TD Currently have a $37.00 target; initiated a position a few minutes ago. GLTA
Keyera Corp.
(KEY-T) C$32.18
First Glance: Q4/23 Results
Event
Keyera Corp. (KEY) reported Q4/23 AFFO/share of $1.02, in-line with our estimate
of $1.02, and above the recent consensus estimate of $0.94 and Q4/22 AFFO/
share of $0.47.
Impact: SLIGHTLY POSITIVE
Q4/23 Results: While fourth-quarter results were overall in-line with our
expectations, performance across all operating segments were above
our forecasts and was offset by higher-than-anticipated spending, notably
maintenance capital. Relative to Q4/22, Liquids Infrastructure results were
primarily driven by incremental contribution from the acquired 21% working
interest in KFS, higher contracted volumes, as well as incremental contribution
from KAPS. Marketing performance was above management guidance and
benefited from higher iso-octane premiums, sales volumes, and motor gasoline
pricing. Results from the G&P business were driven by higher contribution from
the Pipestone and Cynthia gas plants.
New Long-Term KAPS Commitments: KEY reported an additional ~30,000 bbl/
d of new long-term commitments on KAPS, with a weighted average contract
term of ~12 years at 75% take-or-pay. The company expects contribution from
approximately half of these additional volumes beginning mid-2024 with a full
ramp up by 2029.
KFS Fractionation Commitments: KEY also reported an additional ~33,000 bbl/
d of fractionation commitments with a weighted average contract term of ~13 years
at 85% take-or-pay. Approximately half of the additional volumes are renewals
while the remainder are new commitments.
2024 Guidance Reiterated: Management reiterated that KEY is on track to
reaching the upper end of its CAGR target for adjusted EBITDA of 6-7% between
2022-2025, holding Marketing contribution constant. KEY's 2024 growth capital
is forecasted to range between $80mm-$100mm while maintenance capital
spending in 2024 is forecasted to range between $90mm-$110mm. AEF has
a new scheduled six week Q2 outage which is expected to impact margin
by $35mm-$45mm, although management expects to be within the Marketing
realized range of $310mm-$350mm in 2024. An updated 2024 marketing margin
guidance will be provided with Q1/24 results after the NGL contracting season
concludes. Forecast cash taxes in 2024 range between $45mm-$55mm.
Conference Call Today at 10:00 am ET: Telephone: 1-888-664-6392. Replay:
1-888-390-0541 or 416-764-8677, Passcode: 274210.