Analyst Note
| Joe Gemino, CPA |Narrow-moat Pembina Pipeline reported fourth-quarter financial results that exceeded our expectations due to higher-than-expected tolls on the company’s pipeline infrastructure. The company reported adjusted EBITDA of CAD 866 million, a 9% increase sequentially and a 10% increase from the prior-year period. The increased performance was driven by the assets acquired from Kinder Morgan, new projects placed into service, and lower operating expenses. The positive impact was partially offset by lower marketing margins from crude oil and natural gas liquids sales and lower volumes on the Alliance pipeline system. Adjusted cash flow from operations also exceeded our expectations. Pembina reported CAD 597 million in the fourth quarter, up 14% sequentially and 5% from the fourth quarter of 2019. However, the company’s cash flow was diluted because of the Kinder Morgan acquisition as the per share amount fell to CAD per 1.10 share from CAD 1.11 per share in the prior-year quarter.