• Adjusted EBITDA: $1.019 billion for Q3 2024, consistent with the same period in the prior year.
• Adjusted Cash Flow from Operating Activities: $724 million or $1.25 per share.
• Earnings: $385 million, representing an 11% increase over the same period in the prior year.
• Pipeline Volumes: 2.7 million barrels per day in Q3, a 6% increase compared to the same period in the prior year.
• Facilities Volumes: Approximately 800 million barrels per day in Q3, a 1% increase compared to the same period in the prior year.
• 2024 Adjusted EBITDA Guidance Range: Narrowed to $4.225 billion to $4.325 billion.
• Debt to Adjusted EBITDA Ratio: 3.6 times based on trailing 12 months, with a normalized ratio of approximately 3.4 times.

• Warning! GuruFocus has detected 10 Warning Signs with PBA.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pembina Pipeline Corp (NYSE:PBA) reported a record third quarter adjusted EBITDA of $1.019 billion, consistent with the same period in the prior year.
• The company has narrowed its 2024 adjusted EBITDA guidance range to $4.225 billion to $4.325 billion, indicating confidence in its financial outlook.
• Pembina completed the acquisition of the remaining 14.6% interest in Aux Sable's US operations, resulting in fully consolidated ownership of all Aux Sable assets.
• The company is progressing well with major projects, including the Northeast BC midpoint pump station expansion, which is trending under its $90 million budget.
• Pembina's Cedar LNG project has reached an early milestone with the start of onshore construction activities, indicating progress in its strategic initiatives.

Negative Points

• The Cochin pipeline faced lower contributions due to lower tolls on new long-term contracts and lower volumes, impacting overall financial performance.
• Pembina experienced a 90-day unplanned outage at Aux Sable, affecting the marketing and new ventures segment.
• The company faced headwinds from various onetime and transitory events that impacted either the current quarter or the prior period.
• Pipeline volumes were affected by lower volumes on the Cochin Pipeline, the Drayton Valley Pipeline, and the Peace Pipeline system.
• Pembina's third quarter corporate segment results reflect higher long-term incentive costs driven by the company's share price performance.

Q & A Highlights

Q: Can you provide more details on the 2% growth in the conventional segment and the outlook for 2025? A: Scott Burrows, CEO, explained that the third quarter was impacted by turnarounds, but they expect a 4% exit-to-exit growth rate by year-end. For 2025, they are confident in a 4% to 6% physical volume growth rate, with strong October volumes indicating positive trends.

Q: With full ownership of the Alliance asset, what are the future plans for optimization and growth? A: Jaret Sprott, COO, stated that integration is going well, and there is high demand for the asset. They are exploring opportunities for incremental demand, including full path and interprovincial opportunities, and are engaged with shippers to unlock further potential.

Q: How has the risk profile for Cedar LNG changed with construction underway, and will future contracts reflect this? A: Scott Burrows, CEO, noted increased interest in Cedar LNG post-FID, with expectations for a premium due to its scarce capacity. They are in discussions with potential off-takers and expect to finalize contracts in early 2025.

Q: How are midstream valuations affecting M&A opportunities, and are you seeing actionable deals? A: Scott Burrows, CEO, mentioned that Pembina is focused on integrating recent acquisitions and is not actively pursuing new M&A opportunities. They remain reactive to market opportunities but are not proactively seeking deals.

Q: Can you update us on the ethane opportunities and the timeline for decision-making? A: Jaret Sprott, COO, stated that they are evaluating their ethane supply portfolio and have initiated engineering and pre-feed work. Decisions on progressing opportunities will be made in the first half of 2025, with major capital deployment expected in 2026-2027.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.