Pembina Pipeline Corporation (NYSE:PBA) Q2 2019 Earnings Conference Call - Final Transcript

Aug 01, 2019 • 06:00 pm ET

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Pembina Pipeline Corporation (NYSE:PBA) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pembina Pipeline Corporation's Second Quarter Results Conference Call. [Operator Instructions] Scott Burrows, Senior Vice President and Chief Financial Officer, you may begin your conference.

Executive
Scott Burrows

Thank you, Christina. Good afternoon, everyone, and welcome to Pembina's conference call and webcast to review highlights from the second quarter of 2019. I'm Scott Burrows, Pembina's Senior Vice President and Chief Financial Officer.

On the call with me today are Mick Dilger, Pembina's President and Chief Executive Officer; Jason Wiun, Senior Vice President and Chief Operating Officer, Pipelines; Jaret Sprott, Senior Vice President and Chief Operating Officer, Facilities; Stu Taylor, Senior Vice President, Marketing and New Ventures and Corporate Development Officer; and Cam Goldade, Vice President, Capital Markets.

Before we start, I'd like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations. Further, some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see the Company's various financial reports, which are available at pembina.com and on both SEDAR and EDGAR.

Pembina delivered strong second quarter results, reporting quarterly adjusted EBITDA of CAD765 million, which represents a CAD65 million or a 9% increase over the same period in 2018. Quarterly results were driven by period-over-period increases in the pipeline and Facilities divisions as a result of new assets being placed into service as well as increased terminalling and storage revenues.

Additionally, in our oil sands business, we saw higher revenues from recoveries under flow-through capital arrangements. These higher recoveries relate to both current and prior periods and reflect increased capital spending. The impact on revenue in future periods will be dependent on actual capital spending.

Within the marketing business, the quarter was positively impacted by the adoption of IFRS 16, a realized gain on commodity-related derivatives and higher NGL volumes, offset by lower NGL margins. Performance in the crude oil marketing business remains steady. The second quarter is seasonally weaker for our NGL marketing business, and there were headwinds in North American propane and butane price markets. However, our growing NGL volumes and hedging program, combined with integration and market diversification, drove sustained performance in the quarter.

Adjusted cash flow from operating activities decreased by 1% to CAD550 million in the second quarter of 2019, compared to the same period in 2018, primarily due to a increase in current taxes, and a decrease in distributions from equity accounted investees, partially offset by an increase in operating results and the adoption of IFRS 16.

Finally, based on our year-to-date results and our outlook for the balance of the year, we remain on track to meet our adjusted EBITDA guidance range of CAD2.85