Altagas Ltd. · TSX:ALA
Altagas — Investor Presentation (September 2022)
50 slides from Altagas's investor presentation, September 2022
Slide 1: September 2022 Investor Presentation
September 2022 Investor Presentation
Slide 2: Forward-Looking Information
Forward-Looking Information 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", "propose", "contemplate", "estimate", "focus", "striv
Slide 3: Who We Are
Who We Are Our A Leading North American infrastructure company that connects Vision customers and markets to affordable and reliable sources of energy. Our To improve quality of life by safely and reliably connecting customers Mission to affordable sources of energy for today and tomorrow. Our Every
Slide 4: Our Governance Philosophy and Commitment
Our Governance Philosophy and Commitment ▪ Robust governance and strong leadership are core to achieving our strategy and delivering sustained value for our stakeholders. As the ultimate steward for AltaGas, the Board has a fiduciary responsibility to ensure it’s providing the proper foresight, over
Slide 5: Our Commitment to Our Stakeholders
Our Commitment to Our Stakeholders Working with all our stakeholders is engrained in our approach to doing business. It is part of our organizational DNA and has been a foundational principle of our nearly three decades of operations. From initial project development through to operations and reclam
Slide 6: Our Corporate Strategy
Earnings Model Per Share Growth Durability Check Points What we FFO Per Share Growth Durability Focus on Medium-term Long-term Leverage Ratios / <5.0x ~4.5x Our Corporate Strategy Margin of Safety Net Debt/EBITDA1 Net Debt/EBITDA1 Invest in and operate long-life infrastructure assets that provide Fo
Slide 7: One Strong Platform Focused on Connecting Customers and Markets
One Strong Platform Focused on Connecting Customers and Markets Investing for the Benefit of our Customers, Investors and the Environment Integrated Midstream Business – from wellhead to global markets Gas Gathering NGL Extraction Transportation, Global Wellhead & Processing Export Markets & Fractio
Slide 8: Overview of Rate Regulated Platform
Overview of Rate Regulated Platform Stable and Predictable Results ▪ 1.7 million customers in stable and growing jurisdictions ▪ US$4.9 billion regulated rate base 5 2022E Utility Revenues ▪ Limited sensitivity through regulated fixed distribution charges and decoupling ▪ ~70% of revenue derived fro
Slide 9: Utilities Strategic Priorities
Utilities Strategic Priorities Strong multi-year growth through investing to benefit customers, investors and the environment Forecasted Rate Base Growth 2022-2026 1. Operate a safe and reliable system to deliver critical energy to customers 2. Invest to modernize our network ▪ Upgrade platform to e
Slide 10: Premier Midstream Business
Premier Midstream Business Leveraging Core Export Strategy Structural Advantage to Markets in Asia Leverage core export strategy and access to premium global pricing to attract volumes ~89% from investment grade customers ~53% from take-or-pay contracts and fee-for-service ~63% of 2022 RIPET volumes
Slide 11: Midstream Strategic Priorities
Midstream Strategic Priorities Strong multi-year growth through optimization, expansion and evolution NEBC Processing Volumes (MMcf/d) 1. Operate a safe and reliable system to deliver critical energy to our 800 Expect NEBC processing customers. volume growth 700 ~27% 2020 - 2022 2. Maximize the pote
Slide 12: Diversified, Lower-Risk Model
Diversified, Lower-Risk Model Focused on Durability and Steady Growth Diversified Asset Mix1 Investment Grade Credit Rating Strong Commercial Constructs Diversified model that operates long-life infrastructure Credit Ratings Commercial Contract Type2 assets that provide durable and growing EPS and F
Slide 13: Dividend Philosophy and Expected Growth Trajectory
Dividend Philosophy and Expected Growth Trajectory • We believe returning capital to shareholders through regular and sustainable dividends is an important component of total shareholder returns and part of our long-term partnership with shareholders. Dividend • As AltaGas executes on its strategic
Slide 14: Capital Allocation Priorities
Capital Allocation Priorities Acute Focus on Balancing the Multiple Items Needed to Achieve Corporate Priorities We maintain a disciplined approach to capital allocation within a self-funding model designed to deliver resilient and durable value for our stakeholders that compounds over time. Our cap
Slide 15: Growth Criteria
Growth Criteria Strenuous Internal Process for Capital Deployment Strong risk-adjusted returns Long-term earnings and Positioned for where the 1 exceeding hurdle rates and required 3 cash flow durability 5 market is heading, including margin of safety the energy evolution ▪ Any growth capital at Alt
Slide 16: Strategy and ESG Work in Harmony
Strategy and ESG Work in Harmony Leading with Strong ESG Practices is Built into the Fullness of our Processes Integrated Midstream Business Vision Informed by Our Core Values We Are Committed to Operational Excellence ▪ Operate a high-quality platform that connects customers and markets and drives
Slide 17: ESG Performance
ESG Performance 1. Senior Leaders as of Dec 1, 2021; Workforce as of May 31, 2021. Includes Petrogas. See "Forward-looking Information“ 17
Slide 18: ESG Goals
ESG Goals 1. Baseline calculation is adjusted for material changes in our asset base.; 2. Dependent on regulatory support and customer demand. See "Forward-looking Information“ 18
Slide 19: Our Value Proposition
Our Value Proposition A Continuous Focus on Compounding A Diversified Infrastructure Company with a Robust Pipeline of Lower-risk Growth Opportunities Streamlined platform with Top-quartile utilities track record of delivering. rate base growth. Industry Leading EPS and FFO per share growth and stoc
Slide 20: Slide 20
Slide 21: Our Utilities Strategy
Our Utilities Strategy Utilities Strategy Operate a safety-focused, digitally-enabled and high-growth utility that exceeds our customers' expectations and excels in the Strong focus on organic opportunities centered on safety emerging energy ecosystem. and reliability, better customer outcomes and e
Slide 22: Focus within the Utilities
Focus within the Utilities Progress in Journey 25% 50% 75% Focus: Maintain the strong Today Maintaining Strong Financial improvement that has been shown Performance in operational and financial performance since 2019. Today Near-term Focus: Upgrade platform with focus on safety and reliability, Upgr
Slide 23: Natural Gas will Remain a Critical Transition Fuel
Natural Gas will Remain a Critical Transition Fuel Economic and Emission Reductions Are Aligned; Affordability will be a key Variable in the Energy Evolution Full-Cycle Energy Consumption vs. CO2 Impact1 2021 Average Energy Prices for Typical U.S. Home1 ▪ Through the energy evolution ($/MMBtu) AltaG
Slide 24: Energy Consumption and Demand Characteristics
Energy Consumption and Demand Characteristics Total Household Energy Consumption – Therms per Home per Month 1,2 Energy demand in 120 our jurisdictions is positive 80 This includes all of our jurisdictions sitting 40 around P50 or above for overall energy - demand per home. Percent of Household Ener
Slide 25: Affordability Remains Key Consideration Through the Energy Evolution
Affordability Remains Key Consideration Through the Energy Evolution 2019 Total Household Energy Affordability (Cost as % of Income)1,2 6.0% Natural Gas Cost as % of Income Electricity as % of Income 4.0% 2.0% 0.0% Cost of Electricity over Natural Gas per Therm 1,2 6.0x 4.0x 2.0x 0.0x 1. U.S. Bureau
Slide 26: Affordability Remains Key Consideration Through the Energy Evolution
Affordability Remains Key Consideration Through the Energy Evolution Average Monthly Cost to Switch to Electricity1,2 $800 $600 $400 $200 $0 Average Cost Increase from Switching to Electricity (Cost as % of Income)1,2 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1. U.S. Bureau of Labor Statistics and U.S. Census
Slide 27: Utilities Capital
Utilities Capital Disciplined Capital Allocation Provides Strong Risk Adjusted Returns and Minimizes Regulatory Lag ARP Spending % of U.S. Utilities Capital Spending Approximately 50% 80% 45% of the Utility capital plan is immediately recoverable through ARPs (~40%) and along with the majority of ma
Slide 28: Building Resilient Infrastructure Across Jurisdictions
Building Resilient Infrastructure Across Jurisdictions ▪ As one of the pioneering North American gas utilities, with our origins dating back more than 170 years, we are proud to have played a role in helping fuel America into the great nation that it is today. ▪ Our rich history also leaves us opera
Slide 29: Forward Rate Base Growth
Forward Rate Base Growth Positioned for Strong Long-term Growth ▪ Long-term capital plan maintains a disciplined Forecasted Rate Base Growth (2022-2026) approach to capital allocation prioritizing safety and reliability; maintaining customer affordability and minimizing regulatory lag. ▪ Secured cap
Slide 30: Agreement to Monetize Alaskan Utilities
Agreement to Monetize Alaskan Utilities Proceeds Fund Long-term Growth and Strengthen Balance Sheet Transaction Overview Strategic Rational: ▪ Opportunity to concentrate on high growth Eastern U.S. Utilities and to de- lever the balance sheet. ▪ Continuation of capital recycling focus to reduce debt
Slide 31: Accelerated Replacement Programs
Accelerated Replacement Programs WGL has Substantial Inventory of Future ARP Spend Utility Location Program ▪ 2019 rate case settlement provides for a renewed Mains Replacement Program for 2021-2025 with total spending Michigan ~US$60 million and the introduction of a new Infrastructure Replacement
Slide 32: WGL - Emissions Reduction Goals
WGL - Emissions Reduction Goals We have applied our learnings from the D.C. climate business plan and implemented emissions reducing initiatives across our broader organization. We believe natural gas can and will be decarbonized with low- to- no-carbon intensive fuels like RNG and hydrogen, and tha
Slide 33: Advancing Lower Carbon Fuels
Advancing Lower Carbon Fuels A Focus on Advancing the Fuels of the Future in a Pragmatic and Purposeful Manner H2 Certified Gas Renewable Natural Gas Hydrogen ▪ Blending certified gas into existing supply can ▪ Supporting the Piscataway Bioenergy Project, AltaGas' ▪ Hydrogen is a promising fuel due
Slide 34: Summary of Recent Rate Case Filings
Summary of Recent Rate Case Filings 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 Received: US$13.1MM Received: 9.7% Received: 52.03% CINGSA (Alaska)2 Filed July 1,
Slide 35: Supportive Regulatory Environment for Utilities
Supportive Regulatory Environment for Utilities 2021 YE Allowed ROE Utility Rate Base Customers and Equity Regulatory Update ($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 case fil
Slide 36: Supportive Regulatory Environment for Utilities
Supportive Regulatory Environment for Utilities 2021 YE Allowed ROE Utility Rate Base Customers and Equity Regulatory Update ($US) Thickness ▪ Distribution rates approved under cost-of-service model, using forward looking adjustments on historical test year with the use of interim rates, subject to
Slide 37: Slide 37
Slide 38: Our Midstream Strategy
Our Midstream Strategy Midstream Strategy Operate a world class Midstream platform that safely connects producers to domestic and global markets and is Operate long-life midstream assets that are positioned for where positioned for the energy evolution. the market is headed. This includes providing
Slide 39: Focus within Midstream
Focus within Midstream Progress in Journey 25% 50% 75% Today Optimize Existing Asset Base for Focus: Maximize facility utilization Appropriate Rates of Return and flows for ideal AltaGas and industry outcomes. Continue to Provide services increase that align with best throughput in industry outcomes
Slide 40: Global Export Facilities
Global Export Facilities >44,000 metric tons ~545,000 Bbls of Propane or Rail Line Very Large Gas ~490,000 Bbls of Butane Carriers (VLGC) Large Gas Ridley Island Lelu Island Carriers (LGC) Ridley Island Propane Export Terminal (RIPET) Prince Rupert is the Deepest Natural Harbour in North America Med
Slide 41: Strong Asian Demand Pull From Investment Grade Partners
Strong Asian Demand Pull From Investment Grade Partners Robust LPG Demand from Key Asian Markets; Canada Represents an Important Supply Diversification Approximately Japan RIPET represents 90% ~11% RIPET exports primarily land in Japan where propane is principally used for home heating and serves as
Slide 42: Leveraging Our Core Competency
Leveraging Our Core Competency Connecting Customers and Markets, for Today and Tomorrow Global exports volume CAGR of: 2019 RIPET Commissioned ~37,000 Bbl/d C3 ~10%+ One Export Terminal through 2026. One Product Ferndale Consolidated • Leverage our structural ~100,000 Bbl/d shipping advantage 2022 C
Slide 43: The West Coast Structural Advantage
The West Coast Structural Advantage West Coast Positioned for Long-term Structural Advantage The RIPET and Ferndale Advantages results in significant increases in producers’ realized prices and tailwinds for the broader energy industry. North American West Coast LPG exports have a RIPET 10 - 11 Fern
Slide 44: New Ships Provide Strategic Advantages
New Ships Provide Strategic Advantages Extending Value Chain to Connect Downstream, While De-risking, Improving Economics and Lowering Emissions Agreement 91,000 cbm Very Large Gas Carriers • Signed 7-year agreements with 3-year extension options for two 91,000 cubic meter (cbm) LPG VLGCs. • AltaGas
Slide 45: Continued Optimization of Existing Asset Base
Continued Optimization of Existing Asset Base From Wellhead to Tidewater and Beyond, we are Focused on Connecting Customers and Markets for Better Outcomes Global 1 Wellhead 2 Gas Gathering & Processing 3 NGL Extraction & Fractionation 4 Transportation, Storage & 5 Export 6 Markets Rail Logistics GA
Slide 46: Our Approach to Reducing Emissions Intensity
Our Approach to Reducing Emissions Intensity Using a Multi-Pronged Approach to Achieving our Targeted 40% Emissions Intensity Reduction by 20301 Increase Utilization of Existing Assets ▪ Fill existing processing capacity Increasing volumes through existing facilities ▪ Grow LPG exports at RIPET make
Slide 47: Midstream Climate Goals
Midstream Climate Goals Aligning our Midstream Business Strategy to Support Meaningful Climate Action Our Midstream 2030 Climate Goals: Scope 1+2 Emissions Breakdown2: 40% Emissions Intensity Reduction1 by 2030 Harmattan 51% Gordondale 15% 15% Absolute Reduction1 in Harmattan Emissions by 2026 2020
Slide 48: 2022 Outlook
2022 Outlook
Slide 49: Strong Growth in Base Business Underpins 2022 Outlook
Strong Growth in Base Business Underpins 2022 Outlook Normalized EBITDA1,2 Guidance Normalized EPS1,3 2022 Guidance ($ millions) (per share) 2022E: $1,500 - $1,550 $1.80 - $1.95 2022E Utilities: 55% Midstream: 46% $1.78 Corporate/Other: ~(1%) 2021A: $1,490 2021A Utilities: ~52% Midstream: ~49% Corpo
Slide 50: 2022 Disciplined Capital Allocation
2022 Disciplined Capital Allocation Strong Organic Growth Drives Robust Risk-adjusted Returns ~$995 million of invested capital expenditure1,2 dedicated to high-quality projects anticipated to drive earnings growth Capital Allocation Criteria: Identified Projects: Includes: Corp/Other ▪ Accelerated