Bullboard - Stock Discussion Forum Keyera Corp T.KEY

Alternate Symbol(s): KEYUF

Energy Oil & Gas Midstream

Keyera Corp. is a Canada-based company, which operates an integrated energy infrastructure business. The Company operates through three segments: Gathering and Processing, Liquids Infrastructure, and Marketing. The Gathering and Processing segment includes raw gas gathering systems and processing plants located in natural gas production areas primarily on the western side of the Western Canada... see more

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TSX:KEY - Post Discussion

Keyera Corp > TD

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Post by retiredcf on May 15, 2024 9:46am

TD

Q1/24 RESULTS: STRONG OPERATIONAL QUARTER; 2024 MARKETING GUIDANCE INTRODUCED

THE TD COWEN INSIGHT

KEY's first-quarter results and increased marketing guidance demonstrated strong operational performance and reinforces our view that KEY, with its incumbency, is well- positioned to provide an integrated offering to WCSB producers as production grows over the medium term.

Event

Keyera Corp. (KEY) reported Q1/24 AFFO/share of $0.90, slightly below our estimate of $0.92, in line with the recent consensus estimate of $0.90, and below Q1/23 AFFO/share of $0.99.

Impact: SLIGHTLY POSITIVE

Q1/24 Results: Performance across all operating segments were above our forecasts, but was offset by higher-than-anticipated spending, notably in maintenance capital and leasing costs. Relative to Q1/23, Liquids Infrastructure results were primarily driven by higher contracted storage volumes and fractionation sales from the acquired 21% working interest in KFS, higher contracted condensate volumes, as well as incremental contribution from KAPS. Results from the G&P business were driven by higher volumes benefiting from a first full-quarter contribution from the Pipestone gas plant expansion project, as well as a $6mm one-time revenue adjustment. Lower sales volumes drove Marketing realized margin lower by ~$2mm y/y.

Marketing 2024 Guidance Introduced: The 2024 Marketing guidance range of $430mm- $470mm (including the impact of the six-week AEF outage) is above the base $310mm- $350mm guidance through to 2025. Management noted that its outlook for the Marketing segment is driven by lower butane feedstock costs and continued strength in the iso- octane business. Marketing 2024 Guidance assumes current forward commodity pricing for unhedged volumes, no material logistics or transportation issues, and that the AEF facility operates at capacity. In response to stronger expected performance in the Marketing business, management raised the 2024 guidance range for cash tax expense to $85mm- $95mm from $45mm-$55mm. 2024 maintenance capital ($90mm-$110mm) and growth capital ($80mm-$100mm) remain unchanged.

Financial Forecasts Updated: We have updated our financial forecasts for Q1/24 results, as well as for the 2024 Marketing guidance, and when combined with our updated outlook, this results in our target price increasing a dollar to $39.00.