Keyera Corp (KEYUF) Q2 2024 Earnings Call Highlights: Strong Financial Performance Amid Challenges

GuruFocus News
4 min read

In This Article:

  • Dividend Increase: 4% increase to $2.8 per share annually.

  • Gathering and Processing Realized Margin: $102 million.

  • Liquids Infrastructure Realized Margin: $133 million, second highest quarter ever.

  • Marketing Segment Realized Margin: $136 million.

  • Adjusted EBITDA: $326 million, up from $293 million last year.

  • Distributable Cash Flow: $202 million or $0.88 per share, compared to $207 million or $0.90 per share last year.

  • Net Earnings: $142 million, down from $159 million last year.

  • Net Debt to Adjusted EBITDA: 2 times, below the targeted range of 2.5 to 3 times.

  • Revised Marketing Segment Guidance for 2024: $450 million to $480 million of realized margin.

  • Cash Taxes Guidance for 2024: $90 million to $100 million, up from $85 million to $95 million.

  • Growth Capital for 2024: Unchanged at $80 million to $100 million.

  • Maintenance Capital Guidance for 2024: $120 million to $140 million, up from $90 million to $110 million.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Keyera Corp (KEYUF) announced a 4% increase in its annual dividend to $2.8 per share, supported by a conservative payout ratio and a strong balance sheet.

  • The company achieved record throughput volumes in the North region, contributing to a $102 million realized margin in the gathering and processing segment.

  • The liquids infrastructure segment delivered its second-highest quarter ever with a $133 million realized margin, driven by the ramp-up of KAPS and growing demand for fractionation, storage, and condensate businesses.

  • Keyera Corp (KEYUF) raised its marketing segment guidance to a range of $450 million to $480 million of realized margin in 2024, up from the previous guidance of $430 million to $470 million.

  • The company maintains a strong financial position with a net debt to adjusted EBITDA ratio of 2 times, below its targeted range of 2.5 to 3 times, allowing for equity self-funding opportunities to enhance shareholder value.

Negative Points

  • Net earnings decreased to $142 million from $159 million for the same period last year, primarily due to higher depreciation and interest costs.

  • Distributable cash flow decreased to $202 million or $0.88 per share, compared to $207 million or $0.90 per share for the same period in 2023.

  • Maintenance capital is expected to increase to a range of $120 million to $140 million, up from $90 million to $110 million, mostly due to increased costs for turnaround activities.

  • The company faces potential challenges from a rail strike, which could impact logistics and operations, although they have storage and contingency plans in place.

  • Producer curtailments in the South region led to a decline in overall volumes, although the impact was tempered by take-or-pay contracts.

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