Stillwater Critical Minerals Corp. press release
ALTAGAS REPORTS STRONG 2021 RESULTS
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AltaGas Delivers Strong 2021 Financial Results and Remains Focused on Executing its Long-term Strategic Plan.
CALGARY, AB , March 4, 2022 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) today reported fourth quarter and full year 2021 financial results and provided an update on the Company's operations.
HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
Normalized EPS 1 was $0.38 in the fourth quarter and $1.78 for the full year in 2021 while GAAP EPS 2 was $(0.56) in the fourth quarter and $0.82 for the full year in 2021. Full year normalized EPS increased 25 percent year-over-year and was in the upper end of the Company's April 2021 increased guidance range of $1.65 - $1.80 . Normalized FFO per share 1 was $1.03 in the fourth quarter and $4.28 for the full year in 2021 while GAAP FFO 3 per share was $(0.56) in the fourth quarter and $2.64 for the full year in 2021. Normalized FFO per share increased 19 percent year-over-year in 2021 and continued to provide the foundation to fund AltaGas' significant organic growth opportunities and increase returns of capital to shareholders over the long-term. Normalized EBITDA 1 was $341 million in the fourth quarter and $1.490 billion for the full year 2021 while income before taxes was $(162) million in the fourth quarter and $446 million for the full year in 2021. Full year normalized EBITDA increased approximately 14 percent year-over-year and was slightly below the mid-point of the Company's April 2021 increased guidance range of $1.475 billion - $1.525 billion . The Midstream segment reported normalized EBITDA of $102 million in the fourth quarter and $734 million for the full year in 2021 while income before taxes in the segment was $(151) million in the fourth quarter and $242 million for the full year in 2021. This included AltaGas exporting 76,609 Bbls/d of liquified petroleum gas (LPG) to Asia during the fourth quarter of 2021 while the Company's average 2021 LPG exports were relatively in line with its 90,000 Bbls/d target, despite logistical challenges during the fourth quarter due to the devastating impacts of the west coast flooding. The Utilities segment reported normalized EBITDA of $238 million in the fourth quarter and $771 million for the full year of 2021 while income before taxes in the segment was $64 million in the fourth quarter and $538 million for the full year in 2021. The Utilities segment continued to focus on modernizing its network to enhance safety and reliability and provide other long-term benefits to our customers. As part of this focus, AltaGas increased the company's 2021 average rate base by approximately 8 percent year-over-year to approximately US$4.7 billion . As a result of the ongoing legal and regulatory challenges on the Mountain Valley Pipeline (MVP), AltaGas recorded a pre-tax provision on its equity investments in the project by approximately $271 million ( $209 million after-tax) in the fourth quarter of 2021, bringing the carrying value in-line with AltaGas' US$352 million cost cap. AltaGas' subsidiary WGL issued US$200 million of 2.98 percent 30-year senior unsecured notes on December 15, 2021 , and AltaGas issued $300 million of 5.25 percent fixed-to-fixed rate subordinated hybrid notes at AltaGas on January 11, 2022 , with plans to redeem its higher cost Series K Preferred Shares. The latter issuance and redemption plans continue to reduce the Company's long-term financing costs while staggering and extending maturities and de-risking its capital structure. AltaGas released its 2021 ESG Report on December 15, 2021 , which included a number of sustainability goals within the core areas of climate, diversity and inclusion, and safety. These were meaningful steps to mark AltaGas' progression along the path of continuous improvement. AltaGas has agreed to sell an interest in certain Midstream processing facilities to a customer for total consideration of approximately $234 million . The transaction is expected to close in the second quarter of 2022. Subsequent to quarter-end, AltaGas closed the sale of the 60 MW Goleta stand-alone energy storage development project and entered an agreement to sell the 70 MW combined cycle Brush II power plant. The divestitures are continuations of AltaGas' ongoing efforts to streamline the platform and exit non-core assets. The Company announces the planned retirement of Terry McCallister from the Board effective April 1, 2022 .
| | | 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 December 31, 2021, which is available on www.sedar.com . 2. GAAP EPS is equivalent to Net income applicable to common shares divided by shares outstanding. 3. GAAP FFO per share is equivalent to funds from operations divided by shares outstanding. |
CEO MESSAGE
"We are extremely proud of the financial performance that we delivered over 2021" said Randy Crawford , President and Chief Executive Officer. "Normalized EPS increased 25 percent and normalized EBITDA increased approximately 14 percent year-over-year with results achieving the increased guidance ranges that we announced in April. This is a testament to our diversified business model that continues to demonstrate the strong advantages that have been shown throughout market cycles and operating environments.
"Our Midstream platform delivered a very strong year, despite the large challenges associated with the devastating floods in British Columbia and Washington state during the fourth quarter. We continued to build on the momentum that has been demonstrated since 2019 through robust LPG export growth, exceeding our cost synergy targets at Petrogas, and continuing to fill latent capacity across the platform. During the quarter, we increased our fractionation and liquids handling volumes by 37 percent year-over-year and our gathering and processing volumes by 9 percent year-over-year, clearly demonstrating the advantage of our industry-leading footprint in Northeastern B.C. With the logistical challenges associated with the flooding in the fourth quarter behind us, the platform is well-positioned to achieve our 2022 export target of 97,000 Bbls/d.
"Our regulated Utilities delivered a solid performance, despite warmer than normal weather and unfavorable foreign exchange. Normalized EBITDA was up six percent on a year-over-year basis in U.S. dollar terms in the fourth quarter of 2021. Our continued investment in Accelerated Pipeline Replacement (ARP) has resulted in a 23 percent and 13 percent reduction in leaks since 2019 and 2020, respectively, and reiterates the improved safety and reliability of our system and drive to deliver better long-term customer outcomes. The decision in the third quarter to change our customer call center provider at Washington Gas and the corresponding integration into our operations caused some temporary challenges and transition costs but has produced meaningful improvements in customer service metrics and we will focus on delivering continuous improvements in those metrics.
"We continue to believe in the role, benefits, and reliability that responsibly sourced natural gas will provide to our customers as we embrace the energy evolution and the alternative fuels of the future. Given the recent geopolitical upheaval, and the corresponding impact on energy availability and costs, I am proud of the role that AltaGas is playing in supporting North American energy independence and our ability to export affordable butane and propane to the world."
CHAIR MESSAGE ON BOARD RETIREMENT
"On behalf of the Board of Directors and all our stakeholders, I want to thank Terry McCallister for his substantial contributions during his long tenure with the organization" stated Pentti Karkkainen , Chair of the Board of AltaGas. "Terry was a senior leader within WGL for nearly two decades, including being Chairman and Chief Executive Officer from 2009 until his retirement in 2018. He has been a valued member of the AltaGas Board since the WGL acquisition and will be missed across the organization."
Following Mr. McCallister's planned retirement, AltaGas' Board will be comprised of ten directors.
RESULTS BY SEGMENT
| Normalized EBITDA 1 | Three Months Ended
December 31 | Year Ended
December 31 | | | | ($ millions) | 2021 | 2020 | 2021 | 2020 | | Utilities | 238 | 259 | 771 | 788 | | Midstream | 102 | 128 | 734 | 473 | | Corporate/Other | 1 | 5 | (15) | 49 | | Normalized EBITDA 1 | 341 | 392 | 1,490 | 1,310 | | | | | | | | Income (Loss) Before Income Taxes | Three Months Ended
December 31 | Year Ended
December 31 | | | | ($ millions) | 2021 | 2020 | 2021 | 2020 | | Utilities | 64 | 157 | 538 | 687 | | Midstream | (151) | (36) | 242 | 235 | | Corporate/Other | (75) | (47) | (334) | (223) | | Income (Loss) Before Income Taxes | (162) | 74 | 446 | 699 |
| (1) | Non–GAAP financial measure; see discussion in the Non-GAAP Financial Measures advisories of this news release |
BUSINESS PERFORMANCE
Utilities
The Utilities segment reported normalized EBITDA of $238 million in the fourth quarter of 2021 compared to $259 million in the fourth quarter of 2020, while income before taxes was $64 million in the fourth quarter of 2021 compared to $157 million in the fourth quarter of 2020. Results were reflective of typical seasonality during the fourth quarter when natural gas demand rises in the fall and winter heating seasons. Operating results during the fourth quarter of 2021 included continued contribution from ongoing ARP investments to upgrade Washington Gas' network, the benefits of the 2021 D.C. and Maryland rate cases, and higher returns on pension assets. However, these factors were more than offset by the combination of lower Retail contribution, warmer-than-normal weather in Michigan and D.C., a weaker U.S. dollar, and higher general and administrative expenses. The latter of which was partially related to replacing the customer call service provider at Washington Gas following service and performance issues with the former provider. The Retail business generated $27 million lower normalized EBITDA contribution on a year-over-year basis in the fourth quarter of 2021 due to the combination of: 1) outsized performance in the fourth quarter of 2020, which was driven by the timing of energy and PJM fixed costs; and 2) the timing impact of swap gains between the third and fourth quarters of 2021, the latter of which had the effect of pulling profits into the third quarter of 2021 rather than the fourth quarter of 2021. These timing issues have the effect of creating quarter-over-quarter variability in financial results with no material impact on the run rate profitability of the business.
AltaGas continued to execute on the Company's various ARPs in the quarter with a sustained focus on replacing aging infrastructure to improve the safety and reliability of the system, which also brings long-term environmental benefits. This included deploying $235 million of invested capital 1 into the Utilities in the quarter, with 36 percent of this capital allocated to ARP spending. In December of 2021, AltaGas also filed the largest accelerated pipeline replacement case in Virginia's history through the Steps to Advance Virginia's Energy (SAVE) Plan, with a request of approximately US$890 million in accelerated capital to continue upgrading and modernizing infrastructure for the period from 2023-2027.
| _ | | | 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 December 31, 2021, which is available on www.sedar.com . |
Midstream
The Midstream segment reported normalized EBITDA of $102 million in the fourth quarter of 2021 compared to $128 million in the fourth quarter of 2020, while income before taxes was $(151) million in the fourth quarter of 2021 compared to $(36) million in the fourth quarter of 2020. Results included continued year-over-year growth in global exports, fractionation and liquids handling, and gathering and processing volumes. However these factors were more than offset by the impact of a $24 million hedge loss associated with global exports revenue recognized in the third quarter of 2021, significant logistical and operations issues associated with the flooding and rail outages on the North American west coast during the quarter that impacted global exports profitability, Allowance for Funds Used During Construction no longer being recorded on the Mountain Valley Pipeline, the accounting impact of the Gordondale blend and extend, and the lost contribution from the U.S. Transportation and Storage business, which was monetized in the second quarter of 2021.
During the fourth quarter AltaGas exported 76,609 Bbls/d of LPG to Asia , spread across 13 VLGCs. This included 48,974 Bbls/d of propane being exported at RIPET across eight ships, and an average of 27,635 Bbls/d of combined butane and propane being exported at Ferndale across five ships. Global Export volumes and margins were negatively impacted by weather and flooding issues experienced in British Columbia and Washington state , which caused extended transportation and rail outages impacting AltaGas' ability to transport LPGs to its export terminals on the west coast, particularly at Ferndale . Positively, AltaGas was able to redirect select propane volumes originally destined for Ferndale to RIPET during the quarter, however the Company was unable to alleviate butane volume disruptions with financial performance further negatively impacted by higher transportation costs associated with rail switching to handle the large logistical outages. AltaGas' gathering and processing volumes increased 9 percent year-over-year in the fourth quarter of 2021 while fractionation and liquids handling volumes increased 37 percent year-over-year. Growth within AltaGas' facilities continued to be more heavily weighted within the Montney and the Company's industry-leading footprint in the region.
AltaGas' realized frac spread averaged $9.18 /Bbl, after transportation costs, as most of AltaGas' frac exposed volumes were hedged at approximately $25.65 /Bbl in the fourth quarter of 2021, prior to transportation costs. AltaGas is well hedged for 2022 with approximately 74 percent of its 2022 expected frac exposed volumes hedged at approximately $33.08 /Bbl, prior to transportation costs. In addition, approximately 44 percent of AltaGas 2022 expected global export volumes are either tolled or financially hedged with an average FEI to North American financial hedge price of US$13.17 /Bbl for non-tolled propane and butane volumes.
2022 Midstream Hedge Program
| | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | | Global Exports volume hedged (%) (1) | 79 | 44 | 31 | 22 | 44 | | Average propane/butane FEI to North America Average hedge (US$/Bbl) (2) | 15.29 | 10.56 | 10.43 | 9.76 | 13.17 | | Fractionation volume hedged (%) | 71 | 79 | 75 | 68 | 74 | | Frac spread hedge rate - (CAD$/Bbl) (3) | 24.40 | 36.02 | 36.14 | 36.17 | 33.08 |
| (1) | Approximate expected volume hedged, includes contracted tolling volumes and financial hedges; based on the assumption of average exports of 90 MBbls/d. | | (2) | Approximate average for the period; 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 of $1 million in the fourth quarter of 2021 compared to $5 million in the same quarter of 2020 while income before taxes was $(75) million in the fourth quarter of 2021 compared to $(47) million in the fourth quarter of 2020. The $4 million year-over-year decrease in normalized EBITDA was driven by the combination of higher corporate expenses, which were primarily related to employee incentive plans as a result of AltaGas' strong corporate performance and rising share price over the course of 2021, lower revenues from energy management services contracts and the transfer of the remaining distributed generation assets to the purchaser in the second quarter of 2021.
CONSOLIDATED FINANCIAL RESULTS
| | Three Months Ended
December 31 | Year Ended
December 31 | | | | | | | | ($ millions) | 2021 | 2020 | 2021 | 2020 | | | | | | Normalized EBITDA (1) | $ | 341 | $ | 392 | $ | 1,490 | $ | 1,310 | | Add (deduct): | | | | | | | | | | Depreciation and amortization | (105) | (108) | (422) | (414) | | | | | | Interest expense | (67) | (68) | (275) | (274) | | | | | | Normalized income tax expense | (39) | (46) | (175) | (138) | | | | | | Preferred share dividends | (13) | (16) | (53) | (66) | | | | | | Other (3) | (10) | (6) | (68) | (21) | | | | | | Normalized net income (1) | $ | 107 | $ | 147 | $ | 497 | $ | 396 | | | | | | | | | | | | Net income (loss) applicable to common shares | $ | (156) | $ | 48 | $ | 230 | $ | 486 | | Normalized funds from operations (1) | $ | 287 | $ | 327 | $ | 1,198 | $ | 1,003 | | | | | | | | | | | | ($ per share except shares outstanding) | | | | | | | | | | Shares outstanding - basic (millions) | | | | | | | | | | During the period (2) | 280 | 279 | 280 | 279 | | | | | | End of period | 280 | 279 | 280 | 279 | | | | | | | | | | | | | | | | Normalized net income - basic (1) | 0.38 | 0.53 | 1.78 | 1.42 | | | | | | Normalized net income - diluted (1) | 0.38 | 0.53 | 1.76 | 1.42 | | | | | | | | | | | | | | | | Net income (loss) per common share - basic | (0.56) | 0.17 | 0.82 | 1.74 | | | | | | Net income (loss) per common share - diluted | (0.56) | 0.17 | 0.82 | 1.74 | | | | |
| (1) | Non–GAAP financial measure; see discussion in Non–GAAP Financial Measures section at the end of this news release. | | (2) | Weighted average. | | (3) | "Other" includes accretion expense, net income applicable to non-controlling interests, foreign exchange gains (losses), and NCI portion of non-GAAP adjustments. The portion of non-GAAP adjustments applicable to non-controlling interests are excluded in the computation of normalized net income to ensure consistency of normalizations applied to controlling and non-controlling interests. These amounts are included in the "net income applicable to non-controlling interests" line item on the Consolidated Statements of Income. |
Normalized EBITDA for the fourth quarter of 2021 was $341 million compared to $392 million for the same quarter in 2020. The largest factors leading to the variance are described in the Business Performance sections above. In addition, the average CAD/USD foreign exchange rate decreased to 1.26 in the fourth quarter of 2021 from an average of 1.30 in the same quarter of 2020, resulting in a decrease in normalized EBITDA of approximately $8 million on a consolidated basis.
Income before income taxes was $(162) million for the fourth quarter of 2021 compared to $74 million for the same quarter in 2020. Net income applicable to common shares was $(156) million or $(0.56) per share for the fourth quarter of 2021, compared to $48 million or $0.17 per share for the same quarter in 2020. Please refer to the Three Months Ended Section of the MD&A for further details on the variance in income before income taxes and net income.
Normalized net income was $107 million or $0.38 per share for the fourth quarter of 2021, compared to normalized net income of $147 million or $0.53 per share reported for the same quarter of 2020. The decrease was mainly due to the same factors impacting normalized EBITDA, higher income tax expense, and higher net income applicable to non-controlling interests, partially offset by lower interest expense and lower depreciation and amortization expense.
Normalized FFO was $287 million or $1.03 per share for the fourth quarter of 2021, compared to $327 million or $1.17 per share for the same quarter in 2020. The decrease was mainly due to the same previously referenced factors impacting normalized EBITDA.