Altagas Ltd. · TSX:ALA
Altagas — Investor Presentation (December 2020)
36 slides from Altagas's investor presentation, Dec 10, 2020
Slide 1: 2021 Strategic Plan and Financial Guidance
2021 Strategic Plan and Financial Guidance December 10, 2020
Slide 2: Forward-Looking Information
Forward-Looking Information FLI/Non-GAAP Rider for 2020 Guidance Presentation This presentation contains forward-looking information (forward-looking statements). Words such as “guidance”, "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "pr
Slide 3: 2021 Financial Guidance Highlights
2021 Financial Guidance Highlights ($CAD unless otherwise noted) Our corporate priorities are on delivering, de-levering, de-risking, investing and executing across all business segments. 4% 4% $1.45 - 1.55 $1.45-1.55 $1.4 -1.5B ~$910M AnnualDividend Annual Dividend Increase Increase Anticipated Ant
Slide 4: 2020 Key Accomplishments
2020 Key Accomplishments Strong execution and focus positions AltaGas for durable long-term value creation Operational Priorities Financial Priorities Utilities • Expect to deliver $900 million self-funded capital program • Expected to close the ROE gap at WGL by ~150 bps • Executed ~$440 million3 o
Slide 5: Building a Track Record of Delivering on our Commitments
Building a Track Record of Delivering on our Commitments 2019: A Transformational Year 2020: Strong Execution and Focus 2021+ Long-term Vision and Strategy Refocused AltaGas on core Utilities and Resilient and durable results expected Operate a diversified low-risk, high-growth Utilities Midstream b
Slide 6: Strategic Plan and 2021 Outlook
Strategic Plan and 2021 Outlook 6
Slide 7: Executive Summary of Strategic Plan
Executive Summary of Strategic Plan • Despite market turmoil, we continue to believe that we have a clear plan for an opaque world. High-level While we recalibrated some of our near-term assumptions to reflect shifts in the macro Views: market, our forward playbook remains relatively unchanged. • We
Slide 8: Strong Growth in Base Business Underpins 2021 Outlook
Strong Growth in Base Business Underpins 2021 Outlook ~12% expected growth in normalized EBITDA and ~20% expected increase in normalized EPS using mid- point numbers is driven by continued growth in core Utilities and Midstream businesses 2021 Normalized EBITDA1 Guidance 2021 Normalized EPS1 Guidanc
Slide 9: 2021 Guidance – Management Assumptions
2021 Guidance – Management Assumptions Utilities ▪ Dividends increase by 4% to $1.00/share ▪ Normalized consolidated effective tax rate ~23% Corporate Corporate ▪ CAD/USD exchange rate ~1.32x ▪ Non-core asset sales considered on an opportunistic basis, nothing embedded in base guidance ▪ No common s
Slide 10: 2021 Operational Review
2021 Operational Review Growth in core business more than offsets lost EBITDA from asset Midstream: Leveraging our core export strategy sales, lower frac spreads and other one-time tailwinds that were ▪ Optimize and increase utilization at existing facilities seen in 2020 and are unlikely to be repe
Slide 11: 2021 Normalized EBITDA Drivers
2021 Normalized EBITDA1 Drivers 2021 Normalized EBITDA1 Growth Drivers 2021 Normalized EBITDA1 Guidance ▲ Rate base growth through disciplined capital allocation $1.4-$1.5 billion ▲ Achieving higher returns on equity through operational excellence Utilities ▲ Cost-reduction initiatives and decreasin
Slide 12: 2021 Disciplined Capital Allocation
2021 Disciplined Capital Allocation Strong organic growth drives robust risk-adjusted returns ~$910 million in top-quality projects anticipated to drive earnings growth Includes: Corp/Other Capital Allocation Criteria: Identified Projects: ▪ Nig Creek Expansion 2% ▪ Accelerated Pipe ▪ Growth/mainten
Slide 13: WGL ROE Strategy
WGL ROE Strategy Path to earning our allowed returns at WGL Strategy in place with a clear line of sight to reach allowed returns during 2021 Key initiatives to achieving allowed returns: 1. Capital Discipline: Anticipated Return On Equity ▪ Accelerated Replacement Programs ensure & Expected Timelin
Slide 14: Utilities Segment Capital Spend
Utilities Segment Capital Spend Disciplined approach to capital focused on strategic projects and Accelerated Replacement Programs Designed to earn immediate returns and increase capital efficiency through approximately 20% growth in ARP spending 2020e Utilities Capital1 2021e Utilities Capital ~US$
Slide 15: Illustrative EBITDA Seasonality
Illustrative EBITDA Seasonality Utilities seasonality driving quarterly EBITDA profile Consolidated Normalized Midstream Normalized Utilities Normalized EBITDA1 By Quarter EBITDA1 By Quarter EBITDA1 By Quarter ~47% ~39% ~29% ~26% ~30% ~23% ~34% ~22% ~17% ~14% ~13% ~6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 16: Appendix A: Additional Corporate Information
Appendix A: Additional Corporate Information 16
Slide 17: AltaGas: Who We Are
AltaGas: Who We Are Our A Leading North American infrastructure company that connects NGLs and natural gas to domestic Vision and global markets. Our To improve quality of life by safely and reliably connecting customers to affordable sources of energy Mission for today and tomorrow. Our Every day,
Slide 18: AltaGas: Who We Are, Including Petrogas
AltaGas: Who We Are, Including Petrogas What We Do: We operate a diversified, low-risk, Who We Are: A leading North American energy high-growth Utilities and Midstream business Our Core infrastructure company that connects NGLs and that is focused on delivering resilient and durable Values Work Safe
Slide 19: Our Midstream Strategy is Straightforward
Our Midstream Strategy is Straightforward Maximize utilization of existing assets and pursue capital efficient high-return expansions Invest ▪ Continue to build upon our export competency Midstream ▪ Diversify and grow our customer base to help mitigate counterparty risk Grow ▪ Optimize existing rai
Slide 20: Premier Midstream Business
Premier Midstream Business Leveraging RIPET’s Structural Advantage to Markets in Asia Leverage RIPET and access to premium global pricing to attract volumes ~70% from investment grade customers ~65% from take-or-pay contracts and fee-for-service ~90% of 2020 RIPET volumes hedged (includes tolling);
Slide 21: Counterparty Credit
Counterparty Credit ~87% of 2021e normalized EBITDA1 from Utilities and investment grade counterparties Credit Quality Counterparty Credit Risk Mitigants: 57% Utilities with ~1.7 million customers Utility & A Diversified Midstream customer base 22% BBB Letters of credit, parental guarantees 65% BB G
Slide 22: Contractedness
Contractedness ~79% of 2021e normalized EBITDA1 from rate Top 5 producers regulated 2020e utilities and take or pay contracts Contract Type ~86% of 2021e normalized EBITDA1 underpinned by 6% Utilities low-risk regulated and contracted assets (take-or- 8% pay and fee-for-service) Take or Pay 7% Merch
Slide 23: Utilities Strategy - Drive Operational Excellence
Utilities Strategy - Drive Operational Excellence Priorities ▪ Maintain safe and reliable infrastructure ▪ Enhance overall returns via complementary Utilities businesses and cost-reduction initiatives Distribution ▪ Attract and retain customers through exceptional customer service ▪ Improve asset ma
Slide 24: Rate Regulated Utilities Provide Stability and Growth
Rate Regulated Utilities Provide Stability and Growth ~57% of 2021e normalized EBITDA1 from Utilities Segment 2021e Utility Revenues 1 Alaska: ~147,000 customers 1.7 million customers in stable and growing jurisdictions 2 Michigan: ~307,000 customers 30% 3 Maryland: ~496,000 customers r ~70% of Util
Slide 25: Summary of Recent Rate Case Filings
Summary of Recent Rate Case Filings Focused on timely recovery of capital Most Recent Equity Revenue ROE Rate Case Filed Thickness SEMCO (Michigan) Filed May 31, 2019 Received: US$19.9MM Received: 9.87% Received: 54%1 WGL (Maryland) Filed August 28, 2020 Requested: US$28.4MM Requested: 10.45% Reques
Slide 26: Supportive Regulatory Environment for Utilities
Supportive Regulatory Environment for Utilities 2019 YE Allowed ROE Average Utility Rate Base and Equity Regulatory Update Customers ($US) Thickness ▪ Distribution rates approved under cost of service model. ▪ Projected test year used for rate cases with 10 month limit to issue a rate order. ▪ Rate
Slide 27: Supportive Regulatory Environment for Utilities
Supportive Regulatory Environment for Utilities 2019 YE Allowed ROE Average Utility Rate Base and Equity Regulatory Update Customers ($US) Thickness ▪ Distribution rates approved under cost of service model. ▪ Rate case filed in July 31, 2018. On December 20, 2019 the Commission granted Virginia 9.2
Slide 28: Accelerated Replacement Program
Accelerated Replacement Program Utility Location Program ▪ 2019 rate case settlement provides for a renewed Mains Replacement Program for 2021-2025 with total Michigan spending ~ $60 million and the introduction of a new Infrastructure Replacement Improvement Program for 2020-2025 with total spendin
Slide 29: Appendix B: Petrogas Acquisition Information
Appendix B: Petrogas Acquisition Information 29
Slide 30: Petrogas Transaction Summary
Petrogas Transaction Summary • AltaGas advances global export strategy through increased ownership in Petrogas; agreement concludes AIJV Petrogas put process announced January 2, 2020. Transaction re-iterates AltaGas’ commitment to providing access to premium global LPG export markets & reducing car
Slide 31: Strategic Rationale
Strategic Rationale Consolidating and integrating ownership position for improved AltaGas and industry outcomes ▪ Consistent with our global export strategy and Midstream operations with multiple interconnects. Supports AltaGas’ Vision and Long-term ▪ Aligns with our corporate focus of building a di
Slide 32: Expands AltaGas Footprint; Focused On Optimization
Expands AltaGas Footprint; Focused On Optimization ▪ Multiple interconnects with AltaGas Terminals ▪ Positions AltaGas to leverage its existing footprint; Positions AltaGas with industry-leading footprint in NEBC increased touch points across the energy ▪ Five rail and pipeline connected terminals,
Slide 33: The RIPET and Ferndale Advantages
The RIPET and Ferndale Advantages Connecting North American producers to premium LPG prices in Asia The RIPET and Ferndale Advantages results in significant increases in producers’ realized prices and tailwinds for the broader energy industry Alberta1 AFEI1 Propane: US$12.80/Bbl Propane US$41.00/Bbl
Slide 34: Petrogas: A Look at How the Assets Fit Into AltaGas' Value Chain
Petrogas: A Look at How the Assets Fit Into AltaGas’ Value Chain Integrated Midstream Business – Unparalleled access from wellhead to global markets; including Asia, North America and WCSB 1 Wellhead 2 Gas Gathering & Processing 3 NGL Extraction & Fractionation 4 Transportation, Storage & 5 RIPET Ex
Slide 35: Midstream: Who We Are Post Petrogas Transaction
Midstream: Who We Are Post Petrogas Transaction Integrated Midstream Business – from wellhead to global markets NGL Extraction & Fractionation Gas Gathering & Processing 64,000 Bbls/d2 6 Facilities: North Pine, Harmattan, We’re a high-quality operator that 2.25Bcf/d1 Processing EEEP, JEEP, PEEP, You
Slide 36: The Road Ahead will be Paved with Integration and Optimization
The Road Ahead will be Paved with Integration and Optimization ▪ Enhancing AltaGas’ value chain with Petrogas’ midstream infrastructure, logistics and services offerings will extend and strengthen the company’s integrated platform, offering material value-added benefits for AltaGas’ producer supplie