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Pembina (PBA) Stock Shows Negligible Move Post Q1 Earnings Miss

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Pembina Pipeline Corporation’s (PBA - Free Report) stock showed no substantial movement since first-quarter 2021 earnings announcement on May 6. The company’s lower-than-anticipated Q1 earnings due to weak sales volumes displeased investors.

Inside Pembina Pipeline’s Earnings

Pembina Pipeline reported first-quarter 2021 earnings per share of 39 cents, missing the Zacks Consensus Estimate by 6 cents. The underperformance was primarily due to lower sales volumes.

However, Pembina Pipeline’s bottom line compared favorably with the year-earlier quarter's earnings of 37 cents on improved natural gas liquids, and crude oil prices and margins.

Pembina Pipeline reported revenues of $1.57 billion that improved 26% year over year.

Operating cash flow rose 11.2% to C$456 million. Adjusted EBITDA of C$835 million was C$5 million higher than the figure registered for the first quarter of 2020.

In the first quarter of 2021, Pembina Pipeline saw volumes of 3,482 thousand barrels of oil-equivalent per day (mboe/d), which compares unfavorably with 3,508 mboe/d reported in the prior-year quarter.

Segmental Information

Pipelines: The unit reported adjusted EBITDA of C$529 million, down 3.8% from the year-ago quarters levels. The downside was the outcome of reduced interruptible volumes from the Drayton Valley, Peace and Vantage pipelines plus higher operating costs due to escalated power expenses and integrity spending. The Pipelines segment saw a 1 % year-over-year volume dip to 2,587mboe/d.

Facilities: The segment’s adjusted EBITDA of C$269 million improved from the year-ago quarter’s C$256 million. The division was boosted by expanded supply volume contribution from the Redwater Complex and the additional revenue amounts associated with the start-up of Duvernay III in November 2020. Volumes of 895 mboe/d were up1.8% year over year.

Marketing & New Ventures: The division posted adjusted EBITDA of C$90 million compared with C$55 million in the first quarter of 2020. The upside was attributable to a rise in net sales resulting from higher propane and crude oil prices during the first quarter of 2021 in combination with higher sold NGL volumes.

The Marketing & New Ventures segment recorded volumes of 221 mboe/d, which rose 13% from the same period in the prior year on the back of monetized built-up storage positions and improved supply volumes at the Redwater Complex.

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

Capital Expenditure & Balance Sheet

Pembina Pipeline spent C$127 million on capital expenditures during the quarter under review compared with C$483 million a year ago. As of Mar 31, 2021, the company had cash and cash equivalents worth $51 million and $8.5 billion in long-term debt. Debt-to-capitalization was approximately 43%.

Project Updates

Pembina Pipeline and its 45% owned joint venture Veresen Midstream successfully launched Hythe Developments during the quarter under review.

Further, the company completed constructing the Prince Rupert Terminal and made it operational. It is a propane export terminal on Watson Island, British Columbia with an authorized capacity of 25,000 barrels per day at the end of the first quarter.

Management also informed about signing of a 100-MW long-term power purchase agreement (PPA) with a TransAlta Corporation subsidiary. The company will benefit from the PPA in multiple ways including obtaining cost-competitive renewable energy and locking a price for a portion of the power it uses.

Guidance

Pembina Pipeline is sticking to its previously issued adjusted EBITDA guided range of $3.2-$3.4 billion for 2021.

Zacks Rank & Key Picks

Pembina Pipeline has a Zacks Rank #3 (Hold), currently.  Some better-ranked players in the energy  space are SilverBow Resources Inc. (SBOW - Free Report) , Matador Resources Co. (MTDR - Free Report) and Continental Resources, Inc. (CLR - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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