TD's Take Event
Pembina Pipeline Corp. (PPL) reported Q1/21 AFFO/share of $1.06, below our
estimate of $1.12 and consensus of $1.08, but above Q1/20 AFFO/share of $1.05.
Impact: NEUTRAL
Q1/21 Results: PPL Q1/21 AFFO/share of $1.06 was below our estimates,
which appears to be largely the result of lower-than-forecast interruptible
volumes on certain Conventional pipeline assets. Additionally, we appear to have
overestimated the benefit of improved NGL margins to New Ventures adjusted
EBITDA, likely the result of an underestimation of the ratio of Q1/21 margins
that been hedged in prior periods at lower margin levels. The company had
systematically hedged approximately 50% of its 2021 frac spread exposure
(excluding Aux Sable) during 2019 and 2020, with additional discretionary winter
storage hedges added to secure seasonal opportunities under an uncertain
period. The company is reviewing its revised exposure profile following the start
up of its Prince Rupert Terminal and expanded Express fractionation facilities.
Prince Rupert Terminal (PRT) In-Service: The company announced that it had
entered into a one-year agreement with a subsidiary of Mitsui for substantially all
of the post-commissioning cargos from the facility. As of April 22, two vessels had
departed PRT destined for international markets.
Credit Upgrade: On April 28, 2021, DBRS upgraded its rating on the company's
senior unsecured MTNs to BBB (high).
EBITDA Guidance Range Reaffirmed: PPL maintained its adjusted EBITDA
guidance range of $3.2 billion-$3.4 billion. The company's 2021 capital program
is expected to be fully funded by cash flow after dividends, provided the company
achieves results above the middle end of the guidance range. The company
indicated that excess cash flow above its committed capital could be allocated to
debt reduction, dividend increase, or opportunistic capital repurchases.