Post by
SuperM on Apr 26, 2023 10:00am
RBC
Great Beat by ALA. GLTA
SM
AltaGas Ltd. Quick Take: "Well-positioned" to meet 2023 guidance; new JV for potential terminal TSX: ALA | CAD 23.14 | Outperform | Price Target CAD 30.00
Sentiment: Positive Our take We believe the solid results will be supportive for the stock as the company works to restore investor confidence in its ability to deliver steady EBITDA and earnings, partly driven by its increased tolling levels and enhanced hedging portfolio, following the messy Q3/22 results released back in November.
Details Solid Q1/23 results. For Q1/23, AltaGas reported normalized EBITDA of $582 million versus our estimate of $542 million and consensus of $545 million (14 estimates; range of $527-566 million). For normalized EPS, the company reported $0.98 for Q1/23 compared to our estimate of $0.88 and consensus of $0.89 (12 estimates; range of $0.77-1.00).
• Midstream: Segment EBITDA was $183 million versus our estimate of $156 million.
• Utilities: Segment EBITDA was $401 million compared to our forecast of $387 million.
• Corporate: Segment EBITDA was ($2) million versus our estimate of ($1) million.
"Well-positioned" to meet its 2023 guidance ranges. As part of the quarter, AltaGas reiterated its full-year 2023 EBITDA guidance range of $1.5-1.6 billion (we were at $1.559 heading in to the quarterly release) and EPS guidance range of $1.85-2.05 (we were at $1.93 heading into the quarterly release). Of note, AltaGas highlighted that it completed its annual liquefied petroleum gas (LPG) contracting at pricing levels "reflecting logistics inflationary impacts".
Joint venture for LPG and bulk liquids export terminal in B.C. Ahead of the Q1/23 release, AltaGas announced a new 50/50 joint venture with Royal Vopak to advance a potential liquefied petroleum gas (LPG) and bulk liquids terminal on Ridley Island in British Columbia. If the Ridley Island Energy Export Facility (REEF) reaches a positive final investment decision, the companies plan to develop and bring it online in phases with AltaGas controlling 100% of the capacity for first phase LPG volumes, while also being responsible for construction and operation of the proposed facility. The joint venture anticipates completing front-end engineering and design work by late 2023, followed by a final investment decision.
New VLGC time charter helps lock in shipping costs. In April 2023, the company reached an agreement for a seven-year time charter with two one-year optional extensions for a new 86,700 cubic metre dual-fuel Very Large Gas Carrier (VLGC). AltaGas expects delivery of the VLGC in 2026 with the company anticipating the agreement will reduce maritime shipping costs by roughly 25% relative to current Baltic freight forward pricing.
No update on the CEO process. The company continues to expect to announce a new CEO prior to June 30, 2023 given Randy Crawford's previously disclosed retirement from AltaGas by the end of H1/23. Conference Call: Today at 11:00 AM (ET) The dial-in number is (888) 664-6392 Al