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Pembina (PBA) Q2 Earnings Rise Y/Y, Sales Lag Estimates

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Pembina Pipeline Corporation (PBA - Free Report) reported second-quarter 2024 earnings per share of 75 Canadian cents, up from the prior-year quarter's level of 60 Canadian cents. This improvement can be attributed to higher contributions from all segments of the company.

Revenues of $1.36 billion decreased 12% year over year and missed the Zacks Consensus Estimate of $1.44 billion. Operating cash flow decreased approximately 46.1% to C$954 million. Adjusted EBITDA came in at C$1,091 million compared with C$823 million in the year-ago period. This is due to higher net revenues and volumes on some of Pembina's Pipelines, Marketing & New Ventures and Facilities’ assets.

Pembina Pipeline Corp. Price, Consensus and EPS Surprise

Pembina Pipeline Corp. Price, Consensus and EPS Surprise

Pembina Pipeline Corp. price-consensus-eps-surprise-chart | Pembina Pipeline Corp. Quote

In the second quarter, PBA witnessed volumes of 3,890 thousand barrels of oil equivalent per day (mboe/d) compared with 3,448 mboe/d in the prior year quarter.

Pembina's board of directors declared a cash dividend of 69 Canadian cents per common share. The dividend will be paid on Sep 27, to its shareholders of record as of Sep 16, subject to applicable law.

The energy transportation and midstream services provider announced that in the second quarter, the Phase VIII Peace Pipeline Expansion was successfully brought into service, both on schedule and well under the original budget. This marks the completion of a decade-long, $4 billion multi-phase expansion designed to meet the increasing customer demand for transportation services in support of development in the Western Canadian Sedimentary Basin.

Canada-based oil and gas storage and transportation company reported a robust financial position as of Jun 30, 2024. The company’s proportionately consolidated debt-to-adjusted EBITDA ratio of 3.6 times aligns with the low end of its targeted range, demonstrating a strong balance sheet.

Segmental Information

Pipelines: Adjusted EBITDA of C$655 million increased about 30.7% from the year-ago quarter’s level. This growth was driven by stronger asset performance, an increase in ownership following the Alliance/Aux Sable Acquisition and the reactivation of the Nipisi Pipeline in the third quarter of 2023.  Additionally, the figure beat our projection of C$604.3 million.

Volume increased about 2.2% year over year to 2,716 mboe/d.

Facilities: Adjusted EBITDA of C$340 million increased from the year-ago quarter’s figure of C$272 million. Moreover, the figure beat our estimate of C$308 million.

Volumes of 855 mboe/d increased about 14.2% year over year.

Marketing & New Ventures: Adjusted EBITDA of C$143 million increased from C$96 million in the prior-year quarter.This increase was driven by a greater ownership stake and improved NGL margins at Aux Sable following the Alliance/Aux Sable Acquisition. The higher margins in the Western Canadian NGL marketing business due to increased volumes and higher prices for propane, butane and condensate aided the figure. However, the figure missed our projection of C$151.9 million.

Volumes of 319 mboe/d increased about 3.9% year over year.

Capital Expenditure & Balance Sheet

Pembina’s capital expenditure was C$265 million in the second quarter compared with C$123 million a year ago.

As of Jun 30, 2024, PBA had cash and cash equivalents worth C$256 million and long-term debt of C$11.7 billion. Its debt to capitalization was 40.4%.

Recent Business Highlights

The company announced significant progress on several key business initiatives in the second quarter. Key developments include:

Acquisition of Alliance and Aux Sable: The company completed the C$3.1 billion acquisition of additional interests in Alliance and Aux Sable on Apr 1, 2024. Subsequently, Pembina acquired full ownership of Aux Sable's U.S. operations.

Cedar LNG Project Advancements: In partnership with the Haisla Nation, Pembina achieved a positive final investment decision for the $4 billion Cedar LNG Project on Jun 25, 2024.

Expansion of Gas Infrastructure: Pembina Gas Infrastructure Inc. (“PGI”) entered into a C$420 million transaction with Whitecap Resources Inc. on Jul 2, 2024. This deal includes a 50% stake in Whitecap's Kaybob Complex and a commitment to future infrastructure development.

Guidance

Pembina has revised its 2024 adjusted EBITDA guidance upward to C$4.20- C$4.35 billion from the previously guided range of C$4.05 billion to C$4.30 billion. This revision is largely driven by stronger performance in NGL marketing, increased contributions from Aux Sable and PGI, higher Nipisi volumes and reduced corporate costs.

Additionally, the company has increased its 2024 capital investment program to C$1.3 billion, reflecting a C$140 million adjustment. This boost is attributed to the approval of PGI's Wapiti Expansion and the K3 Cogeneration Facility, along with further investments in pipeline infrastructure and higher non-recoverable sustaining capital. The capital program will be financed through operating cash flow, after accounting for dividends.

In the first half of 2024, the company also contributed C$240 million to Cedar LNG and does not anticipate further contributions this year. PBA also plans to invest C$200 million in non-recoverable sustaining capital to maintain operations, which includes a C$60 million increase tied to ownership changes and accounting adjustments following the Alliance/Aux Sable Acquisition.

PBA currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Important Q2 Energy Earnings So Far

While we have discussed Pembina Pipeline’s second-quarter results in detail, let’s take a look at some other key energy reports of this season.

Liberty Energy (LBRT - Free Report) , the Denver-CO-based oil and gas equipment company, announced second-quarter 2024 adjusted earnings of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. However, LBRT’s bottom line underperformed the year-ago quarter’s reported figure of 87 cents due to a year-over-year increase in costs and expenses.

Ahead of the earnings release, Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased the company’s shares worth $30 million at an average price of $20.39 per share in the reported quarter. Liberty returned $41 million to its shareholders through share repurchases and cash dividends.

Houston, TX-based Halliburton Company (HAL - Free Report) , an oil and gas equipment and services provider, reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter profit of 77 cents (adjusted). The robust numbers reflect strength in the international markets.

As of Jun 30, 2024, the company reported $2.1 billion in cash and cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 43.2. HAL also bought back $250 million worth of its stock in the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to a free cash flow of $793 million.  

Meanwhile, energy infrastructure provider Kinder Morgan (KMI - Free Report) reported second-quarter adjusted earnings per share of 26 cents, in line with the Zacks Consensus Estimate. The bottom line was favorably impacted by strong financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI’s second-quarter discounted cash flow (DCF) was $1.10 billion, up from $1.07 billion a year ago.

As of Jun 30, 2024, Kinder Morgan reported $98 million in cash and cash equivalents. Its long-term debt amounted to $28.5 billion at quarter-end. For the full year 2024, KMI anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion, each indicating 8% growth from the previous year’s reported figures.

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