Three more Canadian Edge Portfolio recommendations have announced fourth-quarter earnings: Keyera Corp (TSX: KEY, OTC: KEYUF), Newalta Corp (TSX: NAL, OTC: NWLTF) and RioCan REIT (TSX: REI, OTC: RIOCF).

Not surprisingly, Aggressive Holding Newalta faced greater headwinds than the other two, which are Conservative Holdings. But all measured up on underlying business numbers and guidance. Therefore, they remain buys below my target prices of USD42, USD16 and USD28, respectively.

Keyera Corp posted another strong fourth-quarter and full-year 2012, as its arsenal of fee-based assets weathered challenging conditions in Canada’s energy patch (See February’s “In Focus”). Cash flow surged 28 percent for the year and distributable cash flow (DCF) came in at CAD2.62 per share. That was down from CAD2.85 a year ago but still enough to cover the monthly distribution of 18 cents a share Canadian by a solid 1.21-to-1 margin.

DCF was lower primarily because of much narrower propane margins dating from the mild winter of 2011-12 as well as higher maintenance costs. The Gathering and Processing segment had slightly lower operating margin, while Natural Gas Liquids (NGL) Infrastructure saw its net rise 63 percent and Marketing margins surged 20.3 percent.

NGL Infrastructure remained the key target of capital spending, and management reported progress on construction of a de-ethanizer and related rail and storage assets. Total growth capital investment in 2012 was CAD446 million, including CAD281 million in acquisitions, all of which will boost the bottom line this year. And Keyera has targeted an additional CAD250 million to CAD300 million for capital spending in 2013, excluding purchases.

Encouragingly, fourth-quarter results were a solid improvement on year-earlier tallies, a promising sign for 2013. DCF per share of 96 cents Canadian was up 33.3 percent from year-ago levels. And the payout ratio for the quarter was just 55 percent, down from 70 percent a year ago. Net processing throughput from the gathering operation was up 7.8 percent, and was up 13.7 percent at the NGL Infrastructure division.

Over the past year, Keyera has converted nearly half of its outstanding balances under credit facilities to long-term debt, even as it has continued to grow operations with new projects and acquisitions. It also expanded its credit facility from CAD500 million to CAD750 million, with the potential to bump it up to CAD1 billion. And with just CAD135 million drawn now, there’s plenty of room to facilitate growth this year.

Looking ahead, Keyera’s growing size and reach ensure it will grab its share of the infrastructure projects needed to fuel North America’s long-term energy drilling boom. Equally important, it continues to find ways to grow in the current environment of widening price differentials between regions.

The company is rapidly expanding a rail and truck terminal in Texas acquired in late 2012. And it’s growing the same business in Canada, as producers attempt to move burgeoning crude oil output by rail to alleviate the current pipeline shortage.

That’s a formula that should keep Keyera’s underlying profitability growing in 2013 and beyond. The only problem is price, as once again the stock has soared well past my target of USD42. Confident as I am in the company’s long-term prospects, I don’t advise paying more.

In fact, those with outsized profits in this stock may want to take some money off the table, as its shares have clearly benefitted from runaway upside momentum. In my view, Keyera will one day be worth far more than the current price of USD52. But it won’t be a one-way trip. Stay patient and buy this great company when momentum investors aren’t chasing it higher.

Newalta Corp’s fourth-quarter and full-year 2012 results took a direct hit from falling prices for recovered products and reduced drilling activity in western Canada. And predictably, that’s led to an immediate selloff in the stock. 

Breaking down the numbers, revenue rose 8 percent for the quarter and 6 percent for the year. Gross profit as a percentage of revenue slipped to 20 percent from 23 percent a year ago. And funds from operations–the key metric for paying dividends–dipped 19 percent.

That was still good enough to cover the quarterly dividend by a 4.2-to-1 margin (23.8 percent payout ratio). And the company was able to boost growth capital expenditures by 36 percent. US revenue rose 25 percent, and the company grew its employee base by 10 percent, positioning for future growth.

The results once again demonstrate Newalta’s earnings are tied to commodity prices, particularly in western Canada where customers’ activity has waned dramatically due to energy price differentials. The results, however, also demonstrate that the company’s overall profits are far more stable than in past cycles thanks to increased diversification and scale–even as management continues to grow the underlying business.

Despite these headwinds, onsite revenue and gross profit rose 28 percent and 19 percent, respectively in the fourth quarter. That went a long way to offsetting lower facilities-based revenue and profit. 

Also impressive is the halving of net finance charges in 2012, as the company was able to fund growth with internal cash flows and successful equity offerings. That too is a big change from past years, and the result of a larger and stronger Newalta that’s better able to deal with what volatile markets throw at it.

Looking ahead, demand for the company’s specialty of providing environmental solutions to industrial and energy sites will continue to grow. It now operates 85 facilities in Canada and the US, and serves 250-plus onsite locations, giving it wide reach from which to launch further expansion. And management continues to transition its business to fee-generating contracts, providing considerably more revenue stability.

Importantly, Newalta has affirmed its previous 2013 forecast for capital spending, noting certain improvements in the drilling sector from the third quarter. That’s not expected to prevent first-quarter results from generally falling short of the comparable period.

However, coupled with efficiencies at the company itself and a pipeline of “organic” development projects, it does ensure continued earnings and dividend growth. That will push the stock higher over time, regardless of how investors react in the short term. This stock has had some ups and downs in past years and investors should be prepared for more volatility in 2013. But for long-term, patient investors, Newalta remains a buy up to USD16.

RioCan REIT continues to benefit from Wal-Mart’s (NYSE: WMT) expansion in Canada. But the retail property owner’s fourth-quarter and full-year 2012 results–as well as bullish 2013 guidance–demonstrate it’s so much more.

Four years of patient investment paid off once again with a 16 percent boost in operating funds from operations (FFO). Per unit FFO, the key metric on which dividends are set, rose 8 percent. That’s the fuel for future dividend growth, which the real estate investment trust (REIT) resumed in December with a 2.2 percent boost, the first since September 2008. Operating FFO for the full year came in at CAD1.52 per unit, a coverage ratio of 1.08-to-1 after the dividend increase.

Occupancy remained among the highest in North America at 97.4 percent. That’s up slightly from 97.3 percent in third-quarter 2012 and down slightly from 97.6 percent in fourth-quarter 2011. That’s remarkable stability, given the company’s robust acquisition and disposition activity. And it’s backed by strong lease renewal rates with an average rent increase of 18.4 percent during the quarter.

RioCan bought partial or full interests in 31 properties during the fourth quarter in North America, bringing the full-year total of deals to 43, with a value of more than CAD1 billion. It also dissolved its joint venture with Cedar Realty Trust (NYSE: CDR) in the US, taking away full ownership of 21 properties in the northeastern US.

This month, the company sold its remaining position in Cedar itself, freeing up CAD48 million in cash for continued expansion. And management is in the process of selling 14 properties in Canada currently valued at CAD645 million, or CAD415 million after paying off associated debt of CAD230 million.

Timely portfolio adjustment has been a big part of RioCan’s success over the years in navigating even the worst environments. Portfolio trends are still positive, with same-property net operating income (excluding acquisitions) rising 1 percent in full-year 2012, but accelerating to 1.9 percent in both the US and Canada during the fourth quarter. Retention ratio for expiring leases rose to 94.3 percent, a distinct improvement from the 84.8 percent rate during the third quarter. 

Portfolio diversification has been equally important. During the quarter, a greater share of vacant space was leased to new tenants. The share of revenue from ultra-safe national and “anchor” tenants rose to 86.1 percent, up from 85.7 percent a year ago. Wal-Mart was the largest tenant, at 4.3 percent of sales. And the current portfolio breakdown is the most regionally diversified it’s ever been as well.

As for finances, RioCan continues to enjoy access to exceptionally cheap capital and is taking advantage by locking in long-term financing for acquisitions and development. That includes property-based debt, as well as bond and equity offerings that have routinely been accretive to FFO.

Despite continued robust expansion, rolling 12-month coverage of debt interest with cash flow rose to 2.82-to-1 in the fourth quarter, up from 2.46-to-1 last year. Canadian mortgage financing during 2012 was completed at an average weighted interest rate of just 3.1 percent and maturity of 5.1 years. In the US, those figures were 4.3 percent for 6.8 years. The company also issued CAD250 million of nine-year debt at a coupon rate of just 3.716 percent. Debt to assets is now down to 43.5 percent from 46.4 percent a year ago.

As long as money is that cheap, RioCan should have no problem funding growth that leads to higher FFO and distributions, even if the North American economy does slow this year. And opportunity will expand even more if growth picks up. Buy up to my target of USD28.

Here’s when to expect the next batch of earnings for Portfolio Holdings. Links will take you to analysis of numbers for those companies that have already reported. Expect to see another Flash Alert late next week.

Aggressive Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Feb. 28 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Feb. 28 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Feb. 28 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–March 7 (estimate)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–March 12 (estimate)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–February Portfolio Update
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)–Feb. 26 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–February Portfolio Update
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Feb. 26 (confirmed)
• Dundee REIT (TSX: D-U, OTC: DRETF)–Feb. 20 (confirmed)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Feb. 28 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–March 14 (confirmed)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Feb. 15 Flash Alert
• Northern Property REIT (TSX: NPR, OTC: NPRUF)–March 13 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–March 1 (confirmed)
• RioCan REIT (TSX: REI, OTC: RIOCF)–Feb. 15 Flash Alert
• Shaw Communications Inc (TSX: SJR/A. NYSE: SJR)–February Portfolio Update
• Student Transportation Inc (TSX: STB, NSDQ: STB)–Feb. 13 Flash Alert
• TransForce Inc (TSX: TFI, OTC: TFIFF)–March 1 (confirmed)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN OTC: ACAZF)–Feb. 13 Flash Alert
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–March 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–February In Focus
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Feb. 21 (confirmed)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–March 22 (estimate)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–March 15 (estimate)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–Feb. 27 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–March 26 (estimate)
• Just Energy Group Inc (TSX: JE, NYSE: JE)–February Best Buy
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Feb. 15 Flash Alert
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Feb. 13 Flash Alert
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Feb. 26 (confirmed)
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–March 7 (estimate)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–March 7 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–March 4 (confirmed)
• Wajax Corp (TSX: WJX, OTC: WJXFF)–March 6 (estimate)