CALGARY,
AB, Dec. 3, 2024 /CNW/ - AltaGas Ltd.
("AltaGas" or the "Company") (TSX: ALA) announces its 2025
guidance and outlook; a six percent increase to its common share
dividend; and continued progress on strategic priorities.
HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars
unless otherwise noted)
- 2025 normalized EBITDA1 guidance of $1,775 million - $1,875
million, which represents approximately six percent
year-over-year growth using midpoint-to-midpoint guidance figures.
Growth is driven by asset modernization investments in the
Utilities and improved utilization in Midstream. This growth is
partially offset by commercial de-risking initiatives and large
multi-year Midstream capital projects that will come online in 2026
and 2027.
- 2025 normalized EPS1 guidance of $2.10 - $2.30,
which represents approximately two percent year-over-year growth
using midpoint-to-midpoint guidance figures.
- The Company's 2025 capital program is forecasted to be
$1.4 billion2, which
reflects strong growth opportunities balanced against AltaGas'
leverage targets. The 2025 business plan includes slightly more
than half of AltaGas' capital allocated to Utilities, with 45
percent funding long-term Midstream projects, and the balance on
digital and systems initiatives focused on improving long-term
operating efficiency.
- AltaGas is increasing its common share dividend by six percent
to $1.26 per share per year. This is
the fifth consecutive dividend increase as the Company remains
committed to delivering regular, sustainable, and annual dividend
increases. The Company is extending its five to seven percent
compounded annual growth rate ("CAGR") guidance on dividends to
2029.
- AltaGas remains committed to completing the de-leveraging
journey and moving towards its 4.0x Adjusted Net Debt1
to normalized EBITDA1 leverage target. This aligns with
a BBB-mid investment grade credit rating and will provide AltaGas
with strong long-term financial flexibility. Monetization of
AltaGas' 10 percent equity interest the Mountain Valley Pipeline
("MVP") is the most immediate path to reducing leverage with the
cash flows from the Pipestone II and Ridley Island Energy Export
Facility ("REEF") projects set to provide incremental
de-leveraging.
- The Utilities have a robust long-term growth outlook driven by
investment opportunities focused on continued customer additions,
asset modernization, and system expansion. These investments will
continue to improve the long-term safety and reliability of the
network, allowing AltaGas to continue to meet long-term customer
demand for safe, reliable, and affordable natural gas while
providing steady rate base growth.
- Increased Midstream investment in 2025 will position the
Company to benefit from the robust growth outlook for Western
Canadian natural gas and natural gas liquids ("NGL") production.
AltaGas has a strong growth outlook for its Midstream platform
based on industry development plans, the location of its
infrastructure assets, continued optimization opportunities, and
various brownfield and greenfield growth initiatives.
Notes: 1) 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 September 30,
2024, which is available on www.sedarplus.com; and 2) excluding
Asset Retirement Obligations ("ARO").
|
CEO MESSAGE
"We are looking forward to 2025 and continuing to deliver on our
strategic plan, which will bring strong value for AltaGas'
shareholders" said Vern Yu, AltaGas'
President and Chief Executive Officer. "We are wrapping up 2024 on
strong footing after delivering on our strategic priorities and we
expect 2025 will be another year of growth.
"The growth opportunities in front of us are tremendous. Our
Utilities have low-risk growth opportunities from continued
customer additions, asset modernization investments and system
expansions. The potential of AI and datacenter demand for natural
gas in Northern Virginia adds to
this already robust outlook and reiterates the long-term need for
safe, reliable, and affordable natural gas to keep society moving
forward.
"Our growth outlook in Midstream is equally robust. After a
decade of being structurally challenged by a lack of take-away
capacity, Canada is positioned to
deliver significant natural gas and NGL production growth in the
years ahead. As liquified natural gas ("LNG") projects on the
Canadian West Coast come online, we will continue to benefit from
increased demand for additional gas processing, liquids handling,
fractionation, and export capacity which are driving investment
opportunities across our value chain.
"Our 2025 capital plan reflects these opportunities and our
desire to balance this outlook against other strategic priorities,
including de-risking the platform and completing our de-leveraging
journey. The past year was another period of delivering
industry-leading total shareholder returns, including the fifth
year of steady dividend increases. We look forward to continuing to
compound shareholder value in 2025 through advancing our strategy
and focusing on execution."
2025 GUIDANCE
AltaGas expects to achieve normalized EPS1 of
$2.10 - $2.30 and normalized EBITDA1 of
$1,775 million - $1,875 million in 2025. AltaGas' 2025 outlook
anticipates year-over-year growth across the Utilities, Midstream
and Corporate segments, and includes the assumption of a
divestiture of its 10 percent interest in MVP at the end of the
second quarter of 2025.
The Utilities segment is expected to represent 54 to 58 percent
of 2025 normalized EBITDA1. Growth is expected to be
driven by a combination of continued new customer additions, rate
base growth from our asset modernization programs, normal weather
conditions, stronger performance from the Retail business, asset
optimization activities, and ongoing cost management.
Washington Gas currently has an active rate case application in
the District of Columbia ("D.C.")
with requested rates designed to collect an incremental
US$34 million in annual revenue, net
of US$12 million in Accelerated
Replacement Program ("ARP") surcharge. New rates are expected to
benefit 2026 financial performance and not have a large impact in
2025. Washington Gas also has a US$215
million asset modernization extension application under
review in D.C. and anticipates a decision by May 2025.
Through ongoing customer additions, asset modernization
investments, and continued system expansion, AltaGas estimates
having the ability to grow rate base by up to eight percent
annually over the next five years. The ultimate amount of realized
rate base growth will be a function of the Company's capital
allocation priorities. Based on the current Midstream capital
investments in 2025, the Company expects to deliver rate base
growth below this level in 2025 with an increase in growth rates in
2026 and beyond.
The Midstream segment is expected to represent 42 to 46 percent
of 2025 normalized EBITDA1. Growth is expected to be
driven by strong global export volumes and higher utilization at
the Company's existing Montney
facilities, including the Townsend
complex, North Pine, and Pipestone
I. These positive factors are expected to be partially offset by a
lower contribution from MVP as AltaGas is actively evaluating
divestiture opportunities and has only included a partial year of
contribution from the pipeline in the first half of 2025, and lower
co-generation revenue at the Harmattan complex.
AltaGas continues to focus on de-risking its business through
long-term commercial contracting while actively managing residual
commodity price exposure through financial hedging. In 2024,
AltaGas made strong progress on this initiative with global exports
tolling estimated to be roughly 56 percent of export volumes for
the 2024-2025 NGL year.
As disclosed in the third quarter of 2024, AltaGas continued to
advance key Midstream commercial priorities in recent months,
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.
- Advancing 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 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 Corporate segment is also expected to show stronger
year-over-year financial performance in 2025 due to Blythe
operating at more stable levels following the extended downtime
that was experienced in the first quarter of 2024.
2025 STRATEGIC PRIORITIES
AltaGas has shown strong progress across its strategic
priorities in 2024 and remains focused on advancing these
priorities in 2025. Specifically, AltaGas' 2025 strategic
priorities are:
- Optimizing assets for maximum returns through increasing
utilization rates, extending asset lives, and controlling operating
costs to drive the highest returns on capital.
- Active de-risking through long-term commercial
contracting in Midstream, systematic hedging of residual risks, and
active regulatory initiatives focused on AltaGas and our customers'
long-term interest in the Utilities.
- Continued balance sheet deleveraging and moving
towards the Company's 4.0x Adjusted Net Debt to normalized EBITDA
leverage target.
- Advancing key growth projects, including our asset
modernization programs at the Utilities, the completion and
commissioning of Pipestone II, and material construction progress
at REEF.
- Continuing to take actions to drive long-term per share
value creation across the enterprise.
AltaGas will continue to be very active in advocacy in 2025 and
champion the critical work that our company and industry does in
delivering safe, reliable, and affordable energy to our global
customer base every day. This includes Washington Gas advancing two
statements of claims to challenge proposed local gas bans in
Maryland and the District of Columbia and ensure our customers
have the right to choose their energy source. Natural gas and NGLs
are essential to modern day life, and we will continue to advocate
for their unfettered use to keep society moving forward.
2025 DIVIDEND INCREASE
AltaGas' Board of Directors approved a six percent increase to
the annual common share dividend to $1.26 per share for the 2025 calendar year, which
equates to a rate of $0.315 per
common share on a quarterly basis. Subject to approval of the Board
of Directors, the first quarterly dividend of $0.315 per common share is expected to be
effective for the March 2025 dividend
and will be paid on March 31, 2025,
to common shareholders of record on March
17, 2025. These dividends are eligible dividends for
Canadian income tax purposes.
2025 CAPITAL
AltaGas' 2025 capital expenditure plan of approximately
$1.4 billion, excluding ARO, is
modestly weighted towards the Utilities business, which is
anticipated to deliver stable rate base growth and drive strong
risk-adjusted returns. The Company is allocating approximately 51
percent of consolidated 2025 capital to the Utilities business and
approximately 45 percent to the Midstream business. This represents
a higher allocation to the Midstream segment compared to prior
years due to continued investment in AltaGas' key growth projects,
REEF and Pipestone II, as well as various other business
development and optimization projects.
The Company will fund 2025 capital requirements through a
combination of internally generated cash flows, the investment
capacity associated with stronger normalized EBITDA across the
enterprise, and ongoing capital recycling with the divestiture of
the Company's interest in MVP planned for 2025. Additional asset
sales will be considered on an opportunistic basis, with any
potential proceeds to be used to strengthen the balance sheet and
increase financial flexibility.
Segment
|
Total
Capital
|
Major Capital
Project and Focus Areas
|
Utilities
|
~51%
|
- Maintenance, safety
and reliability investments, including system
betterment
- Asset modernization
programs across all jurisdictions
- New customer
connects and system expansion
|
Midstream
|
~45%
|
- Maintenance, safety
and reliability investments
- REEF
and Pipestone II
- Facility
optimization and higher throughput volumes
- Smaller scale
business development and growth projects
|
Corporate
|
~4%
|
- Maintenance,
digital and system investments
|
ABOUT ALTAGAS
AltaGas is a leading North American infrastructure company that
connects customers and markets to affordable and reliable sources
of energy. The Company operates a diversified, lower-risk,
high-growth energy infrastructure business that is focused on
delivering stable and growing value for its stakeholders.
For more information visit www.altagas.ca or reach out to one of
the following:
Jon Morrison
Senior
Vice President, Corporate Development and Investor Relations
Jon.Morrison@altagas.ca
Aaron Swanson
Vice
President, Investor Relations
Aaron.Swanson@altagas.ca
Investor Inquiries
1-877-691-7199
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 "guidance", "may",
"can", "would", "could", "should", "will", "intend", "plan",
"anticipate", "believe", "aim", "seek", "propose", "contemplate",
"estimate", "focus", "strive", "forecast", "expect", "project",
"target", "potential", "objective", "continue", "outlook",
"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: 2025 guidance including normalized
EBITDA guidance of $1,775 million to
$1,875 million and normalized EPS
guidance of $2.10 to $2.30; the Company's capital program of
$1.4 billion, excluding ARO;
allocation of capital among Utilities, Midstream and digital and
systems initiatives; the future dividend strategy including a six
percent increase to AltaGas' anticipated common share dividend; the
Company's commitment to delivering regular, sustainable and annual
dividend increases; the Company's CAGR guidance on dividends to
2029; AltaGas' de-leveraging journey and its 4.0x Adjusted Net Debt
to Normalized EBITDA leverage target; the belief that de-leveraging
will provide AltaGas with strong long-term financial flexibility
and that monetization of MVP is the most immediate path to reducing
leverage along with cash flows from the Pipestone II and REEF
projects providing incremental de-leveraging; driving factors
behind the Utilities' long-term growth outlook; the expectation
that investment opportunities in the Utilities will improve the
long-term safety and reliability of the network and the anticipated
benefits therefrom; increased investment in the Midstream business
and the anticipated benefits therefrom including the growth outlook
for the Midstream platform; AltaGas' strategic plan, its ability to
deliver on the strategic plan and the anticipated value for
shareholders therefrom; AltaGas' growth opportunities including the
potential of AI and datacenter demand for natural gas; the
expectation that AltaGas will continue to benefit from increased
demand for additional gas processing, liquids handing,
fractionation and export capacity; AltaGas commitment to its 2025
capital plan and compounding shareholder value in 2025; anticipated
year-over-year growth across the Utilities, Midstream and Corporate
segments; the assumption that AltaGas will divest its 10 percent
interest in MVP at the end of the second quarter of 2025; the
expectation that the Utilities segment will generate approximately
54 to 58 percent of 2025 normalized EBITDA driven by continued new
customer additions, rate base growth from asset modernization
programs, normal weather conditions, stronger performance from the
Retail business, asset optimization activities and ongoing cost
management; anticipated annual revenue from Washington Gas' active
rate case application in DC and the anticipated benefits therefrom
in 2026; timing for receiving a decision on Washington Gas' asset
modernization extension application in DC; anticipated rate base
growth of up to eight percent annually over the next five years
with the expectation that AltaGas will deliver rate base growth
below that level in 2025 with an increase in growth rates in 2026
and beyond; the expectation that the Midstream segment will
generate approximately 42 to 46 percent of 2025 normalized EBITDA
driven by strong global export volumes and higher utilization
at the Company's existing Montney
facilities; AltaGas' focus on de-risking its business through
long-term commercial contracting and actively managing residual
commodity price exposure through financial hedging; AltaGas' target
of having 60 percent of its export volumes under long-term tolling
agreements by the start of the 2027 NGL year; anticipated financial
performance of the Corporate segment in 2025 due to Blythe
operating at more stable levels; AltaGas' strategic priorities and
its commitment to advancing these priorities in 2025; AltaGas'
commitment to being active in advocacy in 2025 including
challenging proposed gas bans in Maryland and DC; anticipated approval of the
quarterly dividend on common shares and the effective date and
timing for payment to shareholders of such dividend; the
expectation that the Utilities business will deliver stable rate
base growth and drive strong risk-adjusted returns; the allocation
of consolidated 2025 capital to the Utilities and Midstream
businesses; the expectation that the Company will fund 2025 capital
requirements through a combination of internally generated cash
flows, the investment capacity associated with stronger normalized
EBITDA across the enterprise, and ongoing capital recycling with
the divestiture of the Company's interest in MVP planned for 2025;
consideration of asset sales and the use of potential proceeds
therefrom; and anticipated capital expenditure by segment and
expected projects for each segment.
Such statements reflect AltaGas' current expectations,
estimates, and projections based on certain material factors and
assumptions at the time the statement was made. Material
assumptions include: effective tax rate; anticipated timing of
asset sale and acquisition closings; the U.S/Canadian dollar
exchange rate; inflation; interest rates; credit ratings;
regulatory approvals and policies; expected commodity supply,
demand and pricing; volumes and rates; propane price differentials;
degree day variance from normal; pension discount rate;
financing initiatives, the performance of the businesses
underlying each sector; impacts of the hedging program; weather;
frac spread; access to capital; future operating and capital costs;
timing and receipt of regulatory approvals; seasonality;
planned and unplanned plant outages; timing of in-service dates of
new projects and acquisition and divestiture activities; taxes;
operational expenses; returns on investments; dividend levels; and
transaction costs.
AltaGas' forward-looking statements are subject to certain
risks and uncertainties which could cause results or events to
differ from current expectations, including, without
limitation: health and safety risks; operating risks;
natural gas supply risk; volume throughput; service
interruptions; transportation of petroleum products; market
risk; inflation; general economic conditions; cybersecurity,
information, and control systems; climate-related risks;
environmental regulation risks; regulatory risks; litigation;
changes in law; Indigenous and treaty rights; dependence on certain
partners; political uncertainty and civil unrest; risks related to
conflict, including the conflicts in Eastern Europe and the Middle East; decommissioning, abandonment and
reclamation costs; reputation risk; weather data; capital market
and liquidity risks; interest rates; internal credit risk; foreign
exchange risk; debt financing, refinancing, and debt service risk;
counterparty and supplier risk; technical systems and processes
incidents; growth strategy risk; construction and development;
underinsured and uninsured losses; impact of competition in
AltaGas' businesses; counterparty credit risk; composition risk;
collateral; rep agreements; market value of the Common Shares and
other securities; variability of dividends; potential sales of
additional shares; labor relations; key personnel; risk management
costs and limitations; commitments associated with regulatory
approvals for the acquisition of WGL; cost of providing retirement
plan benefits; failure of service providers; risks related to
pandemics, epidemics or disease outbreaks and the other
factors discussed under the heading "Risk Factors" in the
Corporation's Annual Information Form (AIF) for the year ended
December 31, 2023 and set out in
AltaGas' other continuous disclosure documents.
Many factors could cause AltaGas' or any particular business
segment's actual results, performance or achievements to vary from
those described in this press release, including, without
limitation, those listed above and the assumptions upon which they
are based proving incorrect. These factors should not be construed
as exhaustive. Should one or more of these risks or uncertainties
materialize, or should assumptions underlying forward-looking
statements prove incorrect, actual results may vary materially from
those described in this news release as intended, planned,
anticipated, believed, sought, proposed, estimated, forecasted,
expected, projected or targeted and such forward-looking statements
included in this news release, should not be unduly relied upon.
The impact of any one assumption, risk, uncertainty, or other
factor on a particular forward-looking statement cannot be
determined with certainty because they are interdependent and
AltaGas' future decisions and actions will depend on management's
assessment of all information at the relevant time. Such statements
speak only as of the date of this news release. AltaGas does not
intend, and does not assume any obligation, to update these
forward-looking statements except as required by law. The
forward-looking statements contained in this news release are
expressly qualified by these cautionary statements.
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
AltaGas management's (Management) assessment of the relevant
information currently available. Readers are cautioned that such
financial outlook information contained in this news release should
not be used for purposes other than for which it is disclosed
herein.
Additional information relating to AltaGas, including its
quarterly and annual Management's Discussion and Analysis
(MD&A) and Consolidated Financial Statements, AIF, and press
releases are available through AltaGas' website at www.altagas.ca
or through SEDAR+ at www.sedarplus.ca.
Non-GAAP Measures
This news release contains references to certain financial
measures that do not have a standardized meaning prescribed by US
GAAP and may not be comparable to similar measures presented by
other entities. The non-GAAP measures and their reconciliation to
US GAAP financial measures are shown in AltaGas' MD&A as at and
for the period ended September 30,
2024. These non-GAAP measures provide additional information
that management believes is meaningful regarding AltaGas'
operational performance, liquidity and capacity to fund dividends,
capital expenditures, and other investing activities. Readers are
cautioned that these non-GAAP measures should not be construed as
alternatives to other measures of financial performance calculated
in accordance with US GAAP.
EBITDA is a measure of AltaGas' operating profitability prior
to how business activities are financed, assets are amortized, or
earnings are taxed. EBITDA is calculated from the Consolidated
Statements of Income (Loss) using income (loss) before income taxes
adjusted for pre‑tax depreciation and amortization, and interest
expense. Normalized EBITDA includes additional
adjustments for transaction costs related to acquisitions and
dispositions, unrealized losses (gains) on risk management
contracts, gains on investments, gains on sale of assets,
restructuring costs, dilution loss on equity investment, provisions
(reversal of provisions) on assets, provisions on investments
accounted for by the equity method, foreign exchange gains, and
accretion expenses related to asset retirement obligations. AltaGas
presents normalized EBITDA as a supplemental measure. Normalized
EBITDA is used by Management to enhance the understanding of
AltaGas' earnings over periods. The metric is frequently used by
analysts and investors in the evaluation of entities within the
industry as it excludes items that can vary substantially between
entities depending on the accounting policies chosen, the book
value of assets, and the capital structure.
Normalized EPS is calculated as normalized net income divided
by the average number of shares outstanding during the
period. Normalized net income is calculated from the
Consolidated Statements of Income (Loss) using net income (loss)
applicable to common shares adjusted for transaction costs
related to acquisitions and dispositions, unrealized losses (gains)
on risk management contracts, non-controlling interest portion of
non-GAAP adjustments, gains on investments, gains on sale of
assets, provisions on assets, restructuring costs, dilution loss on
equity investment, and provisions on investments accounted for by
the equity method. Normalized net income per share is used
by Management to enhance the comparability of AltaGas' earnings, as
these metrics reflect the underlying performance of AltaGas'
business activities.
Net debt is used by the Corporation to monitor its capital
structure and financing requirements. It is also used as a measure
of the Corporation's overall financial strength and is presented to
provide this perspective to analysts and investors. Net debt
is defined as short-term debt, plus current and long-term portions
of long-term debt, current and long-term portions of finance lease
liabilities, and Hybrid Notes, less cash and cash equivalents.
Adjusted net debt is defined as net debt adjusted for current and
long-term portions of finance lease liabilities, Hybrid Notes, and
debt associated with acquisitions that occurred in the last half of
the fiscal year. Adjusted net debt to normalized EBITDA is
calculated by dividing adjusted net debt as defined above by
normalized EBITDA for the preceding twelve-month period.
SOURCE AltaGas Ltd.