Earnings Announcement: AltaGas Reports Strong Q3 Results for 2024, Focusing on Data Center Growth

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Earnings Announcement: AltaGas Reports Strong Q3 Results for 2024, Focusing on Data Center Growth

AltaGas Ltd. (TSX: ALA) has reported strong financial and operational results for the third quarter of 2024. The company announced that its normalized EBITDA reached $294 million, reflecting a 17% increase compared to the same period last year, while normalized earnings per share (EPS) nearly doubled to $0.14.

These results were supported by record levels of global liquefied petroleum gas (LPG) export volumes and robust performance in the utilities segment bolstered by retirement plan payments and capital investments.

Key projects such as REEF and Pipestone 2 are progressing as planned and within budget. The company is actively pursuing growth opportunities, particularly in the Montney region and the emerging data center energy market.

Key Highlights:

  • AltaGas reported a 17% increase in normalized EBITDA to $294 million in Q3 2024, and nearly doubled normalized EPS to $0.14.
  • Record LPG export volumes to Asia exceeded 128,000 barrels per day despite weak natural gas prices.
  • The utilities segment saw a 65% increase in normalized EBITDA to $117 million, influenced by retirement plan payments and asset modernization investments.
  • Key infrastructure projects REEF and Pipestone 2 are on track, with expected operational dates by the end of 2026 and 2025, respectively.
  • The company issued $900 million in hybrid bonds to enhance balance sheet flexibility and set a new leverage target.
  • AltaGas is pursuing growth opportunities in the data center market while managing regulatory challenges in gas supply choices.

Company Outlook: AltaGas expects normalized EBITDA to be at the upper end of its guidance range for 2024 and maintains a $1.3 billion capital budget. The company continues to focus on disciplined capital allocation and growth opportunities in data centers, where significant gas demand is anticipated.

Factors Creating Downside Expectations:

  • Ongoing regulatory challenges related to gas bans in D.C. and Maryland.
  • Outcomes from the Maryland price case and milder weather partially offset financial gains from retirement plan payments.

Factors Creating Upside Expectations:

  • Strong performance in LPG exports with a 9% year-over-year increase.
  • Successful operational launch of the Mountain Valley Pipeline and expansion assessment to meet demand.
  • Active discussions for future energy contracts with data center operators in Loudoun County, Virginia.

Deficiencies: No specific "deficiencies" were noted in the provided summary.

Q&A Highlights:

  • Vern Yu and Blue Jenkins expressed cautious optimism regarding growth opportunities in data centers.
  • James Harbilas addressed midstream performance and the impact of mild weather, expressing confidence in reaching the upper guidance limit.

Financial Strategy and Credit Rating: AltaGas is focused on initiatives to mitigate commercial and operational risk to maintain its BBB rating from Fitch. The company's hybrid capital issuance and MVP monetization are critical for achieving credit rating targets. Ongoing discussions with credit rating agencies underscore the importance of these strategic initiatives.

AltaGas's third-quarter earnings report has painted a profile of a company poised for growth, benefiting from high export volumes and strategic investments. With key projects progressing as planned and a clear focus on expanding into the data center market, AltaGas positions itself for long-term success while managing regulatory environments and showcasing a strong financial posture.