ALA AltaGas Ltd

AltaGas Delivers on Full Year Guidance and Advances Key Strategic Priorities that will Drive Long-term Value Creation

CALGARY, AB, March 8, 2024 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reports fourth quarter and full year 2023 financial results, reaffirms 2024 financial guidance, and provides an update on its operations and other corporate developments.

HIGHLIGHTS

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

• Normalized EBITDA¹ was $502 million in the fourth quarter and $1,575 million for the full year of 2023, while income before income taxes was $161 million in the fourth quarter and $912 million for the full year of 2023. Full-year normalized EBITDA was in the upper-half of the Company's 2023 guidance range of $1.5 billion - $1.6 billion and included strong performance across the Midstream platform and ongoing enterprise growth.
• Normalized EPS¹ was $0.76 in the fourth quarter and $1.90 for the full year of 2023, while GAAP EPS² was $0.40 in the fourth quarter and $2.27 for the full year of 2023. Full year normalized EPS was slightly below the mid-point of the Company's 2023 EPS guidance range of $1.85 - $2.05, principally due to higher interest costs weighing on strong operating performance across the business.
• Normalized FFO per share¹ was $1.33 in the fourth quarter and $4.00 for the full year of 2023, while cash from operations per share³ was $0.54 in the fourth quarter and $3.98 for the full year of 2023. Normalized FFO per share for the quarter increased slightly year-over-year due to higher normalized EBITDA, partially offset by non-cash items included in normalized EBITDA, higher normalized current income tax expense, and higher interest expense.
• The Utilities segment reported normalized EBITDA¹ of $311 million in the fourth quarter of 2023 compared to $294 million in the fourth quarter of 2022, while income before taxes was $207 million in the fourth quarter of 2023 compared to $80 million in the fourth quarter of 2022. The largest drivers of the fourth quarter year-over-year increase were strong contributions from WGL's retail business, lower operating and administrative expenses, continued rate base growth, and the Virginia rate case. These positive factors were partially offset by the Company's Alaska Utilities divestiture, lower asset optimization, and warmer weather in Michigan and the District of Columbia ("DC").
• The Midstream segment reported normalized EBITDA¹ of $182 million in the fourth quarter of 2023 compared to $163 million in the fourth quarter of 2022, while income before taxes in the segment was $79 million in the fourth quarter of 2023 compared to $113 million in the fourth quarter of 2022. The largest drivers of the fourth quarter year-over-year increase in normalized EBITDA¹ included strong performance from the global exports business, allowance for funds used during construction ("AFUDC") on the Mountain Valley Pipeline project ("MVP"), and the absence of inventory write downs.
• The global exports business shipped 90,996 Bbl/d of liquified petroleum gases ("LPGs) in the fourth quarter of 2023 and an average of 106,071 Bbls/d during 2023 from the Ridley Island Propane Export Terminal ("RIPET") and the Ferndale terminal ("Ferndale"). Although the fourth quarter is a seasonally low quarter for exports, volumes were below internal expectations this quarter due to delayed ship arrivals at both terminals during December 2023, which were loaded in the first quarter of 2024. Despite these timing impacts in the fourth quarter, AltaGas continued to demonstrate the multi-year growth trajectory that has been demonstrated since 2019 while connecting the Canadian upstream and Asian downstream markets and driving stronger Canadian industry netbacks.
• On December 22, 2023, AltaGas closed the acquisition of natural gas processing and storage infrastructure assets in the Pipestone area of the Alberta Montney (the "Pipestone Acquisition"), including Pipestone natural gas processing plant phase I ("Pipestone Phase I"), the Pipestone Phase I expansion project ("Pipestone Phase II"), the Dimsdale natural gas storage facility, and ancillary assets from Tidewater Midstream and Infrastructure Ltd. ("Tidewater"). AltaGas also declared a positive final investment decision ("FID") on Pipestone Phase II with 100 percent of the capacity contracted under long-term take-or-pay agreements.
• AltaGas continued to advance key activities on the Ridley Island Energy Export Facility ("REEF") during and subsequent to the fourth quarter of 2023. This included commencing site clearing work, including logging, clearing, and drainage work that will further solidify the project's readiness to reaching FID, which is expected during the second quarter of 2024.
• In December 2023, AltaGas commissioned the first of two new very large gas carriers ("VLGCs"), the Boreal Pioneer, which made its maiden voyage from Ferndale to Asia in early January 2024. The second VLGC, the Boreal Voyager, was commissioned in February 2024. These two seven-year time charters with optional extensions will reduce and de-risk shipping costs with materially all of AltaGas' expected Baltic freight exposure protected through time charters, financial hedges, and tolled volumes in 2024.
• On October 20, 2023, Washington Gas executed a definitive agreement with Opal Fuels Inc. ("Opal Fuels") to support a renewable natural gas ("RNG") project at the Prince William County Landfill in Virginia. As part of the agreement, Washington Gas will become an offtake customer for RNG production and purchase key interconnect infrastructure for approximately US$25 million and continue to advance long-term climate goals.
• On December 14, 2023, the Public Service Commission of Maryland ("PSC of MD") approved a US$10 million rate increase with a 9.5 percent return on equity and 52 percent equity thickness. The new rates became effective immediately.
• On December 22, 2023, the Public Service Commission of the District of Columbia ("PSC of DC") approved an increase of approximately US$20 million in revenues, net of approximately US$5 million of costs collected through the PROJECTpipes surcharge. This included a 9.65 percent return on equity and 52 percent equity thickness. The new rates went into effect January 19, 2024.
• On March 1, 2023, AltaGas closed the divestiture of its Alaskan Utilities for US$800 million (approximately CAD$1.1 billion), prior to closing adjustments. Sale proceeds were used to reduce debt while providing AltaGas with the financial flexibility to advance its strong growth opportunities across the Midstream and Utilities platforms over the coming years.
• On December 5, 2023, AltaGas' Board of Directors approved a 6 percent increase to its annual common share dividends to $1.19 per common share annually ($0.2975 per common share quarterly). This change will be effective for the dividend that will be paid on March 29, 2024, with long-term dividends expected to continue to compound by five to seven percent per annum in the years ahead, subject to annual Board approval.
• On December 5, 2023, AltaGas released its 2023 ESG Report, highlighting 2022 data for key topics and outlining progress towards the Company's sustainability goals within the areas of climate, diversity and inclusion and safety.
• AltaGas is pleased with the construction progress on MVP. The pipeline is now 99 percent complete and expected to be placed into service in the second quarter of 2024 and will provide critical energy security to customers in the Eastern U.S. As previously disclosed, AltaGas does not consider its equity stake in MVP as core and will consider value maximizing opportunities as part of the Company's plan to reach its 4.5x net debt to normalized EBITDA target once the pipeline is fully operational.
• AltaGas had a series of financing during and subsequent to the fourth quarter, including:
  • On October 19, 2023, Washington Gas issued US$200 million in private placement notes, which includes US$150 million of notes with a 6.06 percent interest rate, maturing on October 14, 2033, and US$50 million of notes at a 6.43 percent interest rate, maturing on October 15, 2053.
  • On November 10, 2023, AltaGas issued $200 million of Hybrid 8.90 percent Fixed-to-Fixed Rate Subordinated Notes, Series 3, due November 10, 2083. On December 31, 2023, AltaGas used the proceeds of the hybrid issuance to redeem all of its issued and outstanding Series E Preferred Shares for $25 per Series E Share, together with all accrued and unpaid dividends.
  • On January 8, 2024, AltaGas issued $400 million of senior unsecured medium-term notes with a 4.67 percent coupon. The net proceeds were used to pay down existing indebtedness under AltaGas' credit facilities (part of which was incurred to fund the debt portion of the Pipestone Acquisition), to fund working capital, and for general corporate purposes.
• AltaGas is reiterating the Company's 2024 full year guidance, including normalized EBITDA¹ of $1,675 million to $1,775 million, and normalized EPS¹ of $2.05 - $2.25.

"We are pleased with the results delivered during 2023," said Vern Yu, President and Chief Executive Officer of AltaGas. "The performance demonstrates the strength of our platform and the actions we have taken to drive long-term value.

"Fourth quarter Midstream performance was strong with normalized EBITDA up 12 percent year-over-year, despite delays on two LPG export vessels that had loadings pushed into the first quarter of 2024. Canadian upstream development remains strong as the industry prepares for improved egress and the arrival of LNG Canada. This was reflected in AltaGas realizing higher year-over-year throughput volumes across our gas processing, fractionation, and liquids handling businesses during the fourth quarter, as we fill latent capacity and prepare for potential brownfield expansions to support industry development.

"The recent issues in the Panama Canal reiterated the importance of connecting Canadian LPGs to key Asian downstream markets and the mutual benefits of a growing Canadian-Pacific energy partnership. We estimate that Canadian producers realized an approximate US$9.50 per barrel better propane netback through long-term tolling at RIPET during the fourth quarter compared to selling domestically in the U.S.

"Despite warmer weather in Michigan and DC, the Utilities performed relatively in line with our expectations and were aided by strong performance from the Retail platform in the fourth quarter. 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 home heating source across each jurisdiction.

"The past year was an active period for AltaGas, including the Pipestone Acquisition, solidifying our REEF joint-venture, closing the Alaskan Utilities sale, advancing key Midstream commercial de-risking initiatives, and continuing to steadily grow our Utilities. I am excited about the road ahead, continuing to leverage the strong long-term fundamentals for natural gas and natural gas liquids ("NGLs"), and building on the strong successes of 2023."

Midstream

The Midstream segment reported normalized EBITDA of $182 million in the fourth quarter of 2023 compared to $163 million in the fourth quarter in 2022, while income before taxes was $79 million in the fourth quarter of 2023 compared to $113 million in the fourth quarter of 2022. The year-over-year increase in normalized EBITDA in the fourth quarter of 2023 was driven by strong performance from the global exports business, contribution from AFUDC on MVP as the pipeline moves towards completion, strong marketing performance, and lower operating expenses across a number of businesses. These factors were partially offset by lower frac spreads and volumes at the extraction facilities, lower power revenue at Harmattan due to power prices, and the absence of the certain acquisition related commercial disputes and contingencies present in the fourth quarter of 2022.

Fourth quarter 2023 results included a year-over-year improvement in the profitability of the global exports business due to stronger Asian-to-North American LPG prices during the quarter. This was partially offset by lower merchant volumes as AltaGas was successful at increasing long-term tolling, merchant volumes being highly hedged in the quarter, and lower-than-expected overall export volumes. AltaGas exported 90,996 Bbls/d of LPGs to Asia during the fourth quarter of 2023, including ten VLGCs at RIPET, and five VLGCs at Ferndale. Although global export volumes traditionally realize lower volumes in the fourth quarter due to a lack of LPG supply coming from Washington refineries at Ferndale and weather-related impacts on logistics, volumes were lower-than-expected due to one delayed ship arrival at RIPET and one delayed ship at Ferndale due to a rail outage.

Over the longer-term, AltaGas continues to see growing demand for LPG exports driven by its structural shipping advantage to Asia and access to low-cost Canadian supply. This structural advantage has amplified recently due to the restricted vessel traffic through the Panama Canal, which is driving additional demand for reliable and ratably-sourced Canadian LPGs and highlights the mutual benefits of a growing Canadian-Pacific energy partnership. AltaGas estimates that Canadian producers realized an approximate US$9.50 per barrel better propane netback through long-term tolling at RIPET during the fourth quarter of 2023 compared to selling domestically in the U.S. at Conway.

Performance across the balance of the Midstream platform was strong and in line with the Company's expectations during the fourth quarter. This included strong year-over-year volume increases at Townsend and Harmattan and nine percent year-over-year growth across AltaGas' Montney footprint during the quarter. This demonstrates the strong resumption of development activity in the basin and the Montney being at the center of the long-term basin development plans. Fractionation volumes were up four percent year-over-year during the fourth quarter of 2023, due to higher volumes at Harmattan, Younger, and North Pine. AltaGas' realized frac spread averaged $23.13/Bbl, after transportation costs, as most of AltaGas' frac exposed volumes were hedged in the fourth quarter of 2023.

AltaGas is well-hedged for 2024 with 90 percent of full year 2024 expected global export volumes tolled or financially hedged with merchant volumes hedged at an average Far East Index ("FEI") to North American financial hedge price of approximately US$17.88/Bbl. This includes AltaGas entering the year with approximately 40 percent of global exports tolled with the expectation of being 50 percent tolled or higher by the end of 2024. Based on AltaGas' signed deals and existing customer conversations, the Company expects to achieve or exceed this level of tolling. Approximately 80 percent of the Company's 2024 expected frac exposed volumes are hedged at approximately US$27.04/Bbl, prior to transportation costs. AltaGas continues to actively manage risk across the Midstream platform through commercial constructs and a systematic hedging program that covers key revenue and operating costs.

In December 2023, AltaGas commissioned the first of two VLGCs, the Boreal Pioneer, which made its maiden voyage from Ferndale to Asia in early January 2024. The second VLGC, the Boreal Voyager, was commissioned in February 2024. These two seven-year time charters with optional extensions will reduce total shipping costs to Asia by approximately 25 percent compared to a standard VLGC. These two seven-year time charters, combined with financial hedges, and tolled volumes have principally eliminated AltaGas' expected Baltic freight exposure in 2024.

Midstream Hedge Program

Utilities

Normalized EBITDA in the Utilities segment was $311 million in the fourth quarter of 2023, compared to $294 million in the same quarter in 2022 while income before taxes was $207 million in the fourth quarter of 2023 compared to $80 million in the fourth quarter of 2022. The quarter included strong performance from WGL's retail marketing business, customer growth, higher revenue from rate base additions from ongoing investments in Accelerated Replacement Programs ("ARPs"), the impact of Washington Gas' Virginia rate case, and lower operating and administrative expenses. These factors were partially offset by the lost contribution of the Alaskan Utilities, which were divested in March of 2023, and had contributed $25 million of normalized EBITDA in the fourth quarter of 2022, larger-than-normal asset optimization contribution at Washington Gas in the fourth quarter of 2022, and warmer weather in Michigan and the DC during the fourth quarter of 2023, which do not have weather normalization or decoupled rate structures. Other positive factors impacting year-over-year normalized EBITDA included foreign exchange hedge gains and lower operating and administrative expenses.

AltaGas' continues to make investment across its Utilities network to improve the safety and reliability of the system on behalf of its customers. During the fourth quarter of 2023 AltaGas invested $192 million across the Utilities network, including $130 million across the Company's various modernization programs. 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. These investments should also reduce leak rates and bring long-term operating cost benefits to our customers. AltaGas will continue to make these critical investments, while balancing the need for ongoing customer affordability, which is particularly important during the current economic environment of higher interest rates and inflation. AltaGas continues to be acutely focused on cost management across the Utilities platform, managing capital investments, and driving the best outcomes for its customers and stakeholders.

During the quarter, Washington Gas had three major regulatory updates. The first was a proposed ARP modernization extension in Maryland, which will run through to 2028. The public law judge has recommended that the PSC of MD approve approximately US$330 million of capital to modernize our system and improve safety and reliability. This builds on AltaGas' ARP program in Virginia that was recently extended to the end of 2027. The second was the PSC of MD approving a US$10 million rate increase for Washington Gas in Maryland with a 9.5 percent return on equity and 52 percent equity thickness with the new rates becoming effective immediately. Lastly, the PSC of DC approved an increase of approximately US$20 million in revenues for Washington Gas in DC, net of approximately US$5 million of costs collected through the PROJECTpipes surcharge with the new rates effective January 19, 2024.

Corporate/Other

Normalized EBITDA in the Corporate/Other segment was $9 million for the fourth quarter of 2023, compared to a loss of $3 million in the same quarter of 2022.  Loss before income taxes in the Corporate/Other segment was $125 million in the fourth quarter of 2023, compared to $115 million in the same quarter of 2022. The largest drivers for the increase in normalized EBITDA was due to lower expenses related to employee incentive plans and lower corporate operating and administrative expenses.

Pipestone Asset Acquisition

On December 22, 2023, AltaGas closed the previously announced Pipestone Acquisition and declared a positive FID on Pipestone Phase II. The assets acquired through the Pipestone Acquisition included: 1) Pipestone Phase I and Pipestone Phase II; 2) the adjacent Dimsdale natural gas storage facility; 3) the Pipestone condensate truck-in/truck-out terminal; and 4) the associated gathering pipeline systems from Tidewater.

The Pipestone Phase II expansion project was 100 percent contracted under long-term take-or-pay agreements during the fourth quarter of 2023 with a combination of marquee independents and investment grade producers. All Pipestone Phase II customers who were existing Pipestone Phase I customers also agreed to multi-year contract extensions, further improving the long-term commercial profile of the Pipestone Assets.

With inclusion of these new agreements, the Pipestone Acquisition is constructive to our risk profile with the Company's take-or-pay and fee-for-service Midstream EBITDA mix set to increase by an estimated six percent with a commensurate decrease in commodity exposed EBITDA, once Pipestone Phase II comes online. In aggregate, more than 90 percent of the Pipestone Assets' normalized EBITDA¹ is expected to come from take-or-pay or fee-for-service based contracts.

The Pipestone Assets have been integrated and AltaGas has welcomed its new employees that joined the Company as part of the transaction. AltaGas is now focused on leveraging the long-term growth opportunities and delivering on the returns that can be generated with the Pipestone assets now part of AltaGas' value chain. The Company is pleased with the transition of operatorship and progress realized to date.

Normalized EBITDA for the fourth quarter of 2023 was $502 million, compared to $454 million for the same quarter in 2022. The largest contributors impacting the year-over-year increase are described in the Business Performance sections above.

For the fourth quarter of 2023, the average Canadian/U.S. dollar exchange rate increased to 1.362 from an average of 1.358 in the same period of 2022.

Income before income taxes for the fourth quarter of 2023 was $161 million, compared to $78 million for the same quarter in 2022. The increase was mainly due to higher normalized EBITDA, lower unrealized losses on risk management contracts, and the absence of provisions on assets, partially offset by higher foreign exchange losses and costs related to the CEO transition and other restructuring costs incurred in 2023. Please refer to the "Three Months Ended December 31" section of AltaGas' Q4 2023 management's discussion and analysis ("MD&A") for further details on the variance in income before income taxes and net income applicable to common shareholders.

Normalized net income was $214 million ($0.76 per share) for the fourth quarter of 2023, compared to $189 million ($0.67 per share) reported for the same quarter in 2022. The increase was mainly due to higher normalized EBITDA, partially offset by higher foreign exchange losses and higher normalized income tax expense. Please refer to the "Non-GAAP Financial Measures" section of AltaGas' Q4 2023 MD&A for further details on normalization adjustments

Normalized funds from operations for the fourth quarter of 2023 was $376 million ($1.33 per share), compared to $371 million ($1.32 per share) for the same quarter in 2022. The increase was mainly due to higher normalized EBITDA, partially offset by the impact of non-cash items included in normalized EBITDA, higher normalized current income tax expense, and higher interest expense.

Depreciation and amortization expense for the fourth quarter of 2023 was $110 million, compared to $112 million for the same quarter in 2022. The decrease was due to the impact of the disposition of the Alaskan Utilities, partially offset by new assets placed in-service.

Interest expense for the fourth quarter of 2023 was $101 million, compared to $99 million for the same quarter in 2022. The slight increase was due to $3 million of incremental hybrid interest costs compared to the same quarter in 2022 due to hybrid notes replacing preferred shares. Excluding the impact of shifting the financing costs between preferred shares and hybrid notes, interest costs were relatively comparable.

AltaGas recorded income tax expense of $33 million for the fourth quarter of 2023 compared to $12 million in the same quarter in 2022. The increase in income tax expense was mainly due to an increase in income before income taxes in the fourth quarter of 2023 compared to the same quarter in 2022.

AltaGas continues to execute on its long-term corporate strategy of building a diversified platform that operates long-life energy infrastructure assets that connect customers and markets and are positioned to provide resilient and growing value for the Company's stakeholders.

AltaGas expects to achieve its previously disclosed 2024 guidance, including:

• 2024 normalized EPS guidance of $2.05 - $2.25, compared to normalized EPS of $1.90 and GAAP EPS of $2.27 in 2023; and
• 2024 normalized EBITDA guidance of $1,675 million - $1,775 million, compared to normalized EBITDA of $1,575 million and income before taxes of $912 million in 2023.

AltaGas is focused on delivering resilient and growing normalized EPS and FFO per share while targeting lowering leverage ratios. This strategy is designed to support steady dividend growth and provide the opportunity for ongoing capital appreciation for long-term shareholders. In December, the Board of Directors approved a six percent increase to the annual common share dividend to $1.19 per share annually for the 2024 calendar year, which equates to a rate of $0.2975 per common share on a quarterly basis. AltaGas' strategy includes plans to deliver sustainable annual dividend increases that compound in the years ahead.

AltaGas is maintaining a disciplined, self-funded capital program of approximately $1.2 billion, excluding asset retirement obligations ("ARO"). The Company is allocating approximately 58 percent of AltaGas' consolidated 2024 capital to its Utilities business, approximately 36 percent to the Midstream business and the balance to the Corporate/Other segment.   

The Company expects to maintain an equity self-funding model in 2024, for the fifth consecutive year, and will fund capital requirements through a combination of internally generated cash flows and investment capacity associated with rising EBITDA levels, with no expectation to issue equity. Asset sales will be considered on an opportunistic basis, with any potential proceeds to be used to de-lever and strengthen the balance sheet and continue to increase financial flexibility of AltaGas.

The Board of Directors approved the following schedule of Dividends:

AltaGas will hold a conference call today, March 8, 2024, at 9:00 a.m. MT (11:00 a.m. ET) to discuss fourth quarter 2023 results and other corporate developments.

Shortly after the conclusion of the call a replay will be available on the Company's website or by dialing 416-764-8677 or toll free 1-888-390-0541. Passcode 184752#.

AltaGas' Consolidated Financial Statements and accompanying notes for the fourth quarter 2023, as well as its related MD&A, are now available online at www.altagas.ca. All documents will be filed with the Canadian securities regulatory authorities and will be posted under AltaGas' SEDAR+ profile at www.sedarplus.ca.

This news release contains references to certain financial measures that do not have a standardized meaning prescribed by US GAAP and may not be comparable to similar measures presented by other entities. The non-GAAP measures and their reconciliation to US GAAP financial measures are shown below and within AltaGas' MD&A as at and for the period ended December 31, 2023. These non-GAAP measures provide additional information that management of the Company ("Management") believes is meaningful regarding AltaGas' operational performance, liquidity and capacity to fund dividends, capital expenditures, and other investing activities. Readers are cautioned that these non-GAAP measures should not be construed as alternatives to other measures of financial performance calculated in accordance with US GAAP.

Change in Composition of Non-GAAP Measures

In the fourth quarter of 2023, Management has changed the composition of certain of AltaGas' non-GAAP measures such that normalized net income now excludes the impact of unrealized intercompany foreign exchange gains (losses) resulting from intercompany balances between a U.S. subsidiary and a Canadian entity, where the foreign exchange impact in the U.S. subsidiary is recorded through gain (loss) on foreign currency translation in the Consolidated Statements of Comprehensive Income and the Canadian entity revaluation is recorded through the foreign exchange gain (loss) line item on the Consolidated Statements of Income. This change was made as a result of Management's assessment that excluding these intercompany foreign exchange impacts from normalized net income is more representative of the Company's ongoing financial performance. Prior period calculations of the relevant non-GAAP measures have been restated to reflect this change. The following table summarizes the impact of this change on the periods presented in this news release:

Normalized EBITDA

EBITDA is a measure of AltaGas' operating profitability prior to how business activities are financed, assets are amortized, or earnings are taxed. EBITDA is calculated from the Consolidated Statements of Income (Loss) using income (loss) before income taxes adjusted for pre–tax depreciation and amortization, interest expense.

AltaGas presents normalized EBITDA as a supplemental measure. Normalized EBITDA is used by Management to enhance the understanding of AltaGas' earnings over periods, as well as for budgeting and compensation related purposes. The metric is frequently used by analysts and investors in the evaluation of entities within the industry as it excludes items that can vary substantially between entities depending on the accounting policies chosen, the book value of assets, and the capital structure.

Normalized Net Income

Normalized net income and normalized net income per share are used by Management to enhance the comparability of AltaGas' earnings, as these metrics reflect the underlying performance of AltaGas' business activities. 

Normalized Funds From Operations

Normalized funds from operations and funds from operations are used to assist Management and investors in analyzing the liquidity of the Company. Management uses these measures to understand the ability to generate funds for capital investments, debt repayment, dividend payments, and other investing activities.

Funds from operations and normalized funds from operations as presented should not be viewed as an alternative to cash from operations or other cash flow measures calculated in accordance with GAAP. 

Invested Capital and Net Invested Capital

Invested capital is a measure of AltaGas' use of funds for capital expenditure activities. It includes expenditures relating to property, plant, and equipment and intangible assets, capital contributed to long term investments, and contributions from non-controlling interests. Net invested capital is invested capital presented net of cash paid for business acquisitions, cash paid for the purchase of remaining non-controlling interest in a subsidiary, and proceeds from disposals of assets and equity investments in the period. Net invested capital is calculated based on the investing activities section in the Consolidated Statements of Cash Flows, adjusted for items such as non-cash capital expenditures, AFUDC, and contributions from non-controlling interests. Invested capital and net invested capital are used by Management, investors, and analysts to enhance the understanding of AltaGas' capital expenditures from period to period and provide additional detail on the Company's use of capital. 

CONSOLIDATED FINANCIAL REVIEW

AltaGas is a leading North American infrastructure company that connects customers and markets to affordable and reliable sources of energy. The Company operates a diversified, lower-risk, high-growth Energy Infrastructure business that is focused on delivering stable and growing value for its stakeholders.

For more information visit www.altagas.ca or reach out to one of the following:

Jon Morrison
Senior Vice President, Corporate Development and Investor Relations
Jon.Morrison@altagas.ca

Adam McKnight
Director, Investor Relations
Adam.McKnight@altagas.ca

Investor Inquiries
1-877-691-7199
investor.relations@altagas.ca

Media Inquiries
1-403-206-2841
media.relations@altagas.ca

This news release contains forward-looking information (forward-looking statements). Words such as "may", "can", "would", "could", "should", "likely", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "future", "commit", "propose", "contemplate", "estimate", "focus", "strive", "forecast", "expect", "project", "potential", "target", "guarantee", "potential", "objective", "continue", "outlook", "guidance", "growth", "long-term", "vision", "opportunity" and similar expressions suggesting future events or future performance, as they relate to the Company or any affiliate of the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect to the following: the Company's 2024 guidance and its ability to deliver on its 2024 guidance; anticipated benefits of AltaGas' VLGCs including reduction in shipping costs to Asia, removing pricing volatility and de-risking maritime shipping costs on a long-term basis; the anticipated benefits of the Pipestone Acquisition including the Pipestone Phase II expansion project; the expectation that the Pipestone Acquisition will be constructive to AltaGas' risk profile; anticipated benefits of AltaGas' VLGCs including reduction in shipping costs, removing pricing volatility and de-risking maritime shipping costs on a long-term basis; REEF reaching a positive FID and the timing thereof; the expectation that Washington Gas will become an offtake customer for RNG production, that it will purchase key interconnect infrastructure and the expected cost thereof and the anticipated benefits of the agreement entered into with Opal Fuels; AltaGas' dividend policy and dividend rate for 2024; the expected in-service date of MVP and the anticipated benefits of MVP for customers; the Company considering value maximizing opportunities to reach its net debt to normalized EBITDA target once MVP is fully operational; the Company's strategic priorities and focus on leveraging long-term fundamentals for natural gas and NGLs; AltaGas' ability to execute its strategic priorities; AltaGas' continued commitment to driving value creation for its stakeholders and de-risking the Midstream business; the growth trajectory of AltaGas' investment proposition; the progress of AltaGas' tolling initiatives; expectations for AltaGas' active hedging program and expected outcomes therefrom; AltaGas' continued commitment to upgrading critical infrastructure and making ongoing investments through the Company's ARP modernization programs and the anticipated benefits therefrom; the Company's focus on cost management across the Utilities platform, managing capital investments and achieving the best outcomes for its customers and stakeholders; the expectation that the extension for Washington Gas' proposed modernization extension in Maryland will run through to 2028; anticipated timing, results and impacts of applications, hearings, and decisions of rate cases before Utilities regulators; AltaGas' ability to execute its long-term corporate strategy; AltaGas' focus on growing normalized EPS and FFO while targeting lower leverage ratios; the expectation that AltaGas' long-term strategy will support steady dividend growth and  ongoing capital appreciation for its long-term shareholders; AltaGas' long-term objectives for managing capital; expected self-funded capital program of $1.2 billion in 2024, excluding asset retirement obligations; the expectation that the Company will not fund capital requirements through the issuance of equity; and the anticipated use of proceeds from potential assets sales.

These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events, and achievements to differ materially from those expressed or implied by such statements. Such statements reflect AltaGas' current expectations, estimates, and projections based on certain material factors and assumptions at the time the statement was made. Material assumptions include: anticipated timing of asset sale and acquisition closings, effective tax rates, financing initiatives, degree day variance from normal, pension discount rate, the performance of the businesses underlying each sector, impacts of the hedging program, expected commodity supply, demand and pricing, volumes and rates, exchange rates, inflation, interest rates, credit ratings, regulatory approvals and policies, future operating and capital costs, capacity expectations, weather, seasonality, frac spread, access to capital, planned and unplanned plant outages, timing of in-service dates of new projects and acquisition and divestiture activities, taxes, operational expenses, returns on investments, dividend levels and transaction costs.

AltaGas' forward-looking statements are subject to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without limitation: health and safety risks; operating risks; infrastructure; natural gas supply risks; volume throughput; service interruptions; transportation of petroleum products; market risk; inflation; general economic conditions; cyber security, information, and control systems; climate-related risks; environmental regulation risks; regulatory risks; litigation; changes in law; Indigenous and treaty rights; dependence on certain partners; political uncertainty and civil unrest; risks related to conflict, including the conflicts in Eastern Europe and the Middle East; decommissioning, abandonment and reclamation costs; reputation risk; weather data; capital market and liquidity risks; interest rates; internal credit risk; foreign exchange risk; debt financing, refinancing, and debt service risk; counterparty and supplier risk; technical systems and processes incidents; growth strategy risk; construction and development; underinsured and uninsured losses; impact of competition in AltaGas' businesses; counterparty credit risk; composition risk; collateral; rep agreements; market value of common shares and other securities; variability of dividends; potential sales of additional shares; labor relations; key personnel; risk management costs and limitations; cost of providing retirement plan benefits; failure of service providers; risks related to pandemics, epidemics or disease outbreaks; and the other factors discussed under the heading "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2023 ("AIF") and set out in AltaGas' other continuous disclosure documents.

Many factors could cause AltaGas' or any particular business segment's actual results, performance or achievements to vary from those described in this press release, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected or targeted and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and AltaGas' future decisions and actions will depend on management's assessment of all information at the relevant time. Such statements speak only as of the date of this news release. AltaGas does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this news release are expressly qualified by these cautionary statements.

Financial outlook information contained in this news release about prospective financial performance, financial position, or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on AltaGas management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.

Additional information relating to AltaGas, including its quarterly and annual MD&A and Consolidated Financial Statements, AIF, and press releases are available through AltaGas' website at www.altagas.ca or through SEDAR+ at www.sedarplus.ca.

SOURCE AltaGas Ltd.