AltaGas Ltd. press release
ALTAGAS REPORTS FOURTH QUARTER AND FULL YEAR 2024 RESULTS
TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Sulfur · Canada
Canada NewsWire
Strong Operating Performance Delivers 2024 Results in Upper Half of Guidance Range
CALGARY, AB , March 7, 2025 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reported fourth quarter and full year 2024 results, reaffirmed 2025 guidance, and provided an update on other corporate developments.
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HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
Normalized EPS 1 was $0.76 in the fourth quarter and $2.18 for the full year of 2024 while GAAP EPS 2 was $0.68 in the fourth quarter and $1.95 for the full year of 2024. Full year normalized EPS was above the midpoint of AltaGas' 2024 guidance range, driven by strong performance across the enterprise. Normalized EBITDA 1 was $520 million in the fourth quarter and $1,769 million for the full year of 2024 while income before income taxes was $231 million in the fourth quarter and $746 million for the full year of 2024. Full year normalized EBITDA was at the top-end of AltaGas' 2024 guidance range, driven by strong business performance, including: the partial settlement of Washington Gas' post-retirement benefit pension plan in the third quarter, record liquified petroleum gas ("LPG") export volumes, the benefit of continued Utilities rate base investments, the addition of the Pipestone assets, and enhanced cost management at the Utilities. Utilities reported normalized EBITDA 1 of $336 million in the fourth quarter of 2024 compared to $311 million in the fourth quarter of 2023, while income before taxes was $186 million in the fourth quarter of 2024 compared to $207 million in the fourth quarter of 2023. The largest drivers of the eight percent year-over-year growth in Utilities normalized EBITDA were enhanced cost management, contribution from investments in rate base, and increased revenue from the 2023 District of Columbia ("D.C.") rate case decision. These factors were partially offset by warm weather in D.C. and Michigan and lower contributions from the Retail business. Midstream reported normalized EBITDA 1 of $182 million in the fourth quarter of 2024 consistent with the fourth quarter of 2023, while income before taxes in the segment was $181 million in the fourth quarter of 2024 compared to $79 million in the fourth quarter of 2023. Positive contributions from increased export volumes and the addition of the Pipestone Assets were offset by lower extraction volumes due to ethane re-injection, a higher percentage of export volumes under tolling contracts in 2024 relative to 2023, and lower contribution from the Mountain Valley Pipeline ("MVP") due to recording equity earnings instead of the allowance for funds used during construction ("AFUDC") recorded in 2023. AltaGas continued to heavily invest in its Utilities business in 2024 to add new customers and enhance the safety and reliability of its system. The Company deployed $722 million of capital to the Utilities in 2024, with $360 million spent on asset modernization programs and the balance on system betterment and new meter growth. Asset modernization and system betterment will remain a key focus in 2025 and beyond, which will allow AltaGas to deliver the lowest cost and most reliable form of residential and commercial heating in its jurisdictions. AltaGas continues to work with numerous data center developers in Northern Virginia around building pipeline interconnects to provide natural gas for onsite power generation for new data centers. Business development and engineering work on these opportunities is expected to progress through 2025 with potential construction in 2026 and onwards. AltaGas is pursuing these opportunities on a de-risked basis through traditional rate regulated investments. These data center opportunities would further increase AltaGas' strong Utilities growth outlook. Utilities system expansion opportunities progressed during the fourth quarter of 2024. SEMCO's Keweenaw Connector Pipeline project continued with key regulatory and engineering work and now expects to seek regulatory approval in 2025. The project is focused on ensuring long-term reliable gas and system resiliency for our Michigan customers, offering diversity of supply and more reliable service to 14,000 customers in the Keweenaw Peninsula . AltaGas advanced a number of key Midstream growth projects in 2024: The Company and Royal Vopak reached a positive final investment decision ("FID") and commenced construction on the Ridley Island Energy Export Facility ("REEF"). REEF remains on budget and on-schedule to achieve its 2026 in-service date. With only ten shipping days to strong demand markets in Northeast Asia , REEF will efficiently deliver Canada's vital energy products to the region and allow Canadian LPGs access to premium global markets. AltaGas continued to progress construction of the Pipestone II deep cut facility in the Alberta Montney. The acid gas wells and gas gathering system have been completed, offsite fabrication has been executed in line with the project delivery schedule, and more than 40 percent of facility construction is complete. The project is on track to be in-service in 2025. Pipestone II is fully contracted under long-term take-or-pay agreements with principally all costs incurred or committed under fixed price contracts. AltaGas continued to advance regulatory and engineering work across a number of gas processing, fractionation, storage and export projects, based on strong customer demand. These projects would further extend the growth outlook for AltaGas' Midstream business.
The Company advanced commercial contracting across the Midstream business which further de-risked cash flows:
Executed long-term LPG supply and tolling agreements across the global exports platform during the fourth quarter of 2024 and first quarter of 2025 achieving AltaGas' base long-term tolling target for REEF. This includes Keyera entering a 15-year contract for 12,500 Bbls/d of LPGs at REEF. Entered two agreements that have a high-single digit average contract length with a large investment grade international energy company in Northeastern B.C. ("NEBC") for a total of 100 Mmcf/d of gas processing capacity at the Townsend facility, with associated liquids handling and fractionation. Extended the contract term with a large investment grade producer at the Pipestone I facility in the Alberta Montney for five years, including gas processing, liquids handling and marketing services. Entered an 18-year agreement for approximately 8,000 Bbls/d fractionation capacity at Keyera Fort Saskatchewan ("KFS"), which provides AltaGas with dedicated frac capacity Pipestone II liquids while securing take-in-kind rights for LPG volumes and provides access to Keyera's extensive rail, storage, and logistics network in Alberta's Industrial Heartland.
Since entering service in June 2024 , the Mountain Valley Pipeline ("MVP") has been steadily operating under long-term 20-year contracts with investment grade counterparties. The 2.0 Bcf/d pipeline is expandable by 475 MMcf/d through additional compression and is extendable into North Carolina through the Southgate expansion project. The Southgate project filed an application with the U.S. Federal Energy Regulatory Commission ("FERC") in February to approve its proposed shortened pipeline route. AltaGas has a ten percent non-operated equity stake in the MVP pipeline and a 5.1 percent interest in Southgate and is currently evaluating a sale of its interests with proceeds planned to accelerate AltaGas' deleveraging plan. AltaGas had two financings in the fourth quarter of 2024, including Washington Gas' execution of a note purchase agreement on October 1, 2024 to issue US$200 million of private placement notes. Of this, US$100 million was issued on October 1, 2024 at 5.40 percent with a maturity date of October 1, 2054 and the remaining US$100 million will be issued on April 1, 2025 at 4.84 percent with a maturity date of April 1, 2035 . On November 18, 2024 , AltaGas also executed a partial debt extinguishment of medium-term notes ("MTNs"), resulting in the derecognition of $806 million of previously issued MTNs for total consideration of $793 million . On December 3 , 2024, AltaGas' Board of Directors approved a six percent increase to its 2025 common share dividends to $1.26 per common share annually ( $0.315 per common share quarterly). This change will be effective for the dividend that will be paid on March 31, 2025 . Concurrent with the dividend increase announcement, the Company extended its five to seven percent compounded annual growth rate ("CAGR") guidance on dividends to 2029. AltaGas has had a strong start to the year and is reiterating the Company's 2025 full year guidance, including normalized EBITDA of $1,775 million to $1,875 million and normalized net income per share of $2.10 to $2.30 .
CEO MESSAGE
"We are pleased with the financial results AltaGas delivered in 2024," said Vern Yu , President and Chief Executive Officer of AltaGas. "This performance demonstrates the strength of our platform and the actions taken to enhance shareholder value. Normalized EBITDA increased by 12 percent year-over-year, reaching the high end of our guidance range. These results underscore the solid operational execution across our enterprise and robust long term energy fundamentals.
"Despite warm weather in D.C. and Michigan , the Utilities performance was strong for the year with normalized EBITDA increasing 14 percent year-over-year. These results were reflective of the active steps management took to create value through enhanced cost management, ongoing rate base investments, and new meter growth. Our Utilities are critical to balancing long-term energy reliability, affordability, and climate needs across our jurisdictions and have a bright future as the largest source of energy for households across our jurisdictions.
"Our Midstream business delivered another strong year with normalized EBITDA increasing 15 percent year-over-year, driven by record volumes in our global export business and the addition of the Pipestone assets. During the year, we actively de-risked cash flows through long-term contracting across the value chain, including reaching our base tolling target at REEF. The impact of U.S. tariffs on Canadian energy creates uncertainty and emphasizes the importance of market diversification and the long‑term advantage of AltaGas' global exports platform. As we continue to meet the needs of our long-time U.S. partners, we believe it is critical to connect more of Canada's vital energy products into the largest LPG demand center - Asia .
"AltaGas had a busy 2024 where we reached positive FID on REEF, executed on our growth initiatives at the Utilities, integrated the Pipestone assets, and commenced construction on two large Midstream growth projects. I am excited about the road ahead, where we will leverage the favourable long-term fundamentals for natural gas and natural gas liquids ("NGLs"), and build on 2024's successes."
RESULTS BY SEGMENT
| Normalized EBITDA (1) | Three Months Ended
December 31 | Year Ended
December 31 | | | | | ($ millions) | 2024 | 2023 | 2024 | 2023 | | | Utilities | $ 336 | $ 311 | $ 1,012 | $ 886 | | | Midstream | 182 | 182 | 785 | 684 | | | Corporate/Other | 2 | 9 | (28) | 5 | | | Normalized EBITDA (1) | $ 520 | $ 502 | $ 1,769 | $ 1,575 | | | | | | | | |
| (1) | Non-GAAP financial measure; see discussion in the Non-GAAP Financial Measures advisories of this news release. |
| Income (Loss) Before Income Taxes | Three Months Ended
December 31 | Year Ended
December 31 | | | | | ($ millions) | 2024 | 2023 | 2024 | 2023 | | | Utilities | $ 186 | $ 207 | $ 627 | $ 886 | | | Midstream | 181 | 79 | 646 | 460 | | | Corporate/Other | (136) | (125) | (527) | (434) | | | Income Before Income Taxes | $ 231 | $ 161 | $ 746 | $ 912 | | | | | | | | |
BUSINESS PERFORMANCE
Utilities
The Utilities segment reported normalized EBITDA of $336 million in the fourth quarter of 2024 compared to $311 million in the fourth quarter of 2023, while income before income taxes was $186 million in the fourth quarter of 2024 compared to $207 million in the fourth quarter in 2023. Year-over-year growth in normalized EBITDA was principally driven by lower operating and maintenance ("O&M") expenses, which more than offset the warmer-than-normal weather in D.C. and Michigan , where the Company has weather exposure. The quarter also saw positive impacts from the D.C. rate case decision in 2023, contributions from continued rate base investments, customer growth, and the higher USD/CAD exchange rate, inclusive of currency hedges. These positive factors were partially offset by lower contributions from the Retail business due to the outsized performance in the fourth quarter of 2023.
Washington Gas has an active rate case application with the Public Service Commission of the District of Columbia ("PSC of D.C.") with requested rates designed to collect an incremental US$34 million in annual revenue, net of US$12 million in Accelerated Replacement Program ("ARP") surcharge. New rates are not expected to impact the Company's 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 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.
AltaGas continued to actively invest across its Utilities assets during the fourth quarter of 2024 with $178 million of capital deployed, including investing $85 million in the quarter through the Company's various asset modernization programs and an additional $75 million on system betterment. These investments continue to be directed towards improving the safety and reliability of the system and connecting customers to the critical energy they require to carry out everyday life. AltaGas remains committed to making these investments, while balancing the need for ongoing customer affordability.
During the fourth quarter of 2024, AltaGas continued efforts to ensure long-term operating costs are aligned with existing rate structures and allowed costs in each jurisdiction. These cost efficiencies will provide additional room for AltaGas to continue to make ongoing rate base investments to expand and modernize the network while minimizing the increase to customer bills. The Company will continue to prioritize cost management for the long-term benefit of our customers while maintaining regulatory and capital discipline.
Midstream
The Midstream segment reported normalized EBITDA of $182 million in the fourth quarter of 2024, consistent with the fourth quarter of 2023, while income before taxes was $181 million in the fourth quarter of 2024 compared to $79 million in the fourth quarter of 2023. These results were in line with expectations, as we successfully delivered on our strategic priorities to grow export volumes while de-risking the business through increasing the percent of tolling contracts in our business. The quarter included record fourth quarter export volumes and strong performance across the balance of the Midstream value chain. These positive factors were partially offset by higher ethane re-injection rates at our extraction plants, lower realized frac spreads, and lower contributions from MVP equity earnings relative to the AFUDC recorded in the fourth quarter of 2023.
AltaGas exported 122,233 Bbls/d of LPGs to Asia in the fourth quarter of 2024, which was spread across 20 Very Large Gas Carriers ("VLGCs"), including 13 VLGCs at RIPET and seven VLGCs at Ferndale . Global LPG export volumes for the full year of 2024 averaged 122,247 Bbls/d across 80 ships, representing a 15 percent year-over-year increase.
The importance of market diversification and the long‑term advantage of AltaGas' global exports platform continues to be reinforced by recent uncertainty relating to U.S. tariffs on Canadian energy. As we continue to meet the needs of our long-time U.S. partners, we believe it is critical for the Canadian energy industry to connect more of Canada's vital energy products into premium global markets. We continue to see growing Asian demand for North American west coast LPGs, which have a 60 percent minimum travel time savings relative to the U.S. Gulf Coast.
Performance across the balance of the Midstream platform was in line with the Company's expectations for the fourth quarter of 2024. Highlights include double digit year-over-year growth in gas processing, fractionation and liquids handling, and extraction volumes. AltaGas' Montney footprint was at the center of growth, which continues to benefit from increased producer activity ahead of LNG Canada's start-up. AltaGas' fourth quarter Montney processing and fractionation volumes were up 30 percent and 8 percent, on a year-over-year basis respectively, including the addition of the Pipestone assets.
AltaGas' realized frac spread averaged $20.99 /Bbl, after transportation costs, as most of AltaGas' frac exposed volumes were hedged at approximately $31.15 /Bbl in the fourth quarter of 2024, prior to transportation costs. AltaGas is well hedged for the first half of 2025 frac exposures with approximately 76 percent of its first half of 2025 expected frac exposed volumes hedged at approximately US$27.10 /Bbl, prior to transportation costs.
In addition, approximately 87 percent of AltaGas' first half of 2025 expected global export volumes are either tolled or financially hedged with an average Far East Index ("FEI") to North American financial hedge price of approximately US$18.61 /Bbl for non-tolled propane and butane volumes. AltaGas is actively contracting and hedging the balance of 2025 global export volumes, recognizing the NGL re-contracting season is more dynamic this year given the impact of tariffs on Canadian LPGs entering the U.S. AltaGas will provide a more comprehensive update on the NGL re-contracting season and hedging activities during first quarter of 2025 reporting.
2025 Midstream Hedge Program
| | Q1 2025 | Q2 2025 | First half of 2025 | | Global Exports volumes hedged (%) (1) | 81 | 94 | 87 | | Average propane/butane FEI to North America average hedge (US$/Bbl) (2) | 18.33 | 18.90 | 18.61 | | Fractionation volume hedged (%) (3) | 72 | 80 | 76 | | Frac spread hedge rate (US$/Bbl) (3) | 27.63 | 26.57 | 27.10 |
| (1) | Approximate expected volume hedged. Includes contracted tolling volumes and financial hedges. Based on AltaGas' internally assumed export volumes. AltaGas is hedged at a higher percentage for firmly committed volumes. | | (2) | Approximate average for the period. Does not include tolling volumes. Does not include physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. | | (3) | Approximate average for the period. |
Corporate/Other
The Corporate/Other segment reported normalized EBITDA for the fourth quarter of 2024 of $2 million , compared to $9 million in the same quarter of 2023. The decrease was mainly due to lower contributions from Blythe where CAISO transmission outages reduced merchant energy generation. Loss before income taxes in the Corporate/Other segment was $136 million in the fourth quarter of 2024, compared to $125 million in the same quarter of 2023.
CONSOLIDATED FINANCIAL RESULTS
| | | | | | | | Three Months Ended
December 31 | Year Ended
December 31 | | | | ($ millions) | 2024 | 2023 | 2024 | 2023 | | Normalized EBITDA (1) | $ 520 | $ 502 | $ 1,769 | $ 1,575 | | Add (deduct): | | | | | | Depreciation and amortization | (123) | (110) | (475) | (441) | | Interest expense | (128) | (101) | (455) | (394) | | Normalized income tax expense (1) | (33) | (60) | (160) | (153) | | Preferred share dividends | (5) | (7) | (18) | (27) | | Other (2) | (4) | (10) | (13) | (24) | | Normalized net income (1) | $ 227 | $ 214 | $ 648 | $ 536 | | | | | | | | Net income applicable to common shares | $ 203 | $ 113 | $ 578 | $ 641 | | Normalized funds from operations (1) | $ 397 | $ 376 | $ 1,192 | $ 1,128 | | | | | | | | ($ per share except shares outstanding) | | | | | | Shares outstanding - basic (millions) | | | | | | During the period (3) | 298 | 283 | 297 | 282 | | End of period | 298 | 295 | 298 | 295 | | | | | | | | Normalized net income - basic (1) | 0.76 | 0.76 | 2.18 | 1.90 | | Normalized net income - diluted (1) | 0.76 | 0.75 | 2.17 | 1.89 | | | | | | | | Net income per common share - basic | 0.68 | 0.40 | 1.95 | 2.27 | | Net income per common share - diluted | 0.68 | 0.40 | 1.94 | 2.26 |