Keyera Corp’s Earnings Call Highlights Growth and Sustainability

Keyera Corp. ((TSE:KEY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Keyera Corp’s recent earnings call conveyed an overall positive sentiment, underscored by notable achievements in fee-for-service margin growth, sustainability milestones, and project advancements. Despite these successes, the company faces challenges in its Marketing segment and has deferred some growth capital spending.

Fee-for-Service Margin Growth

Keyera reported a significant year-over-year increase of over 10% in its fee-for-service margin. This growth was primarily driven by higher utilization across its integrated system, reflecting the company’s strong operational performance.

GHG Intensity Reduction Achievement

In a commendable stride towards sustainability, Keyera met its 2025 greenhouse gas intensity reduction target of 25% a full year ahead of schedule. This achievement underscores the company’s commitment to environmental responsibility and sustainable operations.

Successful Contracting and Project Advancements

Keyera secured over 100,000 barrels per day of new contracts on KAPS and existing in-plant fractionation capacity. Major growth projects, including the KFS frac 2 debottleneck and KAPS Zone 4, are progressing on time and within budget, highlighting the company’s effective project management.

Financial Performance

The company reported an adjusted EBITDA of $286 million, distributable cash flow of $186 million, and net earnings of $85 million. These figures reflect a stable financial performance, reinforcing Keyera’s solid market position.

Sustainability and Growth Outlook

Keyera’s sustainability program is robust, focusing on long-term risks and value creation. The company projects a compound annual growth rate of 7% to 8% in fee-based adjusted EBITDA from 2024 through 2027, indicating a positive growth trajectory.

Marketing Segment Underperformance

The Marketing segment experienced a decline, with realized margins dropping to $73 million from $135 million last year. This underperformance was attributed to reduced condensate import volumes and lower liquids blending activity.

Impact of Unplanned Outage

An unplanned outage at the AEF earlier in the year negatively impacted marketing results by approximately $50 million, posing a challenge to the segment’s performance.

Deferred Growth Capital Spending

Keyera adjusted its growth capital spending for 2025 downwards to between $220 million and $240 million, from a previous estimate of $275 million to $300 million. This adjustment reflects a deferral in spending to 2026, indicating a strategic shift in capital allocation.

Forward-Looking Guidance

Keyera’s forward-looking guidance remains robust, with expectations of continued margin growth in its fee-for-service business. The company anticipates marketing segment margins between $280 million and $300 million for the full year, with long-term guidance reaffirmed at $310 million to $350 million. Growth capital for 2026 is projected at $400 million-$475 million, while maintenance capital is expected to be $130 million-$150 million, demonstrating a strategic focus on future growth and sustainability.

In summary, Keyera Corp’s earnings call highlighted a positive overall sentiment, driven by significant achievements in margin growth, sustainability, and project advancements. Despite challenges in the Marketing segment and deferred capital spending, the company’s forward-looking guidance suggests a strong focus on growth and sustainability, positioning it well for future success.