Keyera (KEY) Q1 2025 earnings summary

Executive summary

• Achieved solid Q1 performance with adjusted EBITDA of $298 million, net earnings up to $130 million, and strong Gathering & Processing and near-record Liquids Infrastructure results, advancing strategic growth projects and securing new long-term integrated contracts.

• Sanctioned KFS Frac III ($500 million, 47,000 bbl/d, in service mid-2028) and KFS Frac II Debottleneck ($85 million, 8,000 bbl/d, online mid-2026), expanding core fractionation capacity by 60% with strong customer commitments.

• Wapiti Gas Plant expected to reach effective capacity in 2026, a year ahead of schedule, with optimization projects underway.

• Fort Saskatchewan condensate system nearing contractual capacity, with de-bottlenecking opportunities under evaluation and new long-term contracts signed.

• Positioned as one of two fully integrated liquids infrastructure platforms in Montney and Duvernay, benefiting from visible basin growth and a deep inventory of capital-efficient, self-funded organic growth projects.

Financial highlights

• Adjusted EBITDA was $298 million (Q1 2024: $314 million), with net earnings of $130 million (Q1 2024: $71 million) and distributable cash flow of $190 million ($0.83/share).

• Revenue reached $1.76 billion, up from $1.52 billion in Q1 2024.

• Fee-for-service segment margins increased 9% year-over-year to $262 million, supporting sustainable dividend growth.

• Dividends declared totaled $119 million ($0.52/share), with a payout ratio of 63%.

• Net debt to adjusted EBITDA at 2.0x, below the 2.5–3.0x target range, with over $500 million net debt reduction in two years.

Outlook and guidance

• Reaffirmed 2025 guidance: Marketing segment realized margin of $310–$350 million, including a $50 million impact from the AEF outage.

• Growth capital expenditures expected at $300–$330 million, maintenance capex at $70–$90 million, and cash taxes at $100–$110 million.

• Fee-based adjusted EBITDA targeted to grow 7–8% annually from 2024 to 2027.

• Average annual growth capital spending from 2026 to 2027 expected at $350–$450 million, to be equity self-funded.

• Sustainable dividend increases supported by growth in fee-based adjusted EBITDA and distributable cash flow per share.