Altagas Ltd. · TSX:ALA
Altagas — Q3 2019 Earnings Presentation
27 slides from Altagas's earnings presentation, Oct 30, 2019
Slide 1: Third Quarter 2019 Results
Third Quarter 2019 Results October 30, 2019
Slide 2: Forward-Looking Information
Forward-Looking Information This presentation contains forward-looking statements. When used in this presentation, the words “will”, “intend”, “plan”, ”potential”, “generate”, "grow", “deliver”, “can”, “continue”, “drive”, “anticipate”, “target”, “come”, “create”, “position”, “achieve”, “seek”, “pro
Slide 3: Near-Term Operational Priorities
Near-Term Operational Priorities Priorities Actions First cargo out of Complete construction and initiate operational phase RIPET early Q2 2019 Introduce feedstock to fill the LPG tank First cargo in May 2019 Volumes delivered to RIPET increased to current capacity of 40,000 Bbl/d Capitalize
Slide 4: Near-Term Financial Priorities
Near-Term Financial Priorities Priorities Actions Execute $1.5 – $2.0 billion of Executed on $2.2 billion in asset sales as at September 30, 20191: non-core asset sales - US$280 million Stonewall asset sale - US$735 million Distributed Generation asset sale - ~US$657 million Central Penn Pipeline
Slide 5: Delivering on the Plan
Delivering on the Plan Another strong quarter operationally Base business is healthy and performing in line with expectations 2019 outlook remains unchanged with expected normalized EBITDA1 guidance in the range of $1.2 - $1.3 billion and normalized FFO1 of $850 - $950 million Our 2019 funding
Slide 6: Midstream Update
AltaGas Midstream Update
Slide 7: Our Midstream Strategy is Straightforward
Our Midstream Strategy is Straightforward Maximize utilization of existing assets and pursue capital efficient high-return expansions Continue to build upon our export competency Midstream Invest Diversify and grow our customer base to help mitigate counterparty risk Grow Optimize existing rai
Slide 8: RIPET – Operational Overview
RIPET – Operational Overview Strong performance positioned for growth RIPET Highlights: ~40,000 Bbl/d propane receipt volumes Q4 2019e Hedged Volumes 3 million barrels or 6 ships exported Third Quarter $37 million in EBITDA (including a $5 million one-time hedging gain1) 28% ~22,500 Bbl/d he
Slide 9: RIPET Netback Advantage
RIPET Netback Advantage RIPET provides enhanced netbacks to producers – at current propane prices1 the RIPET advantage is ~80% increase in realized price Alberta3 RIPET Advantage (US$/bbl) US$9.29/bbl 2019 FWD AFEI1 ~$35.39 Transport & Terminalling4 ~$18.70 Ft. Saskatchewan RIPET Netback ~$16.69 RIP
Slide 10: Utilities Update
AltaGas Utilities Update
Slide 11: Utilities Strategy - Drive Operational Excellence
Utilities Strategy - Drive Operational Excellence Priorities Maintain safe and reliable infrastructure Enhance overall returns via complementary businesses and cost reduction initiatives Utilities Distribution Attract and retain customers through exceptional customer service Improve asset ma
Slide 12: Our Utility Business Operating Model
Our Utility 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 experience Operational Excellence Invest in aging infrastructure; grow earnings
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: Return On Equity & Expected Timeline 1. Capital Discipline: • Accelerated Replacement Programs ensure timely recovery of i
Slide 14: Rate Case Update
Rate Case Update Focused on Timely Recovery of Capital ROE Requested & Equity Thickness Rate Case Revenue Requested Notes Approved Requested & Approved • Rebuttal testimony filed October 18th Filed May 31, 2019, • The hearing is expected to take SEMCO Requested: US$38 MM, includes the Marquette Requ
Slide 15: Rate Case Update: Virginia Financial Impact
Rate Case Update Virginia Financial Impact Distribution rates approved under cost of service model 1. Interim rates effective since January 2019, subject to true-up Rate case filed on July 31, 2018 seeking rate increase of or refund US$37.6 million (or US$22.9 million net of SAVE1 rider), 2. WGL
Slide 16: Financial Update
Financial Update 16
Slide 17: Q3 Financial Results Summary
Q3 Financial Results Summary Strong Performance from Core Businesses Q3 2019 Normalized EBITDA1 of $178M Q3 2019 Normalized Net Loss1 of $58M Exceeded target with $2.2B in Asset Sales announced or completed in 2019 YTD Reduced Net Debt1 by $2.4B in 2019 YTD First full quarter of RIPET 1 Non-GAAP mea
Slide 18: Q3 Normalized EBITDA Walk Down
Q3 Normalized EBITDA1 Walk Down 2019 Q3 Actuals vs. 2018 Q3 Actuals – Normalized EBITDA1 ($ millions) (12) (30) (93) +1 +16 +70 226 178 Q3 2018 Q3 2019 Midstream Power Utilities Corporate VA Rate Case Asset Sales Actual Actual ▲ RIPET ▲ US Retail Energy ▲ WGL acquisition ▼ Employee costs ▼ Rate refu
Slide 19: Q3 2019 – Normalized EBITDA Variance
Q3 2019 – Normalized EBITDA1 Variance Strong Performance in Midstream Offset by One-Time Adjustment at WGL ($ millions) Q3 2019 Normalized EBITDA1 Q3 2019 Q3 2018 Variance Q3 2019 vs. Q3 2018 Normalized EBITDA1 Drivers + WGL acquisition timing - VA Rate case (-$30 MM) + Stronger U.S. dollar - ACI IP
Slide 20: Robust Asset Sales Provide Flexibility in 2019 Funding Plan
Robust Asset Sales Provide Flexibility in 2019 Funding Plan 2019 Sources and Uses1 Secured Capital Program ($ billions) (C$millions unless otherwise specified) ~$4.6 ~$4.6 Expected Target Utility Capital Projects Capex2,3 In-Service1 Utility 2019 Annual Capital ~$625 2019 Marquette Connector Pipelin
Slide 21: De-leveraging Program On Track
De-leveraging Program On Track ~$2.4 billion reduction in net debt1 year-to-date Net Debt1 ($ billions) ~$3 billion in debt 2019 Plan Supports repayment $2.4 billion reduction to net debt1 to-date $10.1 Lower debt and stronger Retained cash flow net of dividends and DRIP balance sheet Northwest
Slide 22: 2019 Outlook Unchanged
2019 Outlook Unchanged 2019 Normalized EBITDA1 Guidance 2020 Drivers ($ millions) 1,600 $1,200 - $1,300 ▲ Rate base and customer growth at Utilities 1,200 ▲ RIPET 800 ▲ Marquette Connector Pipeline ▲ Additional fractionation and gas processing volumes 400 ▼ Asset sales 0 2019e Utilities Midstream Po
Slide 23: 2020 Outlook Drivers
2020 Outlook Drivers Significant Opportunity for Rebased Business in 2020 2020: Unlocking the growth potential of our assets Achievement of critical near-term priorities allows management to return its focus to growing the core businesses Appropriate capital discipline, hurdle rates and business
Slide 24: Appendix
AltaGas Appendix
Slide 25: Normalized Net Income (Loss) Walk Down
Normalized Net Income (Loss)1 Walk Down ($ millions) Q3 2019 Q3 2018 Variance YTD 2019 YTD 2018 Variance Normalized EBITDA1 178 226 (48) 847 615 232 Add (deduct): Depreciation and amortization (104) (122) 18 (329) (268) (61) Interest expense (GAAP) (92) (112) 20 (269) (198) (71) Interest expense Nor
Slide 26: Impact of Asset Sales and VA Hearing Examiner’s Report
Impact of Asset Sales and VA Hearing Examiner’s Report on Normalized EBITDA1 and FFO1 EBITDA FFO ($ millions) ($ Millions) ($ millions) ($ Millions) Q3 2018 normalized EBITDA1 226 Q3 2018 normalized FFO1 117 Remove asset sales (93) Remove asset sales (93) Q3 2018 normalized EBITDA excluding asset sa
Slide 27: Third Quarter 2019 Results
Third Quarter 2019 Results October 30, 2019