Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gibson Energy Inc (GBNXF, Financial) achieved a record adjusted EBITDA of $610 million in 2024, marking a new high for the company.
- The Infrastructure segment demonstrated strong performance with a compound annual growth rate of approximately 14% since 2017.
- The Gateway acquisition has been a key catalyst, contributing significantly to the company's growth and exceeding expectations.
- Gibson Energy Inc (GBNXF) increased its quarterly dividend by 5% to $0.43 per share, marking the sixth consecutive dividend increase.
- The company is executing a cost focus campaign targeting over $25 million in cost savings by year-end, with 50% of this goal already achieved.
Negative Points
- The Marketing segment underperformed, with adjusted EBITDA decreasing from $145 million in 2023 to $63 million in 2024.
- The company faced challenging market conditions in the Marketing segment, including narrow differentials and steep backwardation.
- Gibson Energy Inc (GBNXF) anticipates another challenging quarter for Marketing in Q1 2025, with adjusted EBITDA expected to be around breakeven.
- The Infrastructure segment faced several non-recurring charges related to ongoing commercial matters, impacting adjusted EBITDA.
- The company's leverage exited the year at the high end of the target range, raising concerns about balancing growth capital and maintaining financial flexibility.
Q & A Highlights
Q: Could you provide more detail on the components that led to the Marketing segment's performance in 2024, and do you see this persisting in 2025?
A: Riley Hicks, Senior Vice President and Chief Financial Officer, explained that the negative performance was due to increased feedstock costs, tight crack spreads, and seasonality affecting demand for paving asphalt. Additionally, ample egress and low inventory levels resulted in steep backwardation and limited volatility, leading to a cautious approach. The first quarter of 2025 is expected to face similar issues, but guidance will be re-evaluated in the Q1 call.
Q: How should we think about the leverage range and capital allocation priorities, given the dredging project and potential challenges in Marketing?
A: Curtis Philippon, President and Chief Executive Officer, stated that they are comfortable with the current leverage range. The first half of the year will focus on growth capital projects like dredging and the Cactus connection, with fewer share buybacks planned. The company expects a quieter Marketing period in the early part of the year.
Q: What has been the most impactful change since you joined, and what is left to do in terms of restructuring?
A: Curtis Philippon highlighted that the focus has been on people, ensuring the right team is in place, removing low performers, and optimizing organizational structure. Significant restructuring has been done, and the company is in the final stages of adding a Chief Operating Officer.
Q: Can you discuss the potential upside if the Trans Mountain Expansion (TMX) is expanded?
A: Curtis Philippon noted that an expansion would increase throughput at the Edmonton facility. The company has prepared for potential additional tankage, and discussions about accelerating TMX expansion could lead to further growth opportunities.
Q: Are there any plans for asset sales to improve the financial position, and what assets might be considered non-core?
A: Riley Hicks stated that the company has already divested non-core assets worth $30 million in 2024. Remaining assets are considered core and synergistic with main facilities, so no further disposals are planned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
