Initial comments from TDWaterhouse
Keyera Corp.
(KEY-T) C$31.02
First Glance: Q4/21 Results
Linda Ezergailis, P.Eng. Alexander Kwong, CPA, (Associate)
Event
Keyera Corp. (KEY) reported Q4/21 AFFO/share of $0.93, above our estimate of $0.75, the recent consensus of $0.89, and Q4/20 AFFO/share of $0.60.
Impact: SLIGHTLY POSITIVE
Q4/21 Results: Q4/21 results were above our estimate, driven by stronger-than[1]expected marketing results as well as operational performance across the board. The Wapiti gas plant benefited from higher processing throughput as well as lower operating costs, and the Pipestone gas plant also contributed to strong Gathering & Processing results. Marketing margins benefited from strong propane and butane markets. This was partly offset by reduced operating margin and lower ethane sales at Rimbey among a few offsets.
KAPS: Growth capital spending net of capitalized interest of $438mm was below the previously provided guidance range of $460-$490mm. Guidance for 2022 capital spending on growth projects has increased to $570-$610mm from $520- $560mm. While the change in guidance relates to timing of spending mostly related to KAPS, management noted that the project is 40% complete as of the end of January 2022 and remains on track to commence operations in Q1/23. The current estimate for the project is not expected to materially exceed its sanctioned cost of $800mm despite cost pressures from inflation as the company has locked in a majority of costs for the project.
Sale of Hull Terminal: KEY announced that the company has closed the sale of its Hull Terminal subsequent to Q4/21. Proceeds of US$40mm is expected to be used in strengthening the company's balance sheet.
2022 Investor Day: KEY will be hosting an investor day on March 29, 2022 where we expect the company to provide a more comprehensive update of the business.
Conference Call Today at 10:00 am ET: Telephone: 1-888-664-6392. Replay: 1-888-390-0541 or 416-764-8677, Passcode: 523095.