Pembina Pipeline (PPL) Q3 2024 earnings summary

Executive summary

• Reported Q3 2024 adjusted EBITDA of $1,019 million (CAD 1.019 billion), net income of $385 million, and adjusted cash flow from operations of $724 million, with strong contributions from recent acquisitions and higher NGL margins.

• Completed the $2.8 billion acquisition of the remaining 14.6% interest in Aux Sable’s U.S. operations and Alliance, achieving full ownership and simplifying reporting.

• PGI, a joint venture with KKR, executed major transactions with Whitecap and Veren, including infrastructure commitments and new asset acquisitions totaling over $800 million.

• Major project milestones achieved, including progress on Northeast BC pump station expansion, RFS IV expansion, and the start of onshore construction at Cedar LNG, which reached FID in June 2024 with an estimated cost of US$4.0 billion and in-service expected in late 2028.

• Declared a Q4 2024 dividend of $0.69 per share, payable December 31, 2024.

Financial highlights

• Q3 2024 adjusted EBITDA was $1,019 million, nearly flat year-over-year, with higher contributions from acquisitions offset by lower Cochin Pipeline revenue.

• Q3 2024 earnings were $385 million, up 11% from the prior year, and earnings per share (basic) was $0.60.

• Cash flow from operating activities rose to $922 million in Q3 2024, up 43% year-over-year, mainly due to working capital changes and higher earnings.

• Pipeline volumes reached 2.7 million barrels per day, a 6% increase year-over-year, driven by increased ownership in Alliance and Nipisi pipeline reactivation.

• Capital expenditures for Q3 2024 were $262 million, primarily for pipeline expansions and Redwater projects.

Outlook and guidance

• 2024 adjusted EBITDA guidance narrowed to $4.225–$4.325 billion, trending toward the midpoint based on current commodity prices and Q4 volume outlook.

• Remaining 2024 capital expenditures are estimated at $270–$300 million, focused on RFS IV, NEBC MPS Expansion, and smaller growth projects.

• Anticipates 4% exit-to-exit growth rate in the conventional system for 2024, with confidence in 4–6% physical volume growth in 2025.

• Expects higher Q4 interruptible volumes and new contracts to support performance.

• Debt-to-adjusted EBITDA ratio at 3.6x as of September 30, 2024, expected to exit the year between 3.4x and 3.6x.