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Gibson Energy Reports Solid Second Quarter Results and Announces Plans to Divest U.S. Environmental Services Business

CALGARY, Alberta, Aug. 01, 2017 (GLOBE NEWSWIRE) -- Gibson Energy Inc. ("Gibsons” or the “Company"), (TSX:GEI), announces performance driven by continued growth in its crude oil infrastructure business, resulting in significant increases in profit and distributable cash flow. The Company also announces plans to divest of its United States Environmental Services business.

Highlights:

(Comparisons made between fiscal Q2 2017 and fiscal Q2 2016 results, unless otherwise noted.)

  • On June 5, 2017, the Company announced the appointment of Steve Spaulding as the Company’s President and Chief Executive Officer, effective June 19, 2017, at which time he also become a member of Gibsons’ Board of Directors;
  • Concurrent with this press release, the Company announces its intention to divest its United States Environmental Services business;
  • Combined segment profit1 of $74 million represented an increase of 47%, supported by a 32% increase in Infrastructure segment profit to $58 million as a result of additional tank capacity and associated fixed fee contracts added late in 2016;
  • Combined adjusted EBITDA2 increased by 50% to $66 million;
  • Distributable cash flow3 from continuing operations increased by 433% to $44 million;
  • The Company expects 2017 growth capital spending to be between $170 and $200 million of which approximately 90% represents infrastructure investments currently underway. All projects are either on track or ahead of scheduled in-service dates. Additionally, the Company confirms its preliminary estimate of 2018 growth capital spending of between $150 and $250 million; and
  • On July 17, 2017, the Company repaid the remaining $39 million of its 7% senior notes, due in 2020, adding to the previously announced program to create approximately $30 million in run rate cost savings.

“Our results and activities over the first half of the year demonstrate the effectiveness of our strategy to focus on growing our midstream infrastructure and have us well-positioned for future growth,” said Steve Spaulding, President and Chief Executive Officer. “Since joining the Company in mid-June, I have been actively reviewing Gibsons’ business. The focus moving forward, is to ensure the Company is executing on a strategy that will create long-term shareholder value during a period of modest commodity prices. This value will be underpinned by the delivery of high quality cash flows supporting the current dividend, to which we remain firmly committed, and its future growth. This includes continued crude oil infrastructure investment, with a preference for organic growth, while improving asset returns through a renewed customer emphasis. As part of this focus, we intend to divest our United States Environmental Services business by the end of the fiscal year. Though this business is performing well this year, it is one that no longer fits with the Company’s long-term focus on infrastructure assets.”


(1) Combined segment profit is defined in Gibsons’ Management’s Discussion and Analysis
(2) Combined adjusted EBITDA is defined in Gibsons’ Management’s Discussion and Analysis
(3) Distributable cash flow from continuing operations is defined in Gibsons’ Management’s Discussion and Analysis

Management’s Discussion and Analysis and Financial Statements

The Second Quarter 2017 Management’s Discussion and Analysis and Condensed Consolidated Financial Statements provide a detailed explanation of Gibsons’ operating results for the three and six months ended June 30, 2017, as compared to the three and six months ended June 30, 2016. These documents are available at www.gibsons.com and at www.sedar.com.

2017 Second Quarter Results Conference Call

A conference call to discuss Gibsons’ second quarter results will be held at 7:00 a.m. MT (9:00 a.m. ET) on Wednesday, August 2, 2017, 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: 5924396#

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 October 25, 2017, using the following dial in process:

  • 905-694-9451 / 800-408-3053
  • Participant Pass Code: 1738292#

About Gibsons

Gibsons is a Canadian-based midstream energy company with operations in most of the key hydrocarbon-rich basins in North America. With headquarters in Calgary, Alberta, the Company’s North American operations include the storage, blending, processing, transportation, marketing and distribution of crude oil, natural gas liquids and refined products. The Company also provides oilfield waste and water management services.

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 within the meaning of applicable securities laws (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 United States Environmental Services business 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 expressing future outcomes or statements regarding an outlook 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 or referred to 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 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 Information” and “Risk Factors” included in the Company’s Annual Information Form dated March 7, 2017 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 INFORMATION
Three months ended June 30 Six months ended June 30
2017 2016 4 2017 2016 4
Continuing operations
Revenue$ 1,480,196 $ 1,095,026 $ 2,929,758 $ 2,001,253
Segment profit 74,032 47,629 160,798 111,376
Net loss (5,523) (132,368) (15,431) (96,793)
Basic and diluted loss per share (0.04) (1.01) (0.11) (0.73)
Adjusted EBITDA 2,3 66,387 41,553 139,656 99,474
EBITDA 2,3 59,661 (71,968) 94,005 23,518
Distributable cash flow 2,3 43,524 8,161 85,303 24,705
Dividends declared 47,075 46,710 94,132 88,453
Cash flow from operating activities 52,403 69,975 154,411 129,329
Growth capital expenditures$ 24,456 $ 52,364 $ 49,498 $ 107,899
Combined operations 1
Segment profit 1$ 74,032 $ 50,357 $ 174,435 $ 130,578
Combined Adjusted EBITDA 1, 2,3 66,387 44,281 153,293 118,324
Combined EBITDA 1, 2,3 59,661 (69,240) 283,006 42,720
Distributable cash flow 2,3$ 43,524 $ 9,454 $ 87,161 $ 41,304


As at June
30, 2017
As at December
31, 2016
Ratios
Total and senior debt leverage ratio3.2 4.4
Interest coverage ratio3.2 3.0

1 See discussion on non-GAAP measures on page 36 of the MD&A. Combined segment profit, Adjusted EBITDA and EBITDA represent the aggregated results of both continuing and discontinued operations which are provided separately in this document.
2 See discussion on non-GAAP measures on pages 20 to 22 and 36 of the MD&A.
3 See pages 30 and 19 to 24 of the MD&A for a reconciliation of distributable cash flow to cash flow from operations and EBITDA to net income (loss), respectively. Distributable cash flow from combined operations include results from continuing and discontinued operations.
4 Comparative period information has been restated to reflect the impact of discontinued operations In accordance with the requirements of IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations. Unless otherwise stated, the Industrial Propane segment is referred to as “Discontinued Operations”, and the remaining operations as “Continuing Operations”, and the total discontinued and continuing operations as “Combined Operations”.

For further information, please contact: Tammi Price Vice President Investor Relations & Corporate Development (403) 206-4212 tprice@gibsons.com

Source: Gibson Energy ULC