AltaGas Ltd. (AltaGas) (TSX:ALA) (TSX:ALA.PR.A) (TSX:ALA.PR.U) today reported
strong third quarter earnings, doubling its normalized net income applicable to
common shares to $24.7 million ($0.21 per share), compared to $12.3 million
($0.13 per share) for the same period 2012. Net income applicable to common
shares was $43.3 million ($0.36 per share) for the three months ended September
30, 2013, compared to $8.0 million ($0.08 per share) for the same period 2012.
Normalized EBITDA increased 61 percent to $103.5 million for third quarter 2013
compared to $64.4 million in third quarter 2012. Normalized funds from
operations increased to $80.2 million ($0.68 per share) for third quarter 2013
compared to $53.3 million ($0.56 per share) for third quarter 2012.
In August 2012 AltaGas completed the SEMCO acquisition, the largest in its
history. This quarter marked the first full year of ownership of SEMCO. As a
result, AltaGas reported record earnings on a trailing twelve month basis.
Normalized net income applicable to common shares was a record $162.6 million
($1.47 per share) and normalized EBITDA and funds from operation were $485
million and $398 million respectively.
"Our third quarter results reflect the strength of our operations and the
positive contributions from the growth on which we have executed," said David
Cornhill, Chairman and CEO of AltaGas. "On a trailing twelve month basis we have
hit record financial results and we are quickly approaching a half billion in
EBITDA. We expect these positive trends to continue as we execute on further
opportunities to strategically grow each of our business segments."
Normalized operating income from the business segments increased 58 percent to
$71.4 million compared to $45.1 million in third quarter 2012. Each of AltaGas'
business segments performed extremely well in the quarter:
-- The Gas segment significantly increased the natural gas volumes
processed compared to the same period in 2012. Extraction volumes
continue to ramp up in liquids rich areas with increased processing
capacity and producer activity over the past 12 months. The Gas segment
increased NGL production to 22,383 Bbls/d up from 14,307 Bbls/d in third
quarter 2012.
-- The Power segment generated more power in the quarter, primarily as a
result of the additional 507 MW Blythe power plant acquired in May 2013
and due to other power assets added in 2012. AltaGas also realized
higher power prices in Alberta.
-- The Utilities segment delivered another strong quarter. AltaGas
continued to see increased results driven by a full quarter of earnings
from SEMCO compared to only one month in third quarter 2012 and rate
base growth at its Canadian utilities. On a trailing twelve month basis
results from SEMCO have been ahead of expectations, reporting $137.8
million in EBITDA for the full twelve month period ending September 30,
2013.
Net income applicable to common shares for the three months ended September 30,
2013 included the after-tax gain of $32.8 million related to the sale of Pacific
Northern Gas Ltd.'s (PNG) investment in the Pacific Trail Pipelines Limited
Partnership. This gain was partially offset by a provision taken for certain
non-core dry gas processing facilities and utilities assets that are expected to
be sold. AltaGas is currently in discussions for the sale of some of these
non-core assets.
Normalized net income for the nine months ended September 30, 2013 increased 84
percent to $115.9 million, compared to $62.9 million for the same period 2012.
Normalized net income per share increased 48 percent to $1.02 per share, up from
$0.69 per share for the first nine months of 2012.
For the nine months ended September 30, 2013, normalized EBITDA increased 71
percent to $355.6 million compared to $207.6 million for the same period 2012.
Normalized funds from operations for the nine months ended September 30, 2013,
increased 69 percent to $285.6 million ($2.50 per share) compared to $169.0
million ($1.84 per share) for the same period 2012.
In the quarter, AltaGas also significantly advanced its projects under
construction and its energy export initiatives.
Northwest Run-of-river Projects:
AltaGas continues to make solid progress on its Northwest run-of-river projects.
At the 195 MW Forrest Kerr project, the generator assembly is ongoing and the
nine turbine centrelines are assembled, aligned and grouted into position.
Overall, the project is over 90 percent complete and remains on track to be
mechanically complete by the end of 2013. Forrest Kerr is expected to be
in-service in mid-2014, contingent on the availability of the Northwest
Transmission Line.
At the 16 MW Volcano Creek project, excavation of the intake site and diversion
have been completed and the weir is scheduled to be installed within the next 90
days. The powerhouse building structural steel has been erected and the
powerhouse crane has been lifted into place. The building is scheduled for
completion in November. The penstock excavation is ongoing and is on track to be
completed in first quarter 2014. The project is expected to be in service in
2014 contingent on the availability of the Northwest Transmission Line.
At the 66 MW McLymont Creek project, construction of the 7 kilometre intake
access road is 85 percent complete and is expected to be completed within the
next 90 days. Excavation of the McLymont power portal has been completed and
approximately 30 percent of the 2,800 metre power tunnel has been excavated.
Excavation of the powerhouse foundation is expected to commence in fourth
quarter 2013 and the project is expected to be in service in mid-2015.
Energy Exports:
On August 1, 2013 AltaGas announced that PNG had entered into Transportation
Reservation Agreements (TRA) with both Douglas Channel Gas Services Ltd. and the
AltaGas Idemitsu Joint Venture Limited Partnership (Partnership) for 520 Mmcf/d
of natural gas transportation capacity on the proposed PNG pipeline expansion.
The PNG expansion is expected to increase capacity of the PNG system to
approximately 750 Mmcf/d from its current capacity of 115 Mmcf/d. PNG continues
to work with other potential shippers for the remaining capacity. The TRAs
support the development costs of the pipeline expansion. The PNG expansion is a
significant milestone in exporting Canadian natural gas from Canada's west coast
to Asian markets.
In advancing its liquefied natural gas export (LNG) initiative, the Partnership
filed an application on October 29, 2013 with the National Energy Board for
approval to export up to 2.3 million tonnes of LNG per year. The application is
an important step required in the project's progress. The Partnership is also
preparing preliminary engineering designs for the construction of the
liquefaction facilities and is in negotiations for potential site locations.
Subject to consultations with First Nations, and the completion of the
feasibility study, permitting, regulatory approvals and facility construction,
the proposed LNG exports could begin as early as 2017.
In the quarter, AltaGas also advanced its liquefied petroleum gas (LPG) export
project. On September 12, 2013, AltaGas entered into an agreement to acquire a
25 percent interest in Petrogas Energy Corp. (Petrogas), a privately held
leading North American integrated midstream company. The acquisition closed on
October 1, 2013.
On October 24, 2013, AltaGas announced it will increase its effective ownership
of Petrogas to 33 1/3 percent. AltaGas plans to transfer its current 25 percent
ownership to the Partnership. The Partnership will acquire an additional 41 2/3
percent interest in Petrogas. As a result of the transaction, Petrogas will be
owned one-third by each of AltaGas, Idemitsu Kosan Co., Ltd., and its current
shareholder. Petrogas provides the key infrastructure as well as supply
logistics and marketing expertise required to pursue LPG exports. The
acquisition is expected to be accretive to AltaGas' earnings per share by
approximately $0.10 in 2015. The acquisition is subject to customary regulatory
approvals, including the Competition Act, the Hart Scott Rodino Antitrust
Improvement Act of 1976, and the Investment Canada Act, and is expected to close
in the first quarter 2014.
"We continue to take significant steps to build the expertise and infrastructure
required to execute on our energy export business," said Mr. Cornhill. "With the
only natural gas pipeline in Northern BC that reaches the west coast and the
advances we've made, we continue to lead the way in getting Canadian natural gas
to export markets."
Monthly Common Share Dividend and Quarterly Preferred Share Dividend
-- The Board approved a dividend of $0.1275 per common share for the
November 2013 dividend. The dividend will be paid on December 16, 2013,
to common shareholders of record on November 25, 2013. The ex-dividend
date is November 23, 2013. This dividend is an eligible dividend for
Canadian income tax purposes;
-- The Board approved a dividend of $0.3125 per share for the period
commencing October 1, 2013, and ending December 30, 2013, on AltaGas'
outstanding Series A Preferred Shares. The dividend will be paid on
December 31, 2013 to shareholders of record on December 16, 2013. The
ex-dividend date is December 12, 2013; and
-- The Board also approved a dividend of US$0.275 per share for the period
commencing October 1, 2013, and ending December 30, 2013, on AltaGas'
outstanding Series C Preferred Shares. The dividend will be paid on
December 31, 2013, to shareholders of record on December 16, 2013. The
ex-dividend date is December 12, 2013.
CONSOLIDATED FINANCIAL REVIEW
Three months ended Nine months ended
(unaudited) September 30 September 30
($ millions) 2013 2012 2013 2012
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Revenue 389.7 290.0 1,461.8 923.9
Net revenue(1) 246.6 146.2 695.6 456.8
Normalized operating
income(1) 63.5 38.5 240.7 138.3
Normalized EBITDA(1) 103.5 64.4 355.6 207.6
Net income applicable to
common shares 43.3 8.0 128.2 75.1
Normalized net income(1) 24.7 12.3 115.9 62.9
Total assets 6,720.7 5,708.3 6,720.7 5,708.3
Total long-term liabilities 3,368.0 3,246.1 3,368.0 3,246.1
Net additions to property,
plant and equipment 85.6 1,041.8 921.2 1,365.6
Dividends declared(2) 45.1 33.4 126.9 95.4
Cash flows
Normalized funds from
operations(1) 80.2 53.3 285.6 169.0
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Three months ended Nine months ended
September 30 September 30
($ per share, except shares
outstanding) 2013 2012 2013 2012
----------------------------------------------------------------------------
Normalized EBITDA(1) 0.87 0.68 3.12 2.27
Net income - basic 0.36 0.08 1.12 0.82
Net income - diluted 0.35 0.08 1.09 0.81
Normalized net income(1) 0.21 0.13 1.02 0.69
Dividends declared(2) 0.38 0.35 1.11 1.04
Cash flows
Normalized funds from
operations(1) 0.68 0.56 2.50 1.84
Shares outstanding - basic
(millions)
During the period(3) 118.7 95.3 114.1 91.6
End of period 118.9 104.7 118.9 104.7
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(1) Non-GAAP financial measure; see discussion in Non-GAAP Financial
Measures section of the third quarter 2013 MD&A.
(2) Dividends declared of $0.115 per common share per month on October 27,
2011, $0.12 on September 10, 2012, $0.125 on April 24, 2013 and $0.1275
on July 31, 2013.
(3) Weighted average.
CONFERENCE CALL AND WEBCAST DETAILS:
AltaGas will hold a conference call today at 9:00 a.m. MT (11:00 a.m. ET) to
discuss third quarter financial results, progress on construction projects and
other corporate developments.
Members of the media, investment communities and other interested parties may
dial (416) 340-2219 or call toll free at 1-866-226-1798. There is no passcode.
Please note that the conference call will also be webcast. To listen, please go
to http://www.altagas.ca/investors/presentations_and_events. The webcast will be
archived for one year.
Shortly after the conclusion of the call, a replay will be available by dialing
(905) 694-9451 or 1-800-408-3053. The passcode is 5334017. The replay expires at
midnight (Eastern) on November 7, 2013.
This news release contains forward-looking statements. When used in this news
release, the words "may", "would", "could", "will", "intend", "plan",
"anticipate", "believe", "seek", "propose", "estimate", "expect", and similar
expressions, as they relate to AltaGas or an affiliate of AltaGas, 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. These statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those anticipated in such
forward-looking statements. Such statements reflect AltaGas' current views with
respect to future events based on certain material factors and assumptions and
are subject to certain risks and uncertainties, including without limitation,
changes in market, competition, governmental or regulatory developments, general
economic conditions and other factors set out in AltaGas' public disclosure
documents. Many factors could cause AltaGas' actual results, performance or
achievements to vary from those described in this news release, including
without limitation those listed above. 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 or
expected, and such forward-looking statements included in, or incorporated by
reference in this news release, should not be unduly relied upon. 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. The forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
FOR FURTHER INFORMATION PLEASE CONTACT:
AltaGas Ltd.
Investment Community
1-877-691-7199
investor.relations@altagas.ca
AltaGas Ltd.
Media
(403) 691-9873
media.relations@altagas.ca
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