Keyera (KEY) Q2 2024 earnings summary

Executive summary

• Achieved consistent growth with adjusted EBITDA rising to $326 million from $293 million year-over-year, and a 4% dividend increase to $2.08 per share annually, supported by a conservative payout ratio and strong fee-for-service cash flow.

• Net earnings for Q2 2024 were $142 million, down from $159 million in Q2 2023, with distributable cash flow at $202 million, slightly below $207 million last year.

• Achieved a 21% reduction in emissions intensity from 2019 to 2023, progressing toward a 25% reduction target by 2025.

• Maintained low leverage at 2.0x net debt/adjusted EBITDA and investment grade credit ratings.

• Strong performance across all business segments, with record North region gas plant volumes and robust demand for fractionation, storage, and condensate services.

Financial highlights

• Adjusted EBITDA for Q2 2024 was $326 million, up from $293 million in Q2 2023; distributable cash flow was $202 million ($0.88/share), compared to $207 million ($0.90/share) last year.

• Q2 2024 revenue was $1.72 billion, up from $1.50 billion in Q2 2023.

• Net earnings per share (basic) for Q2 2024 were $0.62, compared to $0.69 in Q2 2023.

• Cash flow from operating activities for Q2 2024 was $273 million, up from $236 million in Q2 2023.

• Payout ratio for Q2 2024 was 57%, up from 53% in Q2 2023.

Outlook and guidance

• 2024 Marketing realized margin guidance raised to $450–$480 million, up from $430–$470 million, reflecting strong year-to-date performance.

• Growth capital expenditures for 2024 reaffirmed at $80–$100 million, with $20–$40 million contingent on project sanctioning.

• Maintenance capital expenditures increased to $120–$140 million, mainly due to higher turnaround costs.

• Cash tax expense for 2024 now expected at $90–$100 million, up from $85–$95 million.

• Adjusted EBITDA expected to reach the high end of the 6–7% CAGR target through 2025.