Altagas Ltd. · TSX:ALA
Altagas — Q4 2023 Earnings Presentation
30 slides from Altagas's earnings presentation, Mar 8, 2024
Slide 1: Q4 2023 Financial Results and Corporate Update
Q4 2023 Financial Results and Corporate Update March 8, 2024
Slide 2: Forward-Looking Information
Forward-Looking Information This presentation contains forward-looking information (forward-looking statements). Words such as "may", "can", "would", "could", "should", "likely", "will", "intend", "contemplate", "plan", "anticipate", "believe", "aim", "seek", "future", "commit", "propose", "contempl
Slide 3: Agenda
Agenda • 2023 Achievements • Project Updates • Macro Outlook • 2024 Priorities • Q4 Business Updates • Capital Allocation and Guidance • Investment Proposition 3
Slide 4: 2023 Achievements
2023 Achievements Financial Growth and Execution Normalized EBITDA1 Normalized EPS1 Upper half of guidance range Slightly below mid point of Closed Alaska Utilities Sale REEF JV guidance range >$1B cash for de-leveraging and growth Advances project; secure future growth $1.575B $1.90 $1.5B - Guidanc
Slide 5: Pipestone and REEF Updates
Pipestone and REEF Updates Pipestone II Sour Deep Cut Gas Processing Plant with Liquids Handling Infrastructure – Alberta Montney Final Investment Decision: Positive – Reached December 22, 2023 Commercial Contracting: Engineering: 100% contracted under long-term TOP with Completed and will be constr
Slide 6: Gas Utilities Critical for Long-term Energy Delivery
Gas Utilities Critical for Long-term Energy Delivery Affordability, Reliability and Climate Benefits Remain Strong Annual U.S. Household Energy Demand Cost of Electricity Over Natural Gas Electrification Costs – Gas vs. Electric Delivered Household Energy Bills 120 6.0x 200% Natural Gas Electricity
Slide 7: Canadian Midstream Set-up is Compelling
Canadian Midstream Set-up is Compelling Rising WCSB Production and Global Connectivity Underpin Strong Multi-year Growth Trajectory WCSB NGL Supply Growth (2020-2030) Asian LPG1 Demand (2015-2050) 2000 7.00 China India 6.00 Japan 1500 South Korea 5.00 Indonesia Other Asia 4.00 (MMBbl/d) (MBbl/d) 100
Slide 8: 2024 Priorities
2024 Priorities Corporate Utilities Midstream Equity Self-funding Improve Returns Integrate Pipestone Self-funding model employed in 2024; fifth year of Continue to close ROE gap; acute focus on costs. Taken operational responsibility of assets; execution. integrating all systems and people. Balance
Slide 9: Midstream – Q4/23 Performance
Midstream – Q4/23 Performance Strong Q4/23 Midstream results supported by robust global exports performance. Normalized Midstream Global Exports Gathering & Processing EBITDA Seasonally weak period due to -6% Strong global exports Strong 5% Y/Y Montney +12% reduced local supply at Ferndale +3%
Slide 10: Utilities – Q4/23 Performance
Utilities – Q4/23 Performance Q4/23 Utilities results relatively in line with expectations with strong long-term fundamentals. Normalized Utilities EBITDA Customer Additions Regulatory Strong Retail performance. +6% Lower O&M costs. Virginia Recent regulatory outcomes +7k ~1% across all WGL ju
Slide 11: Continuing to Improve Returns at WGL
Continuing to Improve Returns at WGL ~$40MM of C Lever to help partially offset D potential annual net income value creation1 C E Allowed ROE B C ~$70MM of D annual net income value creation1 A B 20-40 bps Operational Excellence: Cost D 30-60 bps A ~120 bps and efficiency Regulatory Lag: +220 bps ma
Slide 12: Commercial Midstream De-risking Remains a Top Priority
Commercial Midstream De-risking Remains a Top Priority 2024E Normalized Midstream EBITDA1, By Contract Type A Minimize Commodity Exposure Increase take-or-pay and fee-for-service contracting Take-or-Pay & Medium-term global exports tolling target of 60%+ Fee-for-Service Active and systematic
Slide 13: Capital Allocation Framework
Capital Allocation Framework Disciplined capital allocation within an equity self-funding model delivers shareholders value. Financial Strength Self-funded and Flexibility Organic Growth Strong balance sheet (4.5x) 1 2 Focus on risk adjusted Reasonable dividend payout per share growth Excess
Slide 14: 2023 Debt Reduction
2023 Debt Reduction Deleveraging journey continues toward goal of 4.5x Year-Over-Year Run-Rate Net Debt Reduction Sale of MVP is the quickest path to accelerate AltaGas exited 2023 at 5.2x net debt / Normalized EBITDA1, adjusting for deleveraging. the Pipestone acquisition debt taken on at year en
Slide 15: MVP Update
MVP Update Target Completion End of Q2/24 Construction Progress The Partners Total Pipeline Pipeline Installation 99% 300 miles complete; 4 miles remain. Progress Since Congress Provided Support to Complete – August 2023 Water Crossings 415 crossing complete; Aug ‘23 97% 13 remain. Upland Pipe Welds
Slide 16: 2024 Capex Budget
2024 Capex Budget 2024 Capital Budget: $1.2 Billion Increasing Midstream Allocation Strong organic growth opportunities across both platforms – driving Largest 2024 capital outlays include Utilities ARP, System Betterment, healthy competition for capital. Attractive opportunities and the Pipestone I
Slide 17: 2024 Guidance Puts and Takes
2024 Guidance Puts and Takes Well positioned to achieve our 2024 guidance figures Normalized EBITDA1 Guidance of Normalized EPS of $2.05 - $2.25 and Normalized ($ millions) EBITDA of $1.675 billion to $1.775 billion. $1,675 - $1,775 $1,575 Midstream: ~44% Midstream: ~ 43% - 47% Changes Since Guidanc
Slide 18: Value Proposition
Value Proposition Diversified, Low-Risk Business Model with Visible Growth and Disciplined Capital Allocation Low Risk Energy Infrastructure Visible, Industry- Disciplined Capital 1 Platform Providing Stable and 2 3 Leading Growth Allocation Growing Earnings / Cash Flows Robust energy fundamentals U
Slide 19: Q4 and 2023 Variances
Q4 and 2023 Variances 19
Slide 20: Consolidated: Q4/23 vs. Q4/22 Normalized EBITDA
Q2/23 vs. Q2/22 Consolidated: Q4/23 Q4/22 Normalized EBITDA1,2 ($ millions) 12 502 61 454 -44 19 410 Q4 2022 Asset Sales & Corp/ Q4 2023 Midstream Utilities Actual One-Time Items Other Actual ▼ Sale of Alaska Utilities ▲ Higher Global Exports ▲ Retail performance ▲ Lower personnel expenses ▼ Larger-
Slide 21: Consolidated: Q4/23 vs. Q4/22 Income Before Income Taxes
Consolidated: Q4/23 vs. Q4/22 Income (Loss) Before Income Taxes1 ($ millions) -10 161 127 -34 78 Q4 2022 Corp/ Q4 2023 Midstream Utilities Actual Other Actual ▲ Primarily same factors impacting ▲ Primarily same factors impacting ▲ Primarily same factors impacting normalized EBITDA normalized EBITDA
Slide 22: Consolidated: FY 2023 vs. FY 2022 Normalized EBITDA
Consolidated: Q2/23 FY 2023vs.vs.Q2/22 FY 2022 Normalized EBITDA1,2 ($ millions) 8 1,575 58 1,537 -122 94 1,415 YE 2022 Asset Sales & Corp/ YE 2023 Midstream Utilities Actual One-Time Items Other Actual ▼ Sale of Alaska Utilities ▲ Higher Global Exports ▲ ARP spending ▲ Lower Corporate G&A ▼ Larger-
Slide 23: Consolidated: FY 2023 vs. FY 2022 Income Before Income Taxes
Consolidated: FY 2023 vs. FY 2022 Income (Loss) Before Income Taxes1 ($ millions) -76 338 912 716 -66 YE 2022 Corp/ YE 2023 Midstream Utilities Actual Other Actual ▲ Primarily same factors impacting ▲ Higher unrealized gains on hedging ▲ Primarily same factors impacting normalized EBITDA ▲ Gain on s
Slide 24: Midstream: Q4/23 vs. Q4/22
Midstream: Q4/23 vs. Q4/22 Normalized EBITDA1,2 ($ millions) 182 -18 19 -11 163 Q4 2022 Q4 2023 Midstream Actual Actual ▲ Higher Global Exports performance ▲ MVP AFUDC ▲ Higher NGL marketing ▲ Lower O&M ▲ GHG credits ▼ Lower contingency release ▼ Lower frac spreads ▼ Lower Harmattan power ▼ Lower cr
Slide 25: Midstream: FY 2023 vs. FY 2022
Midstream: FY 2023 vs. FY 2022 Normalized EBITDA1,2 ($ millions) 684 94 607 -17 590 YE 2022 YE 2023 Asset Sales Midstream Actual Actual ▼ Aitken Creek (sold in Q2 2022) ▲ Higher Global Exports performance ▲ MVP AFUDC ▲ Higher crude marketing ▲ NGL marketing ▲ Stronger Harmattan performance ▲ Higher
Slide 26: Utilities: Q4/23 vs. Q4/22
Utilities: Q4/23 vs. Q4/22 Normalized EBITDA1,2 ($ millions) 311 43 1 294 -44 17 - 250 Q4 2022 Asset Sales & Q4 2023 WGL SEMCO Retail Actual One-Time Items Actual ▼ Sale of Alaska Utilities ▲ VA rate case ▲ EWR initiative ▲ Gas and electric margins ▼ Larger-than-normal Asset ▲ ARP spending ▲ Lower O
Slide 27: Utilities: FY 2023 vs. FY 2022
Utilities: FY 2023 vs. FY 2022 Normalized EBITDA1,2 ($ millions) 933 -2 -105 73 -13 -11 886 828 YE 2022 Asset Sales & YE 2023 WGL SEMCO Retail Actual One-Time Items Actual ▼ Sale of Alaska Utilities ▲ VA rate case ▲ EWR initiative ▲ Higher electric margins ▼ Larger-than-normal Asset ▲ ARP spending ▲
Slide 28: Corporate/Other: Q4/23 vs. Q4/22
Corporate/Other: Q4/23 vs. Q4/22 Normalized EBITDA1,2 ($ millions) 9 12 -3 Q4 2022 Q4 2023 Corporate Actual Actual ▲ Lower personnel expenses ▲ Lower G&A Notes: 1) Non-GAAP financial measure; see discussion in the advisories; 2) Numbers may not add due to rounding. 28
Slide 29: Corporate/Other: FY 2023 vs. FY2022
Corporate/Other: FY 2023 vs. FY2022 Normalized EBITDA1,2 ($ millions) 5 8 -3 YE 2022 YE 2023 Corporate Actual Actual ▲ Lower G&A ▲ Lower personnel expenses ▼ Blythe Notes: 1) Non-GAAP financial measure; see discussion in the advisories; 2) Numbers may not add due to rounding; 29
Slide 30: Contact Information
Contact Information For more information visit www.altagas.ca or reach out to one of the following: Jon Morrison Adam McKnight Daine Biluk Senior Vice President, Corporate Director, Investor Relations Director, Corporate Development Development and Investor Relations Adam.McKnight@altagas.ca and Inv