Inter Pipeline Reports 2021 Preliminary Unaudited Year-End Results
CALGARY, AB, Feb. 2, 2022 /CNW/ - Inter Pipeline Ltd. ("Inter Pipeline") today announced its preliminary unaudited results for the three and twelve-month periods ended December 31, 2021.
During 2021, Inter Pipeline's business achieved robust financial and operating results, reflecting the diligence and commitment of the commercial and operating teams, supported by a favourable commodity pricing environment. The results of 2021 have successfully positioned Inter Pipeline to continue optimizing the business and bring the Heartland Petrochemical Complex online this year as planned.
| | Three months ended December 31 | Twelve months ended December 31 |
| CAD$ millions, unaudited | 2021 | 2020 | 2021(1) | 2020 |
| Net income | $ | 7.0 | $ | 168.7 | $ | 63.9 | $ | 359.0 |
| Gross profit | $ | 338.9 | $ | 277.3 | $ | 1,255.2 | $ | 1,126.5 |
| Adjusted EBITDA(2) | $ | 298.7 | $ | 245.6 | $ | 1,102.8 | $ | 1,001.8 |
| Funds From Operations(2) | $ | 245.6 | $ | 204.3 | $ | 948.0 | $ | 810.8 |
| (1) Includes supplementary financial measures. Please refer to the "Specified Financial Measures" section of this news release. |
| (2) Non-GAAP financial measures. Please refer to the "Specified Financial Measures" section of this news release. |
Inter Pipeline reported net income of $63.9 million for the year ended December 31, 2021, compared to $359.0 million in the prior year. Net income decreased compared to the prior year primarily due to higher transaction costs totalling $500.7 million, including a $350 million transaction break fee incurred in relation to the strategic alternatives review commenced by Inter Pipeline in early 2021.
For the twelve months ended December 31, 2021, gross profit of $1,255.2 million reflects an 11 percent increase, while adjusted EBITDA of $1,102.8 million excluding transaction and other one-time costs of $512.8 million, increased by 10 percent compared with the same period last year. Funds from Operations (FFO) for the year ended December 31, 2021 totalled $948.0 million, a 17 percent increase over the prior year. Full-year 2021 results were supported by strong commodity prices, slightly offset by higher fuel, power and operating costs.
Breakdown by Segments
Gross profit (loss) generated by each of Inter Pipeline's reportable segments for the three and twelve ended December 31 is as follows:
| | Three months ended December 31 | Twelve months ended December 31 |
| CAD$ millions, unaudited | 2021 | 2020 | 2021(1) | 2020 |
| Transportation | $ | 224.7 | $ | 229.5 | $ | 900.8 | $ | 961.7 |
| Facilities Infrastructure | $ | 13.8 | $ | 35.9 | $ | 92.8 | $ | 170.6 |
| Marketing | $ | 153.7 | $ | 21.7 | $ | 342.8 | $ | 31.3 |
| New Ventures | $ | (24.0) | $ | (5.5) | $ | (48.0) | $ | (14.7) |
| Corporate(2) | $ | (29.3) | $ | (4.3) | $ | (33.2) | $ | (22.4) |
| Gross profit | $ | 338.9 | $ | 277.3 | $ | 1,255.2 | $ | 1,126.5 |
| (1) Includes supplementary financial measures. Please refer to the "Specified Financial Measures" section of this news release. |
| (2) Includes intersegment eliminations. |
Adjusted EBITDA generated by each of Inter Pipeline's reportable segments for the three and twelve months ended December 31 is as follows:
| | Three months ended December 31 | Twelve months ended December 31 |
| CAD$ millions, unaudited | 2021 | 2020 | 2021 | 2020 |
| Transportation | $ | 212.2 | $ | 216.3 | $ | 841.5 | $ | 894.3 |
| Facilities Infrastructure | $ | 9.9 | $ | 35.1 | $ | 84.2 | $ | 165.8 |
| Marketing | $ | 111.2 | $ | 22.3 | $ | 328.7 | $ | 29.7 |
| New Ventures | $ | (16.2) | $ | (8.0) | $ | (55.5) | $ | (26.5) |
| Corporate(1) | $ | (18.4) | $ | (20.1) | $ | (96.1) | $ | (61.5) |
| Adjusted EBITDA(2) | $ | 298.7 | $ | 245.6 | $ | 1,102.8 | $ | 1,001.8 |
| (1) Includes intersegment eliminations. |
| (2) Non-GAAP financial measure. Please see the "Specified Financial Measures" section of this news release. |
The transportation segment generated gross profit and adjusted EBITDA of $900.8 million and $841.5 million, respectively, a reduction of approximately six percent compared with the prior year. The decreased full-year 2021 results are primarily due to the sale of 15 storage terminals located in Europe in November 2020 which contributed adjusted EBITDA of approximately $70 million in the prior year.
Gross profit for the facilities infrastructure segment was $92.8 million, compared with $170.6 million in the prior year, and adjusted EBITDA was $84.2 million compared with $165.8 million in 2020. Lower full-year 2021 results are largely a result of higher fuel, power and other operating costs, combined with approximately $25 million lower earnings due to the sale of Empress straddle plants in June 2021.
Gross profit and adjusted EBITDA for the marketing segment totaled $342.8 million (increase of $311.5 million) and $328.7 million (increase of $299.0 million), respectively. The significant annual increases reflect elevated commodity prices throughout 2021, which improved product margins.
The new ventures segment reported a gross loss of $48.0 million, a variance of $33.3 million compared to the full-year 2020. Adjusted EBITDA for the new ventures segment totaled a loss of $55.5 million, a variance of $29.0 million. Full-year 2021 results reflect the incremental employee and operational readiness costs incurred as HPC continues to advance towards completion.
Update on Strategic Initiatives
During the fourth quarter of 2021, progress on the Heartland Petrochemical Complex (Heartland) continued with construction substantially complete and a shift in focus to commissioning and start-up activities. Heartland will be one of the lowest emitting polypropylene producers globally marketing under the brand name Heartland Polymers. Based on the latest integrated schedule we continue to target a mid-2022 start-up, despite ongoing COVID-related challenges. Final cost adjustments related to the potential capitalization of certain additional commissioning expenses and interest during construction for the commissioning period continue to be finalized but are not anticipated to significantly impact the final capital cost.
A significant milestone was achieved during the fourth quarter of 2021 as Inter Pipeline successfully brought the Central Utilities Block (CUB) online and began producing power to the Alberta grid. This is an important step towards the overall operation of the Heartland Petrochemical Complex.
About Inter Pipeline Ltd.
Inter Pipeline is a major petroleum transportation and natural gas liquids processing business based in Calgary, Alberta, Canada. Inter Pipeline owns and operates energy infrastructure assets in Western Canada and is building the Heartland Petrochemical Complex — North America's first integrated propane dehydrogenation and polypropylene facility. www.interpipeline.com