AltaGas Reports Strong Second Quarter 2024 Results

Press Release

CALGARY, AB, Aug 1, 2024 – AltaGas Ltd. (“AltaGas” or the “Company”) (TSX: ALA) reported second quarter 2024 financial results and provided an update on its operations and other corporate developments.

HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars unless otherwise noted)

• Normalized EPS¹ was $0.14 in the second quarter of 2024 compared to $0.07 in the second quarter of 2023, while GAAP EPS² was a $0.14 loss in the second quarter of 2024 compared to $0.47 in the second quarter of 2023. Normalized EPS growth was driven by strong performance across the enterprise.
• Normalized EBITDA¹ was $295 million in the second quarter of 2024 compared to $239 million in the second quarter of 2023, while loss before income taxes was $46 million in the second quarter of 2024 compared to income before taxes of $182 million in the second quarter of 2023. The quarter included strong year-over-year growth in the Midstream and Utilities businesses, driven by record global export volumes, strong cost management, and the benefit of recent capital investments.
• Normalized FFO per share¹ was $0.61 in the second quarter of 2024 compared to $0.53 in the second quarter of 2023, while cash from operations per share³ was $1.52 in the second quarter of 2024 compared to $1.32 in the second quarter of 2023.
• The Utilities segment reported normalized EBITDA of $122 million in the second quarter of 2024 compared to $102 million in the second quarter of 2023, while income before taxes was $31 million in the second quarter of 2024 compared to $105 million in the second quarter of 2023. The largest drivers of the year-over-year growth in Utilities normalized EBITDA were active cost management, contribution from continued investments in rate base, and strong performance from the Retail business.
• The Midstream segment reported normalized EBITDA of $175 million in the second quarter of 2024 compared to $134 million in the second quarter of 2023, while income before taxes was $46 million in the second quarter of 2024 compared to $181 million in the second quarter of 2023. The largest contributors to the year-over-year increase in Midstream normalized EBITDA were record global export volumes, strong fractionation and liquids handling contribution, and the addition of the Pipestone gas processing and storage assets. AltaGas exported a record of 123,285 Bbl/d of liquified petroleum gases (“LPGs”) to Asia in the quarter, a seven percent year-over-year increase.
• AltaGas continued to advance key Midstream growth projects in the second quarter. This included AltaGas and Royal Vopak reaching a positive final investment decision (“FID”) on the Ridley Island Energy Export Facility (“REEF”), a large-scale LPG and bulk liquids terminal on Ridley Island, B.C. REEF is a $1.35 billion project slated to come online near 2026 year-end, with an initial export capacity of 55,000 Bbls/d of propane and butane and will have large expansion opportunities. The partnership continues to de-risk the project, having executed fixed price engineering, procurement and construction (“EPC”) contracts for approximately 40 percent of projected costs with an additional 10 percent expected to be awarded in the coming weeks and the remaining balance to be awarded over the project execution plan.
• Work continued on the Pipestone II expansion project in the Alberta Montney during and subsequent to quarter-end with the two acid gas injection wells drilled, completed and awaiting tie-in. Work is also currently advancing on the gas gathering system with cooperative weather conditions to date. 92 percent of the Pipestone expansion project costs are now fixed, and we remain on budget and on track for a late 2025 in-service date.
• The Mountain Valley pipeline (“MVP”) in the Appalachian Basin was completed and placed into service in June of 2024 with firm service contracts coming into effect July 1, 2024. The 2.0 Bcf/d pipeline is fully subscribed with 20-year contracts with investment grade counterparties. The pipeline is expandable by an additional 500 MMcf/d through additional compression. AltaGas has a ten percent non-operated equity stake in the pipeline and the Company is evaluating a sale of its interest to accelerate AltaGas’ deleveraging strategy.
• During the second quarter of 2024, AltaGas executed an agreement to construct and contract an additional time charter for a very large gas carrier (“VLGC”) for a ten-year term with optional extensions. The time charter is expected to be commissioned in late 2026. The agreement represents AltaGas’ fifth time charter with three currently operating and two under construction. This fifth agreement will further reduce and de-risk AltaGas’ shipping costs, with materially all of AltaGas’ expected Baltic freight exposure protected through time charters, financial hedges, and tolled volumes in 2024.
• Subsequent to the quarter, AltaGas issued $250 million of senior unsecured medium-term notes with a 5.60 percent coupon, due on March 14, 2054. The net proceeds were used to pay down amounts drawn on the syndicated credit facility, which was incurred when the Company repaid its term loan on June 28, 2024.
• Following a strong second 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.

CEO MESSAGE

“We’re pleased with our strong second quarter results, which reflect the strength of operating businesses and the structural tailwinds behind them. Performance in the quarter was modestly ahead of our expectations and positions AltaGas well to deliver on our 2024 guidance” said Vern Yu, President and Chief Executive Officer. “As we look ahead we will continue to execute on our strategic priorities of lowering the business risk profile, executing on our organic growth projects and sustainably growing our earnings and cash flows.

“Midstream performance was strong in the second quarter, including record global export volumes. These volumes highlight the strength of our export business. Performance across the other parts of the Midstream segment were also strong with gas processing volumes up six percent, fractionation and liquids handling volumes up 14 percent, and extraction volumes up 32 percent on a year-over-year basis.

“We continue to focus on de-risking our Midstream operations to generate stable and predictable results. This includes recently finalizing long-term agreements for an additional 18 percent of REEF’s Phase I throughput capacity. We continue to have advanced tolling negotiations with multiple counterparties for more than 100 percent of REEF’s initial capacity. These agreements build on AltaGas’ previously announced success in securing 56 percent of our expected export volumes under tolling agreements, which started in the second quarter of 2024. During the second quarter we also executed an additional agreement to construct a fifth VLGC time charter, which continues to lock in maritime shipping costs and de-risk long-term operations.

“Performance in our Utilities business was in line with our expectations and continued to deliver stable earnings growth for the enterprise, despite warmer-than-normal weather in Michigan and the District of Columbia (“D.C.”). The quarter included the benefit of active cost management through reduced operating and administrative costs, increased revenue from ongoing rate base investments across our network, and strong Retail performance. Our Utilities capital investment during the quarter was focused on meeting the needs of our expanding customer base and supporting long-term safety and reliability needs through our 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.

“We’re excited about AltaGas’ long-term outlook and the value that can be created through continuing to execute on our strategic plan. We remain very positive on the macro fundamentals for natural gas, natural gas liquids (“NGLs”) and the outlook for both our businesses. We continue to make significant progress optimizing and expanding our Midstream business, including filling remaining latent capacity, while constructing the REEF and Pipestone II projects that support our next phase of growth. We also continue to make large investments in our Utilities to meet our customers’ long-term needs and ensure that we are positioned to deliver the critical energy required to keep society moving forward.”

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