AltaGas Ltd.
Quick Take: Results were close to consensus; "well positioned" to achieve 2024 guidance
TSX: ALA | CAD 29.57 | Outperform | Price Target CAD 32.00
Sentiment: Neutral
Our take
With the Q4/23 results coming in close to consensus and AltaGas reiterating its 2024 guidance, we do not expect these items to have a material impact on the share price.
Details
Q4/23 results were close to consensus with annual results falling within guidance. AltaGas reported normalized EBITDA of $502 million versus our estimate of $501 million and consensus of $500 million (11 estimates; range of $482-518 million). For normalized EPS, the company reported $0.76 for Q4/23 compared to our estimate of $0.82 and consensus of $0.76 (eight estimates; range of $0.71-0.82). For the year, EBITDA was $1.575 billion, which was in the upper-half of the $1.5-1.6 billion guidance range, with EPS of $1.90 coming in modestly below the mid-point of the $1.85-2.05 guidance range.
• Midstream: Segment EBITDA was $182 million versus our estimate of $189 million. AltaGas noted that two LPG export vessels had loadings pushed into Q1/24.
• Utilities: Segment EBITDA was $311 million compared to our estimate of $310 million. • Corporate: Segment EBITDA was $9 million versus our estimate of $2 million.
"Well positioned" to achieve its 2024 guidance. The company continues to expect EBITDA of between $1.675-1.775 billion (we were at $1.739 billion heading into the quarter) and EPS of $2.05-2.25 (we were at $2.16 heading into the quarter). Since it set guidance in December 2023, AltaGas flagged the D.C. rate case timing and MVP AFUDC as tailwinds, with the Maryland rate case outcome, an extended outage at Blythe, long-term incentive plan costs and narrower propane and butane spreads on unhedged volumes as being headwinds.
Modest delays for the MVP project. AltaGas continues to hold a 10% stake in the Mountain Valley Pipeline (MVP) project, and the project's lead proponent recently noted that it now expects construction to be completed in Q2/24 (previously Q1/24) due to adverse weather conditions in January 2024 that impeded construction productivity and the ability to reduce construction headcount.
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