Pembina's diversified
business supported by strong prices across all commodities and
poised to benefit from growing sector activity
All financial figures are in Canadian dollars unless otherwise
noted. This news release refers to certain financial measures that
are not specified, defined or determined in accordance with
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. 4, 2021 /PRNewswire/ -- Pembina Pipeline
Corporation ("Pembina" or the
"Company") (TSX: PPL) (NYSE: PBA) announced today its financial and
operating results for the third quarter of 2021.
Highlights
- Third quarter earnings of $588
million and adjusted EBITDA of $850
million reflect strong pricing across all commodities in
Pembina's value chain.
- During the quarter, Pembina
received payment of a $350 million
(pre-tax) fee related to the termination of the proposed
acquisition of Inter Pipeline.
- Pembina recently announced its
target to reduce greenhouse gas emissions intensity by 30 percent
by 2030, relative to baseline 2019 emissions.
Financial and Operational Overview
|
3 Months Ended
September 30
|
9 Months Ended
September 30
|
($ millions,
except where noted)(unaudited)
|
2021
|
2020(3)
|
2021
|
2020(3)
|
Infrastructure and
other services revenue
|
756
|
744
|
2,240
|
2,199
|
Product sales
revenue
|
1,393
|
752
|
3,827
|
2,074
|
Total
revenue
|
2,149
|
1,496
|
6,067
|
4,273
|
Net
revenue(1)
|
961
|
849
|
2,854
|
2,490
|
Earnings
|
588
|
323
|
1,162
|
900
|
Earnings per common
share – basic & diluted (dollars)
|
1.01
|
0.52
|
1.92
|
1.42
|
Cash flow from
operating activities
|
913
|
434
|
1,953
|
1,486
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.66
|
0.78
|
3.55
|
2.70
|
Adjusted cash flow
from operating activities(1)
|
786
|
524
|
1,906
|
1,686
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.43
|
0.95
|
3.47
|
3.07
|
Common share
dividends declared
|
347
|
346
|
1,040
|
1,039
|
Dividends per common
share (dollars)
|
0.63
|
0.63
|
1.89
|
1.89
|
Capital
expenditures
|
209
|
174
|
482
|
868
|
Total volume
(mboe/d)(2)
|
3,411
|
3,451
|
3,464
|
3,462
|
Adjusted
EBITDA(1)
|
850
|
796
|
2,463
|
2,415
|
(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.
|
(3)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" and "Restatement of Revenue and Cost of Goods Sold" in
Pembina's management's discussion and analysis for the three and
nine months ended September 30, 2021 ("MD&A") and Note 2 to
Pembina's unaudited condensed consolidated interim financial
statements as at and for the three and nine months ended September
30, 2021 ("Interim Financial Statements").
|
Financial and Operational Overview by Division
|
3 Months Ended
September 30
|
9 Months Ended
September 30
|
|
2021
|
2020
|
2021
|
2020
|
($ millions,
except where noted)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit(4)
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit(4)
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,563
|
347
|
503
|
2,580
|
381
|
541
|
2,592
|
1,047
|
1,554
|
2,588
|
1,159
|
1,631
|
Facilities
|
848
|
233
|
273
|
871
|
182
|
251
|
872
|
628
|
812
|
874
|
523
|
757
|
Marketing & New
Ventures
Ventures(3)
|
—
|
100
|
109
|
—
|
5
|
34
|
—
|
185
|
237
|
—
|
77
|
118
|
Corporate
|
—
|
2
|
(35)
|
—
|
—
|
(30)
|
—
|
2
|
(140)
|
—
|
2
|
(91)
|
Total
|
3,411
|
682
|
850
|
3,451
|
568
|
796
|
3,464
|
1,862
|
2,463
|
3,462
|
1,761
|
2,415
|
(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 MD&A for further information.
|
(4)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
Financial & Operational Highlights
Adjusted EBITDA
Change in Third Quarter Adjusted EBITDA ($
millions)(1)(2)
(1)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
(2)
|
Refer to "Non-GAAP
Measures".
|
Pembina reported strong
adjusted EBITDA of $850 million for
the third quarter, seven percent higher than the same period in the
prior year. Higher margins on NGL and crude oil sales and the
positive impact of higher marketed NGL volumes were partially
offset by a realized loss on commodity-related derivatives compared
to a realized gain in the prior period. In addition, the
year-over-year increase was due to contributions from assets placed
into service in Facilities including Prince Rupert Terminal,
Empress Infrastructure, Duvernay III and Hythe Developments, as
well as higher volumes at Veresen Midstream's Dawson Assets and
higher volumes on the Peace Pipeline system. These positive factors
were partially offset by the impact of a lower U.S. dollar exchange
rate, a lower contribution from Ruby Pipeline due to lower
contracted volumes, lower revenue from Cochin Pipeline due to the
impact of a timing difference in the recognition of deferred
revenue, and higher general and administrative expense due to
higher long-term incentive expenses as a result of changes in
Pembina's share price.
Earnings
Change in Third Quarter Earnings ($
millions)(1)(2)(3)
(1)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
(2)
|
Facilities results
ex. commodity-related derivatives and Marketing & New Ventures
results ex. commodity-related derivatives include gross profit less
realized and unrealized losses on commodity-related derivative
financial instruments.
|
(3)
|
Other includes other
expenses, impairments and corporate.
|
Pembina reported earnings of
$588 million for the third quarter,
82 percent higher than the same period in the prior year. In
addition to the factors impacting adjusted EBITDA, as noted above,
earnings were positively impacted by the receipt of the
$350 million payment associated with
Pembina's termination of its
proposed acquisition of Inter Pipeline, net of the related tax
impact, a higher unrealized gain related to certain gas processing
fees tied to AECO natural gas prices, and an unrealized gain on
commodity-related derivatives compared to a loss in the prior
period. These positive factors were offset by higher net finance
costs due to a foreign exchange loss, compared to a gain in the
prior period, and lower share of profit from Ruby Pipeline.
Cash Flow From Operating Activities
Cash flow from operating activities of $913 million for the third quarter was an
increase of 110 percent over the same period in the prior year. The
increase was driven primarily by receipt of the payment associated
with Pembina's termination of the
proposed acquisition of Inter Pipeline; an increase in operating
results, as discussed above, after adjusting for non-cash items; a
change in non-cash working capital; and a decrease in taxes paid.
These positive factors were partially offset by an increase in net
interest paid. On a per share (basic) basis, cash flow from
operating activities for the third quarter increased due to the
same factors.
Adjusted Cash Flow From Operating Activities
Adjusted cash flow from operating activities of $786 million was 50 percent higher compared to
the same period in the prior year. The increase is due to the same
factors impacting cash flow from operating activities, discussed
above, net of the change in non-cash working capital and decrease
in taxes paid, partially offset by higher current tax expense and
an increase in accrued share-based payments. On a per share (basic)
basis, adjusted cash flow from operating activities for the third
quarter increased due to the same factors.
Volumes
Total volumes of 3,411 mboe/d for the third quarter represent an
approximately one percent decrease over the same period in the
prior year.
Divisional Highlights
- Pipelines reported adjusted EBITDA for the third quarter of
$503 million, representing a seven
percent decrease compared to the same period in the prior year. The
decrease was largely due to a lower contribution from Ruby Pipeline
due to lower contracted volumes, lower revenue from Cochin Pipeline
due to the impact of a timing difference in the recognition of
deferred revenue, and the impact of a lower U.S. dollar exchange
rate. These factors were partially offset by higher volumes on
Peace Pipeline.
Pipelines volumes of 2,563 mboe/d in the third quarter represent
a one percent decrease compared to the same period in the prior
year. The decrease was driven by lower contracted volumes on Ruby
Pipeline due to contract expirations, lower interruptible volumes
on AEGS due to third party outages, and lower volumes on Vantage
Pipeline. These decreases were partially offset by higher volumes
on Peace Pipeline and Alliance Pipeline.
- Facilities reported adjusted EBITDA of $273 million for the third quarter, which
represents a nine percent increase over the same period in the
prior year. The increase was primarily due to the contribution from
Empress Infrastructure and Duvernay III, which were placed into
service in the fourth quarter of 2020, and Prince Rupert Terminal
and Veresen Midstream's Hythe Developments, which were placed into
service in March 2021, as well as
higher volumes at Younger due to a turnaround in the prior
year.
Facilities volumes of 848 mboe/d in the third quarter were three
percent lower than the same period in the prior year. The decrease
was largely due to take-or-pay relief provided to Redwater Complex
customers following third-party outages during the quarter, lower
volumes at Saturn Complex due to higher deferred revenue volumes
recognized in the same period in the prior year, and lower supply
volumes on the East NGL System as volumes are now being processed
at Empress NGL Extraction Facility. These factors were partially
offset by higher volumes at Younger due to a turnaround in the
prior year, higher volumes at Veresen Midstream's Dawson Assets and
higher volumes associated with Duvernay III being placed into
service in the fourth quarter of 2020.
- Marketing & New Ventures reported third quarter adjusted
EBITDA of $109 million, an increase
of $75 million, or 221 percent, over
the same period in the prior year. Higher margins were realized on
NGL and crude oil sales as a result of higher NGL and crude oil
prices and higher marketed NGL volumes. This was partially offset
by a realized loss on commodity-related derivatives, due to higher
NGL and crude oil market prices, compared to a realized gain in the
same period in the prior year. Excluding the impact of realized
losses on commodity-related derivatives, third quarter adjusted
EBITDA increased $127 million over
the same period in the prior year.
Marketed NGL volumes of 177 mboe/d in the third quarter
represent a five percent increase compared to the same period in
the prior year. Marketed NGL volumes increased as sales have
returned to pre-pandemic levels compared to the third quarter of
2020 when Pembina built up storage
positions due to lower commodity prices.
Executive Overview
We are very pleased to report strong third quarter results
reflecting continued robust pricing across all commodities in
Pembina's value chain – crude,
condensate, natural gas and NGL. The current commodity price
environment is supportive of our outlook for 2021 and 2022, as well
as the longer-term prospects for Pembina's business, including a robust backlog
of currently deferred and potential new growth projects totaling
more than $5 billion.
As the Company continues to advance its ESG strategy, we were
pleased recently to announce our target to reduce Pembina's greenhouse gas ("GHG") emissions
intensity by 30 percent by 2030, relative to baseline 2019
emissions. The GHG reduction target will help guide business
decisions and improve overall emissions intensity performance while
increasing Pembina's long-term
value and ensuring Canadian energy is developed and delivered
responsibly. To meet the target, Pembina will focus initially on operational
opportunities, greater use of renewable and lower emission energy
sources, and investments in a lower carbon economy. In addition to
the GHG target, Pembina expects to
make further ESG progress with the announcement of Equity,
Inclusion and Diversity targets by the end of 2021.
Looking ahead, a number of fundamental developments within our
business and across the broader industry make us increasingly
optimistic about the prospects for Pembina and, by extension, each of our
stakeholders:
- Underinvestment and capital discipline among producers is
driving natural gas and NGL prices to a seven year high and
inventories remain at below average levels as we head into winter.
These conditions support our view of strong pricing continuing into
2022, creating an opportunity for Pembina to maintain an above average
contribution from our marketing business. As disclosed previously,
the Company has hedged approximately 50 percent of its 2021 frac
spread exposure, excluding Aux
Sable. For 2022, the Company has now hedged approximately 38
percent of its frac spread exposure, excluding Aux Sable.
- Our producer customers' financial health is as strong as it has
ever been. Despite the broader inflationary pressures in the global
economy, ingenuity and continuous improvement have driven
efficiencies, enabling producers to deliver more value with the
same development dollars. While we expect continued financial
discipline by producers, we also recognize that increasing energy
prices may eventually necessitate a supply response to meet the
world's near-term energy needs. This would clearly have positive
implications for Pembina.
- We were encouraged to see a recent significant announcement
from DOW Chemical Co., highlighting plans to build a new
polyethylene cracker in Fort
Saskatchewan, Alberta. The announced project would represent
a significant increase in ethane demand in Alberta as we estimate over 100,000 barrels
per day of new ethane feedstock supply could be required. This
should have positive implications for third-party service
providers, as new infrastructure will be required for ethane
extraction and transportation.
- Alliance Pipeline has tremendous utility and over the long term
offers reliable and highly competitive access to the mid-western
U.S. gas markets, as well as a conduit to the Gulf Coast and the
robust liquefied natural gas ("LNG") market. A recent open season
for short-term capacity was nearly three times over-subscribed,
resulting in Alliance being essentially fully contracted for 2022.
The current outlook also supports contracting of capacity beyond
2022 and we look forward to providing further updates by the end of
the year.
- The completion of the Line 3 Replacement Project represents a
major milestone for the industry and meaningfully advances Western
Canadian oil egress. In conjunction with the Trans Mountain
Pipeline expansion currently under construction, we expect the
Western Canadian Sedimentary Basin will soon have up to 750,000
barrels per day of excess takeaway capacity, providing ample
opportunity for supply to grow meaningfully to fill the gap, with
the potential for related benefits to accrue to Pembina over the long-term.
With strong pricing providing a steady tailwind for our
business, we remain optimistic about the future. We will continue
to advance our ESG strategy and progress development of future
growth opportunities. Finally, we remain on track to deliver full
year 2021 adjusted EBITDA within our guidance range of $3.3 - $3.4 billion
and look forward to providing our outlook for 2022 with the release
of our guidance and capital budget update in early December.
Projects and New Developments
(1)
Pipelines:
- Pembina continues to progress
its Phase VII Peace Pipeline Expansion ("Phase VII"), which
includes a new 20-inch, approximately 220 km pipeline and two new
pump stations or terminal upgrades. Phase VII will add
approximately 160,000 barrels per day of incremental capacity
upstream of Fox Creek, accessing
capacity available on the mainlines downstream of Fox Creek. Construction is underway and the
project is trending under its $775
million budget and ahead of schedule relative to the
expected in-service date in the first half of 2023.
- The Phase IX Peace Pipeline Expansion ("Phase IX") will add
capacity in the northwest Alberta-to-Gordondale, Alberta corridor to accommodate increased
activity in the northeast British Columbia Montney play. Phase IX
also includes a pump station in the Wapiti-to-Kakwa corridor that
was previously part of the Phase VII project scope. The project has
an estimated cost of approximately $120
million and an expected in-service date in the second half
of 2022.
- The previously announced Phase VIII Peace Pipeline Expansion
("Phase VIII") remains deferred. Initial contracts supporting the
project remain intact and customers continue to signal plans which
will necessitate the incremental capacity. Value engineering work
is ongoing and Pembina continues
to evaluate this project in discussions with its producing
customers with a reactivation decision expected in the fourth
quarter of 2021. Prior to deferral, Phase VIII had an associated
capital cost of approximately $500
million but Pembina expects
this level of investment to decrease given cost and scope
improvements.
Facilities:
- Pembina continues to progress
the Empress Cogeneration Facility. The facility will use natural
gas to generate up to 45 megawatts of electrical power, reducing
overall operating costs by providing power and heat to the existing
Empress NGL Extraction Facility. All the power will be consumed on
site, supplying approximately 90 percent of the site's power
requirements. Further, this project will contribute to annual
greenhouse gas emission reductions at the Empress NGL Extraction
Facility through the utilization of cogeneration waste heat and
low-emission power generated. Pembina anticipates a reduction of
approximately 90,000 tonnes of carbon dioxide equivalent per year
based on the current energy demand of the Empress NGL Extraction
Facility. Construction is progressing and the mechanical contractor
is expected to mobilize to site in November
2021. The project has an expected in-service date in the
fourth quarter of 2022.
- The Prince Rupert Terminal Expansion remains deferred.
Engineering of the expansion is well advanced and Pembina expects to make a final investment
decision in the first quarter of 2022.
__________________________
|
(1)
|
For further details
on the Company's significant assets, including definitions for
capitalized terms used herein that are not otherwise defined, refer
to Pembina's Annual Information Form for the year ended December
31, 2020 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.
|
Marketing & New Ventures:
- Pembina's New Ventures
continues to advance business opportunities in petrochemicals,
terminals, including LNG, and low-carbon energy. New Ventures is
focused on developing opportunities that integrate into
Pembina's core businesses, while
progressing projects that will extend Pembina's value-chain and benefit
stakeholders. Pembina has formed a
strategic partnership agreement with the Haisla First Nation to
develop the proposed Cedar LNG Project, a floating LNG facility
strategically positioned to leverage Canada's abundant natural gas supply and
British Columbia's growing LNG
infrastructure to produce industry-leading low–carbon, low-cost
Canadian LNG for overseas markets. The Cedar LNG Project is
expected to be the largest First Nation-owned infrastructure
project in Canada and have one of
the cleanest environmental profiles in the world. In addition,
Pembina and TC Energy Corporation
intend to jointly develop the Alberta Carbon Grid, a world-scale
carbon transportation and sequestration system, which will enable
Alberta-based industries to
effectively manage their greenhouse gas emissions, contribute
positively to Alberta's
lower-carbon economy and create sustainable long-term value for
Pembina and TC Energy
stakeholders.
Restatement of Revenue and Cost of Goods Sold in 2020
Financial Statements
During the third quarter, management identified certain crude
contracts within Pembina's
Marketing and New Ventures Division that were recorded incorrectly
as it relates to gross versus net revenue. There is no impact to
Pembina's balance sheet or any of
the following: net revenue, gross profit, earnings, cash flow from
operating activities, adjusted cash flow from operating activities
or adjusted EBITDA. As a result, Pembina intends to refile its consolidated
financial statements for the year ended December 31, 2020 and the management discussion
and analysis with respect thereto to reflect the restated revenue
and cost of goods sold figures for the years ended December 31, 2020 and 2019. The estimated
adjustments are as follows:
($ millions,
unaudited)
|
2021
|
2020
|
2019
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Revenue previously
reported
|
1,954
|
2,045
|
1,694
|
1,569
|
1,268
|
1,671
|
1,754
|
1,700
|
1,808
|
1,968
|
Restatement
adjustment
|
(52)
|
(29)
|
(14)
|
(73)
|
(39)
|
(123)
|
(86)
|
(208)
|
(245)
|
(319)
|
Revenue
restated(1)
|
1,902
|
2,016
|
1,680
|
1,496
|
1,229
|
1,548
|
1,668
|
1,492
|
1,563
|
1,649
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
previously reported
|
1,060
|
1,046
|
740
|
720
|
492
|
806
|
917
|
949
|
1,050
|
1,194
|
Restatement
adjustment
|
(52)
|
(29)
|
(14)
|
(73)
|
(39)
|
(123)
|
(86)
|
(208)
|
(245)
|
(319)
|
Cost of good sold
restated
|
1,008
|
1,017
|
726
|
647
|
453
|
683
|
831
|
741
|
805
|
875
|
Net revenue
impact(1)(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Gross profit and
earnings impact(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
Revenue for 2018 in
the "Selected Annual Information" table in section 9 of the refiled
2020 management's discussion and analysis will be restated to
$6,125 million (from originally reported of $7,351 million). While
not disclosed in the 2020 management discussion and analysis, a
corresponding restatement of cost of goods sold in 2018 would also
be made in connection with this restatement. The adjustments have
no impact to Pembina's balance sheet or any of the following: net
revenue, gross profit, earnings, cash flow from operating
activities, adjusted cash flow from operating activities or
adjusted EBITDA.
|
(2)
|
Refer to "Non-GAAP
Measures".
|
Dividends
- Pembina declared and paid
dividends of $0.21 per common share
in July, August and September 2021
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: $0.268875; and Series 21: $0.30625 to shareholders of record as of
August 3, 2021. 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, 2021. 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 August 3, 2021.
Third Quarter 2021 Conference Call & Webcast
Pembina will host a conference
call on Friday, November 5, 2021 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 2021. The conference call dial-in numbers for
Canada and the U.S. are
647-792-1240 or 800-437-2398. A recording of the conference call
will be available for replay until November
12, 2021 at 11:59 p.m. ET. To
access the replay, please dial either 647-436-0148 or 888-203-1112
and enter the password 9073529.
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://produceredition.webcasts.com/starthere.jsp?ei=1354435&tp_key=4504814289
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; and
is growing an export terminals 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 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", "believe" 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 of new business initiatives and growth opportunities,
including the anticipated benefits therefrom and the expected
timing thereof; expectations about industry activities and
development opportunities, including outlooks related thereto;
expectations about future demand for Pembina's infrastructure and services;
expectations relating to new infrastructure projects, including the
benefits therefrom and timing thereof; Pembina's sustainability, climate change and
environmental, social and governance plans, initiatives and
strategies, including expectations relating to Pembina's GHG Target and timing for the
announcement of its diversity commitments; planning, construction,
capital expenditure estimates, schedules, locations, expected
capacity, incremental volumes, completion and in-service dates,
rights, activities and operations with respect to the construction
of, or expansions on, existing pipelines systems, gas services
facilities, processing and fractionation facilities, terminalling,
storage and hub facilities and other facilities or energy
infrastructure, as well as the impact of Pembina's projects on its future financial
performance and stakeholders; pipeline, processing, fractionation
and storage facility and system operations and throughput levels;
the expected benefits from Pembina's agreements; decisions and activities
related to deferred projects; the impact of current and expected
market conditions on Pembina.
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; prevailing commodity prices, interest rates, carbon
prices, tax rates and exchange rates; 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 projects; 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 and
Indigenous and landowner consultation requirements; the impact of
competitive entities and pricing; reliance on third parties to
successfully operate and maintain certain assets; 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 ability of
Pembina to acquire or develop the
necessary infrastructure in respect of future development projects;
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; constraints on the, or the unavailability of,
adequate infrastructure; the political environment in North
American and elsewhere, and public opinion; the ability to access
various sources of debt and equity capital; changes in credit
ratings; counterparty credit risk; technology and cyber security
risks; natural catastrophes; 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
Throughout this news release, Pembina has disclosed certain financial
measures that are not defined in accordance with GAAP and which are
not disclosed in Pembina's
financial statements. Non-GAAP financial measures either exclude an
amount that is included in, or include an amount that is excluded
from, the composition of the most directly comparable financial
measure determined in accordance with GAAP. These non-GAAP
financial measures are used by management to evaluate the
performance and cash flows of Pembina and its businesses and to provide
additional useful information respecting Pembina's financial performance and cash flows
to investors and analysts.
In this news release, Pembina has disclosed the following non-GAAP
financial measures: net revenue, adjusted earnings before interest,
taxes, depreciation and amortization ("adjusted EBITDA"), adjusted
cash flow from operating activities, cash flow from operating
activities per common share and adjusted cash flow from operating
activities per common share. These non-GAAP financial measures
disclosed in this news release do not have any standardized meaning
under International Financial Reporting Standards ("IFRS") and may
not be comparable to similar financial measures disclosed by other
issuers. The measures should not, therefore, be considered in
isolation or as a substitute for, or superior to, measures of
Pembina's financial performance,
or cash flows specified, defined or determined in accordance with
IFRS, including revenue, earnings and cash flow from operating
activities.
Except as otherwise described herein, these non-GAAP
financial measures are calculated on a consistent basis from period
to period. Specific reconciling items may only be relevant in
certain periods.
Below is a description of each non-GAAP financial measure
disclosed in this news release, together with, as applicable,
disclosure of the most directly comparable financial measure that
is determined in accordance with GAAP to which each non-GAAP
financial measure relates and a quantitative reconciliation of each
non-GAAP financial measure to such directly comparable GAAP
financial measure. Additional information relating to such non-GAAP
financial measures, including disclosure of the composition of each
non-GAAP financial measure, an explanation of how each non-GAAP
financial measure provides useful information to investors
and the additional purposes, if any, for which management uses each
non-GAAP financial measure and an explanation of the reason for any
change in the label or composition of each non-GAAP financial
measure from what was previously disclosed, is contained in the
"Non-GAAP Measures" section of the management's discussion and
analysis of Pembina for the three
and nine months ended September 30,
2021 (the "MD&A") is incorporated by reference in this
news release. The MD&A is available on SEDAR at www.sedar.com,
EDGAR at www.sec.gov and Pembina's
website at www.pembina.com.
Net Revenue
Net revenue is a non-GAAP financial measure which is defined
as total revenue less cost of goods sold including product
purchases. The most directly comparable financial measure to net
revenue that is determined in accordance with GAAP and disclosed in
Pembina's financial statements is
revenue.
3 Months Ended
September 30
($
millions)
|
Pipelines
|
Facilities
|
Marketing
&
New Ventures(1)
|
Corporate
&
Inter-segment
Eliminations
|
Total(1)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
566
|
557
|
341
|
311
|
1,393
|
752
|
(151)
|
(124)
|
2,149
|
1,496
|
Cost of goods sold,
including product purchases
|
—
|
—
|
1
|
3
|
1,268
|
720
|
(81)
|
(76)
|
1,188
|
647
|
Net
revenue
|
566
|
557
|
340
|
308
|
125
|
32
|
(70)
|
(48)
|
961
|
849
|
(1)
|
Comparative 2020
period has been restated. See "Restatement of Revenue and Cost of
Goods Sold" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
9 Months Ended
September 30
($
millions)
|
Pipelines
|
Facilities
|
Marketing
&
New Ventures(1)
|
Corporate
&
Inter-segment
Eliminations
|
Total(1)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
1,673
|
1,648
|
1,014
|
905
|
3,827
|
2,074
|
(447)
|
(354)
|
6,067
|
4,273
|
Cost of goods sold,
including product purchases
|
—
|
—
|
7
|
7
|
3,463
|
2,006
|
(257)
|
(230)
|
3,213
|
1,783
|
Net
revenue
|
1,673
|
1,648
|
1,007
|
898
|
364
|
68
|
(190)
|
(124)
|
2,854
|
2,490
|
(1)
|
Comparative 2020
period has been restated. See "Restatement of Revenue and Cost of
Goods Sold" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization
Adjusted EBITDA is a non-GAAP measure and is calculated as
earnings before net finance costs, income taxes, depreciation and
amortization (included in operations and general and administrative
expense) and unrealized gains or losses on commodity-related
derivative financial instruments. Adjusted EBITDA also includes
adjustments to earnings for losses (gains) on disposal of assets,
transaction costs incurred in respect of acquisitions, dispositions
and restructuring, impairment charges or reversals in respect of
goodwill, intangible assets, investments in equity accounted
investees and property, plant and equipment, certain non-cash
provisions and other amounts not reflective of ongoing operations.
The most directly comparable financial measure to adjusted EBITDA
that is determined in accordance with GAAP and disclosed in
Pembina's financial statements is
earnings before income tax.
3 Months Ended
September 30
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($ millions,
except per share amounts)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Earnings before
income tax(1)
|
329
|
371
|
207
|
175
|
91
|
2
|
154
|
(114)
|
781
|
434
|
Adjustments to share
of profit from equity accounted investees and
other(1)
|
65
|
58
|
33
|
34
|
5
|
9
|
—
|
—
|
103
|
101
|
Net finance
costs(1)
|
8
|
8
|
12
|
5
|
2
|
(7)
|
122
|
76
|
144
|
82
|
Depreciation and
amortization(1)
|
100
|
103
|
56
|
49
|
13
|
12
|
11
|
11
|
180
|
175
|
Unrealized (gain)
loss on commodity-related derivative financial
instruments
|
—
|
—
|
(45)
|
(11)
|
(2)
|
17
|
—
|
—
|
(47)
|
6
|
Canadian Emergency
Wage Subsidy
|
—
|
—
|
—
|
—
|
—
|
—
|
8
|
(9)
|
8
|
(9)
|
Transformation and
restructuring costs
|
—
|
—
|
—
|
—
|
—
|
—
|
11
|
—
|
11
|
—
|
Transaction costs
incurred in respect of acquisitions
|
—
|
—
|
—
|
—
|
—
|
—
|
8
|
6
|
8
|
6
|
Arrangement
Termination Payment
|
—
|
—
|
—
|
—
|
—
|
—
|
(350)
|
—
|
(350)
|
—
|
Impairment charges
and non-cash provisions
|
1
|
1
|
10
|
(1)
|
—
|
1
|
1
|
—
|
12
|
1
|
Adjusted
EBITDA
|
503
|
541
|
273
|
251
|
109
|
34
|
(35)
|
(30)
|
850
|
796
|
Adjusted EBITDA per
common share – basic (dollars)
|
|
|
|
|
|
|
|
|
1.55
|
1.45
|
(1)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
9 Months Ended
September 30
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($ millions,
except per share amounts)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Earnings before
income tax(1)
|
987
|
1,120
|
555
|
499
|
167
|
38
|
(177)
|
(426)
|
1,532
|
1,231
|
Adjustments to share
of profit from equity accounted investees and
other(1)
|
221
|
180
|
99
|
103
|
18
|
15
|
—
|
—
|
338
|
298
|
Net finance
costs(1)
|
23
|
24
|
30
|
16
|
(7)
|
2
|
297
|
319
|
343
|
361
|
Depreciation and
amortization(1)
|
312
|
300
|
158
|
149
|
38
|
37
|
35
|
34
|
543
|
520
|
Unrealized (gain)
loss on commodity-related derivative financial
instruments
|
—
|
—
|
(62)
|
(14)
|
19
|
12
|
—
|
—
|
(43)
|
(2)
|
Canadian Emergency
Wage Subsidy
|
—
|
—
|
—
|
—
|
—
|
—
|
3
|
(37)
|
3
|
(37)
|
Transformation and
restructuring costs
|
—
|
3
|
—
|
2
|
—
|
1
|
26
|
4
|
26
|
10
|
Transaction costs
incurred in respect of acquisitions
|
—
|
—
|
—
|
—
|
—
|
—
|
26
|
16
|
26
|
16
|
Arrangement
Termination Payment
|
—
|
—
|
—
|
—
|
—
|
—
|
(350)
|
—
|
(350)
|
—
|
Impairment charges
and non-cash provisions
|
11
|
4
|
32
|
2
|
2
|
13
|
—
|
(1)
|
45
|
18
|
Adjusted
EBITDA
|
1,554
|
1,631
|
812
|
757
|
237
|
118
|
(140)
|
(91)
|
2,463
|
2,415
|
Adjusted EBITDA per
common share – basic (dollars)
|
|
|
|
|
|
|
|
|
4.48
|
4.39
|
(1)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to Pembina's Interim
Financial Statements.
|
Adjusted Cash Flow from Operating Activities, Cash Flow from
Operating Activities per Common Share and Adjusted Cash Flow from
Operating Activities per Common Share
Adjusted cash flow from operating activities is a non-GAAP
measure which is defined as cash flow from operating activities
adjusting for the change in non-cash operating working capital,
adjusting for current tax and share-based payment expenses, and
deducting preferred share dividends paid. The most directly
comparable financial measure to adjusted cash flow from operating
activities that is determined in accordance with GAAP and disclosed
in Pembina's financial statements
is cash flow from operating activities.
Cash flow from operating activities per common share and
adjusted cash flow from operating activities per share are non-GAAP
financial measures which are calculated by dividing cash flow from
operating activities or adjusted cash flow from operating
activities, as applicable, by the weighted average number of common
shares outstanding.
|
3 Months Ended
September 30
|
9 Months Ended
September 30
|
($ millions,
except per share amounts)
|
2021
|
2020
|
2021
|
2020
|
Cash flow from
operating activities
|
913
|
434
|
1,953
|
1,486
|
Cash flow from
operating activities per common share – basic (dollars)
|
1.66
|
0.78
|
3.55
|
2.70
|
Add
(deduct):
|
|
|
|
|
Change in non-cash
operating working capital
|
(7)
|
89
|
70
|
168
|
Current tax
expense
|
(141)
|
(52)
|
(255)
|
(195)
|
Taxes paid, net of
foreign exchange
|
68
|
89
|
265
|
289
|
Accrued share-based
payments
|
(16)
|
1
|
(56)
|
6
|
Share-based
payments
|
—
|
1
|
32
|
45
|
Preferred share
dividends paid
|
(31)
|
(38)
|
(103)
|
(113)
|
Adjusted cash flow
from operating activities
|
786
|
524
|
1,906
|
1,686
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)
|
1.43
|
0.95
|
3.47
|
3.07
|
Investor Relations, Scott Arnold,
Manager Investor Relations, (403) 231-3156, 1-855-880-7404, E-mail:
investor-relations@pembina.com, www.pembina.com