The Company Expects 2024 Normalized EBITDA to be in the Upper End of Guidance Range, Based on Strong Utilities and Midstream Performance

CALGARY, AB, Oct. 31, 2024 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reported third 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 third quarter of 2024 compared to $0.08 in the third quarter of 2023, while GAAP EPS2 was $0.03 in the third quarter of 2024 compared to a loss of $0.18 in the third quarter of 2023. Year-over-year normalized EPS growth was primarily driven by strong Utilities performance.Normalized EBITDA1 was $294 million in the third quarter of 2024 compared to $252 million in the third quarter of 2023, while income before income taxes was $20 million in the third quarter of 2024 compared to a loss before income taxes of $51 million in the third quarter of 2023. The 17 percent year-over-year growth in normalized EBITDA was principally driven by strong Utilities performance, as outlined below.Normalized FFO per share1 was $0.35 in the third quarter of 2024 compared to $0.50 in the third quarter of 2023, while cash from operations per share3 was $0.07 in the third quarter of 2024 compared to $0.01 in the third quarter of 2023.The Utilities segment reported normalized EBITDA of $117 million in the third quarter of 2024 compared to $71 million in the third quarter of 2023, while income before taxes was $24 million in the third quarter of 2024 compared to a loss of $16 million in the third quarter of 2023. Strong year-over-year growth was principally driven by the partial settlement of Washington Gas' post-retirement benefit pension plan, contributions from rate base and accelerated replacement programs ("ARP") investment, and enhanced cost controls.The Midstream segment reported normalized EBITDA of $181 million in the third quarter of 2024 compared to $185 million in the third quarter of 2023, while income before taxes was $123 million in the third quarter of 2024 compared to $61 million in the third quarter of 2023. Despite rail outages due to the Alberta wildfires and national rail strike that drove higher one-time operating costs, AltaGas was able to deliver strong financial performance due to operational execution.AltaGas exported a record of 128,272 Bbl/d of liquified petroleum gases ("LPGs") to Asia in the quarter, a nine percent year-over-year increase. Strong export volumes and contributions from the Pipestone assets were offset by lower export margins (including the impact of higher percentage of tolling contracts), higher long-term incentive costs due to AltaGas' rising share price, and a lower year-over-year contribution from the Mountain Valley Pipeline ("MVP") as the asset was placed into service with equity earnings below the Allowance for Funds Used During Construction ("AFUDC") in the third quarter of 2023.AltaGas continued to advance key Midstream commercial priorities during and subsequent to the quarter, including:Entering two agreements that have a high-single digit average contract length with a large investment grade international energy company in Northeastern B.C. ("NEBC") for a total of 100 Mmcf/d of gas processing capacity at the Townsend facility, along with associated liquids handling and fractionation services;Extending the contract term with a large Canadian investment grade producer at the Pipestone I gas processing facility in the Alberta Montney for an additional five years, including gas processing, liquids handling and marketing services; andAdvancing long-term tolling arrangements across the global exports platform with a number of agreements now in definitive documentation stages. This includes AltaGas having contracts in hand or being in active negotiations for more than 100 percent of first phase capacity for the Ridley Island Energy Export Facility ("REEF"). AltaGas continues to target having 60 percent of its export volumes under long-term tolling agreements by the start of the 2027 NGL year.The ongoing commercial success reiterates the strategic advantages of AltaGas' assets across NEBC, the Alberta Montney, and the global exports value chain. The Company continues to look forward to leveraging its assets to connect upstream and downstream customers and markets and drive the best collective outcomes for all stakeholders.AltaGas remained active from a regulatory perspective during the third quarter, including filing a rate case and proposed accelerated replacement program ("ARP") extension in the District of Columbia ("D.C."). The District Strategic Accelerated Facility Enhancement ("District SAFE") is Washington Gas' third modernization program in D.C. and is focused on long-term safety and reliability.AltaGas continued to advance key Midstream growth projects during the third quarter. Strong progress was made on REEF's in-water piling work for the jetty and the site's overburden activities, while compression, refrigeration and vessel fabrication work is advancing in controlled operating environments at offsite manufacturing facilities. At Pipestone II, construction is progressing to plan, including completion of the two acid gas injection wells and the majority of the gas gathering system, while compression, processing and fabrication work is progressing at offsite manufacturing facilities. Both midstream growth projects remain on schedule and on budget with 50 percent of REEF and 92 percent of Pipestone II project costs either incurred or under fixed price contracts.MVP in the Appalachian Basin moved into full commercial operations in the quarter with 20-year firm service contracts with investment grade counterparties coming into effect July 1, 2024. The 2.0 Bcf/d pipeline is fully subscribed and is expandable by an additional 475 MMcf/d through low cost compression with extension into North Carolina through the Southgate project. AltaGas' 10 percent, non-operated equity stake in the pipeline remains non-core and is a divestiture candidate for the coming period.AltaGas had two financings in the third quarter of 2024, including:On July 9, 2024, 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.On September 23, 2024, AltaGas issued US$900 million of 7.20 percent Fixed-to-Fixed Rate Junior Subordinated Hybrid Notes, due 2054 (the "Hybrid Notes"). The Hybrid Notes are callable at the first reset date of October 15, 2034. AltaGas also executed a cross-currency swap arrangement to convert the underlying proceeds and interest costs into Canadian dollars, resulting in an effective annual interest rate of 6.90 percent over the initial ten year period of the notes. AltaGas intends to use the net proceeds of the Hybrid Notes to reduce the Company's outstanding senior notes and bank debt, and will receive 50 percent equity treatment for credit rating metrics.On September 30, 2024, AltaGas announced the conversion of the Cumulative Redeemable Floating Rate Preferred Shares, Series H (the "Series H Shares") into Cumulative Redeemable Five-Year Rate Reset Preferred Shares, Series G (the "Series G Shares") on a one for one basis and the subsequent cancellation and de-listing of the Series H Shares from the Toronto Stock Exchange ("TSX").On October 1, 2024, Washington Gas executed a note purchase agreement to issue US$200 million in private placement notes. US$100 million of these notes were issued on October 1, 2024 at 5.40 percent with a maturity date of October 1, 2054 and the remaining US$100 million will be issued on April 1, 2025 at 4.84 percent with a maturity date of April 1, 2035. The proceeds will be used for general corporate purposes.Following a strong third quarter, AltaGas anticipates delivering fiscal 2024 results that will include normalized EBITDA1 in the upper end of the guidance range of $1,675 million to $1,775 million while normalized EPS1 is expected to be around the midpoint of the guidance range of $2.05 to $2.25.