AltaGas Announces Strong First Quarter 2019 Results

Press Release

Midstream and Utilities provide strong results as near-term priorities to enhance asset performance, de-lever and fund organic growth are on track

CALGARY, May 2, 2019 – AltaGas Ltd. (AltaGas or the Company) (TSX: ALA) today reported first quarter 2019 financial results and provided an update on its business, including the expansion of its integrated western Canadian midstream service offering to include global energy export capabilities, through its Ridley Island Propane Export Terminal (RIPET).

AltaGas also announced today that its subsidiary WGL Midstream, Inc. (WGL Midstream) has reached an agreement for the sale of WGL Midstream’s entire interest in the Stonewall Gas Gathering System (Stonewall) to a wholly-owned subsidiary of DTE Energy Company (DTE) for total gross proceeds of approximately $370 million (US $275.3 million). The transaction is subject to the execution of a definitive agreement following the satisfaction of certain third party notice and election periods. This sale forms part of the $1.5-$2.0 billion additional 2019 asset sale program and serves to advance AltaGas’ overall strategy to de-lever the business and focus the Company on its core assets.

“We remain committed to restoring our financial strength and flexibility. The sale of our non-operating interest in the Stonewall gathering system and the significant progress we are making in other sales processes provides tangible proof that we are fulfilling the goals we set in December,” said Mr. Randy Crawford, President and Chief Executive Officer of AltaGas. “In addition to having a strong first quarter, we reduced our net debt1 balance by $1.7 billion in Q1, we are on target to unlock considerable value with our game changing RIPET project, and we continue to improve the return on our assets. 2019 will be a defining year for our Company, as we continue to unlock the true value of our assets.”

AltaGas achieved normalized EBITDA1 of $466 million, a 109 percent increase over first quarter 2018 normalized EBITDA of $223 million. The year-over-year increase reflects strong contributions from WGL Holdings Inc. (WGL) which were partially offset by asset sales. Normalized funds from operations (FFO)1 were $376 million, an increase of approximately 122 percent over the first quarter of 2018.

Other Q1 2019 Highlights Included:
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)

Net income applicable to common shares was $809 million ($2.93 per share) in the first quarter compared to $49 million ($0.28 per share) in the first quarter of 2018. Normalized net income¹ was $202 million ($0.73 per share) in the first quarter compared to $70 million ($0.40 per share) in the first quarter of 2018.
Normalized utility adjusted FFO (UAFFO)¹ was $301 million ($1.09 per share) in the first quarter compared to $140 million ($0.79 per share) in the first quarter of 2018.
AltaGas’ 2019 funding and deleveraging strategy is progressing as expected. In the first quarter AltaGas reduced net debt by approximately $1.7 billion.
AltaGas’ business outlook remains unchanged, with expected normalized EBITDA in the range of $1.2 – $1.3 billion and normalized FFO of $850 – $950 million.
On April 22, 2019, Washington Gas filed an application with the Maryland Public Service Commission (MPSC) to increase base rates and charges.

Midstream and Utilities Performance

Delivered on-time and on budget, RIPET began introducing feedstock to fill the LPG tank, significantly expanding AltaGas’ western Canadian midstream service offering. RIPET is Canada’s first propane export facility, and is the cornerstone of the Company’s integrated strategy in western Canada, leveraging AltaGas’ existing gathering, processing and fractionation assets, while providing higher netbacks and market optionality to customers.

Non-GAAP measure; see discussion in the advisories of this news release and reconciliation to US GAAP financial measures shown in AltaGas’ Management’s Discussion and Analysis (MD&A) as at and for the period ended March 31, 2019, which is available on www.sedar.com.

“This is an important and historic milestone for AltaGas, our project partners, western Canadian natural gas producers and our customers in Asia,” continued Mr. Crawford. “RIPET has come online at a crucial time for the Canadian energy industry, providing domestic natural gas producers with much-needed access to tidewater and more attractive global pricing,” concluded Mr. Crawford.

On April 22, 2019, Washington Gas filed an application with the MPSC to increase base rates and charges for natural gas service for its Maryland customers. The filing addresses rate relief necessary for Washington Gas to recover its costs of providing safe, reliable natural gas service in its Maryland service territory; continue delivering improved service to customers; and permit Washington Gas to earn its allowed rate of return. The change in proposed rates and charges includes an increase in base rates of US $35.9 million, partially offset by a reduction of US $5.1 million in surcharges currently paid by customers for system upgrades.

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