declared to Shareholders 169,177
Payout Ratio 125 %
Leverage Metrics:
Total Debt Ratio 3.3
Interest Coverage Ratio 3.6
* Segment profit is defined as revenue minus (i) cost of sales; and (ii) operating costs. It excludes depreciation, amortization, impairment charges, stock based compensation and corporate expenses.

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