ALTAGAS REPORTS STRONG FIRST QUARTER 2024 RESULTS
Performance Due to Strong Midstream Execution, Record First Quarter Global Export Volumes, and Continued Advancement of Major Strategic Priorities
HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
- Normalized EPS1 was
$1.14 in the first quarter of 2024 compared to$0.99 in the first quarter of 2023, representing a 15 percent year-over-year increase, while GAAP EPS2 was$1.38 in the first quarter of 2024 compared to$1.58 in the first quarter of 2023. Normalized EPS was ahead ofAltaGas' expectations due to strong Midstream performance, including robust global exports volumes partially due to favorable timing of ships at the end of the first quarter, and continued cost management. - Normalized EBITDA1 was
$660 million in the first quarter of 2024 compared to$582 million in the first quarter of 2023, while income before income taxes was$541 million in the first quarter of 2024 compared to$619 million in the first quarter of 2023. The quarter included strong Midstream performance while Utilities results were in line with expectations. - Normalized FFO per share1 was
$1.73 in the first quarter of 2024 compared to$1.63 in the first quarter of 2023, while cash from operations per share3 was$1.89 in the first quarter of 2024 compared to$2.10 in the first quarter of 2023. - The Utilities segment reported normalized EBITDA of
$437 million in the first quarter of 2024 compared to$401 million in the first quarter of 2023, while income before income taxes was$384 million in the first quarter of 2024 compared to$590 million in the first quarter of 2023. The largest drivers of the year-over-year growth in Utilities normalized EBITDA included strong performance from WGL's Retail business, contribution fromAltaGas' continued investment in rate base, customer additions, and the positive impact of theDistrict of Columbia ("D.C.") rate case. These positive factors were partially offset by the lost contribution of theAlaska Utilities due to its divestiture onMarch 1, 2023 and associated gain on debt defeasance. - The Midstream segment reported normalized EBITDA of
$247 million in the first quarter of 2024 compared to$183 million in the first quarter of 2023, while income before income taxes was$297 million in the first quarter of 2024 compared to$138 million in the first quarter of 2023. The largest drivers of the year-over-year increase in Midstream normalized EBITDA included strong performance in the global exports business, including record first quarter volumes, the benefit from Allowance forFunds Used During Construction ("AFUDC") associated with the construction of the Mountain Valley Pipeline ("MVP"), strong marketing performance, and the addition of the newly acquiredPipestone assets. -
AltaGas exported a first quarter record of 115,108 Bbl/d of liquified petroleum gases ("LPGs") to Asia in the quarter, which represented a 16 percent year-over-year increase. Growth was underpinned by strong execution at theRidley Island Propane Export Terminal ("RIPET") andFerndale Terminal ("Ferndale"), continued strong demand inAsia , and increased LPG supply inWestern Canada . -
AltaGas continued to advance key Midstream growth projects in the quarter. This included the Company drilling the first acid gas injection well for the Pipestone II expansion project and continuing to advance key activities on the Ridley Island Energy Export Facility ("REEF"). Site clearing work at REEF has progressed as expected, while key commercial agreements are progressing.AltaGas continues to expect a positive final investment decision ("FID") during the second quarter of 2024. -
AltaGas is pleased with the construction progress on MVP. The pipeline is more than 99 percent complete and is expected to be placed into service in June of 2024, where it will provide critical energy security to customers in the Eastern U.S. As previously disclosed,AltaGas does not consider its equity stake in MVP as core and will consider value maximizing opportunities once the pipeline is fully operational. - In the first quarter of 2024, AltaGas commissioned one new very large gas carrier ("VLGC"), the Boreal Voyager, under a seven-year contract with optional extensions, and extended an existing contract for one VLGC time charter with Astomos, with whom
AltaGas has had a long-standing partnership since RIPET was commissioned. This follows the commissioning of the Boreal Pioneer inDecember 2023 , which is also operating under a seven-year agreement. These three time charters will reduce and de-risk shipping costs with materially all ofAltaGas' expectedBaltic freight exposure protected through time charters, financial hedges, and tolled volumes in 2024. -
AltaGas had two financings in the first quarter of 2024, including:- On
January 8, 2024 , AltaGas issued$400 million of senior unsecured medium-term notes with a 4.67 percent coupon, due onJanuary 8, 2029 . The net proceeds were used to pay down existing indebtedness underAltaGas' credit facilities (part of which was incurred to fund the debt portion of the Pipestone Acquisition), to fund working capital, and for general corporate purposes. - On
March 14, 2024 , AltaGas issued$350 million of senior unsecured medium-term notes with a 5.14 percent coupon, due onMarch 14, 2034 and$250 million of senior unsecured medium-term notes with a 5.60 percent coupon, due onMarch 14, 2054 . The net proceeds were used to refinanceAltaGas' March 2024 medium-term note maturities, pay down other existing indebtedness, fund working capital, and for general corporate purposes.
- On
- Following a strong first quarter, AltaGas is reiterating the Company's 2024 full year guidance, including normalized EPS1 of
$2.05 to$2.25 , and normalized EBITDA1 of$1,675 million to$1,775 million .
(1) Non-GAAP measure; see discussion and reconciliation to US GAAP financial measures in the advisories of this news release or in |
CEO MESSAGE
"We're pleased with our first quarter performance and continued execution of our long-term strategic plan" said
"Performance in our Utilities was in line with our expectations and continued to deliver stable and growing earnings for the enterprise, despite warmer-than-normal weather throughout much of the quarter. In addition to the strong Retail performance, the quarter included the benefit of continued modernization investments, customer growth, and the D.C. rate case. We continued to make strong investments in our Utilities during the quarter to meet the needs of our expanding customer base and support long-term safety and reliability needs through ongoing asset modernization programs. Our natural gas Utilities have a bright future as the lowest cost and most reliable form of residential and commercial heating across our jurisdictions.
"Performance in our Midstream segment was robust, including strong execution in global exports and the addition of the
"We remain focused on executing our strategic priorities that will drive long-term value for our stakeholders. This includes operating with an equity self-funding model, commercially de-risking the business through increasing our tolling, take-or-pay and fee-for-service contracts, continued balance sheet deleveraging, optimizing our assets for the best risk-adjusted returns, and executing with a high degree of capital discipline. In the near-term, we are also focused on executing the construction of the Pipestone Phase II expansion project, which we reached a positive FID in
RESULTS BY SEGMENT
Normalized EBITDA (1) |
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Utilities |
$ 437 |
$ 401 |
Midstream |
247 |
183 |
Corporate/Other |
(24) |
(2) |
Normalized EBITDA (1) |
$ 660 |
$ 582 |
(1) Non‑GAAP financial measure; see discussion in Non‑GAAP Financial Measures section of this news release. |
Income (Loss) Before Income Taxes |
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Utilities |
$ 384 |
$ 590 |
Midstream |
297 |
138 |
Corporate/Other |
(140) |
(109) |
Income Before Income Taxes |
$ 541 |
$ 619 |
BUSINESS PERFORMANCE
Utilities
The Utilities segment reported normalized EBITDA of
During the quarter, the
On
Midstream
The Midstream segment reported normalized EBITDA of
Subsequent to quarter-end,
Over the longer-term,
Performance across the balance of the Midstream platform was strong but included partially curtailed gas processing volumes due to cold weather and maintenance related outages at certain facilities. The
Midstream Hedge Program |
Q2 2024 |
Q3 2024 |
Q4 2024 |
Remainder |
Global Exports volumes hedged (%) (1) |
92 |
96 |
82 |
90 |
Average propane/butane FEI to |
18.24 |
15.79 |
16.82 |
16.82 |
Fractionation volume hedged (%) (3) |
90 |
91 |
71 |
83 |
Frac spread hedge rate - (CAD$/Bbl) (3) |
26.66 |
26.66 |
24.21 |
25.84 |
(1) |
Approximate expected volumes hedged. Includes contracted tolling volumes and financial hedges. Based on |
(2) |
Approximate average for the period. Does not include physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. |
(3) |
Approximate average for the period. |
Corporate/Other
In the Corporate/Other segment, normalized EBITDA was a loss of
CONSOLIDATED FINANCIAL RESULTS
|
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Normalized EBITDA (1) |
$ 660 |
$ 582 |
Add (deduct): |
|
|
Depreciation and amortization |
(116) |
(111) |
Interest expense |
(107) |
(105) |
Normalized income tax expense |
(100) |
(76) |
Preferred share dividends |
(4) |
(6) |
Other (2) |
5 |
(5) |
Normalized net income (1)(3) |
$ 338 |
$ 279 |
|
|
|
Net income applicable to common shares |
$ 408 |
$ 445 |
Normalized funds from operations (1) |
$ 510 |
$ 460 |
|
|
|
($ per share, except shares outstanding) |
|
|
Shares outstanding - basic (millions) |
|
|
During the period (4) |
295 |
282 |
End of period |
296 |
282 |
|
|
|
Normalized net income - basic (1)(3) |
1.14 |
0.99 |
Normalized net income - diluted (1)(3) |
1.14 |
0.99 |
|
|
|
Net income per common share - basic |
1.38 |
1.58 |
Net income per common share - diluted |
1.37 |
1.57 |
(1) |
Non‑GAAP financial measure; see discussion in Non-GAAP Financial Measures section at the end of this news release. |
(2) |
"Other" includes accretion expense, net income applicable to non-controlling interests, foreign exchange gains (losses), unrealized foreign exchange losses on intercompany balances and NCI portion of non-GAAP adjustments. The portion of non-GAAP adjustments applicable to non-controlling interests are excluded in the computation of normalized net income to ensure consistency of normalizations applied to controlling and non-controlling interests. These amounts are included in the "net income applicable to non-controlling interests" line item on the Consolidated Statements of Income. |
(3) |
In the fourth quarter of 2023, |
(4) |
Weighted average. |
Normalized EBITDA for the first quarter of 2024 was
Income before income taxes was
Normalized net income was
Normalized FFO was
Depreciation and amortization expense was
Interest expense for the first quarter of 2024 was
Income tax expense was
FORWARD FOCUS, GUIDANCE AND FUNDING
- 2024 normalized EPS guidance of
$2.05 -$2.25 , compared to normalized EPS of$1.90 and GAAP EPS of$2.27 in 2023; and - 2024 normalized EBITDA guidance of
$1,675 million -$1,775 million , compared to normalized EBITDA of$1,575 million and income before taxes of$912 million in 2023.
The Company expects to maintain an equity self-funding model in 2024, for the fifth consecutive year, and will fund capital requirements through a combination of internally generated cash flows and investment capacity associated with rising EBITDA levels, with no expectation to issue equity. Asset sales will be considered on an opportunistic basis, with any potential proceeds to be used to de-lever and strengthen the balance sheet and continue to increase the financial flexibility of
QUARTERLY COMMON SHARE DIVIDEND AND PREFERRED SHARE DIVIDENDS
The Board of Directors approved the following schedule of Dividends:
Type (1) |
Dividend (per share) |
Period |
Payment Date |
Record |
Common Shares |
|
n.a. |
|
|
Series A Preferred Shares |
|
|
|
|
Series B Preferred Shares |
|
|
|
|
Series G Preferred Shares |
|
|
|
|
Series H Preferred Shares |
|
|
|
|
(1) Dividends on common shares and preferred shares are eligible dividends for Canadian income tax purposes. |
CONFERENCE CALL AND WEBCAST
Date: |
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Time: |
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Webcast: |
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Dial-in (Audio only): |
1-416-764-8659 or toll free at 1-888-664-6392 |
Shortly after the conclusion of the call a replay will be available on the Company's website or by dialing 416-764-8677 or toll free 1-888-390-0541. Passcode 598981#.
NON-GAAP MEASURES
This news release contains references to certain financial measures that do not have a standardized meaning prescribed by
Change in Composition of Non-GAAP Measures
In the fourth quarter of 2023, Management has changed the composition of certain of
Increase as result of change |
Three Months Ended
|
|
($ millions, except where noted) |
2024 |
2023 |
Normalized net income (1) |
$ — |
$ 2 |
Normalized income tax expense |
$ — |
$ 1 |
Normalized effective tax rate (%) |
— % |
0.1 % |
(1) Corresponding per share amounts have also been adjusted. |
Normalized EBITDA
|
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Income before income taxes (GAAP financial measure) |
$ 541 |
$ 619 |
Add: |
|
|
Depreciation and amortization |
116 |
111 |
Interest expense |
107 |
105 |
EBITDA |
$ 764 |
$ 835 |
Add (deduct): |
|
|
Transaction costs related to acquisitions and dispositions (1) |
5 |
15 |
Unrealized losses (gains) on risk management contracts (2) |
(117) |
36 |
Gains on sale of assets (3) |
(1) |
(307) |
Transition and restructuring costs (4) |
13 |
— |
Accretion expenses |
1 |
3 |
Foreign exchange gains |
(5) |
— |
Normalized EBITDA |
$ 660 |
$ 582 |
(1) |
Comprised of transaction costs related to acquisitions and dispositions of assets and/or equity investments in the period. These costs are included in the "cost of sales" and "operating and administrative" line items on the Consolidated Statements of Income. Transaction costs include expenses, such as legal fees, that are directly attributable to the acquisition or disposition. |
(2) |
Included in the "revenue" and "cost of sales" line items on the Consolidated Statements of Income. Please refer to Note 13 of the unaudited condensed interim Consolidated Financial Statements as at and for the three months ended |
(3) |
Included in the "other income" line item on the Consolidated Statements of Income. |
(4) |
Comprised of transition and restructuring costs (including CEO transition). These costs are included in the "operating and administrative" line items on the Consolidated Statements of Income. |
EBITDA is a measure of
Normalized Net Income
|
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Net income applicable to common shares (GAAP financial measure) |
$ 408 |
$ 445 |
Add (deduct) after-tax: |
|
|
Transaction costs related to acquisitions and dispositions (1) |
4 |
11 |
Unrealized losses (gains) on risk management contracts (2) |
(89) |
28 |
Losses (gains) on sale of assets (3) |
2 |
(207) |
Transition and restructuring costs (4) |
9 |
— |
Unrealized foreign exchange losses on intercompany balances (5) |
4 |
2 |
Normalized net income |
$ 338 |
$ 279 |
(1) |
Comprised of transaction costs related to acquisitions and dispositions of assets and/or equity investments in the period. The pre-tax costs are included in the "cost of sales" and "operating and administrative" line items on the Consolidated Statements of Income. Transaction costs include expenses, such as legal fees, which are directly attributable to the acquisition or disposition. |
(2) |
The pre-tax amounts are included in the "revenue" and "cost of sales" line items on the Consolidated Statements of Income. Please refer to Note 13 of the unaudited condensed interim Consolidated Financial Statements as at and for the three months ended |
(3) |
The pre-tax amounts are included in the "other income" line item on the Consolidated Statements of Income. |
(4) |
Comprised of transition and restructuring costs (including CEO transition). The pre-tax costs are included in the "operating and administrative" line item on the Consolidated Statements of Income. |
(5) |
Relates to unrealized foreign exchange losses on intercompany accounts receivable and accounts payable balances between a |
Normalized net income and normalized net income per share are used by Management to enhance the comparability of
Normalized Funds from Operations
|
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Cash from operations (GAAP financial measure) |
$ 557 |
$ 591 |
Add (deduct): |
|
|
Net change in operating assets and liabilities |
(71) |
(190) |
Asset retirement obligations settled |
— |
2 |
Funds from operations |
$ 486 |
$ 403 |
Add (deduct): |
|
|
Transaction costs related to acquisitions and dispositions (1) |
5 |
15 |
Transition and restructuring costs (2) |
13 |
— |
Current tax expense on asset sales (3) |
6 |
42 |
Normalized funds from operations |
$ 510 |
$ 460 |
(1) |
Comprised of transaction costs related to acquisitions and dispositions of assets and/or equity investments in the period. These costs exclude non-cash amounts and are included in the "cost of sales" and "operating and administrative" line items on the Consolidated Statements of Income. Transaction costs include expenses, such as legal fees, which are directly attributable to the acquisition or disposition. |
(2) |
Comprised of transition and restructuring costs (including CEO transition). The pre-tax costs are included in the "operating and administrative" line item on the Consolidated Statements of Income. |
(3) |
Included in the "current income tax expense" line item on the Consolidated Statements of Income. |
Normalized funds from operations and funds from operations are used to assist Management and investors in analyzing the liquidity of the Corporation. Management uses these measures to understand the ability to generate funds for capital investments, debt repayment, dividend payments, and other investing activities.
|
Three Months Ended
|
|
($ millions) |
2024 |
2023 |
Cash used in (from) investing activities (GAAP financial measure) |
$ 269 |
$ (869) |
Add (deduct): |
|
|
Net change in non-cash capital expenditures (1) |
(14) |
(28) |
Capitalized interest and AFUDC (2) |
1 |
— |
|
$ 256 |
$ (897) |
Asset dispositions |
1 |
1,072 |
Invested capital |
$ 257 |
$ 175 |
(1) |
Comprised of non-cash capital expenditures included in the "accounts payable and accrued liabilities" line item on the Consolidated Balance Sheets. Please refer to Note 19 of the unaudited condensed interim Consolidated Financial Statements as at and for the three months ended |
(2) |
AFUDC is the amount that a rate-regulated enterprise is allowed to recover for its cost of financing assets under construction, and excludes any AFUDC within investments accounted for by the equity method. Capitalized interest and AFUDC are included in the "property, plant and equipment" line item on the Consolidated Balance Sheets. |
Invested capital is a measure of
CONSOLIDATED FINANCIAL REVIEW
|
Three Months Ended
|
|
($ millions, except effective income tax rates) |
2024 |
2023 |
Revenue |
3,655 |
4,048 |
Normalized EBITDA (1) |
660 |
582 |
Income before income taxes |
541 |
619 |
Net income applicable to common shares |
408 |
445 |
Normalized net income (1) (2) |
338 |
279 |
Total assets |
23,901 |
21,989 |
Total long-term liabilities |
12,666 |
11,233 |
Invested capital (1) |
257 |
175 |
Cash from (used in) investing activities |
(269) |
869 |
Dividends declared (3) |
88 |
79 |
Cash from operations |
557 |
591 |
Normalized funds from operations (1) |
510 |
460 |
Normalized effective income tax rate (%) (1) (2) |
22.4 |
20.8 |
Effective income tax rate (%) |
23.1 |
26.4 |
|
Three Months Ended
|
|
($ per share, except shares outstanding) |
2024 |
2023 |
Net income per common share - basic |
1.38 |
1.58 |
Net income per common share - diluted |
1.37 |
1.57 |
Normalized net income - basic (1) (2) |
1.14 |
0.99 |
Normalized net income - diluted (1) (2) |
1.14 |
0.99 |
Dividends declared (3) |
0.30 |
0.28 |
Cash from operations |
1.89 |
2.10 |
Normalized funds from operations (1) |
1.73 |
1.63 |
Shares outstanding - basic (millions) |
|
|
During the period (4) |
295 |
282 |
End of period |
296 |
282 |
(1) |
Non‑GAAP financial measure or non-GAAP financial ratio; see discussion in Non-GAAP Financial Measures section of the MD&A. |
(2) |
In the fourth quarter of 2023, |
(3) |
Dividends declared per common share per quarter: |
(4) |
Weighted average. |
ABOUT
For more information visit www.altagas.ca or reach out to one of the following:
Senior Vice President, Corporate Development and Investor Relations
Jon.Morrison@altagas.ca
Vice President, Investor Relations
Aaron.Swanson@altagas.ca
Investor Inquiries
1-877-691-7199
investor.relations@altagas.ca
Media Inquiries
1-403-206-2841
media.relations@altagas.ca
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information (forward-looking statements). Words such as "may", "can", "would", "could", "should", "likely", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "future", "commit", "propose", "contemplate", "estimate", "focus", "strive", "forecast", "expect", "project", "potential", "target", "guarantee", "potential", "objective", "continue", "outlook", "guidance", "growth", "long-term", "vision", "opportunity" and similar expressions suggesting future events or future performance, as they relate to the Company or any affiliate of the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect to the following: the Company's 2024 guidance including normalized earnings per share of
These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events, and achievements to differ materially from those expressed or implied by such statements. Such statements reflect
Many factors could cause
Financial outlook information contained in this news release about prospective financial performance, financial position, or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on
Additional information relating to
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