Solid results continue to demonstrate the Company's
resilience
All financial figures are in Canadian dollars unless otherwise
noted. This news release refers to certain financial measures that
are not defined by Generally Accepted Accounting Principles
("GAAP"), including net revenue, adjusted earnings before interest,
taxes, depreciation and amortization ("adjusted EBITDA"), cash flow
from operating activities per common share, adjusted cash flow from
operating activities and adjusted cash flow from operating
activities per common share. For more information see "Non-GAAP
Measures" herein.
CALGARY, AB, Nov. 5, 2020 /PRNewswire/ -- Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL) (NYSE: PBA)
announced today its financial and operating results for the third
quarter of 2020.
Financial and Operational Overview
|
|
|
|
|
|
3 Months
Ended
|
September
30
|
9 Months
Ended
|
September
30
|
($ millions,
except where noted)(unaudited)
|
2020
|
2019
|
2020
|
2019
|
Infrastructure and
other services revenue
|
744
|
594
|
2,199
|
1,764
|
Product sales
revenue
|
825
|
1,106
|
2,309
|
3,712
|
Total
Revenue
|
1,569
|
1,700
|
4,508
|
5,476
|
Net
revenue(1)
|
849
|
751
|
2,490
|
2,283
|
Gross
profit
|
563
|
613
|
1,746
|
1,830
|
Earnings
|
318
|
370
|
885
|
1,347
|
Earnings per common
share – basic (dollars)
|
0.51
|
0.66
|
1.39
|
2.45
|
Earnings per common
share – diluted (dollars)
|
0.51
|
0.66
|
1.39
|
2.44
|
Cash flow from
operating activities
|
434
|
535
|
1,486
|
1,804
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
0.79
|
1.05
|
2.70
|
3.53
|
Adjusted cash flow
from operating activities(1)
|
524
|
530
|
1,686
|
1,658
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
0.95
|
1.04
|
3.07
|
3.25
|
Common share
dividends declared
|
346
|
307
|
1,039
|
899
|
Dividends per common
share (dollars)
|
0.63
|
0.60
|
1.89
|
1.76
|
Capital
expenditures
|
174
|
421
|
868
|
1,216
|
Total volume
(mboe/d)(2)
|
3,451
|
3,436
|
3,462
|
3,408
|
Adjusted
EBITDA(1)
|
796
|
736
|
2,415
|
2,274
|
(1)
|
Refer to "Non-GAAP
Measures".
|
(2)
|
Total revenue
volumes. Revenue volumes are physical volumes plus volumes
recognized from take-or-pay commitments. Volumes are stated in
thousand barrels of oil equivalent per day ("mboe/d"), with natural
gas volumes converted to mboe/d from millions of cubic feet per day
("MMcf/d") at a 6:1 ratio.
|
Financial and Operational Overview by Division
|
3 Months Ended
September 30
|
9 Months Ended
September 30
|
|
2020
|
2019
|
2020
|
2019
|
($ millions,
except where noted)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,580
|
378
|
541
|
2,570
|
331
|
458
|
2,588
|
1,150
|
1,631
|
2,532
|
1,031
|
1,387
|
Facilities
|
871
|
180
|
251
|
866
|
161
|
233
|
874
|
517
|
757
|
876
|
486
|
701
|
Marketing & New
Ventures(3)
|
—
|
5
|
34
|
—
|
120
|
83
|
—
|
77
|
118
|
—
|
313
|
301
|
Corporate
|
—
|
—
|
(30)
|
—
|
1
|
(38)
|
—
|
2
|
(91)
|
—
|
—
|
(115)
|
Total
|
3,451
|
563
|
796
|
3,436
|
613
|
736
|
3,462
|
1,746
|
2,415
|
3,408
|
1,830
|
2,274
|
(1)
|
Volumes for Pipelines
and Facilities divisions are revenue volumes, which are physical
volumes plus volumes recognized from take-or-pay commitments.
Volumes are stated in mboe/d, with natural gas volumes converted to
mboe/d from MMcf/d at a 6:1 ratio.
|
(2)
|
Refer to "Non-GAAP
Measures".
|
(3)
|
Marketed natural gas
liquids ("NGL") volumes are excluded from Volumes to avoid double
counting. Refer to "Marketing & New Ventures Division" in
Pembina's Management's Discussion and Analysis for the three and
nine months ended September 30, 2020 ("MD&A") for further
information.
|
Financial & Operational Highlights
- Earnings in the third quarter of $318
million represent a 14 percent decrease over the same period
in the prior year. Earnings were positively impacted by higher
gross profit in Pipelines and Facilities, as the contribution from
additional assets following the acquisition of Kinder Morgan Canada
Limited and the U.S. portion of the Cochin Pipeline (the "Kinder
Acquisition") offset weaker global energy demand resulting from the
ongoing COVID-19 pandemic. Marketing and New Ventures was impacted
by lower margins on crude oil and NGL sales during the quarter as a
result of reduced crude activities due to the impact of the
COVID-19 pandemic on market conditions, in addition to lower frac
spreads impacting NGL margins. General & administrative expense
net of other income decreased due to lower incentive costs.
- Third quarter adjusted EBITDA of $796
million represents an eight percent increase over the same
period in the prior year. The third quarter was positively impacted
largely by the contribution from new assets following the Kinder
Acquisition, partially offset by lower margins on crude oil and NGL
sales in the marketing business as a result of lower commodity
prices and frac spreads during the third quarter of 2020, and a
lower contribution from Alliance due to less interruptible volumes
and from Aux Sable due largely to lower NGL margins and a narrower
AECO-Chicago natural gas price differential, which reduced
revenue.
- Cash flow from operating activities of $434 million for the third quarter was a decrease
of 19 percent over the same period in the prior year. The decrease
was primarily driven by an increase in taxes paid, as corporate tax
installments were deferred until the third quarter of 2020 due to
the COVID-19 pandemic, an increase in net interest paid, a decrease
in distributions from equity accounted investees and a change in
non-cash working capital, partially offset by the increase in
operating results after adjusting for non-cash items. On a per
share (basic) basis, cash flow from operating activities for the
third quarter decreased by 25 percent, compared to the same period
in the prior year, due to the same factors, as well as additional
common shares issued pursuant to the Kinder Acquisition.
- Adjusted cash flow from operating activities of $524 million in the third quarter represents a
one percent decrease over the same period in the prior year. The
same factors impacting cash flow from operating activities,
discussed above, were largely offset by the change in taxes paid,
net of the change in non-cash working capital. On a per share
(basic) basis, adjusted cash flow from operating activities for the
third quarter decreased by nine percent compared to the same period
in the prior year, due to the same factors, as well as additional
common shares issued pursuant to the Kinder Acquisition.
- Total volume of 3,451 mboe/d for the third quarter was
consistent with the same period in the prior year.
Divisional Highlights
- Pipelines reported adjusted EBITDA for the third quarter of
$541 million, which represents an 18
percent increase compared to the same period in the prior year. The
quarter was positively impacted by higher revenue associated with
Cochin Pipeline and Edmonton Terminals following the Kinder
Acquisition, partially offset by increased operating expenses
associated with the larger asset base and a lower contribution from
Alliance due to lower interruptible volumes driven by the narrower
AECO-Chicago natural gas price differential.
- Pipelines volumes of 2,580 mboe/d in the third quarter were
consistent with the same period in the prior year. Volumes were
positively impacted by the contribution from Cochin Pipeline
following the Kinder Acquisition, combined with higher temporary
interruptible volumes on Ruby Pipeline, partially offset by lower
throughput on Alberta Ethane Gathering System and lower
interruptible volumes on the Alliance and Vantage pipelines.
Additionally, lower interruptible volumes on Peace Pipeline and
lower volumes on Drayton Valley Pipeline were largely offset by the
Peace Pipeline Phase VI Expansion coming into service in
June 2020 and additional revenue on
the NEBC Pipeline.
- Facilities reported third quarter adjusted EBITDA of
$251 million, which represents an
eight percent increase compared to the same period in the prior
year. The third quarter was positively impacted by the contribution
from Vancouver Wharves, following the Kinder Acquisition, and
Duvernay II being place into service, combined with increased
revenue at Kakwa River, partially offset by lower revenue at the
Resthaven facility and the Cutbank Complex, as well as lower
volumes at the Younger facility.
- Facilities volumes of 871 mboe/d in the third quarter represent
a one percent increase compared to the same period in the prior
year. Volumes during the third quarter were impacted by higher
supply volumes at the Redwater Complex and revenue volumes
associated with Duvernay II being placed into service, largely
offset by lower volumes at the Younger facility due to a regularly
scheduled turnaround.
- Marketing & New Ventures reported third quarter adjusted
EBITDA of $34 million, which
represents a 59 percent decrease compared to the same period in the
prior year. The decrease was largely due to lower margins on crude
oil and NGL sales as a result of the lower crude oil differentials
and frac spreads during the third quarter of 2020, combined with a
lower contribution from Aux Sable due to lower NGL margins and the
narrower AECO-Chicago natural gas price differential, which
resulted in lower revenues.
- Marketed NGL volumes of 169 mboe/d in the third quarter,
represent a four percent decrease compared to the same period in
the prior year. Volumes for the third quarter decreased as Pembina
proactively increased storage positions for NGL with the intention
to monetize them during the upcoming winter season, partially
offset by increased volumes at Aux Sable.
Executive Overview
Pembina's results for the third quarter of 2020 again reinforced
the stability and resiliency of our business and the strategy that
underpins it. Our focus on integration across the hydrocarbon value
chain began over 10 years ago with the acquisition of the Cutbank
Complex. It was furthered in 2012, by an expansion into the natural
gas liquids midstream business, and then more so in 2017 with an
expansion into the natural gas value chain. Along with integration
came diversification of customers, commodities and currencies.
Finally, an unwavering commitment to Pembina's financial guardrails
has been a common thread through this cycle and those which have
preceded it, including the 2015-16 oil price collapse and the
2008-09 financial crisis. Evidence of Pembina's resilience
include:
- Pembina continues to expect 2020 adjusted EBITDA to be within
the Company's original guidance range set in the fourth quarter of
2019, albeit near the lower end of that range, or 96 percent of the
midpoint of the original range. Based on our current outlook for
the remainder of the year, the Company has narrowed its guidance
range and expects to generate adjusted EBITDA of $3.25 billion to $3.30
billion in 2020. The primary drivers of the range include
the results of the crude oil and NGL marketing business, the amount
of interruptible volumes, the timing and completion of typical
fourth quarter integrity and maintenance expense spending and the
Company's share price, specifically relating to the impact on
share-based incentive compensation;
- The underlying business is highly contracted, with
approximately 95 percent of 2020 adjusted EBITDA supported by
long-term, fee-based contracts, including approximately 72 percent
coming from cost-of-service or take-or-pay contracts with no volume
or price risk;
- Approximately 75 percent of the Company's credit exposure is
with investment grade and split-rated counterparties or with
counterparties secured by letters of credit. Non-investment grade
and split-rated counterparty exposure is well diversified across
various industries. Our counterparty portfolio is well diversified
across approximately 200 counterparties, with our top 20 customers
accounting for approximately 70 percent of our exposure;
- We serve the full hydrocarbon value chain, with approximately
40 percent of our business derived from the crude oil and
condensate value chain, approximately 30 percent from the natural
gas liquids value chain and approximately 30 percent from the
natural gas value chain. While crude and condensate pricing has
been weaker during the COVID-19 pandemic, natural gas prices have
strengthened and supported stable results in our Facilities
Division;
- Direct commodity exposure in Pembina's business is limited to
the Marketing & New Ventures Division. For the last two years,
our Marketing & New Ventures Division generated adjusted EBITDA
in excess of $400 million annually,
and in 2020, we expect to generate less than half of that under
unprecedented circumstances. We have remained steadfast in our
systematic natural gas liquids hedging program. By the fall of
2019, we had hedged 50 percent of our 2020 frac spread exposure,
excluding Aux Sable, which to date has generated approximately
$40 million of realized gains. We
have secured hedges for 50 percent of our 2021 frac spread
exposure, excluding Aux Sable, thus achieving our objective for the
upcoming year. The 2021 hedges were executed throughout 2019 and
2020 and therefore reflect a combination of higher and lower frac
spread environments but overall, provide protection against further
narrowing of 2021 frac spreads;
- The balance sheet is strong and resilient. During the second
quarter, Pembina's credit ratings were affirmed at BBB by both
Standard & Poor's and DBRS Limited, with the outlook or trend
maintained as Stable. It is worth noting that Pembina remains among
a select group within the energy infrastructure sector that has not
suffered a negative rating action over the past five years. In 2020
and 2021, we will reduce equity accounted investee debt by
$158 million and $130 million, respectively, through scheduled
amortization. Furthermore, at the end of the third quarter,
available liquidity totaled $2.5
billion; and
- During the first nine months of 2020, Pembina's ratio of common
share dividends to adjusted cash flow from operating activities was
approximately 60 percent. Pembina's commitment to its dividend can
be evidenced by examining its history. Throughout past commodity
and financial cycles, as well as the conversion from a non-taxable
to taxable entity, Pembina has maintained and grown its
dividend.
While it is easy to become mired in the challenges facing the
energy industry, a number of opportunities are beginning to come
into greater focus and we remain optimistic as we approach
2021.
Firstly, the disruptions and challenges of the COVID-19
pandemic, deferral of major capital projects and new work-from-home
protocols have afforded Pembina the opportunity to sharpen its
focus on the productivity and efficiency of the business. Our focus
has been overwhelmingly growth oriented for many years and current
circumstances have created space to enhance another capability,
ultimately benefiting all our stakeholders – customers, investors,
employees and communities. In March, we announced a target of
reducing full year operating and general and administrative
expenses by $100 million relative to
the Company's 2020 budget. We currently expect that 2020 cost
savings will exceed our original target by approximately 50
percent. A significant portion of those savings are expected
to be sustainable into 2021 and beyond.
Secondly, activity levels have stabilized and are beginning to
improve. In Pembina's conventional pipelines business, physical
volumes in July and August were consistent with levels seen at the
end of the second quarter, or roughly eight percent below first
quarter levels and well above the lows experienced in late April
and early May. As is typical for the third quarter of each
year, physical volumes declined in September as operators elected
to perform routine maintenance and turnaround activities.
Additional unplanned outages at third-party facilities also
contributed to lower physical volumes. October physical volumes
have since recovered to levels slightly above those in July and
August. Notably, despite slightly lower and more volatile physical
volumes, due to the take-or-pay nature of the underlying contracts,
revenue volumes in the conventional pipeline business during the
third quarter were relatively unaffected.
Finally, Pembina continues to evaluate its portfolio of deferred
projects. As it relates to the Phase VII Peace Pipeline Expansion
in particular, engineering work is ongoing and focused on
optimizing the scope of the project to meet customers' needs. As a
result of this work, estimated project costs are trending
materially lower. Phase VII and the other deferred projects,
including CKPC's PDH/PP Facility, and the conditions under which
they may be restarted, continue to be evaluated within the context
of our customers' future plans and the ongoing COVID-19 pandemic
and resulting global economic outlook. Further options for
allocating capital include funding a growing backlog of other
uncommitted growth projects, debt repayment and returning capital
to shareholders. Pembina looks forward to providing a fulsome
business update in early December, including an update on each of
the Company's currently deferred capital projects, as well as its
2021 outlook, capital budget and funding plan.
Projects and New Developments1
Pipelines:
- While the Phase VII Peace Pipeline Expansion remains deferred,
the Company continues to advance engineering work and optimize
scope to meet customers' needs.
________
|
(1)
|
For further details
on the Company's significant assets, including definitions, refer
to Pembina's Annual Information Form filed at www.sedar.com (filed
with the U.S. Securities and Exchange Commission at www.sec.gov
under Form 40-F) and on Pembina's website at
www.pembina.com.
|
Facilities:
- Subsequent to the quarter, Pembina completed the startup of new
fractionation and terminalling facilities at the Empress NGL
Extraction Facility. This project was placed into service on time
and on budget. These new assets add approximately 30,000 barrels
per day ("bpd") of propane-plus fractionation capacity and enable
Pembina to optimize propane marketing from the facility between
eastern and western markets.
- Pembina continues to progress Duvernay III, which includes a
100 MMcf/d sweet gas, shallow cut processing train; 20,000 bpd of
inlet condensate stabilization; and other associated
infrastructure. Construction is substantially complete and
commissioning work is currently progressing as planned. The capital
budget is $200 million and the
project is trending under budget with an expected in-service date
in the fourth quarter of 2020.
- Development continues at Pembina's Prince Rupert Terminal
located on Watson Island, British
Columbia. The approximately 25,000 bpd project will
primarily source propane from the Company's Redwater Complex. All
site construction activities have restarted since being temporarily
halted during March, April and May as a result of the COVID-19
pandemic. Facility piping and on-site sphere construction, as well
as marine and electrical work continue to progress to completion.
The project has a capital budget of $250
million and is trending over budget with an expected
in-service date in the first quarter of 2021.
- Pembina continues to progress the Hythe Developments project
whereby Pembina and its 45 percent owned joint venture, Veresen
Midstream, will construct natural gas gathering and processing
infrastructure in the Pipestone Montney region. Construction is
substantially complete. The capital budget for the Hythe
Developments project is $240 million,
net to Pembina, with an anticipated in-service date of late
2020.
Financing
- Subsequent to quarter end, on November
2, 2020, Pembina announced that it did not intend to
exercise its right to redeem the currently outstanding 9,000,000
Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 9
("Series 9 Shares") on December 1,
2020 (the "Conversion Date"). As a result, subject to the
terms of the Series 9 Shares, the holders of the Series 9 Shares
will have the right to convert all or part of their Series 9 shares
on a one-for-one basis into Cumulative Redeemable Floating Rate
Class A Preferred Shares, Series 10 ("Series 10 Shares") on the
Conversion Date. Holders who do not exercise their right to convert
their Series 9 Shares into Series 10 Shares will retain their
Series 9 Shares. The deadline to provide notice of exercise of the
right to convert Series 9 Shares into Series 10 Shares is 3:00
(MST) / 5:00 (EST) on November 16,
2020. For more information on the terms of the Series 9
Shares and the Series 10 Shares, please see the prospectus
supplement dated April 2, 2015, which
can be found under Pembina's profile on SEDAR at www.sedar.com or
on the Company's website at www.pembina.com and the news release
dated November 2, 2020.
Dividends
- Pembina declared and paid dividends of $0.21 per common share in July, August and
September 2020 for the applicable
record dates.
- Pembina declared and paid quarterly dividends per Class A
preferred share of: Series 1: $0.306625; Series 3: $0.279875; Series 5: $0.285813; Series 7: $0.27375; Series 9: $0.296875; Series 11: $0.359375; Series 13: $0.359375; and Series 21: $0.30625 to shareholders of record as of
August 4, 2020. Pembina also declared
and paid quarterly dividends per Class A preferred share of: Series
15: $0.279; Series 17: $0.301313; and Series 19: $0.29275 to shareholders of record on
September 15, 2020. Pembina also
declared and paid quarterly dividends per Class A preferred share
of Series 23: $0.328125; and Series
25: $0.3250 to shareholders of record
on July 31, 2020.
Third Quarter 2020 Conference Call & Webcast
Pembina will host a conference call on Friday, November 6, 2020 at 8:00 a.m. MT (10:00 a.m.
ET) for interested investors, analysts, brokers and media
representatives to discuss results for the third quarter of 2020.
The conference call dial-in numbers for Canada and the U.S. are 647-427-7450 or
888-231-8191. A recording of the conference call will be available
for replay until November 13, 2020 at
11:59 p.m. ET. To access the replay,
please dial either 416-849-0833 or 855-859-2056 and enter the
password 4396278.
A live webcast of the conference call can be accessed on
Pembina's website at pembina.com under Investor Centre/
Presentation & Events, or by entering:
https://produceredition.webcasts.com/starthere.jsp?ei=1290111&tp_key=6417bd122e in
your web browser. Shortly after the call, an audio archive will be
posted on the website for a minimum of 90 days.
About Pembina
Pembina is a leading transportation and midstream service
provider that has been serving North
America's energy industry for more than 65 years. Pembina
owns an integrated system of pipelines that transport various
hydrocarbon liquids and natural gas products produced primarily in
western Canada. The Company also
owns gas gathering and processing facilities; an oil and natural
gas liquids infrastructure and logistics business; is growing an
export terminals business; and is developing a petrochemical
facility to convert propane into polypropylene. Pembina's
integrated assets and commercial operations along the majority of
the hydrocarbon value chain allow it to offer a full spectrum of
midstream and marketing services to the energy sector. Pembina is
committed to identifying additional opportunities to connect
hydrocarbon production to new demand locations through the
development of infrastructure that would extend Pembina's service
offering even further along the hydrocarbon value chain. These new
developments will contribute to ensuring that hydrocarbons produced
in the Western Canadian Sedimentary Basin and the other basins
where Pembina operates can reach the highest value markets
throughout the world.
Purpose of Pembina:
To be the leader in delivering integrated infrastructure
solutions connecting global markets;
- Customers choose us first for reliable and
value-added services;
- Investors receive sustainable industry-leading
total returns;
- Employees say we are the 'employer of choice'
and value our safe, respectful, collaborative and fair work
culture; and
- Communities welcome us and recognize the net
positive impact of our social and environmental
commitment.
Pembina is structured into three Divisions: Pipelines Division,
Facilities Division and Marketing & New Ventures Division.
Pembina's common shares trade on the Toronto and New
York stock exchanges under PPL and PBA, respectively. For
more information, visit www.pembina.com.
Forward-Looking Statements and Information
This document contains certain forward-looking statements and
forward looking information (collectively, "forward-looking
statements"), including forward-looking statements within the
meaning of the "safe harbor" provisions of applicable securities
legislation, that are based on Pembina's current expectations,
estimates, projections and assumptions in light of its experience
and its perception of historical trends. In some cases,
forward-looking statements can be identified by terminology such as
"continue", "anticipate", "schedule", "will", "expects",
"estimate", "potential", "planned", "future", "outlook",
"strategy", "protect", "trend", "commit", "maintain", "focus",
"ongoing" and similar expressions suggesting future events or
future performance.
In particular, this document contains forward-looking
statements, including certain financial outlooks, pertaining to,
without limitation, the following: Pembina's corporate strategy and
the development and expected timing of new business initiatives and
growth opportunities and the expected timing thereof; expectations
about industry activities and development opportunities;
expectations about future growth opportunities and the demand for
our service; expectations regarding new corporate developments and
their impact on access to markets; planning, construction, capital
expenditure estimates, schedules, locations, regulatory and
environmental applications and approvals, expected capacity,
incremental volumes, completion and in-service dates, rights,
activities and operations with respect to planned new construction
of, or expansions on, existing pipelines systems, gas services
facilities, processing and fractionation facilities, terminalling,
storage and hub facilities, facility and system operations and
throughput levels; plans and activities related to deferred
projects and estimated project costs; the impact of current market
conditions on Pembina; expectations regarding adjusted EBITDA;
Pembina's hedging strategy and expected results therefrom; expected
sources of liquidity; expected cost savings and Pembina's ability
to maintain such cost savings into the future; expectations
regarding Pembina's NGL storage positions and its intentions with
respect thereto; expected volumes across Pembina's conventional
pipelines business; levels and types of contracted volumes;
Pembina's options for allocating capital; timing of the provision
of the 2021 outlook; Pembina's intentions with respect to the
conversion of the Series 9 Shares; Pembina's commitment to and the
future level and sustainability of cash dividends that Pembina
intends to pay its shareholders, including the expected future cash
flows and the sufficiency thereof.
The forward-looking statements are based on certain
assumptions that Pembina has made in respect thereof as at the date
of this news release regarding, among other things: oil and gas
industry exploration and development activity levels and the
geographic region of such activity; the success of Pembina's
operations and growth projects; prevailing commodity prices,
interest rates and exchange rates and the ability of Pembina to
maintain current credit ratings; the availability of capital to
fund future capital requirements relating to existing assets and
projects; future operating costs; geotechnical and integrity costs;
that any third-party projects relating to Pembina's growth projects
will be sanctioned and completed as expected; that any required
commercial agreements can be reached; that all required regulatory
and environmental approvals can be obtained on the necessary terms
in a timely manner; that counterparties will comply with contracts
in a timely manner; that there are no unforeseen events preventing
the performance of contracts or the completion of the relevant
facilities; that there are no unforeseen material costs relating to
the facilities which are not recoverable from customers; prevailing
interest and tax rates; prevailing regulatory, tax and
environmental laws and regulations; maintenance of operating
margins; the amount of future liabilities relating to lawsuits and
environmental incidents; and the availability of coverage under
Pembina's insurance policies (including in respect of Pembina's
business interruption insurance policy).
Although Pembina believes the expectations and material
factors and assumptions reflected in these forward-looking
statements are reasonable as of the date hereof, there can be no
assurance that these expectations, factors and assumptions will
prove to be correct. These forward-looking statements are not
guarantees of future performance and are subject to a number of
known and unknown risks and uncertainties including, but not
limited to: the regulatory environment and decisions; the impact of
competitive entities and pricing; labour and material shortages;
reliance on key relationships and agreements; the strength and
operations of the oil and natural gas production industry and
related commodity prices; non-performance or default by
counterparties to agreements which Pembina or one or more of its
affiliates has entered into in respect of its business; actions by
governmental or regulatory authorities, including changes in tax
laws and treatment, changes in royalty rates, climate change
initiatives or policies or increased environmental regulation; the
failure to realize the anticipated benefits or synergies of
acquisitions (including the Kinder Acquisition) due to the factors
set out herein, integration issues or otherwise; fluctuations in
operating results; adverse general economic and market conditions
in Canada, North America and worldwide, including
changes, or prolonged weaknesses, as applicable, in interest rates,
foreign currency exchange rates, commodity prices, supply/demand
trends and overall industry activity levels; risks relating to the
current and potential adverse impacts of the COVID-19 pandemic;
ability to access various sources of debt and equity capital;
changes in credit ratings; counterparty credit risk; technology and
cyber security risks; and certain other risks detailed from time to
time in Pembina's public disclosure documents available at
www.sedar.com, www.sec.gov and through Pembina's website at
www.pembina.com.
This list of risk factors should not be construed as
exhaustive. Readers are cautioned that events or circumstances
could cause results to differ materially from those predicted,
forecasted or projected. The forward-looking statements contained
in this document speak only as of the date of this document.
Pembina does not undertake any obligation to publicly update or
revise any forward-looking statements or information contained
herein, except as required by applicable laws. Readers are
cautioned that management of Pembina approved the financial outlook
contained herein as of the date of this press release. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
Non-GAAP Measures
In this news release, Pembina has used the terms net revenue,
adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA), cash flow from operating activities
per common share, adjusted cash flow from operating activities, and
adjusted cash flow from operating activities per common share,
which do not have any standardized meaning under International
Financial Reporting Standards ("IFRS"). Since these non-GAAP
financial measures do not have a standardized meaning prescribed by
GAAP and are therefore unlikely to be comparable to similar
measures presented by other companies, securities regulations
require that non-GAAP financial measures be clearly defined,
qualified and reconciled to their most directly comparable GAAP
measure. These non-GAAP measures are calculated and disclosed on a
consistent basis from period to period. Specific adjusting items
may only be relevant in certain periods. The intent of non-GAAP
measures is to provide additional useful information respecting
Pembina's financial and operational performance to investors and
analysts and the measures do not have any standardized meaning
under IFRS. The measures should not, therefore, be considered in
isolation or used in substitute for measures of performance
prepared in accordance with IFRS.
Non-GAAP Proportionate Consolidation of Investments in Equity
Accounted Investees Results
In accordance with IFRS, Pembina's jointly controlled
investments are accounted for using equity accounting. Under
equity accounting, the assets and liabilities of the investment are
net into a single line item in the Consolidated Statement of
Financial Position, "Investments in Equity Accounted Investees".
Net earnings from Investments in Equity Accounted Investees are
recognized in a single line item in the Consolidated Statement of
Earnings and Comprehensive Earnings, "Share of Profit from Equity
Accounted Investees". Cash contributions and distributions from
Investments in Equity Accounted Investees represent Pembina's
proportionate share of cash paid and received in the period to and
from the equity accounted investment.
To assist the readers' understanding and evaluation of the
performance of these investments, Pembina is supplementing the IFRS
disclosure with non-GAAP disclosure of Pembina's proportionately
consolidated interest in the Investments in Equity Accounted
Investees. Pembina's proportionate interest in Investments in
Equity Accounted Investees has been included in adjusted
EBITDA.
Other issuers may calculate these non-GAAP measures
differently. Investors should be cautioned that these measures
should not be construed as alternatives to revenue, earnings, cash
flow from operating activities, gross profit or other measures of
financial results determined in accordance with GAAP as an
indicator of Pembina's performance. For additional information
regarding non-GAAP measures, other than as described herein,
including reconciliations to, the most directly comparable measures
recognized by GAAP, please refer to Pembina's management's
discussion and analysis for the three and nine months ended
September 30, 2020, which is
available online at www.sedar.com, www.sec.gov and through
Pembina's website at www.pembina.com.
Contact: Investor Relations, Scott
Arnold, Manager Investor Relations, (403) 231-3156,
1-855-880-7404, E-mail: investor-relations@pembina.com,
www.pembina.com