Scotiabank analyst Robert Hope has increased the price target for Keyera (KEYUF, Financial), adjusting it from C$50 to C$51. Despite this slight change, he continues to maintain an Outperform rating on the stock. This adjustment reflects a positive outlook on Keyera's performance and potential within the market.
KEYUF Key Business Developments
Release Date: May 15, 2025
- Adjusted EBITDA: CAD298 million, down from CAD314 million in Q1 last year.
- Distributable Cash Flow: CAD190 million or $0.83 per share.
- Net Earnings: CAD130 million, up from CAD71 million in the same period last year.
- Fee-for-Service Segments Margin: Up 9% over the same period last year.
- Gathering and Processing Margin: CAD109 million with a new throughput record at Wapiti.
- Liquid Infrastructure Margin: Near-record CAD152 million.
- Marketing Segment Realized Margin: CAD78 million, primarily driven by iso-octane and propane sales.
- Net Debt to EBITDA: Two times, below the targeted range.
- Marketing Segment Realized Margin Guidance: Expected between CAD310 million and CAD350 million.
- Gross Capital Expenditures Guidance: Expected between CAD300 million and CAD330 million.
- Maintenance Capital Expenditures Guidance: Expected between CAD70 million and CAD90 million.
- Cash Taxes Guidance: Expected between CAD100 million and CAD110 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Keyera Corp (KEYUF, Financial) reported solid financial results for the first quarter, with net earnings of CAD130 million, up from CAD71 million in the same period last year.
- The company announced the sanctioning of KFS Frac III, a major expansion of their Frac complex in Fort Saskatchewan, which will increase total Frac capacity by about 60%.
- Keyera Corp (KEYUF) has secured long-term customer commitments for the Frac expansions, with a high degree of taker pay, ensuring stable future revenues.
- The company is advancing KAPS Zone 4 with commercial discussions nearing completion, indicating continued growth and expansion opportunities.
- Keyera Corp (KEYUF) maintains a strong balance sheet with a net debt to EBITDA ratio of two times, providing financial flexibility for future investments and shareholder returns.
Negative Points
- Adjusted EBITDA for the first quarter was CAD298 million, down from CAD314 million in Q1 last year, indicating a slight decline in earnings performance.
- The AEF facility experienced a maintenance outage that extended longer than anticipated, impacting the annual marketing segment realized margin by approximately CAD50 million.
- Despite strong financial performance, the company faces challenges from recent commodity market volatility, which could impact future earnings.
- The company acknowledges the need for a competitive policy environment in Canada to attract capital and enable responsible growth, indicating potential regulatory challenges.
- There is a risk of potential oversupply in the Frac capacity market by 2028, which could impact future profitability if demand does not meet expectations.
