secondary to the company's business development outlook. This may
particular the proposed asset sales and regulatory approval process.
Outperformer rating. Implications
WGL: Given the early nature of the process, minimal updates were to
be expected. The company clarified that it expects asset sales to be
timed in "lock-step" with the acquisition closing (excluding some noncore
gas assets identified prior to acquisition announcement).
Project Updates: The company reached positive FID for the first train
of its Townsend Phase 2 expansion and submitted an application to
repower its Pomona facility with the California Energy Commission
(CEC). Progress in California has been slower than initially expected,
and a successful award could be a positive for investor sentiment.
2017 Guidance In Line: The company expects stronger contribution
from frac spread-exposed operations, normalizing weather conditions
and contributions from new assets placed into service to result in
high-single-digit EBITDA and normalized FFO growth. The 2017
capital budget was increased to $550 million-$650 million with
maintenance capital of $25 million-$35 million. Guidance is in line
with consensus estimates of 8% EBITDA growth, $570 million capex,
and $26 million maintenance capital implying minimal revisions to
street expectations.
Q4 Results In Line: Normalized EBITDA of $194 million was consistent
with CIBC and consensus forecasts of $199.6 million and $196.3
million, respectively. Distributable cash of $0.92/share beat our
estimate of $0.79/share (consensus $0.81/share) and included an $11
million ($0.07/share) adjustment relating to the termination of
Sundance B PPAs.