Bullboard - Stock Discussion Forum AltaGas Ltd ATGPF

Primary Symbol: T.ALA Alternate Symbol(s): ATGFF | T.ALA.PR.A | T.ALA.PR.B | T.ALA.PR.G | ATGAF

AltaGas Ltd. is a Canada-based energy infrastructure company that connects natural gas and natural gas liquids (NGLs) to domestic and global markets. The Company’s segments include Utilities and Midstream. Its Utilities segment owns and operates franchised, rate-regulated natural gas distribution and storage utilities, which includes four utilities that operate across five United States... see more

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AltaGas Ltd > More RBC

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Post by retiredcf on Aug 01, 2024 10:47am

More RBC

August 1, 2024

AltaGas Ltd.
Quick Take: Strong Q2/24 results that exceeded our expectations and consensus

TSX: ALA | CAD 32.92 | Outperform | Price Target CAD 34.00

Sentiment: Positive

Our take

We positively view the solid Q2/24 results, albeit against the backdrop of strong share price performance headed into the quarter. The Q2/24 results highlight AltaGas' execution on multiple fronts, including de-risking its Midstream business via additional tolling contracts, locking down costs for its growth projects, and growing its Midstream and Utilities segments.

Details

Strong Q2/24 results. In Q2/24, AltaGas reported normalized EBITDA of $295 million versus our estimate of $264 million and consensus of $275 million (nine estimates; range of $264-284 million). For normalized EPS, the company reported $0.14 for Q2/24 compared to our estimate of $0.08 and consensus of $0.11 (nine estimates; range of $0.08-0.14).

Midstream: Segment EBITDA was $175 million versus our estimate of $160 million. AltaGas posted record global export volumes of 123,285 b/d, which was a 7% year-over-year increase.
Utilities: Segment EBITDA was $122 million compared to our estimate of $108 million. The company cited strong results from its retail segment as well as cost management as positively impacting the Q2/24 results.
Corporate: Segment EBITDA was ($2) million compared to our estimate of ($3) million.

The quarterly results were "modestly ahead" of management's expectations, which "positions AltaGas well" to deliver on its 2024 guidance. Despite the strong quarterly results, AltaGas reiterated its 2024 guidance, which includes normalized EPS of $2.05-2.25 (we were at $2.16 heading into the quarter) and normalized EBITDA of $1.675-1.775 billion (we were at $1.751 billion heading into the quarter).

Positive updates in the Midstream segment. AltaGas provided a number of incremental updates for its Midstream business, which include:

Additional contracting for the REEF project. AltaGas recently finalized long-term contracts for an additional 18% of the capacity for Phase I. The company continues to message that it is in "advanced" discussions with potential customers for tolling contracts covering more than 100% of the project's initial capacity.
Fixed-price EPC contracts now sit at roughly 40% for REEF. AltaGas noted that it expects to award further contracts covering an additional 10% of its expected project costs in the coming weeks.
Good progress on the Pipestone II expansion. AltaGas drilled and completed two acid gas injection wells, with work also advancing on the gas gathering system. The company highlighted that 92% of the project's costs are now fixed, and that the Pipestone II expansion remains on budget and on track for an in-service date of late 2025.

Completion of MVP during the quarter paves the way for a potential sale of AltaGas' 10% stake. The Mountain Valley Pipeline (MVP) was placed into service in June 2024. The 2.0 Bcf/d natural gas pipeline is fully subscribed with 20-year contracts, and it has the potential to expand by another 0.5 Bcf/d via additional compression. As expected, AltaGas is evaluating a sale of its 10% non-operated stake in MVP as part of its deleveraging strategy.

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