ALTAGAS REPORTS STRONG FIRST QUARTER 2025 RESULTS

2025-05-01

TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Sulfur · Canada

Canada NewsWire

Reiterating 2025 Guidance and Robust Long-term Growth Outlook

CALGARY, AB , May 1, 2025 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reported first quarter 2025 financial results and provided an update on its operations, projects and other corporate developments.

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FIRST QUARTER HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars unless otherwise noted)

FINANCIAL RESULTS

Normalized EPS 1 was $1.15 in the first quarter of 2025 compared to $1.14 in the first quarter of 2024, while GAAP EPS 2 was $1.31 in the first quarter of 2025 compared to $1.38 in the first quarter of 2024. Normalized EBITDA 1 was $689 million in the first quarter of 2025 compared to $660 million in the first quarter of 2024, while income before income taxes was $513 million in the first quarter of 2025 compared to $541 million in the first quarter of 2024. The four percent year-over-year growth in normalized EBITDA was driven by strong Utilities performance that offset lower Midstream contribution. The Utilities segment reported normalized EBITDA of $501 million in the first quarter of 2025 compared to $437 million in the first quarter of 2024, while income before taxes was $446 million in the first quarter of 2025 compared to $384 million in the first quarter of 2024. The 15 percent year-over-year growth in normalized Utilities EBITDA was principally driven by strong performance from WGL's retail business, colder weather in Michigan and D.C., active cost management, contributions from Utilities modernization investments and asset optimization activities. The Midstream segment reported normalized EBITDA of $197 million in the first quarter of 2025 compared to $247 million in the first quarter of 2024, while income before taxes was $204 million in the first quarter of 2025 compared to $297 million in the first quarter of 2024. Strong operational execution across the Midstream segment was impacted by lower global export margins due to reduced merchant spreads and higher tolling volumes, the absence of two favourable one-time items that were present in the first quarter of 2024, and lower contribution from the Mountain Valley Pipeline ("MVP") due to recording equity earnings post the pipeline going into service compared to the Allowance for Funds Used During Construction ("AFUDC") last year.

OPERATIONAL AND BUSINESS HIGHLIGHTS

AltaGas posted record first quarter global export volumes of 119,241 Bbl/d of liquified petroleum gases ("LPGs") to Asia . The four percent year-over-year increase included shipments from 12 very large gas carriers ("VLGCs") from the Ridley Island Propane Export Terminal ("RIPET") and seven VLGCs from the Ferndale Terminal ("Ferndale"). Volumes across the balance of AltaGas' Midstream value chain were strong, including gas processing volumes increasing 11 percent year-over-year, led by AltaGas' Montney footprint, where volumes were up 16 percent year-over-year largely due to the Townsend and Blair Creek facilities. AltaGas' focus on operational excellence at the Utilities continued to be demonstrated in the first quarter of 2025 where Washington Gas' operating and maintenance ("O&M") costs were down 11 percent year-over-year. This reduction was achieved despite colder weather on a year-over-year basis across all of the Company's Utilities jurisdictions, which normally drives higher costs due to increased asset usage and overtime costs. AltaGas continued to execute long-term contracting across its global exports' platform. AltaGas entered into a 15-year tolling agreement with Keyera for 12,500 Bbl/d of LPG export capacity at REEF and a long-term agreement with one of the world's leading global chemicals companies for 8,000 Bbl/d of butane export capacity at REEF. AltaGas has now exceeded its 2027 tolling target across its global exports portfolio and will continue to evaluate additional long-term contracts. MVP performed well during the first quarter of 2025, exceeding expectations due to optimization activities and flowing interruptible volumes at premium rates during demand peaks. Despite this strong performance, MVP contribution was down year-over-year as AltaGas began recording equity earnings once the pipeline was brought into service compared to AFUDC recorded in the same quarter of 2024. The 2.0 Bcf/d pipeline is backed by 20-year contracts with investment grade counterparties. MVP is expandable by 475 MMcf/d through additional compression and extendable into North Carolina through the Southgate project. Both projects are advancing towards final investment decisions ("FID"). AltaGas continues to evaluate a potential monetization of its interest in MVP with proceeds to be used for leverage reduction. In February 2025 , the Public Service Commission of D.C. ("PSC of D.C.") ordered an additional extension of PROJECTpipes 2 from May 1, 2025 through December 31, 2025 with an additional US$34 million of modernization capital being added to the pre-approved program. This will ensure uninterrupted pipeline modernization work continues while the PSC of D.C. continues to review Washington Gas' proposed new modernization program – the District Strategic Accelerated Facility Enhancement ("SAFE").

(1) Non-GAAP measure; see discussion and reconciliation to US GAAP financial measures in the advisories of this news release or in AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended March 31, 2025 , which is available on www.sedarplus.ca . (2) GAAP EPS is equivalent to Net income applicable to common shares divided by shares outstanding. (3) GAAP FFO per share is equivalent to cash from operations divided by shares outstanding.

PROJECT UPDATES

Construction of the Ridley Island Energy Export Facility ("REEF") remains on budget and schedule to achieve its 2026 year-end in-service date ("ISD"). Uplands work continues with overburden removal finished and rock blasting nearing completion, while offsite equipment fabrication is progressing according to the execution plan. Progress on the jetty has accelerated and is recovering from winter weather delays. Approximately 60 percent of total project costs are now incurred or committed, further de-risking the project's capital budget. Construction of the Pipestone II deep cut facility continues to be on track for a late 2025 ISD. Facility construction is 76 percent complete with the project fully contracted under long term take-or-pay agreements and principally all capital costs are incurred or committed under fixed price agreements. Pipestone II will provide critical gas processing and liquids handling capacity to the Pipestone region in the Alberta Montney. AltaGas has reached a positive FID on the RIPET methanol removal project. This project will allow RIPET cargos to reach all Asian markets, while ensuring fungible propane between RIPET and REEF. Capital cost for the project is estimated to be $55 million ; an approximate five times capex-to-EBITDA build multiple. The project is targeted to be online by 2026 year-end. AltaGas continues to advance growth projects across the Utilities segment. In addition to continued new meter growth and execution of existing asset modernization programs, SEMCO is in late stages of getting regulatory approval for the Keweenaw Pipeline Connector, which has a capital cost of approximately US$120 million and a 2027 ISD. Washington Gas continues to work with a number of developers that are seeking natural gas for new data centers in Northern Virginia . These business development initiatives will complement AltaGas' already robust Utilities growth outlook. AltaGas continues to advance regulatory, engineering and commercial work for growth projects. This includes Pipestone III, North Pine , the Dimsdale natural gas storage expansion project, and additional capacity at REEF, once operational. These organic opportunities will further extend AltaGas' Midstream growth outlook towards the end of the decade.

OUTLOOK AND OTHER HIGHLIGHTS

Following AltaGas' strong first quarter of 2025, the Company is reiterating its 2025 full year guidance, including normalized EBITDA of $1,775 million to $1,875 million and normalized EPS of $2.10 to $2.30 . AltaGas is also reiterating its expectation of five to seven percent compounded annual growth rate ("CAGR") guidance on dividends to 2029. On April 1, 2025 , Washington Gas issued the remaining US$100 million in private placement notes with a 4.84 percent coupon, due on April 1, 2035 , as part of the note purchase agreement executed on October 1, 2024 .

CEO MESSAGE

"We are pleased with our strong start to 2025" said Vern Yu , President and Chief Executive Officer of AltaGas. "Our first quarter results reflect progress on our strategic priorities where we have de-risked our business, optimized our assets, and continued to pursue growth opportunities that will deliver long-term value for our stakeholders.

"Our diversified business and strong contract profile allowed AltaGas to drive steady returns, despite the significant market volatility in the first quarter. Over the past five years, we have cut our commodity price exposure in half where today approximately 85 percent of AltaGas' normalized EBITDA is now comprised of cost-of-service, take-or-pay and fee-for-service contracts.

"Our Utilities delivered a strong first quarter. The combination of strong retail performance, colder temperatures relative to 2024, further cost management, significant investments in pipeline modernization programs, and asset optimization activities all contributed to this performance. We continue to focus on delivering the best outcomes for all stakeholders by delivering the lowest possible cost to our customers.

"Our Midstream business produced another quarter of strong operational execution with record first quarter global export volumes to Asia , ensuring more Canadian production realizes premium global prices. Our gas processing volumes were up 11 percent year-over-year, led by our Montney and Northeastern B.C. footprint. While the recent commodity price volatility has created some uncertainty for select upstream development, we believe our assets will continue to realize strong forward growth through this market volatility.

"Strong commercial success for the first phase of REEF has allowed us to accelerate the regulatory and engineering work for its next phases. Demand for capacity at REEF highlights the importance of building energy infrastructure that connects Canadian energy to premium global markets.

"Our long-term strategy of having a diversified business mix provides steady and ratable earnings growth for our shareholders. Our unique ability to connect Western Canada's growing energy supply to premium demand markets in Asia will increase in value over time. We are excited for the future as we continue to leverage our strategic asset base and compound long-term value across our enterprise."

RESULTS BY SEGMENT

| Normalized EBITDA (1) | Three Months Ended

March 31 | | | ($ millions) | 2025 | 2024 | | Utilities | $ 501 | $ 437 | | Midstream | 197 | 247 | | Corporate/Other | (9) | (24) | | Normalized EBITDA (1) | $ 689 | $ 660 |

| (1) | Non‑GAAP financial measure; see discussion in Non‑GAAP Financial Measures section of this news release. |

| Income (Loss) Before Income Taxes | Three Months Ended

March 31 | | | ($ millions) | 2025 | 2024 | | Utilities | $ 446 | $ 384 | | Midstream | 204 | 297 | | Corporate/Other | (137) | (140) | | Income (Loss) Before Income Taxes | $ 513 | $ 541 |

BUSINESS PERFORMANCE

Midstream

The Midstream segment reported normalized EBITDA of $197 million in the first quarter of 2025 compared to $247 million in the first quarter of 2024, while income before income taxes was $204 million in the first quarter of 2025 compared to $297 million in the first quarter of 2024. Strong operational execution across the Midstream segment was impacted by lower export margins due to reduced merchant spreads and higher tolled volumes relative to last year. The segment also saw increased operating and administrative expenses and lower contribution from MVP as AltaGas moved to recording equity earnings, once the pipeline was placed into service, relative to AFUDC last year. Year-over-year performance was also negatively impacted by the absence of two one-time items that had positively impacted AltaGas' results in the first quarter of 2024. This included the monetization of certain hedges to avoid an imbalance of financial and physical merchant barrels over 2024 and a positive asset retirement obligation ("ARO") adjustment related to the reclamation of AltaGas' Alton facility.

AltaGas exported 119,241 Bbl/d of LPGs to Asia in the first quarter of 2025, including 12 VLGCs at RIPET and seven VLGCs at Ferndale . This represented another first quarter record with volumes up four percent year-over-year. This strong operating performance came despite certain interruptions related to cold weather delays experienced by CN in February. AltaGas continues to focus on operational execution that will position the Company to deliver continued year-over-year export volume growth over the balance of 2025.

The importance of market diversification and the strategic advantage of AltaGas' global exports platform is being reinforced in the current market with U.S. and global tariffs. AltaGas provides its customers the opportunity for protection against U.S. tariff impacts and ensures access to the highest priced global markets. As Canadian production continues to grow, we believe it is critical to connect more of Canada's vital energy products to premium global markets for the benefit of all Canadians. AltaGas is positioned to benefit from the long-term fundamentals of growing Canadian natural gas and NGL production, strong Asian demand and the Company's structural shipping advantage from the west coast.

Performance across the balance of the Midstream platform was largely in line with the Company's expectations for the first quarter of 2025. Highlights include 16 percent year-over-year growth in Montney gas processing volumes, led by Townsend and Blair Creek . While the recent commodity price volatility has created some uncertainty for select upstream development, we believe AltaGas' assets will continue to realize strong forward growth through this market volatility.

Consistent with the Company's de-risking focus, AltaGas' Midstream operations are well-hedged for 2025 with approximately 89 percent of the remaining 2025 expected global export volumes tolled or financially hedged. Merchant volumes are hedged at an average Far East Index ("FEI") to North American financial hedge price of US$20.96 /Bbl while tolling volumes are in line with historical rates. Approximately 85 percent of the Company's 2025 expected frac exposed volumes are hedged at US$26.32 /Bbl, prior to transportation costs. AltaGas continues to actively manage risk across the Midstream platform through commercial contracting and a systematic hedging program to manage its commodity price exposure. For the remainder of 2025, AltaGas has materially hedged all of its expected Baltic freight exposure through time charters, financial hedges, and tolled volumes.

| Midstream Hedge Program | Q2

2025 | Q3

2025 | Q4 2025 | Remainder of 2025 | | Global Exports volumes hedged (%) (1) | 97 | 98 | 71 | 89 | | Average propane/butane FEI to North America hedge (US$/Bbl) (2) (3) | 20.40 | 18.91 | 27.88 | 20.96 | | Fractionation volume hedged (%) (3) | 76 | 86 | 94 | 85 | | Frac spread hedge rate - (US$/Bbl) (3) | 26.27 | 26.27 | 26.42 | 26.32 |

| (1) | Approximate expected volumes hedged based on AltaGas' internally assumed export volumes. Hedged amounts include contracted tolling volumes and financial hedges. AltaGas is hedged at a higher percentage for firmly committed volumes. | | (2) | Does not include physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. | | (3) | Approximate average for the period. |

Utilities

Utilities reported normalized EBITDA of $501 million in the first quarter of 2025 compared to $437 million in the first quarter of 2024, while income before income taxes was $446 million in the first quarter of 2025 compared to $384 million in the first quarter of 2024. Strong year-over-year growth was principally driven by strong performance at WGL's retail business, colder weather in Michigan and D.C., active cost management, contributions from asset modernization investments, and asset optimization activities.

During the first quarter of 2025, AltaGas continued to focus efforts on ensuring long-term operating costs are aligned with existing rate structures and its allowed costs in each jurisdiction. In the first quarter, Washington Gas' regulated O&M costs were 11 percent lower year-over-year. These cost savings came despite colder weather, which typically drives higher operating expenses due to increased asset usage and overtime costs. This continued focus on cost controls will provide Washington Gas with room to make additional rate base investments to expand and modernize its network while minimizing increases to customer bills.

AltaGas continued to actively invest in its Utilities business during the first quarter of 2025 with $127 million of capital deployed across the Company's Utilities network. This included investing approximately $52 million in the quarter toward the Company's asset modernization programs. These investments improve the safety and reliability of the system while connecting customers to the critical energy they rely on everyday. AltaGas remains committed to making these investments, while balancing the need for ongoing customer affordability.

Washington Gas continues to work with the PSC of D.C. on the August 2024 rate case where requested rates are designed to collect an incremental US$34 million in annual revenue, net of US$12 million in Accelerated Replacement Program ("ARP") surcharge. Included in the filing was a proposed weather normalization adjustment that seeks to remove fluctuations in weather-related usage. Given the anticipated timelines, new rates are not expected to impact AltaGas' 2025 financial performance. Washington Gas also has a US$215 million asset modernization extension application under review in D.C. through its District SAFE plan. In February 2025 , the PSC of D.C. ordered an additional extension of the existing PROJECTpipes 2 from May 1, 2025 through December 31, 2025 with an additional US$34 million of modernization capital being added for this period to ensure uninterrupted pipeline modernization work continues while District SAFE is being reviewed.

Corporate/Other

The Corporate/Other segment reported normalized EBITDA for the first quarter of 2025 of a loss of $9 million , compared to a loss of $24 million in the same quarter of 2024. Loss before income taxes in the Corporate/Other segment was $137 million in the first quarter of 2025, compared to $140 million in the same quarter of 2024. The year-over-year normalized EBITDA loss narrowed due to higher contribution from Blythe, which had limited operations in the first quarter of 2024 due to downtime related to planned maintenance.

CONSOLIDATED FINANCIAL RESULTS

| | Three Months Ended

March 31 | | | | ($ millions) | 2025 | 2024 | | | Normalized EBITDA (1) | $ 689 | $ 660 | | | Add (deduct): | | | | | Depreciation and amortization | (128) | (116) | | | Interest expense | (115) | (107) | | | Normalized income tax expense | (98) | (100) | | | Preferred share dividends | (5) | (4) | | | Other (2) | (1) | 5 | | | Normalized net income (1) | $ 342 | $ 338 | | | | | | | | Net income applicable to common shares | $ 392 | $ 408 | | | Normalized funds from operations (1) | $ 551 | $ 510 | | | | | | | | ($ per share, except shares outstanding) | | | | | Shares outstanding - basic (millions) | | | | | During the period (3) | 298 | 295 | | | End of period | 299 | 296 | | | | | | | | Normalized net income - basic (1) | 1.15 | 1.14 | | | Normalized net income - diluted (1) | 1.14 | 1.14 | | | | | | | | Net income per common share - basic | 1.31 | 1.38 | | | Net income per common share - diluted | 1.31 | 1.37 | |