Pembina (PBA) Q2 Earnings Fall Y/Y, Sales Lag Estimates
Pembina Pipeline PBA reported second-quarter 2023 net earnings per share of 60 Canadian cents, down from the prior-year quarter's level of 69 Canadian cents. This underperformance was primarily due to weak delivery in the company’s Pipelines, Facilities and Marketing & New Ventures segments.
Quarterly revenues of $1.5 billion decreased about 37.5% year over year and also missed the Zacks Consensus Estimate of $1.6 billion. Operating cash flow increased approximately 8.1% to C$653 million. Adjusted EBITDA came in at C$823 million compared with C$849 million in the year-ago period.
In the second quarter, PBA witnessed volumes of 3,187 thousand barrels of oil equivalent per day (mboe/d) compared with 3,344 mboe/d reported in the prior-year quarter.
Pembina declared a cash dividend of 66.75 Canadian cents per share for the second quarter, subject to applicable law, on Sep 29, 2023, to shareholders of record as on Sep 15, 2023.
Pembina Pipeline Corp. Price, Consensus and EPS Surprise
Pembina Pipeline Corp. price-consensus-eps-surprise-chart | Pembina Pipeline Corp. Quote
Segmental Information
Pipelines: Adjusted EBITDA of C$501 million decreased about 4.2% from the year-ago quarter’s level. This downside was due to lower revenues from the Northern Pipeline system and the impacts of wildfires and third-party outages. The figure beat our projection of C$468 million. The volume fell about 1.5% year over year to 2,438 mboe/d.
Facilities: Adjusted EBITDA of C$272 million reduced from the year-ago quarter’s figure of C$277 million. The downside was due to lower revenues resulting from the transfer of the majority of Pembina's wholly-owned field-based gas processing assets to Pembina Gas Infrastructure. The figure, however, beat our projection of C$237 million. Volumes of 749 mboe/d dipped about 13.7% year over year.
Marketing & New Ventures: Adjusted EBITDA of C$96 million decreased from C$103 million reported in the second quarter of 2022. The downside can be attributed to a drop in commodity market prices, including NGL and crude oil. The figure beat our projection of C$88.1 million.
Capital Expenditure & Balance Sheet
Pembina spent C$123 million as capital expenditure during the quarter under review compared with C$152 million a year ago.
As of Jun 30, 2023, PBA had cash and cash equivalents worth C$57 million and C$10.6 billion in long-term debt. Debt to capitalization was 40.5%.
Guidance
For full-year 2023, Pembina expects its adjusted EBITDA in the C$3.55-C$3.75 billion range.
It expects to maintain debt-to-adjusted EBITDA in the band of 3.4-3.6 times.
Zacks Rank and Key Picks
Currently, PBA carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy CVI, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy (CVI) is valued at around $3.67 billion. In the past year, its shares have risen 19.5%
CVI currently pays a dividend of $2 per share, or 5.47% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Evolution Petroleum is worth approximately $320.71 million. EPM currently pays a dividend of 48 cents per share, or 4.98% on an annual basis.
The company currently has a forward P/E ratio of 8.93. In comparison, its industry has an average forward P/E of 14.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.04 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.75%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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