Operating Performance Reflects AltaGas' Continued Focus on
Optimizing the Platform to Generate Strong Value Creation and Drive
Better Outcomes for all Stakeholders
CALGARY, AB, July 29, 2021
/CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX:
ALA) today reported second quarter 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 EPS1 of $0.08 in Q2 2021 compared to $0.06 in Q2 2020, demonstrating 33% Y/Y growth
and alignment with AltaGas' focus on driving steady EPS growth and
consistent earnings durability.
- Normalized FFO per share1 of $0.56 in Q2 2021 compared to $0.51 in Q2 2020, demonstrating 10% Y/Y growth
and continuing to provide the foundation for increased returns of
capital and fund accretive expansion.
- Normalized EBITDA1 of $230
million in Q2 2021, compared to $206
million in Q2 2020, representing a 12% Y/Y increase. Results
reflected strong execution across all segments, partially offset by
the negative effect of the unfavourable move in the CAD/USD
exchange rate, the impact of AltaGas' rising share price on
long-term incentive programs and asset sales.
- The Utilities segment reported normalized EBITDA of
$99 million in Q2 2021 compared to
$80 million in Q2 2020, representing
a 24% Y/Y increase. On a local currency basis, Utilities normalized
EBITDA was up 35% Y/Y and reflected ongoing regulatory, capital and
cost discipline, as well as improvements in Retail
performance.
- The Midstream segment reported normalized EBITDA of
$142 million in Q2 2021 compared to
$111 million in Q2 2020, representing
a 28% Y/Y increase. Performance was driven by record global exports
of 90,106 Bbls/d of liquified petroleum gases (LPGs) to
Asia for the quarter, a 12% Y/Y
increase in gas processing volumes, and a 35% Y/Y increase in
fractionation volumes.
- On April 23, 2021, AltaGas
completed the monetization of its non-core U.S. Transportation and
Storage business, which significantly advanced the Company towards
its goal of reducing leverage below 5.0x Net Debt1 to
Normalized EBITDA and providing an enhanced margin of safety moving
forward.
1. Non-GAAP measure; see
discussion in the advisories of this news release and
reconciliation to US GAAP financial measures shown in AltaGas'
Management's Discussion and Analysis (MD&A) as at and for the
period ended June 30, 2021, which is available on
www.sedar.com.
|
CEO MESSAGE
"AltaGas delivered strong second quarter results, continued to
execute on our strategic plan, and left the platform
well-positioned to meet the Company's 2021 and longer-term growth
plan" said Randy Crawford, President
and Chief Executive Officer. "We grew normalized EPS by 33%
year-over-year, reflecting the continued strong operational and
financial performance of the business. During the quarter, the
Utilities segment continued to drive strong execution, which was
centered on providing safe, reliable, affordable, and outstanding
service to our customers. On a local currency basis, we grew
Utilities normalized EBITDA 35% year-over-year, reflecting recent
investments and upgrades across our network. New customer connects
within the WGL footprint continued to track modestly ahead of our
expectation in the second quarter and was in-line with the strong
population growth seen in the D.C.-Maryland-Virginia region over the past decade, which
has eclipsed the national average by nearly 25% since 2010. We were
also pleased to make headway in promoting combined heat and power
(CHP) to larger commercial and industrial customers during the
quarter, which is advancing our lower-carbon focus that is part of
our climate business plan.
"As the world focuses on decarbonization and a changing energy
ecosystem, we look forward to continuing to progress our climate
business plan. We will leverage the core building blocks of end-use
energy efficiency and the adoption of lower and carbon-free fuels.
Our commitment to ongoing system upgrades to improve AltaGas'
distribution and transmission network is priority one. During this
evolution we will be focused on sustainability and be a tireless
advocate for our customers and the best societal outcomes.
Affordability underpins this evolution and we will carefully
balance our competing priorities.
"For the second quarter, we continued to capitalize on the
tremendous market opportunity to export cleaner energy to
Asia from the world class
Montney play due to the rising
demand for lower-carbon and ethically-produced LPGs in the region.
Our global exports business shipped a record 90,106 Bbls/d of
combined propane and butane to Asia during the second quarter; further
demonstrating the value of our expanded platform. This included
exporting fifteen very large gas carriers (VLGCs) to Asia in the quarter with Ferndale exceeding 50,000 Bbls/d of exports in
June, which was a new record for the terminal. We also realized
strong volume growth across our gas processing and fractionation
facilities, which were up 12% and 35% year-over-year,
respectively.
"During the quarter Petrogas purchased a real property interest
in approximately 1,600 acres of land adjacent to the Ferndale LPG
export facility. The incremental land position will provide
Petrogas with the enhanced logistical flexibility to support our
existing lower-carbon LPG exports into Asia. The land will also provide optionality
around pursuing other promising energy transition development
projects that are under early-stage exploratory work, fall within
our long-term strategic focus, and could represent further positive
economic and employment opportunities for the region. During the
quarter, AltaGas also entered into a seven-year time charter with a
three-year optional extension for two new 91,000 cubic meter
dual-fuel VLGCs with deliveries expected in late 2023 and early
2024. The agreement will extend our value chain reach into
Asia. The vessels are 15% more
fuel efficient, carry 8% larger loads and will reduce total
shipping costs to Asia by
approximately 25% compared to a standard VLGC. Their deployment
will also remove pricing volatility for AltaGas and its customers
on a long-term basis.
"We are enthusiastic about our long-term growth prospects and
remain confident on being able to achieve the increased financial
guidance that was set concurrent with the first quarter. We also
remain acutely focused on maintaining our strong credit ratings
and, most importantly, continuing to reliably deliver for our
customers. Our continued focus on execution and strong performance
will provide the foundation for ongoing dividend growth and
profitable expansion that will uniquely position AltaGas to drive
long-term shareholder value creation."
BUSINESS PERFORMANCE
Utilities
Utilities second quarter normalized EBITDA of $99 million was up $19
million year-over-year, despite an unfavourable move in the
CAD/USD foreign exchange rate that resulted in a $9 million headwind during the quarter. On a
local currency basis, the Utilities segment normalized EBITDA
increased by $28 million or 35%
year-over-year. This growth was driven by continued rate base
growth from ongoing capital investment across the network through
accelerated replacement program (ARP) investments, the recent D.C.
and Maryland rate cases, and
marked improvements in Retail performance.
Our strong 8% forecasted rate base CAGR through 2025 is
underpinned by disciplined investments across the network, which
are focused on driving better customer outcomes through improved
network safety and reliability, reduced leak rates, and lower
operating costs. The Company continues to make progress towards
closing the ROE gap at WGL through updating rates, capital
discipline and acute cost management. During the quarter, the
Maryland and D.C. rate cases
became effective, which drove increased firm revenue of
$8 million. On July 1, a rate case was filed at CINGSA
requesting a US$1.9 million rate
increase. Our rate case activity is focused on updating rates to
reflect current operating costs and minimizing regulatory lag.
The Utilities segment also benefited from a stronger pricing
environment and improved power and gas margins in the Retail
business, higher returns on pension assets, customer growth and
lower COVID-19 related costs and other tailwinds. These were
partially offset by higher G&A and lower asset optimization
revenue.
Midstream
The Midstream segment reported normalized EBITDA of $142 million in the second quarter of 2021, a 28%
year-over-year increase. Strong growth was attributed to solid
execution across all businesses, including global exports,
fractionation & liquids handling, and gas processing.
Performance was also reflective of the progress made on the
integration of Petrogas, where AltaGas and its customers are
realizing strong benefits from the combined platform.
Global exports contributed $70
million in normalized EBITDA during the quarter and achieved
record volumes of 90,106 Bbls/d of LPGs shipped to Asia, across 15 VLGCs. This included
Ferndale exceeding 50,000 Bbls/d
in June, which is a new record for the terminal. Record export
volumes were underpinned by strong operations and efficiencies
across the two terminals, robust demand for North American LPGs
within Asia and ongoing growth in
throughput volumes in AltaGas' gas processing and fractionation
facilities.
The strong underlying fundamentals of the current commodity
price environment were again seen in the quarter. Total gas
processing volumes were up 12% year-over-year while fractionation
volumes were up 35% year-over-year. Similar to the first quarter,
producers in the Montney region
continue to execute on active drilling programs and ramp up
production to meet take-or-pay commitments, driving increased
throughput at our expanded Townsend and North
Pine facilities. Within the Montney we continue to see the strongest
acceleration in development activity north of the Peace River,
which is in line with our core footprint in NEBC. Processing and
fractionation volumes at AltaGas' non-Montney facilities also increased during the
quarter, driven by improved commodity prices and resulting
increased production volumes. The Midstream segment also benefited
from stronger Alberta power
prices, which generated higher earnings from the cogeneration
plants at Harmattan during the quarter.
The average spot NGL frac spread for the second quarter of 2021
was $20.54/Bbl, however due to
AltaGas' hedging program the Company's realized frac spread
averaged approximately $11.59/Bbl
(net of $13.41/Bbl in transportation
costs), as 84% of AltaGas' frac exposed volumes were hedged at
$25.00/Bbl. AltaGas remains well
hedged through 2021 with approximately 98% of total expected frac
exposed volumes realized or collectively hedged at approximately
$25.70/Bbl and 79% of 2021 total
expected global export volumes realized, tolled or collectively
hedged. The latter includes an average FEI to North American
financial hedge price average approximately US$10.79/Bbl, including both propane and butane
for the hedged and non-tolled volumes.
2021 Midstream Hedge Program
|
Q1
2021
|
Q2
2021
|
Q3
2021
|
Q4
2021
|
Global Exports volume
hedged (%)(1)
|
67
|
72
|
68
|
49
|
Average
propane/butane FEI to North America Average hedge
(US$/Bbl)(2)
|
10.21
|
10.79
|
11.04
|
14.29
|
Fractionation volume
hedged (%)
|
97
|
84
|
98
|
95
|
Frac spread hedge rate
- (CAD$/Bbl)(3)
|
26.07
|
25.00
|
25.86
|
25.67
|
(1)
|
Approximate
expected volume hedged, includes contracted tolling volumes and
financial hedges; based on the assumption of average exports of 90
MBbls/d.
|
(2)
|
Approximate
average for the period; does not include physical differential to
FSK for C3 volumes.
|
(3)
|
Approximate
average for the period
|
Q2 2021 FINANCIAL RESULTS
|
Three Months
Ended June 30
|
($
millions)
|
2021
|
|
2020
|
|
Segmented
Normalized EBITDA(1)
|
|
|
Utilities
|
99
|
|
80
|
|
Midstream
|
142
|
|
111
|
|
Sub-total: Operating
Segments
|
$
|
241
|
|
$
|
191
|
|
Corporate/Other
|
(11)
|
|
15
|
|
Normalized EBITDA
(1)
|
$
|
230
|
|
$
|
206
|
|
Add
(deduct):
|
|
|
Depreciation and
amortization
|
(108)
|
|
(93)
|
|
Interest
expense
|
(69)
|
|
(71)
|
|
Normalized Income Tax
Expense
|
(11)
|
|
(6)
|
|
Preferred share
dividends
|
(13)
|
|
(17)
|
|
Other
(3)
|
(6)
|
|
(2)
|
|
Normalized net
income (1)
|
$
|
23
|
|
$
|
17
|
|
|
|
|
Net income
applicable to common shares
|
$
|
24
|
|
$
|
21
|
|
|
|
|
($ per share,
except shares outstanding)
|
2021
|
|
2020
|
|
Shares outstanding -
basic (millions)
|
|
|
During the period
(2)
|
280
|
|
279
|
|
End of
period
|
280
|
|
279
|
|
|
|
|
Normalized net income
- basic (1)
|
0.08
|
|
0.06
|
|
Normalized net income
- diluted (1)
|
0.08
|
|
0.06
|
|
|
|
|
|
|
|
Net income per common
share - basic
|
0.09
|
|
0.08
|
|
Net income per common
share - diluted
|
0.09
|
|
0.08
|
|
(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
non-controlling interest portion of non-GAAP adjustments, accretion
expense, net income applicable to non-controlling interests, and
foreign exchange gains (losses).
|
Normalized EBITDA for the second quarter of 2021 was
$230 million, which represented an
approximate 12% year-over-year increase compared to $206 million for the same quarter in 2020,
reflecting strong performance across both Utilities and Midstream
businesses. Year-over-year growth drivers in the Midstream segment
included the consolidation of Petrogas and stronger performance in
global exports, continued robust performance throughout AltaGas'
NEBC platform due to higher volumes and volume commitment
associated with previously developed NEBC expansion projects and
stronger Alberta power prices.
This was partially offset by the lack of Allowance for Funds Used
During Construction (AFUDC) recorded on MVP, a blend and extend
contract at Gordondale that was signed in 2018 with new rates
taking effect in 2021, and the loss of contribution from the U.S.
Transportation and Storage business following the monetization that
took place during the quarter.
Strong results from the Utilities business were driven by higher
revenue from a larger rate base that was underpinned by ongoing ARP
investments focused on system upgrades, higher firm revenue from
the D.C. and Maryland rate cases
which took effect in the quarter, higher margins in the Retail
business, and higher returns on pension assets. This was partially
offset by the unfavourable CAD/USD exchange rate, which had a
$9 million impact on Utilities
normalized EBITDA.
The Corporate/Other segment reported normalized EBITDA loss of
$11 million, compared to $15 million earned in the same quarter of 2020.
The $26 million year-over-year
decrease was mainly due to: 1) the mark-to-market impact that
AltaGas' rising share price had on long-term incentive programs; 2)
the impact of asset monetizations, including Pomona and
Ripon in the third quarter of
2020; and 3) the unfavourable CAD/USD exchange rate impact of
$2 million.
For the second quarter of 2021, the average Canadian/U.S. dollar
exchange rate decreased to 1.23 from an average of 1.39 in the same
quarter of 2020, resulting in a decrease in normalized EBITDA of
approximately $14 million on a
consolidated basis.
Normalized net income was $23
million or $0.08 per share for
the second quarter of 2021, compared to normalized net income of
$17 million or $0.06 per share reported for the same quarter of
2020. The increase is due to the same factors impacting normalized
EBITDA and lower interest expense, partially offset by higher
depreciation and amortization expense and higher normalized income
tax expense.
Net income applicable to common shares for the second quarter of
2021 was $24 million or $0.09 per share, compared to $21 million or $0.08 per share for the second quarter of 2020.
In addition to the factors impacting normalized EBITDA, the
increase was mainly due to: 1) the partial reversal of a provision
recorded in the first quarter of 2021 due to an increase in the
fair value of net assets held for sale upon close of the sale of
the U.S. Transportation and Storage business in April 2021; 2) higher foreign exchange gains; and
3) the gain on sale of the majority of the U.S. Transportation and
Storage business, partially offset by higher unrealized losses on
risk management contracts and higher depreciation and amortization
expense.
Depreciation and amortization expense for the second quarter of
2021 was $108 million, compared to
$93 million for the same quarter in
2020. The increase was mainly due to the absence of an amortization
adjustment in the second quarter of 2020, new assets placed
in-service, and amortization expense on Petrogas assets upon
consolidation.
Interest expense for the second quarter of 2021 was $69 million, compared to $71 million for the same quarter in 2020. The
decrease in interest expense was mainly due to lower average
interest rates and a lower average Canadian/U.S. dollar exchange
rate, partially offset by higher average debt balances.
AltaGas recorded income tax expense of $3
million for the second quarter of 2021, consistent with the
same quarter of 2020. Current tax expense of $27 million was recorded in the second quarter of
2021, which included $18 million of
tax on asset sales.
GUIDANCE AND FUNDING
AltaGas remains acutely focused on growing EPS and creating
earnings durability in the years ahead and is reiterating the
Company's 2021 increased guidance ranges that were provided in
April 2021, including:
- 2021 Normalized EPS guidance is $1.65 - $1.80 per
share.
- 2021 Normalized EBITDA guidance is $1.475 billion - $1.525
billion.
AltaGas' 2021 capital expenditure plan, which remains unchanged
at approximately $910 million,
excluding asset retirement obligations (ARO), is heavily weighted
towards the lower-risk Utilities business and is comprised
primarily of ARP and system betterment projects that are
anticipated to deliver stable and transparent rate base growth and
strong risk-adjusted returns. The Company is allocating
approximately 38% of AltaGas' consolidated 2021 capital to ARPs in
its Utilities business, representing approximately 46% of the total
2021 Utilities capital program.
MONTHLY COMMON SHARE DIVIDEND AND QUARTERLY PREFERRED SHARE
DIVIDENDS
The Board of Directors approved the following schedule of
Dividends:
Type
|
Dividend
(per
share)
|
Period
|
Payment
Date
|
Record
|
Common
Shares1
|
$0.0833
|
n.a.
|
15-Sep-21
|
25-Aug-21
|
Series
A Preferred Shares
|
$0.19125
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
Series B
Preferred Shares
|
$0.17448
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
Series
C Preferred Shares
|
US$0.330625
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
Series E
Preferred Shares
|
$0.337063
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
Series G
Preferred Shares
|
$0.265125
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
Series
H Preferred Shares
|
$0.19969
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
Series
K Preferred Shares
|
$0.3125
|
30-Jun-21
to
29-Sep-21
|
30-Sep-21
|
16-Sep-21
|
(1)
|
Eligible dividend
for Canadian income tax purposes
|
CONSOLIDATED FINANCIAL REVIEW
|
Three Months
Ended June 30
|
Six Months
Ended June 30
|
($ millions,
except normalized effective income tax rate)
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
2,009
|
1,059
|
5,094
|
2,928
|
Normalized EBITDA
(1)
|
230
|
206
|
904
|
705
|
Net income applicable
to common shares
|
24
|
21
|
361
|
484
|
Normalized net income
(1)
|
23
|
17
|
384
|
237
|
Total
assets
|
20,315
|
20,003
|
20,315
|
20,003
|
Total long-term
liabilities
|
10,732
|
10,083
|
10,732
|
10,083
|
Net additions
(dispositions) of property, plant and equipment
|
(136)
|
188
|
1
|
388
|
Dividends declared
(2)
|
70
|
67
|
141
|
134
|
Cash from
operations
|
81
|
337
|
686
|
812
|
Normalized funds from
operations (1)
|
157
|
141
|
741
|
562
|
Normalized effective
income tax rate (%) (1)
|
18.0
|
13.3
|
21.0
|
23.4
|
|
Three Months
Ended June 30
|
Six Months
Ended June 30
|
($ per share,
except shares outstanding)
|
2021
|
2020
|
2021
|
2020
|
Net income per common
share - basic
|
0.09
|
0.08
|
1.29
|
1.73
|
Net income per common
share - diluted
|
0.09
|
0.08
|
1.28
|
1.73
|
Normalized net income
- basic (1)
|
0.08
|
0.06
|
1.37
|
0.85
|
Normalized net income
- diluted (1)
|
0.08
|
0.06
|
1.37
|
0.85
|
Dividends declared
(2)
|
0.25
|
0.24
|
0.50
|
0.48
|
Cash from
operations
|
0.29
|
1.21
|
2.45
|
2.91
|
Normalized funds from
operations (1)
|
0.56
|
0.51
|
2.65
|
2.01
|
Shares outstanding -
basic (millions)
|
|
|
During the period
(3)
|
280
|
279
|
280
|
279
|
End of
period
|
280
|
279
|
280
|
279
|
(1)
|
Non–GAAP financial
measure; see discussion in Non-GAAP Financial Measures section of
this MD&A.
|
(2)
|
Dividends declared
per common share per month: $0.08 beginning on December 27, 2018,
increased to $0.0833 per share beginning December
2020.
|
(3)
|
Weighted
average.
|
CONFERENCE CALL AND WEBCAST DETAILS
AltaGas will hold a conference call today, July 29, at 8:00 a.m.
MT (10:00 a.m. ET and
14:00 BST) to discuss 2021 second
quarter results and other corporate developments.
Members of the investment community and other interested parties
may dial 1-416-764-8659 or toll free at 1-888-664-6392. Please note
that the conference call will also be webcast. To listen, please go
to http://www.altagas.ca/invest/events-and-presentations. The
webcast will be archived for one year.
Shortly after the conclusion of the second quarter call, a
replay will be available commencing at 10:00
a.m. MT (12:00 p.m. ET) on
July 29, 2021 by dialing 416-764-8677
or toll free 1-888-390-0541. The passcode is 599580#. The replay
will expire at 9:59 p.m. MT
(11:59 p.m. ET) on August 5, 2021.
AltaGas' unaudited condensed interim Consolidated Financial
Statements and accompanying notes for the second quarter ended
June 30, 2021, as well as its related
Management's Discussion and Analysis, 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.sedar.com.
ABOUT ALTAGAS
AltaGas is a leading North American energy infrastructure
company that connects NGLs and natural gas to domestic and global
markets. The Company operates a diversified, lower-risk,
high-growth Utilities and Midstream business that is focused on
delivering resilient and durable value for its stakeholders.
For more information visit www.altagas.ca or reach out to one of
the following:
Jon Morrison
Senior
Vice President, Investor Relations & Corporate Development
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
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information
(forward-looking statements). Words such as "may", "can", "would",
"could", "should", "will", "intend", "plan", "anticipate",
"believe", "aim", "seek", "propose", "contemplate", "estimate",
"focus", "strive", "forecast", "expect", "project", "target",
"potential", "objective", "continue", "outlook", "vision",
"opportunity" and similar expressions suggesting future events or
future performance, as they relate to the Corporation or any
affiliate of the Corporation, 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: lower-carbon focus and
climate business plan; plans for use of land acquired adjacent to
the Ferndale facility; reduction
in shipping costs expected from the VLGC time charter arrangement;
expectation for ongoing dividend growth and profitable expansion;
expected 2021 Normalized EPS guidance of $1.65 - $1.80 per
share; expected 2021 Normalized EBITDA guidance of $1.475 billion - $1.525
billion; expected capital expenditure plan of approximately
$910 million; planned segment
allocation of 2021 capital expenditures;
and expected dividend payments and dates of payment. 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: number of ships and export levels from the
Ferndale and RIPET facilities,
current forward curves, effective tax rates, the U.S./Canadian
dollar exchange rate, the impact of the COVID-19 pandemic,
financing initiatives, propane price differentials, degree day
variance from normal, pension discount rate, the performance of the
businesses underlying each sector, impacts of the hedging program,
commodity prices, weather, frac spread, access to capital, timing
and receipt of regulatory approvals, planned and unplanned plant
outages, timing of in-service dates of new projects and acquisition
and divestiture activities, operational expenses, returns on
investments, and dividend levels.
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:
risk related to COVID -19; health and safety risks; risks related
to the integration of Petrogas; operating risks; regulatory risks;
cyber security, information, and control systems; litigation risk;
climate-related risks, including carbon pricing; changes in law;
political uncertainty and civil unrest; infrastructure risks;
service interruptions; decommissioning, abandonment and reclamation
costs; reputation risk; weather data; Indigenous land and rights
claims; crown duty to consult with Indigenous peoples; capital
market and liquidity risks; general economic conditions; internal
credit risk; foreign exchange risk; debt financing, refinancing,
and debt service risk; interest rates; technical systems and
processes incidents; dependence on certain partners; growth
strategy risk; construction and development; transportation of
petroleum products; impact of competition in AltaGas' businesses;
counterparty credit risk; market risk; composition risk;
collateral; rep agreements; delays in U.S. Federal Government
budget appropriations; market value of common shares and other
securities; variability of dividends; potential sales of additional
shares; volume throughput; natural gas supply risk; risk management
costs and limitations; underinsured and uninsured losses;
commitments associated with regulatory approvals for the
acquisition of WGL; securities class action suits and derivative
suits; electricity and resource adequacy prices; cost of providing
retirement plan benefits; labor relations; key personnel; failure
of service providers; compliance with Section 404(a) of
Sarbanes-Oxley Act; and the other factors discussed under the
heading "Risk Factors" in the Corporation's Annual Information Form
for the year ended December 31, 2020
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 (Management) 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.sedar.com.
NON-GAAP MEASURES
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 in AltaGas' Management's
Discussion and Analysis (MD&A) as at and for the period ended
June 30, 2021. These non-GAAP
measures provide additional information that 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.
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 using net income adjusted for pre tax
depreciation and amortization, interest expense, and income tax
expense. Normalized EBITDA includes additional adjustments for
transaction costs related to acquisitions and dispositions,
unrealized losses (gains) on risk management contracts, gains on
sale of assets, restructuring costs, dilution loss on equity
investment, COVID-19 related costs, provisions (reversal of
provisions) on assets, foreign exchange gains, and accretion
expenses related to asset retirement obligations. AltaGas presents
normalized EBITDA as a supplemental measure. Normalized EBITDA is
used by Management to enhance the understanding of AltaGas'
earnings over periods. 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 EPS is calculated as normalized net income divided
by the average number of shares outstanding during the
period.
Funds from operations is calculated from the Consolidated
Statements of Cash Flows and is defined as cash from operations
before net changes in operating assets and liabilities and
expenditures incurred to settle asset retirement obligations.
Normalized funds from operations is calculated based on cash from
operations and adjusted for changes in operating assets and
liabilities in the period and non operating related expenses (net
of current taxes) such as transaction and financing costs related
to acquisitions and dispositions, COVID-19 related costs, and
restructuring costs. Normalized funds from operations is used to
assist Management and investors in analyzing the liquidity of the
Corporation. Management uses this measure to understand the ability
to generate funds for capital investments, debt repayment, dividend
payments, and other investing activities.
Net debt is used by the Corporation to monitor its capital
structure and financing requirements. It is also used as a measure
of the Corporation's overall financial strength and is presented to
provide this perspective to analysts and investors. Net debt is
defined as short-term debt (excluding third-party project financing
obtained for the construction of certain energy management services
projects), plus current and long-term portions of long-term debt,
less cash and cash equivalents.
SOURCE AltaGas Ltd.