Potential for them to raise their current $40.00 target. GLTA
ALTAGAS LTD. Q2/24 First Look: Results Beat Across The Board
Results Beat: AltaGas reported Q2/24 EBITDA results that were ahead of
both our estimates (+5.1%) and consensus (+6.9%). The Midstream segment
beat due to record global export volumes, strong fractionation and liquids
handling contribution, and the addition of the Pipestone gas processing and
storage assets. The Utilities segment was buoyed by active cost
management, contribution from continued investments in rate base, and a
strong retail business from the hot weather in June. The company reiterated
and is well on track to achieve guidance.
Normalized EBITDA at $295MM was notably higher than our estimate of
$281MM and consensus of $276MM. Normalized diluted EPS for the quarter
of $0.14 was also higher than our estimate of $0.12 and consensus of $0.12.
Normalized FFO/share of $0.61 was below our estimate of $0.68.
Midstream EBITDA posted a beat at $175MM versus our $170MM estimate
(+2.8%), and was up 30.6% vs. Q2/23, partly due to the addition of the
Pipestone assets and the Mountain Valley Pipeline (MVP), but also on strong
global export results. REEF continues to de-risk with 40% of projected costs
secured with fixed price EPC contracts, an additional 10% expected to be
awarded in the coming weeks and the balance to be achieved over the
project execution plan. Commercial contracts for an additional 18% of REEF
capacity were secured. The segment saw solid export margins, with record
LPG export volumes of 123,285 Bbl/d well ahead of our 115,080 Bbl/d
estimate. The company achieved 56% tolling, still ahead of its goal of 50%
tolling by year-end, an important de-risking event for shareholders. The LPG
export hedge book has slightly lower hedging in H2/24, which may be due to
higher volume expectations, albeit with higher hedge prices.
Utilities EBITDA was also ahead at $122MM compared to our $117MM
estimate (+4.4%), and above the $102MM from a year ago. The Y/Y change
was due largely to active cost management, contribution from continued
investments in rate base, and higher retail margins. The company has
submitted applications to the Michigan PSC to extend modernization
programs of US$46MM and US$68MM for the period of 2025-2027.
The company will hold a conference call today at 10 a.m. ET. Dial in:
416-764-8659 or 1-888-664-6392