Gibson Energy Inc. Reports 2012 Second Quarter Financial Results

Aug 07, 2012

All financial figures are in Canadian dollars

CALGARY, Aug. 7, 2012 /CNW/ - Gibson Energy Inc. ("Gibson" or the "Company"), TSX: GEI, announced today strong results for the second quarter of 2012 supported by increases in segment profit1 across four operating segments.

Adjusted EBITDA2 increased by 47% to $62.0 million for the three months ended June 30, 2012 compared to $42.1 million in the three months ended June 30, 2011.  Adjusted EBITDA in the six months ended June 30, 2012 increased by 35% to $133.8 million compared to $99.1 million in the six months ended June 30, 2011.  Pro Forma Adjusted EBITDA3 for the twelve months ended June 30, 2012 was $270.3 million.

Cash provided by operations for the three and six months ended June 30, 2012 was $56.1 million and $120.8 million, respectively, compared to $23.5 million and $87.1 million in the three and six months ended June 30, 2011.

"Despite falling crude prices in the second quarter, our integrated business model continues to deliver strong results," said Stewart Hanlon, Gibson's President and Chief Executive Officer.  "I am very pleased with our results, especially considering the typical seasonality impacts that occur in this quarter."

For the three months ended June 30, 2012, segment profit increased by 34% to $64.7 million compared to $48.2 million in the same period for 2011 driven by significant increases in the Company's Truck Transportation, Marketing, Propane and NGL Marketing and Distribution, and Terminals and Pipelines segments. Segment profit increased by 25% to $143.1 million in the six months ended June 30, 2012 compared to $114.7 million in the six months ended June 30, 2011, with large increases in the Company's Terminals and Pipelines, Truck Transportation and Marketing segments.

The majority of Gibson's operations experienced volume increases in the second quarter of 2012 versus the same period in 2011.  Higher volumes were achieved at the Hardisty and Edmonton Terminals, injection stations in the U.S., Truck Transportation, retail propane, roofing flux and the crude oil from the Company's Marketing segment.

Other Highlights for the Three and Six Months Ended June 30, 2012:

  • On May 1, 2012, the Company completed the acquisition of Fricken Fracken Water Hauling Ltd. for approximately $4.6 million, expanding its market presence in west central Saskatchewan and providing synergies with the Company's custom treating and terminals business by providing water and transportation services;
   
(1)      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.
(2)      Adjusted EBITDA is defined as consolidated net income (loss) before interest expense, income taxes, depreciation, amortization, other non-cash expenses and charges deducted in determining consolidated net income (loss), including movement in the unrealized gains and losses on the Company's financial instruments, stock based compensation expense, impairment of goodwill and intangible assets, and non-cash inventory write-downs. It also takes into account the impact of foreign exchange movements in the Company's U.S. dollar denominated long-term debt, management fees, debt extinguishment costs and other adjustments that are considered non-recurring in nature.
(3)      Pro Forma Adjusted EBITDA differs from Adjusted EBITDA in that it also includes the pro forma effect of acquisitions that took place in the twelve month period as if the acquisitions took place at the beginning of the twelve month period in which such acquisitions occurred.
(4)  Distributable cash flow is defined as cash flow generated from operating activities excluding changes in non-cash working capital minus (i) upgrade and replacement capital; (ii) interest paid; and (iii) current income tax.
  • On July 24, 2012, subsequent to quarter end, the Company completed the acquisition of Mobile Propane Services Inc. for consideration of approximately $4.9 million plus working capital. The acquisition expands the Company's retail propane market presence in south east Saskatchewan, provides synergies with the Company's current businesses and provides it with an expanded client base;

  • Capital expenditures, excluding acquisitions, were $87.9 million in the six months ended June 30, 2012, of which $66.0 million related to internal growth projects. The internal growth project expenditures are primarily related to the construction of tankage and pipeline connections at the Company's facilities, the expansion of the custom treating and terminals business and the growth of the Truck Transportation and Canwest fleets;

  • The Company declared a dividend of $0.25 per common share in each of the three month periods ended March 31, 2012 and June 30, 2012 for total dividends of $24.9 million in the three months ended June 30, 2012 and $49.7 million in the six months ended June 30, 2012. For the twelve months ended June 30, 2012, distributable cash flow4 was $165.3 million resulting in a dividend payout ratio of 60%; and

  • On May 24, 2012, through an amendment of its existing credit agreement, the Company replaced its U.S.$645.0 million senior secured first lien term loan facility with a U.S.$650.0 million senior secured first lien term loan facility and re-priced such loan to reflect a decrease in the interest rate from LIBOR plus 4.5% to LIBOR plus 3.75% and a decrease in the LIBOR Floor from 1.25% to 1.0%.  Also, the Company's U.S.$275.0 million revolving credit facility was expanded by U.S.$100.0 million to U.S.$375.0 million.

The Company has also increased its 2012 Capital Expenditure Program from $173 million to $225 million.  This $52 million increase is due to organic growth opportunities and acquisitions.  "A key part of our growth strategy is to continually expand our integrated asset base to capture synergies," said Gibson's Chief Financial Officer, Donald Fowlis.  "This increase in our growth capital for 2012 will be funded through cash on hand, expected cash flow from existing operations and potential drawings on our revolving credit facility."

Management's Discussion and Analysis and Financial Statements

The Company's Management's Discussion and Analysis and the Condensed Consolidated Financial Statements provide a more detailed explanation of Gibson's operating results for the three and six months ended June 30, 2012, as compared to the three and six months ended June 30, 2011.  These documents are available at www.gibsons.com and at www.sedar.com.

2012 Second Quarter Results Conference Call

A conference call to discuss Gibson's second quarter results will be held at 7:00 a.m. MT (9:00 a.m. ET) on Wednesday, August 8, 2012 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:  7015666#

Shortly after the call, an audio archive will be posted on the Investor Relations and Media section at http://www.gibsons.com.

The call will also be recorded for playback 60 minutes after the meeting end time, until February 8, 2013, using the following dial in process:

  • 905-694-9451 / 800-408-3053
  • Pass code:  8654994#

About Gibson

Gibson is one of the largest independent midstream energy companies in Canada and a major participant in the crude oil transportation business in the United States, and is engaged in the movement, storage, blending, processing, marketing and distribution of crude oil, condensate, natural gas liquids, and refined products.  Gibson transports hydrocarbons by utilizing its integrated network of terminals, pipelines, storage tanks, and truck fleet located throughout western Canada and the United States.  Gibson is also involved in the processing, blending and marketing of hydrocarbons, provision of water disposal and oilfield waste management services and is the second largest retail propane distribution company in Canada.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information and statements (collectively, "forward-looking statements"). 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 6, 2012 as filed on SEDAR and available on the Gibson 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 (loss), 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 (loss) determined in accordance with IFRS as an indication of the Company's performance.

Second Quarter- Selected Financial Highlights

  Three months ended June 30   Six months ended June 30
  2012   2011   2012   2011
  (in thousands)
               
Segment Profit:              
Terminals and Pipelines $19,970   $17,075   $43,023   $33,811
Truck Transportation 20,950   13,177   40,312   29,413
Propane and NGL Marketing and Distribution 5,585   4,660   20,919   22,208
Processing and Wellsite Fluids  1,737   3,777   12,466   14,905
Marketing  16,409   9,501   26,365   14,327
Total Segment Profit  64,651   48,190   143,085   114,664
               
Statement of Cash Flows Data:              
Cash flows provided by (used in):              
Operating Activities  $56,114   $23,532   $120,755   $87,103
Investing Activities  (43,865)   (34,331)   (78,520)   1,775
Financing Activities  (32,428)   35,557   (52,631)   (18,769)
               
Other Financial Data:              
Capital Expenditures:              
Internal Growth Projects  $32,967   $22,459   $66,017   $37,418
Upgrade and Replacement Capital  12,877   13,149   21,856   21,617
Acquisitions  4,640   -   4,640   -
               
Adjusted EBITDA  $62,044   $42,147   $133,833   $99,086
               
  Twelve
months ended
June 30, 2012
           
Pro Forma Adjusted EBITDA  $270,261            
               

 

SOURCE: Gibson Energy Inc.

For further information:

Ken Hall
Vice President Investor Relations and Communications
(403) 781-2899
ken.hall@gibsons.com