Altagas Ltd. · TSX:ALA
Altagas — Investor Presentation (December 2019)
33 slides from Altagas's investor presentation, Dec 17, 2019
Slide 1: 2020 Outlook and Strategic Update
2020 Outlook and Strategic Update December 17, 2019
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: 2020 Guidance Highlights
2020 Guidance Highlights ($CAD unless otherwise noted) A leading North American infrastructure company that connects NGL and natural gas to domestic and global markets Suspension $1.20 - 1.30 $1,275 – 1,325M $900M of the DRIP Anticipated Normalized Anticipated Normalized Planned Capital Program EPS1
Slide 4: 2019 Key Accomplishments
2019 Key Accomplishments Setting the stage for attractive growth in 2020 and beyond Operational Priorities Financial Priorities Completed key infrastructure projects Executed $2.2 billion2 of non-core asset sales ▪ RIPET De-levered the balance sheet, maintained investment grade ▪ Marquette Connector
Slide 5: 2020 Outlook
2020 Outlook 5
Slide 6: Strong Growth in Base Business Underpins 2020 Outlook
Strong Growth in Base Business Underpins 2020 Outlook Strong growth in core Utilities and Midstream businesses EPS growth driven by lower leverage more than offsets lost EBITDA from asset sales and interest expense 2020 Normalized EBITDA1 Guidance2 2020 Normalized EPS Guidance2 ($ millions) (per sha
Slide 7: 2020 Operational Review
2020 Operational Review Growth in core business more than offsets lost EBITDA from asset sales Utilities: Leveraging our core distribution footprint 2020 Normalized EBITDA1,2 Growth ($ millions) ▪ Increase utilization of the Accelerated $1,275 - $1,325 $1,200 - $1,300 Replacement Programs ▪ Invest i
Slide 8: 2020 Normalized EBITDA Drivers
2020 Normalized EBITDA1 Drivers Normalized 2020E EBITDA1 Growth Drivers 2020 Normalized EBITDA1 Guidance2 ($ millions) ▲ Rate base growth through disciplined investment in aging infrastructure $1,275 - $1,325 ▲ Achieving higher returns on equity Utilities ▲ Cost-reduction initiatives and decreasing
Slide 9: 2020 Disciplined Capital Allocation
2020 Disciplined Capital Allocation Strong organic growth drives robust risk-adjusted returns ~$900 million in top-quality projects anticipated to drive earnings growth Capital Allocation Criteria: Power Corporate 2% 2% Strong organic growth potential and strategic fit Identified Projects: Identifie
Slide 10: RIPET – 2020 Operational Overview
RIPET – 2020 Operational Overview Strong performance; positioned for growth ▪ Increased utilization - strong interest from producers supports volumes ramping up to exit 2020 at ~50,000 bbl/d RIPET 2020e ▪ ~80% of expected 2020 volumes hedged including tolling Hedged Volumes Highlights ~20,000 bbl/d
Slide 11: Processing – 2020 Operational Overview
Processing – 2020 Operational Overview Increased utilization and expansions drive growth Northeast B.C. Midstream Operating Capacity Processing 800 70,000 700 60,000 ▪ Projects coming online in 2020 add significant volume 600 Fractionation Capacity (bbl/d) Gas Processing (MMCF/D) growth supported by
Slide 12: Utilities 2020 Growth Drivers
Utilities 2020 Growth Drivers Grow earnings through rate base investment Investment in aging infrastructure and attracting new customers is expected to drive strong rate base growth of 8 - 10% Rate Base Growth (US$ millions) Opportunities ▪ Disciplined approach to maintaining and replacing aging inf
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 allowed returns in 2021 Key initiatives to achieving allowed returns: Anticipated Return On Equity & Expected Timeline 1. Capital Discipline: ▪ Accelerated Replacement Programs ensure timely ~
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 25% growth in ARP spending 2019e Utilities Capital 2020e Utilities Capital (US$
Slide 15: Maintain Investment Grade Credit Rating
Maintain Investment Grade Credit Rating Entering 2020 with significantly stronger financial footing Solid foundation to capitalize on significant organic growth opportunities 10.1x ▪ Commitment to investment grade credit rating ▪ Regained financial flexibility and improving Debt/EBITDA metrics Impro
Slide 16: 2020: Self-Funded Model
2020: Self-Funded Model Growth in cash flow eliminates need for common equity and provides funding flexibility 2020 capital plan funded internally and focused on projects with near-term returns 2020e Sources and Uses ($ millions) $1,800 ~$1,600 ~$1,600 $1,600 Leverage Asset Sales and/or Borrowing Po
Slide 17: 2020e EBITDA Seasonality
2020e EBITDA Seasonality Utilities seasonality driving quarterly EBITDA profile Consolidated Normalized 2020e Midstream Normalized 2020e Utilities Normalized 2020e EBITDA1 By Quarter EBITDA1 By Quarter EBITDA1 By Quarter ~25% ~25% ~25% ~25% ~40% ~50% ~30% 35% ~20% ~10% ~10% ~5% Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 18: 2019: Outlook Unchanged
2019: Outlook Unchanged 2019 Normalized EBITDA1 Guidance 2019 Net Debt Decrease ($ millions) ($ millions) 1,600 ~$3 billion $1,200 - $1,300 in debt repayment 1,200 800 400 - 2019e YE 2019e Net Debt Utilities Midstream Power 1 Non-GAAP financial measure; see discussion in the advisories 2 Includes 20
Slide 19: Launched our Inaugural ESG Report
Launched our Inaugural ESG Report To earn the right to grow, we must continue to integrate ESG considerations into the execution of our strategy The report outlines our 2018 performance in several key areas relevant to the long-term sustainability of our business, and demonstrates our ongoing commit
Slide 20: Appendix
Appendix 20
Slide 21: World-Class Assets
World-Class Assets ($CAD unless otherwise noted) $5.5B $1.2 - 1.3B $2.2B $21B Market Cap1 2019e Normalized Asset Sales in 20191 Total Assets EBITDA2 1.9Bcf/d 54,500bbl/d 80,000bbl/d Gas Processing3 Fractionation4 Export5 US$3.7B 5 1.6 Million Rate Base U.S. Jurisdictions Customers 1. As at December
Slide 22: Our Business Strategies are Straightforward
Our Business Strategies are Straightforward Low-Risk, High-Growth Utilities and Midstream Company Low-Risk Regulated Utilities Opportunity-Rich Integrated Midstream Utilities Global Distribution Export Leveraging our Core Leveraging our Distribution Footprint Core Export Strategy Steady and predicta
Slide 23: Midstream Update
Midstream Update 23
Slide 24: 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 25: Premier Midstream Business Connecting Canadian Producers to Global Markets
Premier Midstream Business Connecting Canadian Producers to Global Markets Leverage RIPET and our integrated value chain to attract volumes Montney Basin Key Assets: Strategic Benefits: ▪ Ridley Island Propane ▪ Global demand market access Export Terminal (RIPET) ▪ Leverages existing assets ▪ Fernda
Slide 26: Integrated Service Offering with Access to Global Markets
Integrated Service Offering with Access to Global Markets Increasing returns along the integrated value chain Gas Processing & 9X – 10X Gathering Field Fractionation, Liquids Handling Storage and Rail CUMULATIVE CAPEX PER Loading Integrated Economics EBITDA Export Terminal 5X – 6X Potential to ~doub
Slide 27: Abundant North American Natural Gas Supply
Abundant North American Natural Gas Supply Excess propane supports development of incremental export capacity Abundant supply of North American natural gas Propane supply growth continues to outpace demand ▪ U.S. natural gas production expected to grow 30% by 2023 ▪ As NA gas supply continues to shi
Slide 28: Supply/Demand Imbalance Supports Export Capacity Growth
Supply/Demand Imbalance Supports Export Capacity Growth Opportunity to grow Canada’s West Coast LPG export capacity Increasing demand in Asia Supply/demand imbalance supports strong spreads ▪ Natural gas and propane are low-cost sources of clean fuel ▪ WCSB growth is constrained by regional market a
Slide 29: RIPET: Providing Enhanced Netbacks to Producers
RIPET: Providing Enhanced Netbacks to Producers At current propane prices1 the RIPET advantage results in a significant increase in our producers realized price Alberta3 US$11.05/bbl Ft. Saskatchewan RIPET AFEI2 10 US$34.52/bbl days Japan Mt. Belvieu 25 US$21.55/bbl days 1 Propane prices as at Decem
Slide 30: Utilities Update
Utilities Update 30
Slide 31: 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 32: Our Utilities Business Operating Model
Our Utilities Business Operating Model Safe and reliable, high-growth competitive strategy Opportunities ▪ Improve business processes and drive down leak remediation costs, reinvesting savings into improving the customer Operational Excellence experience ▪ Invest in aging infrastructure; grow earnin
Slide 33: Rate Case Update
Rate Case Update Focused on Timely Recovery of Capital Equity Thickness Rate Case Revenue ROE Approved Notes Approved • Final order released December 6, Filed May 31, 2019, SEMCO 2019 includes the Marquette Received: US$19.9 MM Received: 9.87% Received: 54%1 (Michigan) • New rates to be implemented