Keyera Beats on Revenue and Earnings, Increases 2015 Guidance

Keyera Corp. (KEY: CN) delivered first quarter adj. EBITDA of $185 million versus our $155 million forecast and $108 million in first quarter of 2014. Just as the fourth quarter of 2014 EBITDA was under-stated, this first quarter EBITDA is partially inflated. We noticed on fourth quarter that the “miss” ($128 million versus our forecast of $163 million) was because of an inventory write-down that would reverse in first quarter – and it did.


  • Keyera delivered strong first quarter financial results with net earnings of $57 million ( $0.33 per share1) compared to $55 million ( $0.35 per share1) in the first quarter 2014.
  • Adjusted earnings before interest, taxes, depreciation and amortization2, 3 (“EBITDA”) were $185 million in first quarter 2015, 71% higher than the $108 million posted in first quarter 2014.
  • All three business segments performed well and contributed to Keyera’s strong financial results. The Gathering and Processing Business Unit generated operating margin4 of $60 million (Q1 2014 – $48 million ); the NGL Infrastructure segment’s operating margin4 was $54 million (Q1 2014 – $39 million ); and operating margin4 in the Marketing segment was $36 million (Q1 2014 – $37 million ).
  • Distributable cash flow2, 3 was $140 million ( $0.83 per share1) in first quarter 2015 compared to $78 million ( $0.49 per share1) recorded in first quarter 2014, resulting in a payout ratio of 40%.
  • Keyera completed the previously announced two-for-one split of its outstanding common shares effective April 1, 2015 . In addition, during the quarter Keyera increased its monthly dividend by 7%, which was Keyera’s thirteenth consecutive dividend increase since going public in 2003.
  • Several capital projects have been completed and are now operational, including the 100 million cubic feet per day gas plant expansion and the 10,000 barrel per day condensate stabilizer at the Simonette gas plant; the 30,000 barrel per day de-ethanizer project at our Fort Saskatchewan facility; and the Twin Rivers pipeline system, which is now delivering incremental gas to our Brazeau River and West Pembina gas plants.
  • Progress was made on a number of other projects that will enhance our natural gas liquids handling capabilities, including the turbo expander and debottlenecking project at the Rimbey gas plant and the new Josephburg rail terminal. All of these projects are expected to be completed in mid-2015.
  • Keyera entered into a 50/50 joint venture with Kinder Morgan , Inc. (“Kinder Morgan”) to build an above ground crude oil storage terminal near Edmonton with an initial scope of 12 tanks and 4.8 million barrels of capacity. The project is fully underpinned by several take-or-pay agreements ranging up to 10 years in length. Keyera’s share of costs to construct the terminal is currently estimated to be $330 million .
  • Total growth capital investment was $213 million in the first quarter of 2015, including $3 million of acquisitions.  In 2015, growth capital investment, excluding acquisitions, is expected to be between $700 million and $800 million 5.
  • Today, Keyera declared a May dividend of $0.115 per share, with an ex-dividend date of May 21, 2015 and payable on June 15, 2015 to shareholders of record as of May 25, 2015 . The Premium DRIPTM, previously suspended  in April 2010 , has been amended and will be reinstated effective with the May 2015 dividend.

Jim Traverso, MBA, is research analyst and reports Services, Financial & REIT and Energy & Utilities sectors. Prior joining Equities Mogul, Jim Traverso worked with Goldman Sachs Research. If you have a great story idea for Jim Traverso, you can write at [ ].


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