Gibson Energy Inc. ((TSE:GEI)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Gibson Energy Inc. recently held its Q1 2025 earnings call, revealing a balanced sentiment with notable achievements in its Infrastructure segment, contrasted by challenges in its Marketing segment. The company celebrated record EBITDA in Infrastructure, driven by strategic initiatives and partnerships, while facing financial pressures due to softer marketing performance.
Record Infrastructure Adjusted EBITDA
Gibson Energy achieved a record $155 million in Infrastructure adjusted EBITDA in Q1 2025. This milestone was driven by record throughput at the Gateway terminal and a full quarter contribution from new tanks with Cenovus in Edmonton, showcasing the strength of their infrastructure operations.
Safety Achievements
The company celebrated a significant safety milestone, achieving 9 million hours without a lost time injury. Additionally, Gibson set a new record for total recordable incident frequency on a rolling 12-month basis, underscoring its commitment to maintaining a safe working environment.
Successful Dredging Project
Gibson successfully completed a dredging project at the Gateway terminal safely, on time, and within budget. This project enhances the terminal’s capabilities, allowing it to load 1.6 million barrels on a VLCC or fully load a Suezmax vessel, thus improving operational efficiency.
Cost Savings Initiative
The company implemented over $18 million in cost savings during Q1, making significant progress towards its $25 million target. This initiative saw nearly 80% employee participation, reflecting a company-wide commitment to financial efficiency.
Strategic Partnership with Baytex
Gibson announced a strategic partnership with Baytex to develop infrastructure in the Duvernay region under a 10-year take-or-pay agreement. This partnership involves a $50 million investment in upstream oil batteries and gathering lines, highlighting Gibson’s strategic growth initiatives.
Muted Marketing Results
The Marketing segment recorded a breakeven adjusted EBITDA for Q1 2025, a $33 million decrease from Q1 2024. This decline was impacted by elevated demand for Canadian heavy oil, resulting in steep backwardation and narrow differentials, posing challenges for the segment.
Increased Leverage
Gibson’s debt to adjusted EBITDA ratio increased to 3.7x, above the target range of 3 to 3.5x. This increase was due to softer marketing segment performance and higher interest expenses, indicating financial pressures that the company aims to address.
Lower Distributable Cash Flow
The company generated $91 million in distributable cash flow in Q1 2025, a $24 million decrease from Q1 2024. This decrease was primarily due to lower marketing results, affecting the company’s cash flow generation.
Forward-Looking Guidance
Gibson Energy provided robust guidance for the future, emphasizing continued strength in its Infrastructure segment with a record-setting adjusted EBITDA. The company plans to complete the Cactus II connection project by Q3 2025, adding significant supply capacity. Despite challenges in the Marketing segment, Gibson remains optimistic, projecting improvements in adjusted marketing EBITDA for the remainder of the year. The company is also set to execute its largest maintenance capital program, focusing on maintaining a strong balance sheet.
In summary, Gibson Energy’s Q1 2025 earnings call highlighted a balanced outlook, with significant achievements in its Infrastructure segment and strategic initiatives, while facing challenges in the Marketing segment. The company remains focused on growth and operational efficiency, with optimistic guidance for the future.