Record results exceed annual guidance reflecting strong
marketing contribution due to higher commodity prices
All financial figures are in Canadian dollars unless otherwise
noted. This news release refers to certain financial measures and
ratios 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"); adjusted cash flow from
operating activities; and adjusted cash flow from operating
activities per common share. For more information see "Non-GAAP and
Other Financial Measures" herein.
CALGARY, AB, Feb. 25, 2022 /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 2021.
Financial and Operational Overview
|
3 Months Ended
December 31
|
12 Months Ended
December 31
|
($ millions,
except where noted)
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
2,560
|
1,680
|
8,627
|
5,953
|
Net
revenue(1)
|
1,084
|
954
|
3,938
|
3,444
|
Gross
profit
|
785
|
247
|
2,647
|
2,008
|
Earnings
(loss)
|
80
|
(1,216)
|
1,242
|
(316)
|
Earnings (loss) per
common share – basic (dollars)
|
0.08
|
(2.28)
|
2.00
|
(0.86)
|
Earnings (loss) per
common share – diluted (dollars)
|
0.08
|
(2.28)
|
1.99
|
(0.86)
|
Cash flow from
operating activities
|
697
|
766
|
2,650
|
2,252
|
Cash flow from
operating activities per common share – basic
(dollars)
|
1.27
|
1.39
|
4.82
|
4.10
|
Adjusted cash flow
from operating activities(1)
|
734
|
603
|
2,640
|
2,289
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.33
|
1.10
|
4.80
|
4.16
|
Common share
dividends declared
|
346
|
346
|
1,386
|
1,385
|
Dividends per common
share (dollars)
|
0.63
|
0.63
|
2.52
|
2.52
|
Capital
expenditures
|
176
|
161
|
658
|
1,029
|
Total volume
(mboe/d)(2)
|
3,437
|
3,614
|
3,456
|
3,500
|
Adjusted
EBITDA(1)
|
970
|
866
|
3,433
|
3,281
|
(1)
|
Refer to "Non-GAAP
and Other Financial 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
December 31
|
12 Months Ended
December 31
|
|
2021
|
2020
|
2021
|
2020
|
($ millions,
except where noted)
|
Volumes(1)
|
Reportable
Segment
Earnings
(Loss)
Before Tax
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Reportable
Segment
Earnings
(Loss)
Before Tax
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Reportable
Segment
Earnings
(Loss)
Before Tax
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Reportable
Segment
Earnings
(Loss)
Before Tax
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,571
|
(70)
|
548
|
2,730
|
(992)
|
577
|
2,586
|
917
|
2,102
|
2,623
|
128
|
2,208
|
Facilities
|
866
|
160
|
285
|
884
|
143
|
255
|
870
|
715
|
1,097
|
877
|
642
|
1,012
|
Marketing & New
Ventures(3)
|
—
|
224
|
183
|
—
|
(684)
|
75
|
—
|
391
|
420
|
—
|
(646)
|
193
|
Corporate
|
—
|
(181)
|
(46)
|
—
|
(114)
|
(41)
|
—
|
(358)
|
(186)
|
—
|
(540)
|
(132)
|
Total
|
3,437
|
133
|
970
|
3,614
|
(1,647)
|
866
|
3,456
|
1,665
|
3,433
|
3,500
|
(416)
|
3,281
|
(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
and Other Financial 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 dated February 24,
2022 for the year ended December 31, 2021 ("MD&A") for further
information.
|
Financial & Operational Highlights
Adjusted EBITDA
Change in Full Year Adjusted EBITDA ($
millions)(1)
(1) Refer to
"Non-GAAP and Other Financial Measures".
|
Pembina reported record quarterly adjusted EBITDA of
$970 million and record full year
adjusted EBITDA of $3,433 million,
representing a twelve percent and five percent increase,
respectively, over the same periods in the prior year. Full year
adjusted EBITDA exceeded the high end of the Company's guidance
range.
Fourth quarter adjusted EBITDA was positively impacted by higher
margins on NGL and crude oil sales combined with a higher
contribution from Aux Sable; higher
contributions from Prince Rupert Terminal and Duvernay III coming
into service in March 2021 and
November 2020, respectively; and
higher share of profit from Veresen Midstream, due to the Hythe
Developments project entering service in March 2021 and higher volumes at the Dawson
Assets.
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, 2021
available 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.
In addition, relative to the prior period, the fourth quarter of
2021 was negatively impacted by higher realized losses on
commodity-related derivative financial instruments; expiration of
contracts on the Nipisi and Mitsue pipeline systems; and a lower
contribution from Ruby Pipeline.
Full year adjusted EBITDA was also impacted by the same factors
affecting the fourth quarter, as described above. In addition, full
year adjusted EBITDA was positively impacted by higher volumes on
the Peace Pipeline system, the placement into service of Empress
Infrastructure in October 2020, the
impact of the lower U.S. dollar exchange rate, and higher marketed
NGL volumes. General & administrative expense for the full year
was higher largely due to higher incentive costs, primarily driven
by the change in Pembina's share price, and an increase in
optimization project costs, partially offset by a reduction in
salaries due to a lower headcount.
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, 2021 available 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.
|
Earnings
Change in Full Year Earnings ($
millions)(1)(2)
(1)
|
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.
|
(2)
|
Other includes other
expenses, impairments and corporate.
|
Pembina recorded earnings in the fourth quarter of $80 million and earnings for the full year of
$1,242 million compared to a loss of
$1,216 million and a loss of
$316 million, respectively, in the
same periods in the prior year.
In addition to the factors impacting adjusted EBITDA, as noted
above, earnings in both periods were positively impacted by lower
non-cash after-tax impairments. Pembina recognized $335 million, net of tax, in impairments in 2021
largely related to the Nipisi and Mitsue pipeline systems as well
as Edmonton South Rail Terminal, compared to $1.6 billion, net of tax, in impairments in
2020.
Both periods also were positively impacted by unrealized gains
on commodity-related derivatives compared to unrealized losses in
the prior year. Both periods were negatively impacted by higher
income tax expense due to the deferred tax recovery on impairments
in the prior year; higher other expense, which increased due to
higher transformation and restructuring costs and project
write-downs; and a lower share of profit from Ruby Pipeline.
Fourth quarter earnings were also negatively impacted by
unrealized losses on commodity-related derivatives for certain gas
processing fees tied to AECO prices, and higher net finance costs
due to lower foreign exchange gains.
Full year earnings also were positively impacted by unrealized
gains on commodity-related derivatives for certain gas processing
fees tied to AECO prices and higher other income due to the receipt
of the termination fee associated with Pembina's proposed
acquisition of Inter Pipeline Ltd. ("Arrangement Termination
Payment"), net of the related tax and associated expenses. These
positive factors were offset by lower other income associated with
the Canadian Emergency Wage Subsidy received in 2020.
Cash Flow From Operating Activities
Cash flow from operating activities of $697 million for the fourth quarter and
$2,650 million for the full year
represent a decrease of nine percent and an increase of 18 percent,
respectively, over the same periods in the prior year.
The decrease in the fourth quarter was primarily driven by a
change in non-cash working capital and an increase in taxes paid,
primarily related to the Arrangement Termination Payment, partially
offset by an increase in operating results after adjusting for
non-cash items, an increase in revenue collected and deferred, and
an increase in distributions from equity accounted investees.
The full year increase was due primarily to an increase in
operating results after adjusting for non-cash items, and receipt
of the Arrangement Termination Payment, partially offset by an
increase in taxes paid and an increase in net interest paid.
On a per share (basic) basis, cash flow from operating
activities for the fourth quarter and full year decreased by nine
percent and increased by 18 percent, respectively, compared to the
same periods in the prior year, due to the same factors.
Adjusted Cash Flow From Operating Activities
Quarterly and record full year adjusted cash flow from operating
activities of $734 million and
$2,640 million, respectively,
represent 22 percent and 15 percent increases, respectively, over
the same periods in the prior year. The increases were due to the
factors impacting cash flow from operating activities, discussed
above, net of the change in non-cash working capital, taxes paid,
and lower current tax expense. On a per share (basic) basis,
adjusted cash flow from operating activities for the fourth quarter
and full year increased by 21 percent and 15 percent, respectively,
compared to the same periods in the prior year, due to the same
factors.
Volumes
Total volumes of 3,437 mboe/d for the fourth quarter and 3,456
mboe/d for the full year represent decreases of approximately five
percent and one percent, respectively, over the same periods in the
prior year. In both periods, volume decreases were largely
attributable to the Pipelines Division, most notably on certain oil
sands pipelines systems and Ruby Pipeline. Divisional volumes are
discussed in further detail below.
Divisional Highlights
- Pipelines had a fourth quarter reportable segment loss before
tax of $70 million compared to a loss
of $992 million in the same period in
the prior year. The increase was largely due to lower impairments
and a higher contribution from NEBC Montney Infrastructure,
partially offset by a lower contribution from Ruby Pipeline and
lower volumes on Cochin Pipeline. For the full year, Pipelines had
reportable segment earnings before tax of $917 million compared to $128 million in the same period in the prior
year. The full year results were also driven by lower impairments
and partially offset by a lower contribution from Ruby Pipeline;
lower volumes on Vantage Pipeline, as end users sourced their
supply from Redwater Complex; lower revenue on the Nipisi and
Mitsue pipelines, due to contract expirations; the impact of the
lower U.S. dollar exchange rate; increased operating expenses due
to higher non-recoverable power costs; and higher general &
administrative expense as a result of higher long-term incentive
costs. These factors were partially offset by higher volumes on
Peace Pipeline.
Pipelines reported adjusted EBITDA for the fourth quarter of
$548 million and $2,102 million for the full year, which both
represent five percent decreases compared to the same periods in
the prior year. The decreases were due to the same items impacting
reportable segment earnings (loss) before tax, discussed above, net
of the decrease in impairments.
Pipelines volumes of 2,571 mboe/d in the fourth quarter and 2,586
mboe/d for the full year, represent six percent and one percent
decreases, respectively, compared to the same periods in the prior
year. Volumes in both periods were impacted by lower contracted
volumes on the Nipisi and Mitsue pipelines, and Ruby Pipeline, as
well as lower volumes on AEGS due to third-party outages and
planned turnarounds. In addition, fourth quarter volumes were
impacted by lower deferred revenue volumes on the Peace Pipeline
system, partially offset by higher volumes on Drayton Valley
Pipeline. Full year volumes were also impacted by higher volumes on
Peace Pipeline.
- Facilities had reportable segment earnings before tax for the
fourth quarter and full year 2021 of $160
million and $715 million,
respectively, representing increases of 12 percent and 11 percent,
respectively, over the same periods in the prior year. Both periods
were positively impacted by the contribution from new assets placed
into service, including Duvernay III and Prince Rupert Terminal; a
higher contribution from Veresen Midstream due to the Hythe
Developments project entering service and higher volumes at the
Dawson Assets, and a realized gain on commodity-related derivatives
for certain gas processing fees tied to AECO prices. In addition,
the fourth quarter was positively impacted by higher contracted
volumes at Younger. The full year was also impacted by higher
revenue at Redwater Complex, partially offset by higher operating
expenses and higher long-term incentive costs.
Facilities reported adjusted EBITDA of $285
million for the fourth quarter and $1,097 million for the full year, which represent
a 12 percent and an eight percent increase, respectively, over the
same periods in the prior year. The increases were due to the same
items impacting reportable segment earnings (loss) before tax,
discussed above.
Facilities volumes of 866 mboe/d in the fourth quarter and 870
mboe/d for the full year, represent a two percent and one percent
decrease, respectively, compared to the same periods in the prior
year. The quarterly and full year decreases were primarily due to
lower supply volumes on East NGL System, which are now being
processed by Empress Infrastructure, higher volumes associated with
Duvernay III being placed into service, and higher contracted
volumes at Younger. Additionally, the fourth quarter was impacted
by lower volumes at Redwater Complex following third party outages,
and higher volumes at Veresen Midstream's Dawson Assets.
- Marketing & New Ventures had reportable segment earnings
before tax for the fourth quarter of 2021 of $224 million compared to losses of $684 million for the same periods in the prior
year. The period-over-period changes were due to significant
impairments in the fourth quarter of 2020. In addition, higher
margins on NGL and crude oil sales as a result of higher NGL and
crude oil prices, combined with a higher contribution from
Aux Sable, were partially offset by
higher realized losses on commodity-related derivatives. For the
full year, Marketing & New Ventures had reportable segment
earnings before tax of $391 million
compared to losses of $646 million in
2020. In addition to the quarterly impacts noted above, the full
year increase was also a result of higher marketed NGL volumes.
Marketing & New Ventures reported fourth quarter adjusted
EBITDA of $183 million and
$420 million for the full year, which
represent a 144 percent and 118 percent increase, respectively,
compared to the same periods in the prior year. The increases were
due to the same items impacting reportable segment earnings (loss)
before tax, discussed above, net of the impairment recognized
during the fourth quarter of 2020.
Marketed NGL volumes of 193 mboe/d in the fourth quarter and 190
mboe/d for the full year, represent a seven percent decrease and
four percent increase, respectively, compared to the same periods
in the prior year. The fourth quarter decrease was largely due to
lower ethane sales caused by third party outages, partially offset
by increased propane and butane sales volumes. For the full year,
higher marketed NGL volumes from monetizing previously built up
storage positions during the first quarter of 2021 and higher NGL
supply volumes in the second and third quarters of 2021 were
largely offset by lower ethane sales during the fourth quarter of
2021.
Executive Overview
One year ago, we reflected on the significant impact the global
health pandemic had on our business, noting that in 2020, Pembina
effectively hit the 'pause' button but that in 2021 there was
renewed optimism building and a sense of being able to hit 'play'
once again. Despite the ongoing pandemic, Pembina did in fact hit
'play', most notably by restarting construction on several
previously deferred capital projects and by exceeding the high end
of our adjusted EBITDA guidance range. Amidst the backdrop of a
recovering economy and strengthening commodity prices, Pembina
delivered strong financial and operational results, progressed new
initiatives, advanced our environmental, social and governance
("ESG") strategy and positioned ourselves for continued growth and
tremendous future success.
Strong 2021 Results
Pembina delivered earnings of $1.2
billion and record adjusted EBITDA of $3.43 billion dollars in 2021, which in the case
of adjusted EBITDA, exceeded the top end of our annual guidance
range and represents a five percent increase over 2020. Strong
financial results reflected much improved commodity prices across
all products within Pembina's value chain – crude oil, natural gas
and natural gas liquids. Volumes on many of Pembina's systems
improved throughout 2021 and higher prices and margins on crude oil
and NGL, as well as higher NGL sales volumes in the year, also led
to strong annual results in our marketing business.
Strong financial performance allowed Pembina to exit 2021 in an
even better financial position with a stronger balance sheet,
improved liquidity and having maintained or strengthened the
Company's financial guardrails. Our commitment to these guardrails
has been demonstrated consistently and is unwavering.
Given an improvement in commodity prices, and the expectation of
a post-pandemic economic recovery, we continue to have a
constructive view of activity in the Western Canadian Sedimentary
Basin. Throughout 2021 and now into 2022, we have observed a number
of important developments, including strong underlying customers,
new third-party infrastructure, and continued petrochemical support
and investment, which we have framed collectively as 'Advantage
Canada'.
Progressing Pembina's ESG Strategy
Pembina has never been one to shy away from a challenge and as
the world around us continues to evolve, Pembina is embracing the
opportunity to adapt, respond and contribute to a more sustainable
future.
Our strong commitment to ESG is being demonstrated by the
ambitious new projects, partnerships and targets we announced this
past year.
- Announced a target to reduce Pembina's greenhouse gas ("GHG")
emissions intensity by 30 percent by 2030, relative to 2019.
- Demonstrated Pembina's commitment to employee diversity, equal
opportunity and ensuring a safe and inclusive workplace with the
announcement of employee equity, diversity and inclusion
targets.
- Announced two significant and transformational partnerships
that combine strong business opportunities with compelling ESG
attributes - a partnership with the Haisla Nation to develop the
proposed Cedar LNG Project, and Chinook Pathways, a partnership
with Western Indigenous Pipeline Group to pursue ownership of the
Trans Mountain Pipeline, following completion of the construction
of the Trans Mountain Expansion project.
- Partnered with TC Energy Corporation ("TC Energy") to jointly
develop a world-scale carbon transportation and sequestration
system, the Alberta Carbon Grid, which will allow Pembina to play a
vital role in helping Alberta-based industries effectively manage
GHG emissions.
Looking Ahead
As we previously announced during the quarter, Pembina expects
to deliver 2022 adjusted EBITDA of $3.35 to $3.55
billion. In 2022, cash flow from operating activities is
expected to exceed dividend payments and the capital expenditure
program. Pembina recently announced it expects to allocate up to
the first $200 million of the excess
cash flow to common share repurchases by mid-2022, representing
approximately one percent of the Company's common shares. During
the fourth quarter, Pembina made progress towards this goal with
the repurchase of $17 million of
common shares.
Based on the current guidance for 2022, Pembina expects to
remain firmly within its financial guardrails with ample liquidity.
Leverage metrics are expected to remain within the ranges for a
strong 'BBB' credit rating.
With all these considerations, Pembina's value proposition
remains compelling. We have a diversified business, integrated
asset base and a growing ability to reach higher value markets for
our customers' products. We look forward to continuing to build
upon Pembina's base business and develop our multi-billion dollar
portfolio of growth opportunities, while being a leading
participant in the energy industry's evolution to a more
sustainable future.
Projects and New Developments
Pipelines:
- As previously announced during the fourth quarter, recent open
seasons on Alliance Pipeline have enhanced its contractual profile.
Alliance is essentially fully contracted for the 2021/2022 gas year
and 76 percent of the full path capacity set to expire October 31, 2022 was successfully contracted on
terms with an average contract length of nearly four years,
beginning November 1, 2022. The
results of recent open seasons, along with improved market
fundamentals, support the prospects for additional contracting over
the coming months.
- During the fourth quarter, Pembina announced that it executed a
new agreement with a second Montney producer, which commits to Pembina
volumes from a multiphase development of the producer's northeast
British Columbia ("NEBC")
Montney acreage, on a take-or-pay
basis, upon the acreage being developed. The agreement provides the
producer with certainty of transportation egress from this key area
for their future development and access to the remainder of
Pembina's integrated value chain.
- Pembina continues to progress the Phase VII Peace Pipeline
Expansion. As previously announced during the quarter, the capital
cost estimate for the project has been revised lower, by
$110 million, to $665 million, and is now anticipated to be in
service in mid-2022. The revised cost and schedule reflect highly
effective project management, favourable weather conditions and
well performing contractors.
- The Phase IX Peace Pipeline Expansion remains on-time and
on-budget with an estimated cost of approximately $120 million and an expected in-service date in
the second half of 2022
Facilities:
- As previously announced during the fourth quarter, Veresen
Midstream is evaluating the opportunity to construct a 200 million
cubic feet per day deep cut NGL extraction facility ("Hythe Deep
Cut") at the Hythe Gas Plant. A final investment decision on Hythe
Deep Cut is expected in the first half of 2022.
- Construction of the Empress Cogeneration Facility is
progressing and 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 in conjunction
with market dynamics that include customer demand, shipping costs,
and North American and international pricing, Pembina expects to
make a decision in the first quarter of 2022 whether to proceed
with the expansion.
Marketing & New Ventures:
- Pembina has entered into a partnership agreement with the
Haisla First Nation to develop the proposed Cedar LNG Project, a
floating liquefied natural gas ("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. Cedar LNG's application for an Environmental Assessment
Certificate was recently submitted to the British Columbia
Environmental Assessment Office, moving the project into the
180-day application review phase. This key project milestone comes
following detailed studies, engineering, and meaningful engagement
with Indigenous and local communities.
- Pembina and TC Energy 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 GHG emissions, contribute positively to Alberta's lower-carbon economy and create
sustainable long-term value for Pembina and TC Energy stakeholders.
On February 1, 2022, Pembina and an
affiliate of TC Energy submitted a proposal to jointly develop the
Alberta Carbon Grid, in response to the Government of Alberta's request for a full project proposal,
detailing Pembina and TC Energy's interest in developing and
operating a carbon sequestration hub to serve emissions sources in
the Alberta industrial heartland
region.
Financing Activity
On December 10, 2021, Pembina
closed an offering of $1.0 billion of senior unsecured medium-term
notes. The offering was conducted in two tranches, consisting of
the issuance of $500 million in senior unsecured medium-term
notes, series 17, having a fixed coupon of 3.53 percent per annum,
payable semi-annually and maturing on December 10, 2031; and $500 million in
senior unsecured medium-term notes, series 18, having a fixed
coupon of 4.49 percent per annum, payable semi-annually and
maturing on December 10, 2051.
Pembina currently has in place a normal course issuer bid
("NCIB") to purchase up to five percent of its outstanding common
shares. The current NCIB expires on March 1,
2022 and Pembina expects to file a notice of intention with
the Toronto Stock Exchange ("TSX") to renew the NCIB to purchase up
to five percent of its outstanding common shares, subject to
approval of the TSX.
Dividends
- Pembina declared and paid dividends of $0.21 per common share in October, November and
December 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
November 1, 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
December 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 November 1, 2021.
Fourth Quarter 2021 Conference Call & Webcast
Pembina will host a conference call on Friday, February 25, 2022 at 8:00 a.m. MT (10:00 a.m.
ET) for interested investors, analysts, brokers and media
representatives to discuss results for the fourth 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 March 4, 2022 at
11:59 p.m. ET. To access the replay,
please dial either 647-436-0148 or 888-203-1112 and enter the
password 8107708.
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=1501576&tp_key=bab2a068be
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 Pipeline Corporation is a leading energy transportation
and midstream service provider that has served North America's energy industry for more than
65 years. Pembina owns an integrated network of hydrocarbon liquids
and natural gas pipelines, gas gathering and processing facilities,
oil and natural gas liquids infrastructure and logistics services,
and a growing export terminals business. Through our integrated
value chain, we seek to provide safe and reliable infrastructure
solutions which connect producers and consumers of energy across
the world, support a more sustainable future and benefit our
customers, investors, employees and communities. For more
information, please visit pembina.com.
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 inclusive 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 our operating segment outlooks
and general market conditions for 2022 and thereafter; 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 emissions reduction target; Pembina's 2022 annual
guidance, including the Company's expectations regarding its
adjusted EBITDA and cash flow from operating activities; planning,
construction and 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 growth
projects on its future financial performance and stakeholders;
expectations regarding Pembina's commercial agreements, including
the expected timing and benefit thereof; statements regarding the
Company's intention to repurchase common shares, including the
timing and magnitude thereof; expectations, decisions and
activities related to the Company's projects and new developments;
the impact of current and expected market conditions on Pembina;
and statements regarding the Company's capital allocation strategy,
including the 2022 capital expenditure program, future leverage
metrics, expected future cash flows and financial
guardrails.
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
and 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; adverse
actions by governmental or regulatory authorities, including
changes in tax laws and treatment, changes in project assessment
regulations, 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 Internationally, 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 related 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, and on acceptable terms; adverse 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 by forward-looking statements contained
herein. 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. Management approved the 2022
adjusted EBITDA guidance contained herein as of the date of this
news release. The purpose of our 2022 adjusted EBITDA guidance is
to assist readers in understanding our expected and targeted
financial results, and this information may not be appropriate for
other purposes. The forward-looking statements contained in this
document are expressly qualified by this cautionary
statement.
Non-GAAP and Other Financial Measures
Throughout this news release, Pembina has disclosed certain
financial measures and ratios 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. Non-GAAP ratios are financial
measures that are in the form of a ratio, fraction, percentage or
similar representation that has a non-GAAP financial measure as one
or more of its components. These non-GAAP financial measures and
ratios 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, 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; an explanation of the reason for any
change in the label or composition of each non-GAAP financial
measure from what was previously disclosed; and a description of
any significant difference between forward-looking non-GAAP
financial measures and the equivalent historical non-GAAP financial
measures, is contained in the "Non-GAAP & Other Financial
Measures" section of the management's discussion and analysis of
Pembina dated February 24, 2022 for
the year ended December 31, 2021 (the
"MD&A"), which information 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
December 31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($
millions)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
606
|
603
|
349
|
326
|
1,750
|
882
|
(145)
|
(131)
|
2,560
|
1,680
|
Cost of goods sold,
including product purchases
|
—
|
—
|
(1)
|
4
|
1,554
|
809
|
(77)
|
(87)
|
1,476
|
726
|
Net
revenue
|
606
|
603
|
350
|
322
|
196
|
73
|
(68)
|
(44)
|
1,084
|
954
|
12 Months Ended
December 31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($
millions)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
2,279
|
2,251
|
1,363
|
1,231
|
5,577
|
2,956
|
(592)
|
(485)
|
8,627
|
5,953
|
Cost of goods sold,
including product purchases
|
—
|
—
|
6
|
11
|
5,017
|
2,815
|
(334)
|
(317)
|
4,689
|
2,509
|
Net
revenue
|
2,279
|
2,251
|
1,357
|
1,220
|
560
|
141
|
(258)
|
(168)
|
3,938
|
3,444
|
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization
Adjusted EBITDA is a non-GAAP financial 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. The exclusion
of unrealized gains or losses on commodity-related derivative
financial instruments eliminates the non-cash impact of such gains
or losses.
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. In addition, Pembina's
proportionate share of results from investments in equity accounted
investees with a preferred interest is presented in adjusted EBITDA
as a 50 percent common interest. These additional adjustments are
made to exclude various non-cash and other items that are not
reflective of ongoing operations.
Management believes that adjusted EBITDA provides useful
information to investors as it is an important indicator of an
issuer's ability to generate liquidity through cash flow from
operating activities and equity accounted investees. Management
also believes that adjusted EBITDA provides an indicator of
operating income generated from capital invested, which includes
operational finance income from lessor lease arrangements. Adjusted
EBITDA is also used by investors and analysts for assessing
financial performance and for the purpose of valuing an issuer,
including calculating financial and leverage ratios. Management
utilizes adjusted EBITDA to set objectives and as a key performance
indicator of the Company's success. Pembina presents adjusted
EBITDA as management believes it is a measure frequently used by
analysts, investors and other stakeholders in evaluating the
Company's financial performance.
Adjusted EBITDA per common share is a non-GAAP ratio which is
calculated by dividing adjusted EBITDA by the weighted average
number of common shares outstanding.
3 Months Ended
December 31
|
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 (loss)
before income tax
|
(70)
|
(992)
|
160
|
143
|
224
|
(684)
|
(181)
|
(114)
|
133
|
(1,647)
|
Adjustments to share
of profit from equity accounted investees and other
|
65
|
60
|
36
|
32
|
5
|
28
|
—
|
—
|
106
|
120
|
Net finance
costs
|
6
|
7
|
5
|
8
|
(1)
|
(15)
|
97
|
59
|
107
|
59
|
Depreciation and
amortization
|
101
|
102
|
56
|
50
|
12
|
13
|
11
|
15
|
180
|
180
|
Unrealized loss
(gain) on commodity-related derivative financial
instruments
|
—
|
—
|
24
|
10
|
(54)
|
76
|
—
|
—
|
(30)
|
86
|
Canadian Emergency
Wage Subsidy
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2)
|
—
|
(2)
|
Transformation and
restructuring costs
|
—
|
—
|
—
|
—
|
—
|
—
|
21
|
—
|
21
|
—
|
Transaction costs
incurred in respect of acquisitions
|
—
|
—
|
—
|
—
|
—
|
—
|
5
|
2
|
5
|
2
|
Impairment charges
and non-cash provisions
|
446
|
1,400
|
4
|
12
|
(3)
|
657
|
1
|
(1)
|
448
|
2,068
|
Adjusted
EBITDA
|
548
|
577
|
285
|
255
|
183
|
75
|
(46)
|
(41)
|
970
|
866
|
Adjusted EBITDA per
common share – basic (dollars)
|
|
|
|
|
|
|
|
|
1.76
|
1.57
|
12 Months Ended
December 31
|
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 (loss)
before income tax
|
917
|
128
|
715
|
642
|
391
|
(646)
|
(358)
|
(540)
|
1,665
|
(416)
|
Adjustments to share
of profit from equity accounted investees and other
|
286
|
240
|
135
|
135
|
23
|
43
|
—
|
—
|
444
|
418
|
Net finance
costs
|
29
|
31
|
35
|
24
|
(8)
|
(13)
|
394
|
378
|
450
|
420
|
Depreciation and
amortization
|
413
|
402
|
214
|
199
|
50
|
50
|
46
|
49
|
723
|
700
|
Unrealized (gain)
loss on commodity-related derivative financial
instruments
|
—
|
—
|
(38)
|
(4)
|
(35)
|
88
|
—
|
—
|
(73)
|
84
|
Canadian Emergency
Wage Subsidy
|
—
|
—
|
—
|
—
|
—
|
—
|
3
|
(39)
|
3
|
(39)
|
Transformation and
restructuring costs
|
—
|
3
|
—
|
2
|
—
|
1
|
47
|
4
|
47
|
10
|
Transaction costs
incurred in respect of acquisitions
|
—
|
—
|
—
|
—
|
—
|
—
|
31
|
18
|
31
|
18
|
Arrangement
Termination Payment
|
—
|
—
|
—
|
—
|
—
|
—
|
(350)
|
—
|
(350)
|
—
|
Impairment charges
and non-cash provisions
|
457
|
1,404
|
36
|
14
|
(1)
|
670
|
1
|
(2)
|
493
|
2,086
|
Adjusted
EBITDA
|
2,102
|
2,208
|
1,097
|
1,012
|
420
|
193
|
(186)
|
(132)
|
3,433
|
3,281
|
Adjusted EBITDA per
common share – basic (dollars)
|
|
|
|
|
|
|
|
|
6.24
|
5.97
|
Adjusted EBITDA from Equity Accounted Investees
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
presented net in 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 Income "Share of Profit from Equity
Accounted Investees". The adjustments made to earnings, in adjusted
EBITDA above, are also made to share of profit from investments in
equity accounted investees. Cash contributions and distributions
from investments in equity accounted investees represent Pembina's
share paid and received in the period to and from the investments
in equity accounted investees.
To assist in understanding and evaluating the performance of
these investments, Pembina is supplementing the IFRS disclosure
with non-GAAP proportionate consolidation of Pembina's interest in
the investments in equity accounted investees. Pembina's
proportionate interest in equity accounted investees has been
included in adjusted EBITDA.
3 Months Ended
December 31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Total
|
($
millions)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Share of profit
(loss) from equity accounted investees - operations
|
29
|
54
|
21
|
14
|
33
|
(312)
|
83
|
(244)
|
Adjustments to share
of profit (loss) from equity accounted investees:
|
|
|
|
|
|
|
|
|
Net finance
costs
|
26
|
17
|
7
|
8
|
(1)
|
20
|
32
|
45
|
Depreciation and
amortization
|
(4)
|
56
|
29
|
24
|
6
|
6
|
31
|
86
|
Unrealized loss on
commodity-related derivative financial instruments
|
—
|
—
|
—
|
—
|
—
|
2
|
—
|
2
|
Share of earnings
(loss) in excess of equity interest(1)
|
43
|
(13)
|
—
|
—
|
—
|
—
|
43
|
(13)
|
Total adjustments to
share of profit from equity accounted investees
|
65
|
60
|
36
|
32
|
5
|
28
|
106
|
120
|
Impairment charges
and non-cash provisions
|
—
|
3
|
—
|
—
|
—
|
295
|
—
|
298
|
Adjusted EBITDA from
equity accounted investees
|
94
|
117
|
57
|
46
|
38
|
11
|
189
|
174
|
(1)
|
Pembina's
proportionate share of results from investments in equity accounted
investees with a preferred interest is presented in adjusted EBITDA
as a 50 percent common interest.
|
12 Months Ended
December 31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Total
|
($
millions)
|
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
Share of profit
(loss) from equity accounted investees - operations
|
124
|
227
|
80
|
55
|
77
|
(314)
|
281
|
(32)
|
Adjustments to share
of profit (loss) from equity accounted investees:
|
|
|
|
|
|
|
|
|
Net finance
costs
|
72
|
75
|
31
|
39
|
1
|
16
|
104
|
130
|
Depreciation and
amortization
|
156
|
218
|
104
|
96
|
22
|
21
|
282
|
335
|
Unrealized loss on
commodity-related derivative financial instruments
|
—
|
—
|
—
|
—
|
—
|
6
|
—
|
6
|
Share of earnings
(loss) in excess of equity interest(1)
|
58
|
(53)
|
—
|
—
|
—
|
—
|
58
|
(53)
|
Total adjustments to
share of profit from equity accounted investees
|
286
|
240
|
135
|
135
|
23
|
43
|
444
|
418
|
Impairment charges
and non-cash provisions
|
—
|
—
|
—
|
—
|
—
|
295
|
—
|
295
|
Adjusted EBITDA from
equity accounted investees
|
410
|
467
|
215
|
190
|
100
|
24
|
725
|
681
|
(1)
|
Pembina's
proportionate share of results from investments in equity accounted
investees with a preferred interest is presented in adjusted EBITDA
as a 50 percent common interest.
|
Adjusted Cash Flow from Operating Activities 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 compensation payment, and
deducting preferred share dividends paid. Adjusted cash flow from
operating activities deducts preferred share dividends paid because
they are not attributable to common shareholders. The calculation
has been modified to include current tax and share-based
compensation payment as it allows management to better assess the
obligations discussed below.
Management believes that adjusted cash flow from operating
activities provides comparable information to investors for
assessing financial performance during each reporting period.
Management utilizes adjusted cash flow from operating activities to
set objectives and as a key performance indicator of the Company's
ability to meet interest obligations, dividend payments and other
commitments.
Adjusted cash flow from operating activities per common share
is a non-GAAP ratio which is calculated by dividing adjusted cash
flow from operating activities by the weighted average number of
common shares outstanding.
|
3 Months Ended
December 31
|
12 Months
Ended
December 31
|
($ millions,
except per share amounts)
|
2021
|
2020
|
2021
|
2020
|
Cash flow from
operating activities
|
697
|
766
|
2,650
|
2,252
|
Cash flow from
operating activities per common share – basic (dollars)
|
1.27
|
1.39
|
4.82
|
4.10
|
Add
(deduct):
|
|
|
|
|
Change in non-cash
operating working capital
|
30
|
(75)
|
100
|
93
|
Current tax
expense
|
(31)
|
(45)
|
(286)
|
(240)
|
Taxes paid, net of
foreign exchange
|
90
|
7
|
355
|
296
|
Accrued share-based
payment expense
|
(20)
|
(13)
|
(76)
|
(7)
|
Share-based
compensation payment
|
—
|
—
|
32
|
45
|
Preferred share
dividends paid
|
(32)
|
(37)
|
(135)
|
(150)
|
Adjusted cash flow
from operating activities
|
734
|
603
|
2,640
|
2,289
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)
|
1.33
|
1.10
|
4.80
|
4.16
|
Investor Relations, Scott Arnold,
Manager Investor Relations, (403) 231-3156, 1-855-880-7404, E-mail:
investor-relations@pembina.com, www.pembina.com