Operating Performance Reflects AltaGas' Continued
Focus on Optimizing the Platform, Execution of its Strategic Plan
and Drive to Deliver Positive Outcomes for all Stakeholders
CALGARY, AB, April 28, 2022 AltaGas Ltd. ("AltaGas" or the
"Company") (TSX: ALA) today reported first quarter 2022
financial results and provided an update on the Company's
operations.
HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars
unless otherwise noted)
- The Midstream segment delivered a strong first quarter of 2022,
exporting a first quarter record of 87,967 Bbls/d of liquified
petroleum gases (LPGs) to Asia.
- The Utilities segment continues to focus on delivering clean
and affordable energy for its customers, providing reliable and
secure energy.
- The Utilities segment achieved normalized EBITDA growth of
approximately 10 percent on a year-over-year basis in the first
quarter of 2022, driven by continued investment in the platform.
This included Utilities rate base increasing by approximately 10
percent on a year-over-year basis in the first quarter of 2022.
- Normalized EPS[1] of $1.02 and
GAAP EPS2 of $1.27 in the
first quarter of 2022 compared to $1.29 and $1.21 in
the first quarter of 2021, respectively. First quarter results were
reflective of strong operating results across the platform offset
by $114 million of lost normalized
EBITDA from the U.S. Transportation and Storage business, which had
delivered outsized performance in the first quarter of 2021 and was
subsequently sold in April 2021.
- Normalized FFO per share1 of $1.65 and GAAP FFO3 per share of
$2.44 in the first quarter of 2022
compared to $2.08 and $2.16 in the first quarter of 2021, respectively.
Continued strong cash generation is providing the foundation to
fund ongoing operations, organic growth and increase returns of
capital to shareholders at a projected five to seven percent
compounded annual growth rate through 2026.
- Normalized EBITDA1 of $574
million and income before income taxes of $504 million in the first quarter of 2022
compared to $674 million and
$473 million in the first quarter of
2021, respectively. Results reflect strong execution within
Midstream and Utilities operations and leaves AltaGas
well-positioned to deliver on its 2022 financial guidance.
- The Midstream segment reported normalized EBITDA of
$174 million and income before income
taxes of $159 million in the first
quarter of 2022 compared to $304
million and $237 million in
the first quarter of 2021, respectively. Operating performance was
in line with AltaGas' expectations, reflected increasing Global
Exports volumes as the quarter progressed, and the $114 million of lost normalized EBITDA
contribution from the U.S. Transportation and Storage business that
was divested in April 2021.
- The Utilities segment reported normalized EBITDA of
$408 million and income before income
taxes of $426 million in the first
quarter of 2022 compared to $371
million and $308 million in
the first quarter of 2021, respectively. Results reflected the
positive impact of continued investments across the Utilities
networks, strong performance from the Retail business and asset
optimization during the quarter.
- Subsequent to the quarter-end, Washington Gas filed an
application to increase rates in the District of Columbia (D.C.) by US$53 million. The requested rates include a
revenue increase of US$5 million for
costs currently collected through the PROJECTpipes surcharge
and an incremental revenue request of approximately US$48 million driven primarily by infrastructure
investments to continue to provide safe, reliable service to our
customers.
_____________________
|
1 Non-GAAP
measure; see discussion and reconciliation to US GAAP financial
measures in the advisories of this news release or in AltaGas'
Management's Discussion and Analysis (MD&A) as at and for the
period ended March 31, 2022, which is available on
www.sedar.com. 2. GAAP EPS is equivalent to Net income
applicable to common shares divided by shares outstanding. 3. GAAP
FFO per share is equivalent to cash from operations divided by
shares outstanding.
|
CEO MESSAGE
"AltaGas delivered solid results and continued to execute on our
strategic plan during the first quarter of 2022, which positions
the platform well to achieve the Company's 2022 and longer-term
growth plans," said Randy Crawford,
President and Chief Executive Officer. "Our diversified business
model continues to provide the stable and predictable results that
we expect while delivering long-term benefits to all of our
stakeholders. We also continued to fulfill our mission of improving
quality of life by safely and reliably connecting our customers to
affordable sources of energy during the quarter; the importance of
which is reiterated in the period of energy scarcity that we are
currently living in.
"Our regulated Utilities performed well in the quarter,
delivering strong customer service throughout the quarter while
delivering the stable and predictable financial results that we
expect from the platform, including growing normalized Utilities
EBITDA by approximately 10 percent on a year-over-year basis. We
continued to make ongoing investments into our network during the
quarter that are focused on improving safety and reliability,
reducing long-term operating costs, and delivering improved
environmental outcomes; all of which drive better outcomes for our
customers. This investment strategy is working as our incoming leak
rates were down more than 25 percent on a year-over-year basis in
the first quarter of 2022 and we have achieved annual operating and
maintenance costs reductions of approximately $20 million since 2019. Our large storage
position also partially sheltered our customers from some of the
extreme winter gas pricing seen during the peak demand season as we
seamlessly delivered our customers with the energy they needed.
"Our Midstream business continued to deliver reliable energy to
end customers during the quarter through our integrated value
chain, while providing AltaGas with strong financial results that
were in line with our expectations. During the quarter we increased
Global Exports volumes to approximately 88,000 Bbls/d of LPGs to
Asia, spread across 14 Very Large
Gas Carriers (VLGCs). Our solid first quarter performance, coupled
with the upcoming seasonal availability of direct butane supply
from the refineries in Washington
State, leave AltaGas well-position to achieve the Company's
2022 export target of approximately 97,000 Bbls/d.
"We remain focused on our de-leveraging strategy and maintaining
our investment-grade credit rating, which was reaffirmed by Fitch
at BBB with a Stable Rating Outlook, subsequent to quarter-end. Our
2022 capital plan of approximately $995
million remains intact as we continue to execute on our
Utilities growth while advancing various growth initiatives within
our Midstream platform. Given the strong first quarter, we are
well-positioned to meet our 2022 guidance ranges, including
normalized EPS guidance of $1.80 -
$1.95 and normalized EBITDA guidance
of $1.50 billion - $1.55 billion."
RESULTS BY SEGMENT
|
|
Normalized
EBITDA1
|
Three Months
Ended March
31
|
($
millions)
|
2022
|
2021
|
Utilities
|
408
|
371
|
Midstream
|
174
|
304
|
Corporate/Other
|
(8)
|
(1)
|
Normalized
EBITDA1
|
574
|
674
|
|
|
|
Income (Loss) Before
Income Taxes
|
Three Months
Ended March
31
|
($
millions)
|
2022
|
2021
|
Utilities
|
426
|
308
|
Midstream
|
159
|
237
|
Corporate/Other
|
(81)
|
(72)
|
Income Before Income
Taxes
|
504
|
473
|
(1) Non‑GAAP
financial measure; see discussion in the Non-GAAP Financial
Measures advisories of this news release
|
BUSINESS PERFORMANCE
Utilities
The Utilities segment reported normalized EBITDA of $408 million in the first quarter of 2022
compared to $371 million in the first
quarter of 2021, while income before taxes was $426 million in the first quarter of 2022
compared to $308 million in the first
quarter of 2021. AltaGas continued to upgrade critical
infrastructure with the deployment of $128
million of invested capital1 during the first
quarter of 2022, including $62
million deployed on the Company's various Accelerated
Replacement Programs (ARPs) with a focus on improving the safety
and reliability of the system, which also brings long-term
operating costs and environmental benefits. This level of capital
deployment was in line with scope and budget for the first quarter
of 2022 and leaves AltaGas well-positioned to deliver on planned
network upgrades with rate base increasing by approximately 10
percent over the same quarter last year.
On April 4, 2022, Washington Gas
filed an application to increase rates in D.C. by US$53 million. The requested rates include a
revenue increase of US$5 million for
costs currently collected through the PROJECTpipes surcharge
and an incremental revenue request of approximately US$48 million driven primarily by infrastructure
investments to continue to provide safe, reliable service to our
customers. Washington Gas has requested that new rates be
implemented by February 2023.
The Retail business generated $21
million of normalized EBITDA in the first quarter of 2022
due to higher gas prices, favourable margins and the timing impact
of swap gains between the first and second quarters of 2022. The
latter has the effect of pulling profits into the first quarter of
2022 rather than the second quarter of 2022 and, as such, AltaGas
expects some of these benefits to be reduced in the coming quarters
as the year progresses within the Retail business.
Midstream
The Midstream segment reported normalized EBITDA of $174 million in the first quarter of 2022
compared to $304 million in the first
quarter of 2021, while income before taxes was $159 million in the first quarter of 2022
compared to $237 million in the first
quarter of 2021. Results were reflective of strong operating
performance across the platform offset by the $114 million of lost normalized EBITDA
contribution from the U.S. Transportation and Storage business,
which had outsized performance in the first quarter of 2021 and was
subsequently divested in April
2021.
Global Exports contributed $81
million of normalized EBITDA to the Midstream segment in the
first quarter of 2022 compared to $70
million in the first quarter of 2021. AltaGas exported a
first quarter record of 87,967 Bbls/d of cleaner burning LPGs to
Asia, which was spread across 14
VLGCs in the first quarter of 2022 and included an average of
52,766 Bbls/d of propane being exported at RIPET across eight ships
and an average of 35,201 Bbls/d of combined butane and propane
being exported at Ferndale across
six ships. Global Exports volumes were modestly impacted by the
carry over effects associated with the extreme weather and flooding
experienced on the west coast during the fourth quarter of 2021
that continued into the early part of the first quarter of 2022
with export volumes rising as the first quarter progressed. Export
volumes were a record for the first quarter, despite these
logistical challenges.
AltaGas' realized frac spread averaged $23.92/Bbl, after transportation costs, with most
of AltaGas' frac exposed volumes financially hedged during the
quarter. AltaGas is well hedged for 2022 with approximately 77
percent of the remaining 2022 expected frac exposed volumes hedged
at approximately $34.58/Bbl, prior to
transportation costs. In addition, approximately 41 percent of
AltaGas' remaining 2022 expected global export volumes are either
tolled or financially hedged with an average FEI to North American
financial hedge price of US$10.10/Bbl
for non-tolled propane and butane volumes.
2022 Midstream Hedge
Program
|
|
|
|
|
|
Q2
2022
|
Q3
2022
|
Q4
2022
|
Remainder
2022
|
Global Exports volume
hedged (%)(1)
|
63
|
34
|
22
|
41
|
Average propane/butane
FEI to North America Average hedge
(US$/Bbl)(2)
|
10.24
|
10.00
|
8.93
|
10.10
|
Fractionation volume
hedged (%)(3)
|
83
|
79
|
70
|
77
|
Frac spread hedge rate
- (CAD$/Bbl)(3)
|
35.04
|
34.28
|
34.38
|
34.58
|
(1)
Approximate expected volume hedged, includes contracted tolling
volumes and financial hedges; based on the assumption of average
exports of 90 MBbls/d.
|
(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
The Corporate/Other segment reported a normalized EBITDA loss of
$8 million in the first quarter of
2022 compared to a $1 million loss in
the same quarter of 2021 while income loss before taxes was an
$81 million in the first quarter of
2022 compared to a $72 million in the
first quarter of 2021. The $7 million
year-over-year decrease in normalized EBITDA was driven by the
combination of: 1) higher corporate expenses, which were primarily
related to employee incentive plans because of AltaGas' strong
corporate performance and rising share price; and 2) costs related
to a planned spring outage at the Blythe Energy Center in
California during the quarter.
CONSOLIDATED FINANCIAL RESULTS
|
|
|
Three Months
Ended March
31
|
($
millions)
|
2022
|
2021
|
Normalized EBITDA
(1)
|
$
|
574
|
$
|
674
|
Add
(deduct):
|
|
|
Depreciation and
amortization
|
(112)
|
(99)
|
Interest
expense
|
(71)
|
(70)
|
Normalized income tax
expense
|
(76)
|
(107)
|
Preferred share
dividends
|
(13)
|
(13)
|
Other
(3)
|
(15)
|
(26)
|
Normalized net
income (1)
|
$
|
285
|
$
|
361
|
|
|
|
Net income
applicable to common shares
|
$
|
357
|
$
|
337
|
Normalized funds
from operations (1)
|
$
|
462
|
$
|
583
|
|
|
|
($ per share except
shares outstanding)
|
|
|
Shares outstanding -
basic (millions)
|
|
|
During the period
(2)
|
280
|
280
|
End of
period
|
281
|
280
|
|
|
|
Normalized net
income - basic (1)
|
1.02
|
1.29
|
Normalized net
income - diluted (1)
|
1.01
|
1.29
|
|
|
|
Net income per
common share - basic
|
1.27
|
1.21
|
Net income per
common share - diluted
|
1.26
|
1.20
|
|
|
(1)
|
Non-GAAP financial
measure; see discussion in Non-GAAP Financial Measures section at
the end of this news release
|
(2)
|
Weighted
average
|
(3)
|
"Other" includes
accretion expense, net income applicable to non-controlling
interests, foreign exchange gains (losses), 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.
|
Normalized EBITDA for the first quarter of 2022 was $574 million compared to $674 million for the same quarter in 2021. The
largest factors leading to the variance are described in the
Business Performance sections above.
Income before income taxes was $504
million for the first quarter of 2022 compared to
$473 million for the same quarter in
2021. Net income applicable to common shares was $357 million or $1.27 per share for the first quarter of 2022,
compared to $337 million or
$1.21 per share for the same quarter
in 2021. Please refer to the Three Months Ended Section of the
MD&A for further details on the variance in income before
income taxes and net income applicable to common
shareholders.
Normalized net income was $285
million or $1.02 per share for
the first quarter of 2022, compared to normalized net income of
$361 million or $1.29 per share reported for the same quarter of
2021. The decrease was mainly due to the same factors impacting
normalized EBITDA, including the $114
million of lost normalized EBITDA associated with the larger
than expected contribution from the U.S. Transportation and Storage
business in the first quarter 2021 that was subsequently sold in
April 2021, and higher depreciation
and amortization expense, partially offset by lower normalized
income tax expense and lower net income applicable to
non-controlling interests.
Normalized FFO was $462 million or
$1.65 per share for the first quarter
of 2022, compared to $583 million or
$2.08 per share for the same quarter
in 2021. The decrease was mainly due to the same previously
referenced factors impacting normalized EBITDA.
Cash from operations in the first quarter of 2022 was
$682 million or $2.44 per share, compared to $605 million or $2.16 per share for the same quarter in 2021.
Please refer to the Liquidity Section of the MD&A for
further details on the variance in cash used by
operations.
Depreciation and amortization expense was $112 million for the first quarter of 2022,
compared to $99 million for the same
quarter in 2021. The increase was mainly due to the absence of
depreciation and amortization adjustments made in the first quarter
of 2021 related to the Petrogas purchase price allocation and the
U.S. Transportation and Storage business, and the impact of new
assets placed in-service.
Interest expense for the first quarter of 2022 was $71 million, compared to $70 million for the same quarter in 2021. The
slight increase in interest expense was mainly due to higher
average debt balances, partially offset by lower average interest
rates.
FORWARD FOCUS, GUIDANCE AND FUNDING
Looking ahead, AltaGas continues to be focused on executing its
long-term corporate strategy of building a diversified platform
that operates long-life energy infrastructure assets that are
positioned to provide resilient and durable value for the Company's
stakeholders.
AltaGas expects to achieve guidance ranges that were previously
disclosed in December 2021,
including:
- 2022 Normalized EPS guidance of $1.80 - $1.95,
compared to actual normalized EPS of $1.78 and GAAP EPS of $0.82 in 2021.
- 2022 Normalized EBITDA guidance of $1.50
billion - $1.55 billion,
compared to actual normalized EBITDA of $1.49 billion and income before taxes of
$446 million in 2021.
AltaGas continues to focus on delivering durable and growing EPS
and FFO per share while targeting lowering leverage ratios within
the business over time. This strategy should support steady
dividend growth and provide the opportunity for ongoing capital
appreciation for its long-term shareholders. AltaGas has announced
forward plans to deliver regular, sustainable and annual dividend
increases that compound in the years ahead with an anticipated five
to seven percent compounded annual growth rate through 2026. Annual
dividend increases will be a function of financial performance and
determined by the Board on an annual basis.
AltaGas' 2022 invested capital plan is approximately
$995 million, excluding asset
retirement obligations, compared to $798
million deployed in 2021. The 2022 invested capital plan is
heavily weighted towards the Utilities business and is comprised
primarily of ARP and system betterment projects that are
anticipated to deliver stable and transparent rate base growth and
positive risk-adjusted returns. The Company is allocating
approximately 31 percent of AltaGas' consolidated 2022 capital to
ARPs in its Utilities business, representing approximately 40
percent of the total 2022 Utilities capital program.
QUARTERLY COMMON SHARE DIVIDEND AND PREFERRED SHARE
DIVIDENDS
The Board of Directors approved the following schedule of
Dividends:
Type1
|
Dividend (per share)
|
Period
|
Payment
Date
|
Record
|
Common
Shares
|
$0.265
|
n.a.
|
30-Jun-22
|
16-Jun-22
|
Series
APreferred Shares
|
$0.19125
|
31-Mar-22 to
29-Jun-22
|
30-Jun-22
|
16-Jun-22
|
Series B
Preferred Shares
|
$0.19802
|
31-Mar-22 to
29-Jun-22
|
30-Jun-22
|
16-Jun-22
|
Series
CPreferred Shares
|
US$0.330625
|
31-Mar-22 to
29-Jun-22
|
30-Jun-22
|
16-Jun-22
|
Series E
Preferred Shares
|
$0.337063
|
31-Mar-22 to
29-Jun-22
|
30-Jun-22
|
16-Jun-22
|
Series G
Preferred Shares
|
$0.265125
|
31-Mar-22 to
29-Jun-22
|
30-Jun-22
|
16-Jun-22
|
Series
HPreferred Shares
|
$0.22295
|
31-Mar-22 to
29-Jun-22
|
30-Jun-22
|
16-Jun-22
|
|
|
(1)
|
Dividends on common
shares and preferred shares are eligible dividends for Canadian
income tax purposes.
|
NON-GAAP MEASURES
This news release contains references to certain financial
measures that do not have a standardized meaning prescribed by US
GAAP and may not be comparable to similar measures presented by
other entities. The non-GAAP measures and their reconciliation to
U.S. GAAP financial measures are shown below and within AltaGas'
Management's Discussion and Analysis (MD&A) as at and for the
period ended March 31, 2022. These non-GAAP measures provide
additional information that management believes is meaningful
regarding AltaGas' operational performance, liquidity and capacity
to fund dividends, capital expenditures, and other investing
activities. Readers are cautioned that these non-GAAP measures
should not be construed as alternatives to other measures of
financial performance calculated in accordance with US GAAP.
Normalized EBITDA
|
|
|
Three Months
Ended March 31
|
($
millions)
|
2022
|
2021
|
Income before income
taxes (GAAP financial measure)
|
504
|
473
|
Add:
|
|
|
Depreciation and
amortization
|
112
|
99
|
Interest
expense
|
71
|
70
|
EBITDA
|
$
|
687
|
$
|
642
|
Add
(deduct):
|
|
|
Transaction costs and
acquired contingencies related to acquisitions and dispositions
(1)
|
1
|
6
|
Unrealized gains on
risk management contracts (2)
|
(110)
|
(55)
|
Gains on sale of assets
(3)
|
(7)
|
—
|
Restructuring costs
(4)
|
—
|
1
|
Provisions on
assets
|
—
|
76
|
Accretion
expenses
|
2
|
—
|
Foreign exchange
losses
|
1
|
4
|
Normalized
EBITDA
|
$
|
574
|
$
|
674
|
|
|
(1)
|
Comprised of
transaction costs and acquired contingencies related to
acquisitions and dispositions of assets and/or equity investments
in the period. These costs are included in the "cost of sales",
"operating and administrative", and "other income" 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. The acquired contingencies relate to
the acquisition of Petrogas and include amounts for additional
contingent consideration for the purchase of Petrogas. Please refer
to Note 3 of the unaudited condensed interim Consolidated Financial
Statements as at and for the three months ended March 31, 2022 for
further details regarding AltaGas' disposition of assets in the
period.
|
(2)
|
Included in the
"revenue" and "cost of sales" line items on the Consolidated
Statements of Income. Please refer to Note 14 of the unaudited
condensed interim Consolidated Financial Statements as at and for
the three months ended March 31, 2022 for further details regarding
AltaGas' risk management activities.
|
(3)
|
Included in the "other
income" line item on the Consolidated Statements of Income. Please
refer to Note 3 of the unaudited condensed interim Consolidated
Financial Statements as at and for the three months ended March 31,
2022 for further details regarding AltaGas' disposition of assets
in the period.
|
(4)
|
Comprised of costs
related to a workforce optimization program. These costs are
included in the "operating and administrative" line item on the
Consolidated Statements of Income.
|
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 using income before income taxes adjusted for
pre‑tax depreciation and amortization, interest expense.
AltaGas presents normalized EBITDA as a supplemental measure.
Normalized EBITDA is used by Management to enhance the
understanding of AltaGas' earnings over periods, as well as for
budgeting and compensation related purposes. 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 Net Income
|
|
|
Three Months
Ended March 31
|
($
millions)
|
2022
|
2021
|
Net income applicable
to common shares (GAAP financial measure)
|
$
|
357
|
$
|
337
|
Add (deduct)
after-tax:
|
|
|
Transaction costs and
acquired contingencies related to acquisitions and dispositions
(1)
|
—
|
4
|
Unrealized gains on
risk management contracts (2)
|
(81)
|
(41)
|
Non-controlling
interest portion of non-GAAP adjustments (3)
|
4
|
1
|
Gains on sale of assets
(4)
|
(5)
|
—
|
Provisions on
assets
|
—
|
59
|
Restructuring costs
(5)
|
—
|
1
|
Loss on redemption of
preferred shares
|
10
|
—
|
Normalized net
income
|
$
|
285
|
$
|
361
|
|
|
(1)
|
Comprised of
transaction costs and acquired contingencies related to
acquisitions and dispositions of assets and/or equity investments
in the period. The pre-tax costs and contingencies are included in
the "cost of sales", "operating and administrative", and "other
income" 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. The
acquired contingencies relate to the acquisition of Petrogas and
include amounts for additional contingent consideration for the
purchase of Petrogas. Please refer to Note 3 of the unaudited
condensed interim Consolidated Financial Statements as at and for
the three months ended March 31, 2022 for further details regarding
AltaGas' disposition of assets in the period.
|
(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 14 of the
unaudited condensed interim Consolidated Financial Statements as at
and for the three months ended March 31, 2022 for further details
regarding AltaGas' risk management activities.
|
(3)
|
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. The amounts are included in the "net income applicable
to non-controlling interests" line item on the Consolidated
Statements of Income.
|
(4)
|
The pre-tax amounts are
included in the "other income" line item on the Consolidated
Statements of Income Please refer to Note 3 of the unaudited
condensed interim Consolidated Financial Statements as at and for
the three months ended March 31, 2022 for further details regarding
AltaGas' disposition of assets in the period.
|
(5)
|
Comprised of costs
related to a workforce reduction program. The pre-tax costs are
included in the "operating and administrative" line item on the
Consolidated Statements of Income.
|
Normalized net income and normalized net income per share are
used by Management to enhance the comparability of AltaGas'
earnings, as these metrics reflect the underlying performance of
AltaGas' business activities.
Normalized Funds From Operations
|
|
|
Three Months
Ended March 31
|
($
millions)
|
2022
|
2021
|
Cash from operations
(GAAP financial measure)
|
$
|
682
|
$
|
605
|
Add
(deduct):
|
|
|
Net change in operating
assets and liabilities
|
(225)
|
(30)
|
Asset retirement
obligations settled
|
2
|
1
|
Funds from
operations
|
$
|
459
|
$
|
576
|
Add
(deduct):
|
|
|
Transaction costs and
acquired contingencies related to acquisitions and dispositions
(1)
|
1
|
6
|
Restructuring costs
(2)
|
—
|
1
|
Current tax expense on
asset sales (3)
|
2
|
—
|
Normalized funds from
operations
|
$
|
462
|
$
|
583
|
|
|
(1)
|
Comprised of costs and
acquired contingencies related to acquisitions and dispositions of
assets and/or equity investments in the period. These costs and
contingencies exclude any non-cash amounts and are included in the
"cost of sales", "operating and administrative", and "other income"
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. The acquired
contingencies relate to the acquisition of Petrogas and include
amounts for additional contingent consideration for the purchase of
Petrogas. Please refer to Note 3 of the unaudited condensed interim
Consolidated Financial Statements as at and for the three months
ended March 31, 2022 for further details regarding AltaGas'
disposition of assets in the period.
|
(2)
|
Comprised of costs
related to a workforce optimization program. These 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.
Funds from operations and normalized funds from operations as
presented should not be viewed as an alternative to cash from
operations or other cash flow measures calculated in accordance
with GAAP.
Invested Capital
|
|
|
Three Months
Ended March 31
|
($
millions)
|
2022
|
2021(3)
|
Cash used in investing
activities (GAAP financial measure)
|
$
|
159
|
$
|
191
|
Add
(deduct):
|
|
|
Net change in non-cash
capital expenditures(1)
|
(37)
|
(58)
|
Contributions from
non-controlling interests(2)
|
—
|
(1)
|
Asset
dispositions
|
20
|
—
|
Invested
capital
|
$
|
142
|
$
|
132
|
|
|
(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 20 of the unaudited condensed interim Consolidated
Financial Statements as at and for the three months ended March 31,
2022 for further details.
|
(2)
|
Comprised of partner
recoveries for capital expenditures incurred for the Ridley Island
Propane Export Terminal. These recoveries are included in the
"contributions from non-controlling interests" under financing
activities in the Consolidated Statements of Cash Flows, however,
as Management views this as part of AltaGas' invested capital, it
has been included in the calculation of net invested
capital.
|
(3)
|
In prior periods,
invested capital did not include adjustments for the cost of
removal of utility assets; however, beginning in the fourth quarter
of 2021, Management has adjusted for these costs to better align
with the investing section of the Consolidated Statements of Cash
Flows. As such, prior periods in 2021 have been restated to reflect
this change.
|
Invested capital is a measure of AltaGas' use of funds for
capital expenditure activities. It includes expenditures relating
to property, plant, and equipment and intangible assets, capital
contributed to long term investments, and contributions from
non-controlling interests. Invested capital is used by Management,
investors, and analysts to enhance the understanding of AltaGas'
capital expenditures from period to period and provide additional
detail on the Company's use of capital.
CONSOLIDATED FINANCIAL REVIEW
|
|
|
Three Months
Ended March 31
|
($ millions, except
normalized effective income tax rate)
|
2022
|
2021
|
Revenue
|
3,892
|
3,085
|
Normalized EBITDA
(1)
|
574
|
674
|
Income before income
taxes
|
504
|
473
|
Net income applicable
to common shares
|
357
|
337
|
Normalized net income
(1)
|
285
|
361
|
Total assets
|
21,766
|
21,071
|
Total long-term
liabilities
|
11,386
|
11,132
|
Invested capital
(1) (2)
|
142
|
132
|
Cash used by investing
activities
|
(159)
|
(191)
|
Dividends declared
(3)
|
74
|
71
|
Cash from
operations
|
682
|
605
|
Normalized funds from
operations (1)
|
462
|
583
|
Normalized effective
income tax rate (%) (1)
|
19.6
|
21.3
|
Effective income tax
rate (%)
|
21.2
|
21.5
|
|
|
|
Three Months
Ended March 31
|
($ per share, except
shares outstanding)
|
2022
|
2021
|
Net income per common
share - basic
|
1.27
|
1.21
|
Net income per common
share - diluted
|
1.26
|
1.20
|
Normalized net income -
basic (1)
|
1.02
|
1.29
|
Normalized net income -
diluted (1)
|
1.01
|
1.29
|
Dividends declared
(3)
|
0.27
|
0.25
|
Cash from
operations
|
2.44
|
2.16
|
Normalized funds from
operations (1)
|
1.65
|
2.08
|
Shares outstanding -
basic (millions)
|
|
|
During the period
(3)
|
280
|
280
|
End of
period
|
281
|
280
|
|
|
(1)
|
Non‑GAAP financial
measure; see discussion in Non-GAAP Financial Measures
section of this MD&A.
|
(2)
|
In prior periods,
invested capital did not include adjustments for the cost of
removal of utility assets; however, beginning in the fourth quarter
of 2021, Management adjusted for these costs to better align with
the investing section of the Consolidated Statements of Cash Flows.
Comparative periods have been restated to reflect this
change.
|
(3)
|
Effective March 31,
2022, common share dividends are declared and paid on a quarterly
basis. The dividend declared each quarter is $0.265 per share
beginning March 2022, which represents a 6 percent increase on an
annual basis from the previous monthly dividends declared of
$0.0833 per share beginning December 2020.
|
CONFERENCE CALL AND WEBCAST DETAILS
AltaGas will hold a conference call today, April 28, at 9:00 a.m.
MT (11:00 a.m. ET and
16:00 BST) to discuss first quarter
2022 results and other corporate developments.
- Date/Time: April 28, 2022,
9:00 a.m. MT (11:00 a.m. ET; 16:00
BST)
- Dial-in: 1-416-764-8659 or toll free at 1-888-664-6392
- Webcast:
http://www.altagas.ca/invest/events-and-presentations.
Shortly after the conclusion of the call, a replay will be
available commencing at 11:00 a.m. MT
(1:00 p.m. ET; 18:00 BST) on April 28,
2022 by dialing 1-416-764-8677 or toll free 1-888-390-0541.
The passcode is 887961#. The replay will expire at 9:59 p.m. MT (11:59 p.m.
ET) on May 5, 2022.
AltaGas' Consolidated Financial Statements and accompanying
notes for the first quarter ended March 31,
2022, as well as its related Management's Discussion and
Analysis, are now available online at www.altagas.ca. All documents
will be filed with the Canadian securities regulatory authorities
and will be posted under AltaGas' SEDAR profile at
www.sedar.com.
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 Utilities and Midstream business that is focused on
delivering resilient and durable value for its stakeholders.
For more information visit www.altagas.ca or reach out to one of
the following:
Jon Morrison
Senior
Vice President, Investor Relations & Corporate Development
Jon.Morrison@altagas.ca
Adam McKnight
Director,
Investor Relations
Adam.McKnight@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", "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 Corporation or any
affiliate of the Corporation, 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: AltaGas'
de-leveraging strategy; maintenance of investment-grade credit
rating; Midstream growth initiatives; belief in the role, benefits
and reliability of responsibly sourced natural gas; timing impact
of swap gains; ARP focus and growth of rate base; impact of
Washington Gas' application to increase rates in D.C.; focus on
AltaGas' long term strategy; expected achievement of export volume
targets for 2022; expected frac exposed volumes and hedging
activities; expected 2022 Normalized EPS guidance of $1.80 - $1.95 per
share; expected 2022 Normalized EBITDA guidance of $1.50 billion - $1.55
billion; expectation for ongoing dividend growth;
anticipated utilities earnings growth; expected capital expenditure
plan of approximately $995 million;
planned segment allocation of 2022 capital expenditures; and
expected dividend payments and dates of payment.
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 AltaGas'
current expectations, estimates, and projections based on certain
material factors and assumptions at the time the statement was
made. Material assumptions include: number of ships and
export levels from the Ferndale
and RIPET facilities, assumptions regarding asset sales anticipated
to close in 2022, effective tax rates, the U.S./Canadian dollar
exchange rate, the expected impact of the COVID-19 pandemic,
inflation, propane price differentials, degree day variance from
normal, pension discount rate, the performance of the businesses
underlying each sector, impacts of the hedging program, commodity
prices, weather, frac spread, access to capital, timing and receipt
of regulatory approvals, planned and unplanned plant outages,
timing of in-service dates of new projects and acquisition and
divestiture activities, 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:
risk related to pandemics, epidemics or disease outbreaks,
including COVID-19; health and safety risks; operating risk;
natural gas supply risks; volume throughput; infrastructure;
service interruptions; cyber security, information, and control
systems; climate-related risks, including carbon pricing;
regulatory risks; litigation risk; changes in law; political
uncertainty and civil unrest; decommissioning, abandonment and
reclamation costs; reputation risk; weather data; Indigenous and
treaty rights; capital market and liquidity risks; general economic
conditions; internal credit risk; foreign exchange risk;
integration of Petrogas; debt financing, refinancing, and debt
service risk; interest rates; counterparty and supplier risk;
technical systems and processes incidents; dependence on certain
partners; growth strategy risk; construction and development;
transportation of petroleum products; underinsured and uninsured
losses; impact of competition in AltaGas' businesses; counterparty
credit risk; market risk; composition risk; collateral; rep
agreements; market value of 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; and the other factors discussed under
the heading "Risk Factors" in the Corporation's Annual Information
Form for the year ended December 31,
2021 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 MD&A and Consolidated Financial
Statements, AIF, and press releases are available through AltaGas'
website at www.altagas.ca or through SEDAR at
www.sedar.com.
SOURCE AltaGas Ltd.