Gibson Energy Inc T.GEI

TD

[retiredcf]

Gibson Energy Inc.

(GEI-T) C$21.47

First Glance: Q2/23 Results Event

August 1, 2023

Recommendation: BUY

Risk: MEDIUM

12-Month Target Price: C$26.00

12-Month Dividend (Est.): C$1.58

12-Month Total Return: 28.5%

Gibson Energy Inc. (GEI) reported Q2/23 AFFO/share of $0.58, above our estimate and recent consensus of $0.56, and above the Q2/22 AFFO/share of $0.50.

Impact: NEUTRAL

• Q2/23 Results: Q2/23 results were above our expectations, driven by stronger- than-forecast performance in the Marketing business, partially offset by weaker Infrastructure results, which was affected by an environmental remedial provision of $16.7mm. After normalizing for the provision, Infrastructure results were largely in line with our estimates and were flat year-over-year, as earnings from equity investments were offset by higher power expenses and costs, as well as the absence of a one-time fee earned in the previous comparable quarter. Higher refined-product margins and increased opportunities in the crude marketing business lifted Marketing segment performance, which was ~$10mm higher than management's forecast of ~$25mm of Adjusted EBITDA that was communicated during the Q1/23 earnings conference call.

• Share Repurchase Program Suspended: Following the announcement of the South Texas Gateway Terminal (STGT) acquisition, GEI has suspended its share- repurchase program after repurchasing one million shares for ~$22 million in Q2/23. Management will re-evaluate future share repurchases in its annual budgeting process for 2024.

   Conference Call at 9:00 a.m. ET Today: Telephone: [phone] or 1-888-664-6392; Replay: 416-764-8677 or 1-888-390-0541; Passcode: 138840. On the conference call, we expect management to provide more visibility on its capital-spending plans and upcoming projects, updated timing on the close of the STGT transaction, as well as an outlook for the scale of marketing opportunities available in the next quarter and in 2023.