Pembina reports record
setting annual results following full year contribution from
strategic acquisition of Veresen and portfolio of growth
projects.
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, Feb. 21, 2019 /PRNewswire/ - Pembina
Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE:
PBA) announced today its financial and operating results for the
fourth quarter and full year 2018.
Operational and Financial Overview
|
|
|
($ millions,
except where noted)
|
3 Months Ended
December 31 (unaudited)
|
12 Months Ended
December 31
|
|
2018
|
2017(1)
|
2018
|
2017(1)
|
Revenue
|
1,726
|
1,716
|
7,351
|
5,400
|
Net
revenue(2)
|
706
|
709
|
2,836
|
2,238
|
Share of profit from
equity accounted investees(3)
|
129
|
116
|
411
|
116
|
Gross
profit
|
663
|
555
|
2,327
|
1,474
|
Earnings
|
368
|
445
|
1,278
|
883
|
Earnings per common
share – basic (dollars)
|
0.66
|
0.83
|
2.28
|
1.87
|
Earnings per common
share – diluted (dollars)
|
0.66
|
0.83
|
2.28
|
1.86
|
Cash flow from
operating activities
|
674
|
523
|
2,256
|
1,513
|
Cash flow from
operating activities per common share – basic
(dollars)(2)
|
1.33
|
1.04
|
4.47
|
3.55
|
Adjusted cash flow
from operating activities(2)
|
543
|
499
|
2,154
|
1,396
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(2)
|
1.07
|
0.99
|
4.27
|
3.27
|
Common share
dividends declared
|
289
|
272
|
1,131
|
873
|
Dividends per common
share (dollars)
|
0.57
|
0.54
|
2.24
|
2.04
|
Preferred share
dividends declared
|
31
|
26
|
122
|
83
|
Capital
expenditures
|
356
|
314
|
1,226
|
1,839
|
Proportionately
Consolidated Financial Overview(2)
|
Volumes
(mboe/d)(4)(5)
|
3,453
|
3,250
|
3,398
|
3,050
|
Operating
margin(2)
|
800
|
749
|
3,154
|
1,922
|
Adjusted
EBITDA(2)
|
715
|
674
|
2,835
|
1,697
|
(1)
|
Financial results
reported for all 2017 periods have been restated to reflect the
Corporate Reorganization and adoption of IFRS 15. See disclosure
under "Changes in Reporting" in the MD&A.
|
(2)
|
Refer to "Non-GAAP
Measures".
|
(3)
|
Includes Investments
in Equity Accounted Investees - Alliance, Aux Sable, Ruby, Veresen
Midstream, CKPC, Grand Valley and Fort Corp.
|
(4)
|
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. Volumes for 2017 have been restated to
reflect the Corporate Reorganization.
|
(5)
|
Average volumes for
assets acquired in the Veresen Acquisition are calculated over the
period following the Veresen Acquisition, rather than the full
twelve months ended December 31, 2017, which would have resulted in
average volumes of 2,608 mboe/d.
|
Financial and Operational Overview by Division
|
|
|
|
3 Months Ended
December 31
(unaudited)
|
12 Months Ended
December 31
|
|
2018
|
2017
(1)
|
2018
|
2017
(1)
|
($
millions)
|
Volumes
(2)
|
Gross
Profit
|
Operating Margin
(3)
|
Volumes
(2)
|
Gross
Profit
|
Operating Margin
(3)
|
Volumes
(2)
|
Gross
Profit
|
Operating Margin
(3)
|
Volumes
(2)
|
Gross
Profit
|
Operating Margin
(3)
|
Pipelines
Division
|
2,529
|
301
|
437
|
2,450
|
255
|
395
|
2,521
|
1,255
|
1,773
|
2,304
|
683
|
948
|
Facilities
Division
|
924
|
155
|
238
|
800
|
136
|
186
|
877
|
574
|
899
|
746
|
429
|
596
|
Marketing & New
Ventures Division(4)
|
—
|
203
|
121
|
—
|
162
|
166
|
—
|
484
|
468
|
—
|
353
|
369
|
Corporate
|
—
|
4
|
4
|
—
|
2
|
2
|
—
|
14
|
14
|
—
|
9
|
9
|
Total
|
3,453
|
663
|
800
|
3,250
|
555
|
749
|
3,398
|
2,327
|
3,154
|
3,050
|
1,474
|
1,922
|
(1)
|
Financial results
reported for all 2017 periods have been restated to reflect the
Corporate Reorganization and the adoption of IFRS 15. See
disclosure under "Changes in Reporting" in the MD&A.
|
(2)
|
Pipelines and
Facilities Divisions are revenue volumes which are physical 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. Volumes for 2017 have been restated to reflect the
Corporate Reorganization.
|
(3)
|
Refer to "Non-GAAP
Measures".
|
(4)
|
Marketed NGL volumes
are excluded from Volumes to avoid double counting. Refer to
"Marketing & New Ventures Division" in the MD&A for further
information.
|
(5)
|
Average volumes for
assets acquired in the Veresen Acquisition are calculated over the
period following the Veresen Acquisition, rather than the full
twelve months ended December 31, 2017, which would have resulted in
average volumes of 1,909 mboe/d for the Pipelines Division, 699
mboe/d for the Facilities Division and total average volumes of
2,608 mboe/d.
|
Financial Highlights
Pembina delivered strong 2018
financial and operational results leading to record full year
earnings and Adjusted EBITDA. These results were largely driven by
the full-year contribution from assets included in the acquisition
of Veresen Inc. ("Veresen") in October
2017 ("Veresen Acquisition") and assets placed into service
following a large-scale capital program, driving growing revenue
volumes. Highlights for the fourth quarter and full year 2018
include:
- Fourth quarter and full year earnings of $368 million and $1.3
billion, a 17 percent decrease and 45 percent increase,
respectively, over the same periods in 2017;
- Cash flow from operating activities of $674 million for the fourth quarter and
$2.3 billion in 2018, increases of 29
percent and 49 percent, respectively, over the same periods in
2017. Adjusted cash flow from operating activities increased by
nine percent and 54 percent to $543
million and $2.2 billion in
the fourth quarter and full year 2018, respectively, compared to
the same periods in 2017;
- On a per share (basic) basis, cash flow from operating
activities for the fourth quarter and full year 2018 increased by
28 percent and 26 percent, respectively, compared to the same
periods in the prior year. On a per share (basic) basis, adjusted
cash flow from operating activities for the fourth quarter
increased eight percent and 31 percent for the full year compared
to the same periods of the prior year;
- Fourth quarter and full year operating margin of $800 million and $3.2
billion, were seven percent and 64 percent higher,
respectively, than the same periods of the prior year; and
- Fourth quarter and full year Adjusted EBITDA of $715 million and $2.8
billion, representing six percent and 67 percent increases,
respectively, over the same periods in 2017.
Operational Highlights
- Total volumes of 3,453 mboe/d for the fourth quarter and 3,398
mboe/d for the full year in 2018, which represent six percent and
11 percent increases, respectively, over the prior year;
- Pipelines Division volumes during the fourth quarter of 2,529
mboe/d and full year of 2,521 mboe/d, representing three percent
and nine percent increases, respectively, compared to the same
periods of 2017. Higher volumes were predominately the result of
increased utilization on the Peace and Drayton systems including assets placed into
service in the prior year;
- Facilities Division volumes of 924 mboe/d in the fourth quarter
and 877 mboe/d for the full year in 2018, representing increases of
16 percent and 18 percent, respectively, compared to the same
periods of 2017. These increases were caused by new volumes arising
from a full year of operations from Veresen Midstream's Sunrise,
Tower and Saturn facilities in 2018; increased utilization at
Duvernay I gas plant and the Redwater complex; and higher volumes at the
majority of the other facilities as customers continued to increase
production in the resource basins where Pembina operates; and
- Marketing & New Ventures Division increased marketed NGL
sales volumes by two percent to 201 mboe/d in the fourth quarter
over the comparable period in 2017 and generated quarterly
operating margin of $121 million, a
27 percent decrease over the comparable period in 2017. The
decrease in operating margin in the fourth quarter was due to the
lower margins on commodity sales as a result of lower crude oil and
NGL market prices compared to the same period in 2017, combined
with increased market-based intercompany fees, offset by the swing
to a realized gain on commodity-related derivative financial
instruments, compared to the realized loss in the same period of
2017. On a full year basis, operating margin was $468 million in 2018 compared to $369 million in 2017. This increase was the
result of the full year contribution from the equity accounted
investment in Aux Sable.
Executive Overview
2018 was truly remarkable for Pembina. We strengthened our financial and
operational performance, driven by our diverse and
strategically-located assets, strong customer contracts, and the
dedication and creativity of our customers and employees. Over this
past year, we continued to secure new business, pursued growth
projects, operated safely and reliably and further enhanced our
already strong relationships with the communities where we live,
work and play.
In 2018, we announced the next evolution in Pembina's corporate strategy - the move
towards accessing global markets. Pembina is committed to identifying additional
opportunities to connect hydrocarbon production to new demand
locations through the development of infrastructure that would
extend our service offering 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.
Our recently approved PDH/PP Facility, the Prince Rupert LPG Export
Terminal, currently under construction, and our proposed Jordan
Cove LNG project are examples of such developments.
The most notable financial achievement over the past year was
exceeding the high end of our original 2018 guidance range with
Adjusted EBITDA of $2,835 million,
seven percent higher than the mid-point of the original range.
Contributing to this record-breaking Adjusted EBITDA was the
full-year contribution from the greater than $10 billion increase in assets from the Veresen
Acquisition and new assets placed into service following the
execution of our large-scale capital program completed in 2017.
The Veresen Acquisition was transformational for Pembina and we are pleased with how well the
integration of staff and systems went. Bringing together two large
and different organizations comes with a wide range of risks and
yet, through the diligent management of our integration team, we
are realizing the strategic and financial benefits of the
combination.
Along with record Adjusted EBITDA, our 2018 adjusted cash flow
from operating activities per common share of $4.27 also was an all-time high. Notably, when
comparing where we are now, to where we were ten years ago, we have
grown volumes by 180 percent, cash flow per share by 171 percent,
and the dividend by 50 percent. Over the same 10-year period,
shareholders have realized a total return of about 380 percent, or
17 percent per year, assuming reinvestment of their dividends.
Our steady and growing dividend is one of the strongest ways we
demonstrate our ongoing commitment to shareholders. We have always
worked hard to ensure our ability to pay a competitive dividend and
the 5.6 percent dividend increase in 2018 represents our seventh
consecutive annual increase. Since our inception, Pembina has returned over $6.9 billion to our shareholders and the dividend
has never been reduced. Ensuring Pembina continues to deliver a
sustainable and growing dividend to shareholders remains a top
priority.
Continuing our dividend track record while growing the business
requires a strong commitment to prudent financial management,
something that has always been fundamental to Pembina. As the Company has grown we have also
improved the risk profile of the business and strengthened our
financial guardrails. We have increased the percentage of our
Adjusted EBITDA that comes from fee-based business and our dividend
is fully supported by these fee-based cash flows, meaning
Pembina is not reliant on the
commodity exposed part of our business to fund the dividend. In
addition, Pembina has a very
strong balance sheet, low payout ratio and expects to fund our
near-term capital program without the need for external equity.
In 2018, we placed approximately $900
million of projects into service, including the Phase IV and
V expansions of the Peace Pipeline system, Veresen Midstream's
North Central Liquids Hub and Saturn II gas plant, cavern
developments as well as several other value-added capital projects.
We also secured over $1.8 billion of
new capital projects including the Phase VI and VII Peace Pipeline
expansions, Hythe Developments and Duvernay III. Consistent with
Pembina's guardrails, these
projects are underpinned by long-term fee-based contracts that will
generate incremental secure and predictable cash flow to support
the stability and growth of the dividend. With new projects placed
into service in 2018, we announced an Adjusted EBITDA guidance
range of $2.8 to $3.0 billion and a $1.6
billion capital program for 2019.
We are entering the new year with positive momentum and already
in 2019 Pembina has secured the $500
million Phase VIII Peace Pipeline expansion and through our
joint venture, Canada Kuwait Petrochemical Corporation, approved
development of a $4.5 billion
($2.5 billion net to Pembina) integrated PDH/PP Facility. The
prospects for future growth, both within the base business and
further extensions of our value chain, remain robust. We are as
rich in growth opportunities as we have ever been, which is a
testament to both the resiliency and creativity of our customers
and the underlying attractiveness of the Western Canadian
Sedimentary Basin.
We look forward to the year ahead and are optimistic, confident
and excited to continue 'Building Something Extraordinary'.
New Developments and Growth Projects Update
Pipelines Division
- Pembina's Phase IV and Phase V
expansions of the Peace Pipeline system were both placed into
service in December 2018, on-time and
slightly over budget;
- Pembina continues to progress
its Phase VI Peace Pipeline expansion, which includes: upgrades at
Gordondale, Alberta; a new 16-inch
pipeline from La Glace to Wapiti,
Alberta and associated pump station and terminal upgrades; and a
20-inch pipeline from Kakwa to Lator, Alberta. This project is trending over budget
and on schedule, with an anticipated in-service date in the second
half of 2019, subject to environmental and regulatory
approvals;
- Aligning with the Phase VI expansion, the Company is
progressing the Wapiti Condensate Lateral, a 12-inch lateral, which
will connect growing condensate volumes from a third-party owned
facility in the Pipestone Montney region into Pembina's Peace Pipeline. Subject to
regulatory and environmental approvals, this lateral is expected to
be in service in the second half of 2019;
- As previously announced in the quarter, Pembina is proceeding with the Phase VII Peace
Pipeline expansion, which will include: a new 20-inch,
approximately 220-kilometer pipeline in the La Glace-Valleyview-Fox
Creek corridor, as well as six new pump stations or terminal
upgrades, between La Glace and
Edmonton, Alberta. This project
has an estimated capital cost of $950
million and is anticipated to be in service in the first
half of 2021, subject to environmental and regulatory
approvals;
- Subsequent to the quarter, Pembina announced that it is proceeding with
the Phase VIII Peace Pipeline expansion, which will include: new 10
and 16-inch pipelines in the Gordondale to La Glace corridor as well as six new pump
stations or terminal upgrades located between Gordondale and
Fox Creek, Alberta. This project
has an estimated capital cost of $500
million and is anticipated to be placed into service in
stages starting in 2020 through the first half of 2022, subject to
regulatory and environmental approvals; and
- Development continues on the previously announced NEBC Montney
Infrastructure in proximity to the Company's Birch Terminal. This
new infrastructure is anticipated to be in service in Q3 2019.
Facilities Division
- The Company's one million barrel Burstall Ethane Storage
facility located near Burstall,
Saskatchewan was placed into service in January 2019;
- Pembina continues with the
construction of new fractionation and terminalling facilities at
the Company's Empress, Alberta
extraction plant for a total expected capital cost of approximately
$120 million. Detailed engineering is
on track and all major equipment purchases have been made. These
facilities have an anticipated in-service date of late 2020;
- Development continues at Pembina's Prince Rupert LPG export terminal.
Detailed engineering is ongoing and early construction work
continues. This project is anticipated to have a total capital cost
of $250 million and is anticipated to
be in service in mid-2020, subject to regulatory and environmental
approvals;
- Pembina continues to progress
construction of Duvernay II, the 100 MMcf/d sweet gas, shallow cut
processing facility, including 30,000 bpd of condensate
stabilization and other associated infrastructure. The facilities
have an expected total capital cost of $290
million. Construction has commenced and the project
continues to track on budget and on schedule with an expected
in-service date in Q4 2019;
- As announced during the quarter, Pembina will construct and operate additional
infrastructure ("Duvernay III") at the Company's Duvernay Complex.
Duvernay III will include a 100 MMcf/d sweet gas, shallow cut
processing facility (a replica of Pembina's Duvernay I and II gas plants) and
20,000 bpd of condensate stabilization and water handing
infrastructure. Pembina expects
the total capital cost to be $165
million with an anticipated in-service date of mid-to-late
2020, subject to regulatory and environmental approvals;
- Also announced during the quarter, the Hythe Developments
project will see Pembina and its
45 percent owned joint venture, Veresen Midstream construct natural
gas gathering and processing infrastructure in the Pipestone
Montney region. Collectively, the Hythe Developments have an
estimated total capital cost of approximately $380 million ($185
million net to Pembina) and
have an anticipated in-service date of late 2020, subject to
regulatory and environmental approvals; and
- The previously announced Redwater co-generation facility is trending
under budget and is expected to be placed into service in the first
quarter of 2019.
Marketing & New Ventures Division
- Subsequent to the quarter, Pembina, along with Petrochemical Industries
Company K.S.C. ("PIC") of Kuwait,
announced a positive final investment decision to construct a
550,000 tonne per annum integrated propane dehydrogenation ("PDH")
plant and polypropylene ("PP") upgrading facility ("PDH/PP
Facility") through their equally-owned joint venture entity, Canada
Kuwait Petrochemical Corporation. The PDH/PP Facility will be
located adjacent to Pembina's
Redwater fractionation complex and
will convert approximately 23,000 bpd of locally supplied propane
into polypropylene, a high value recyclable polymer used in a wide
range of finished products including automobiles, medical devices,
food packaging and home electronic appliances, among others.
Pembina's net investment in this
project is expected to be $2.5
billion with an expected contribution to annual Adjusted
EBITDA of $275 to $350 million, net to Pembina. This project is expected to be in
service mid-2023, subject to environmental and regulatory
approvals; and
- Pembina continues to progress
its proposed Jordan Cove LNG project that will transport natural
gas from the Malin Hub in southern Oregon to an export terminal. The Company has
received a Notice of Schedule that indicates FERC will provide a
decision not later than November
2019. Pembina continues to
work with various state and other agencies to progress the project
on a similar time line. In addition, as previously disclosed, the
Company executed non-binding off-take agreements, for a total of 11
million tonnes per annum ("Mtpa"), which exceeds the planned
capacity of 7.5 Mtpa. Pembina is
working to conclude off-take agreements in the first quarter of
2019. Pembina continues to
anticipate first gas in 2024, pending the receipt of the necessary
regulatory approvals, a positive final investment decision and
other requirements.
Financing
- On December 31, 2018,
Pembina's Series F Convertible
Debentures matured. At maturity, the outstanding principal of
$1.6 million plus accrued and unpaid
interest was settled in cash.
Dividends
- Declared and paid dividends of $0.19 per qualifying common share for the
applicable record dates in October, November and December 2018; and
- Declared and paid quarterly dividends per qualifying preferred
shares of: Series 1: $0.265625;
Series 3: $0.29375; Series 5:
$0.3125; Series 7: $0.28125; Series 9: $0.296875; Series 11: $0.359375; Series 13: $0.359375; and Series 21: $0.30625 to shareholders of record as of
November 1, 2018. Declared and paid
quarterly dividends per qualifying preferred shares of: Series 15:
$0.279; Series 17: $0.3125; and Series 19: $0.3125 to shareholders of record on December 17, 2018.
Fourth Quarter 2018 Conference Call & Webcast
Pembina will host a conference
call on Friday, February 22, 2019 at
8:00 a.m. MT (10:00 a.m. ET) for interested investors,
analysts, brokers and media representatives to discuss details
related to the fourth quarter and full year 2018 results. 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 March 1, 2019 at
11:59 p.m. ET. To access the replay,
please dial either 416-849-0833 or 855-859-2056 and enter the
password 4476144. A live webcast of the conference call can be
accessed on Pembina's website at
www.pembina.com under Investor Centre, Presentation & Events,
or by entering:
https://event.on24.com/wcc/r/1880615/5C669B405E364DCA99AEBF12B03DD994 in
your web browser. Shortly after the call, an audio archive
will be posted on the website for a minimum of 90 days.
2019 Investor Day
Pembina will hold an Investor
Day on Tuesday, May 14, 2019 at The
Omni King Edward Hotel in Toronto,
Ontario. For parties interested in attending the event,
please email investor-relations@pembina.com to request an
invitation.
About Pembina
Calgary-based Pembina
Pipeline Corporation is a leading transportation and midstream
service provider that has been serving North America's energy industry for over 60
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 and an oil and natural gas liquids
infrastructure and logistics business. 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's strategy is
to:
- Preserve Value by providing safe,
environmentally conscious, cost-effective and reliable
services;
- Diversify by providing integrated solutions
which enhance profitability and customer service;
- Implement Growth by pursuing projects or
assets that are expected to generate cash flow per share accretion
and capture long-life, economic hydrocarbon reserves; and
- Secure Global Markets by understanding what
the world needs, where they need it, and delivering it.
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
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" and similar
expressions suggesting future events or future performance.
In particular, this document contains forward-looking
statements, including certain financial outlook, pertaining to,
without limitation, the following: Pembina's corporate strategy; expectations
about industry activities and development opportunities;
expectations about future growth opportunities and demand for our
service; expectations regarding new corporate developments and
impact on access to markets; anticipated adjusted EBITDA
projections for 2019 and financial performance expectations
resulting from Pembina's capital
expenditures; planning, construction, capital expenditure
estimates, schedules, regulatory and environmental applications and
approvals, expected capacity, incremental volumes, in-service
dates, rights, activities and operations with respect to planned
new construction of, or expansions on existing pipelines, gas
services facilities, fractionation facilities, terminalling,
storage and hub facilities, facility and system operations and
throughput levels; anticipated synergies between assets under
development, assets being acquired and existing assets of the
Company; 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 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 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; 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
purpose of the 2019 Adjusted EBITDA projection is to provide
investors with an indication of the value to Pembina of capital projects that have been and
will be brought into service in 2019. Readers should be aware that
the information contained in the financial outlook contained herein
may not be appropriate for other purposes. 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,
operating margin, adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA
per common share, cash flow from operating activities per common
share, adjusted cash flow from operating activities per common
share, which do not have any standardized meaning under IFRS
("Non-GAAP Measures"). Since 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 are clearly defined, qualified and reconciled to their
nearest 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 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
operating margin, Adjusted EBITDA and other reconciling line items
to IFRS. A reconciliation of operating margin and Adjusted EBITDA
to share of profit from equity accounted investees can be found
under the heading "Proportionately Consolidated Results by
Investments in Equity Accounted Investees" in the MD&A.
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, including reconciliations to measures recognized by GAAP,
please refer to Pembina's
management's discussion and analysis for the period ended
December 31, 2018, which is available
online at www.sedar.com, www.sec.gov and through Pembina's website at www.pembina.com.
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SOURCE Pembina Pipeline Corporation