ALTAGAS ANNOUNCES 2024 GUIDANCE AND STRATEGIC PRIORITIES, SIX PERCENT DIVIDEND INCREASE, AND RELEASES 2023 ESG REPORT

AltaGas remains focused on executing long-term strategic plan for shareholder value creation.

CALGARY, AB, Dec. 5, 2023 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) announces its 2024 guidance and outlook; provides an update on its long-term strategic plan, and releases its 2023 Environment, Social and Governance (ESG) report, including progress toward achieving ESG goals.

HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars unless otherwise noted)

• 2024 normalized EPS1 guidance of $2.05 - $2.25 represents approximately ten percent year-over-year growth using midpoint-to-midpoint guidance figures. Strong year-over-year growth is underpinned by strong business performance in each of the core segments.
  
  
• 2024 normalized EBITDA1 guidance of $1,675 million - $1,775 million represents approximately eleven percent year-over-year growth using midpoint-to-midpoint guidance figures. Strong growth in AltaGas' Midstream and Utilities businesses is expected to more than offset the lost contribution from the Alaska Utilities sale, which was divested in the first quarter of 2023.
  
  
• AltaGas is maintaining a disciplined and equity self-funded capital program of $1.2 Billion in 2024, excluding Asset Retirement Obligations (ARO). The 2024 capital program is more weighted towards low-risk organic growth in the Utilities; however, the program reflects a significant shift relative to prior years with Utilities 2024 capital accounting for approximately 58 percent of the annual capital budget and Midstream accounting for approximately 36 percent. Higher annual Midstream capital reflects the strong outlook for the Midstream business and strong growth opportunities, including the Pipestone II project.
  
  
• AltaGas is increasing returns of capital to shareholders through a six percent increase to its anticipated common share dividend of $1.19 per share for 2024. The Company remains committed to delivering regular, sustainable, and annual dividend increases while maintaining a prudent dividend payout target range of 50 - 60% of earnings, which balances the need to return capital to shareholders and fund the Company's significant organic growth program within an equity self-funding model.
  
  
• The Midstream segment is positioned to deliver strong year-over-year organic growth in 2024 and beyond. This growth is underpinned by the Pipestone acquisition, continued facility optimization, and growth initiatives across the value chain.
  
  
• AltaGas and its joint-venture partner, Royal Vopak, have commenced site clearing work at the Ridley Island Energy Export Facility ("REEF"), representing another important step in the project's development. Site clearing activities including logging, clearing, and drainage will help determine the project's readiness prior to reaching a Final Investment Decision ("FID").
  
  
• Earnings growth within the Utilities segment will be underpinned by operational excellence, stronger earned ROEs, contribution from recent rate cases, and ongoing rate base growth from the Company's Accelerated Pipeline Replacement programs ("ARPs").
  
  
• AltaGas remains committed to reducing financial leverage to move towards its 4.5x Net Debt1 to normalized EBITDA1. Monetization of the Mountain Valley Pipeline ("MVP") is the most immediate path to moving towards this goal, which will be evaluated in 2024 as the pipeline moves toward completion. AltaGas also expects a stronger period of financial flexibility to evaluate the optionality associated with its strong investment capacity, which could be used for leverage reduction, post the Pipestone II and REEF projects coming online, assuming REEF reaches a positive FID in the first half of 2024.
  
  
• AltaGas released its 2023 ESG Report, which features 2022 performance data and highlights progress made towards its ESG goals in the core areas of emission reductions, safety, and diversity.

"We look forward to executing on our strategic plan and delivering strong value for AltaGas' shareholders in 2024" said Vern Yu, AltaGas' President and Chief Executive Officer. "We are exiting 2023 on a strong footing and expect to achieve financial results for 2023 in the upper half of our guidance ranges.

"AltaGas has a unique set of assets with strong competitive advantages that position the Company to deliver industry-leading earnings and dividend growth. We remain committed to operating with an equity self-funding model and see a clear path to moving towards our 4.5x Net Debt1 to normalized EBITDA1 target. We have a tremendous pipeline of growth projects, but we'll be disciplined in our capital allocation process to funnel these opportunities to ensure we deliver the best risk-adjusted returns and balance our competing priorities, including long-term leverage reduction.

"Our Utilities have a bright future with natural gas remaining the largest home energy source across all our jurisdictions where, on average, electrical substitution costs are more than three times the cost of natural gas on a delivered basis. We have visible and low-risk growth opportunities through new customer additions, system expansion, and modernization opportunities. AltaGas will continue to act in our customers best interests during this period of higher inflation and interest rates, balancing the critical needs of energy affordability and reliability with rate increases and regional climate goals.

"After a decade of being structurally challenged by a lack of take-away capacity, Canada is set to deliver significant natural gas and NGL production growth in the years ahead, with our Midstream business realizing strong growth opportunities. As liquified natural gas ("LNG") projects on the Canadian West Coast come online in the next couple of years, we expect numerous customer-backed opportunities to add infrastructure to support these developments. This includes opportunities to connect increasing Canadian liquefied petroleum gases ("LPGs") and other vital energy products into premiere downstream markets in Asia.

"As transporters of energy, we serve a crucial role delivering energy affordably, reliably, and safely, while working towards a lower carbon future. Today, with the release of our 2023 ESG report we're pleased to highlight the progress we've made against our commitments to safety and reliability, emissions reductions, and diversity and inclusion. While it's clear that we need to reduce our GHG emissions, we need to take a balanced approach, where affordability, reliability, and energy security are part of the mix."

AltaGas expects to achieve normalized EPS1 of $2.05 - $2.25 and normalized EBITDA1 of $1,675 million - $1,775 million in 2024. These guidance figures represent AltaGas' expectations for continued growth in consolidated performance of the business.

Approximately 55 percent of 2024 normalized EBITDA1 is expected to be generated by the Utilities segment. Utilities normalized EBITDA1 growth is expected to be driven by positive contribution from the Maryland and District of Columbia rate cases, continued rate base growth through ongoing capital investments through various ARPs, new customer meter growth, normal 2024 weather, and ongoing cost management, which is being partially offset by the lost contribution of the Alaskan Utilities which divestiture closed in the first quarter of 2023 and higher operating costs associated with a higher inflationary and cost environment.

Washington Gas currently has active rate case applications in Maryland and the District of Columbia. Within Maryland the requested rates are designed to collect an incremental US$49 million in annual revenue, while the District of Columbia requested rates are designed to collect an incremental US$48 million in annual revenue with rates forecasted to take effect in December 2023 and the second quarter of 2024, respectively. AltaGas has ARPs in place across all three jurisdictions within Washington Gas as well as SEMCO in Michigan. New meter growth is expected to continue across AltaGas' Utilities jurisdictions at approximately ~1% over a multi-year time horizon.

AltaGas can grow rate base by up to an eight percent CAGR through 2028 through population growth and new meter connects and ongoing modernization investments across the network, which are focused on long-term safety and reliability. The Utilities growth rate in the year ahead will be a function of relative opportunities and calls on capital across the platform as AltaGas focuses on driving the best-balanced outcomes for all stakeholders.

Approximately 45 percent of 2024 normalized EBITDA1 is expected to be generated by the Midstream segment. Strong year-over-year growth in normalized EBITDA1 is driven by the Pipestone and Dimsdale asset acquisition, strong global export volumes and higher margins, higher utilization at the Company's existing Northeastern B.C. facilities, and the absence of wildfires impacts in Alberta. These positive factors are expected to be partially offset by a lower contribution from Allowance of Funds Used During Construction ("AFUDC") on the MVP and lower co-generation revenue at Harmattan.

AltaGas operates a fully integrated Midstream platform that connects Western Canadian producers to global markets. From wellhead to tidewater, the Company is focused on providing its customers with safe and reliable service. This includes providing access to global markets for North American LPGs and providing North American producers and aggregators with the best netbacks for their propane and butane, while delivering diversity of supply and affordable lower carbon energy to markets in Asia.

Strong macro fundamentals, commodity prices, and improving natural gas egress out of Western Canada are providing a strong outlook for natural gas and natural gas liquids ("NGL") production growth in the coming years. This includes LNG terminals coming online mid-decade on the Canadian West Coast, which will bring associated LPGs. AltaGas continues to see increasing demand for LPG exports through the Ridley Island Propane Export Terminal ("RIPET") and Ferndale LPG export terminal driven by the Company's structural shipping advantage to serve demand markets in Asia and access to low-cost supply. This structural advantage has magnified recently due to restricted vessel traffic through the Panama Canal, caused by lower water levels, and is driving strong demand for more Canadian LPGs in Asia.

AltaGas continues to focus on de-risking its business commercially through long-term tolling contracts while actively managing remaining commodity price exposure. In 2023, AltaGas made strong progress on this initiative with increased tolling within the Global Exports business and believes there is a clear path to push towards 60 percent or higher tolling over a multi-year time horizon. AltaGas will also continue to actively and systematically hedge remaining merchant export volumes to lock-in the structural margins and cashflows. The Company has hedged approximately 73 percent of AltaGas' 2024 expected global export volumes through tolling arrangements or financial hedges with the latter including an average Far East Index ("FEI") to North American financial hedge price of US$15.60/Bbl for non-tolled propane and butane volumes. The Company is also 78 percent hedged on ocean freight costs for expected 2024 export volumes through a combination of time-charters, tolling, and financial hedges.

AltaGas also continues to de-risk the Global Exports supply chain. In October 2023, AltaGas entered a five-year transportation agreement with Canadian National Railway Company, which provides AltaGas, and its customers, cost and service predictability. AltaGas also expects to take delivery of two new very large gas carriers ("VLGCs") in December 2023 and March 2024. These two seven-year time charters will reduce total shipping costs to Asia by approximately 25 percent compared to normal pricing on a standard VLGC. The vessels' deployment will also remove pricing volatility and de-risk maritime shipping costs on a long-term basis. Following the delivery of these two vessels AltaGas will have three Time Charters operating in 2024 and a fourth under construction, which is set to be commissioned in the first half of 2026.

The Company's Board of Directors approved a six percent increase to the annual common share dividend to $1.19 per share annually for the 2024 calendar year, which equates to a rate of $0.2975 per common share on a quarterly basis. Subject to approval of the Board of Directors, the first quarterly dividend of $0.2975 per common share is expected to be effective for the March 2024 dividend and will be paid on March 29, 2024, to common shareholders of record on March 15, 2024. These dividends are eligible dividends for Canadian income tax purposes.

AltaGas' 2024 capital expenditure plan of approximately $1.2 billion, excluding ARO, is more weighted towards the low-risk Utilities business, which is anticipated to deliver stable and transparent rate base growth and strong risk-adjusted returns. The Company is allocating approximately 58 percent of AltaGas' consolidated 2024 capital to its Utilities business and approximately 36 percent to the Midstream business. This represents a strong increase in capital allocation to the Midstream segment versus recent years given the strong growth opportunities and relative capital returns that are projected, including the development of the Pipestone II project.

The Company expects to maintain an equity self-funding model in 2024, for the fifth consecutive year, and will fund capital requirements through a combination of internally generated cash flows and investment capacity associated with rising EBITDA levels, with no expectation to issue equity, assuming the Pipestone acquisition closes prior to 2023 year-end. Asset sales will be considered on an opportunistic basis, with any potential proceeds to be used to de-lever and strengthen the balance sheet and continue to increase financial flexibility of AltaGas.

Today, AltaGas released its 2023 ESG Report which features 2022 performance data for the Company's ESG priority areas and highlights progress made towards its ESG goals. For more information, please see AltaGas' 2023 ESG Report available on the company's website at link.

The Company will host its 2023 Investor Day today, December 5, 2023. The event will be held in-person in Toronto, Ontario with a virtual option. At the event the Company will provide an update on its corporate strategy and outlook, share its near- and- long-term priorities, and discuss the road ahead. To register select the link below or go to AltaGas' Events and Presentations webpage.

AltaGas is a leading North American infrastructure company that connects customers and markets to affordable and reliable sources of energy. The Company operates a diversified, lower-risk, high-growth Energy Infrastructure business that is focused on delivering stable and growing value for its stakeholders.

For more information visit www.altagas.ca or reach out to one of the following:

Jon Morrison
Senior Vice President, Corporate Development and Investor Relations
Jon.Morrison@altagas.ca

Adam McKnight
Director, Investor Relations
Adam.McKnight@altagas.ca

Investor Inquiries
1-877-691-7199

Media Inquiries
1-403-206-2841
media.relations@altagas.ca

This news release contains forward-looking information (forward-looking statements). Words such as "guidance", "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "propose", "contemplate", "estimate", "focus", "strive", "forecast", "expect", "project", "target", "potential", "objective", "continue", "outlook", "vision", "opportunity" and similar expressions suggesting future events or future performance, as they relate to the Company or any affiliate of the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect to the following: the expectation that growth in AltaGas' Midstream and Utilities businesses will more than offset the lost contribution from the Alaska utilities sale; anticipated self-funding capital program of $1.2 billion in 2024, excluding ARO, and the anticipated benefits of the capital expenditure plan; anticipated capital expenditure by segment and expected projects for each segment; the expectation that AltaGas will fund capital requirements through a combination of internally generated cash flows and investment capacity associated with rising EBITDA levels; the expectation that there will be no equity issued in 2024; the assumption that the Pipestone acquisition closes in 2023; consideration of asset sales and the use of potential proceeds therefrom; strong outlook and growth opportunities for the Midstream business; the expectation that the Pipestone acquisition will close in 2023 and that the Pipestone II project will provide the Midstream business with strong growth opportunities; the expectation that AltaGas' Midstream segment will deliver organic growth in 2024 with such growth underpinned by the Pipestone acquisition, continued facility optimization and growth initiatives across the value chain; the future dividend strategy, including a six percent increase to AltaGas' anticipated common share dividend; AltaGas' dividend payout target range of 50-60% earnings; the expectation that the Board of Directors will approve the 2024 first quarterly dividend, the effective date and timing for payment to shareholders of such dividend; expectations regarding the construction of REEF and the project reaching a FID; the expectation that operational excellence, stronger earned ROEs, contribution from recent rate cases and ongoing rate base growth from AltaGas' ARPs will underpin earnings growth within the Utilities segment; AltaGas' commitment and ability to achieve a 4.5x Net debt to normalized EBITDA; the belief that monetization of MVP is the most immediate path to achieving a 4.5x Net Debt to normalized EBITDA ratio and long-term leverage reduction; the expectation that AltaGas will evaluate monetization of MVP in 2024; anticipated financial flexibility allowing the Company to evaluate optionality associated with its investment capacity and the expectation that this could be used to leverage reduction post-Pipestone II and REEF projects coming online; anticipated timing for REEF reaching a positive FID; the expectation that AltaGas will achieve financial results for 2023 in the upper half of its guidance ranges; the belief that AltaGas is positioned to deliver industry-leading earnings and dividend growth; anticipated growth projects for AltaGas; the Company's commitment to being disciplined in its capital allocation process in assessing growth projects and the expectation that this will deliver the best risk-adjusted returns and balance competing priorities; the belief that Utilities has visible and low-risk growth opportunities through new customer additions, system expansion and modernization opportunities; AltaGas commitment to acting in its customer's best interests by balancing critical needs of energy affordability and reliability with rate increases and regional climate goals; the belief that Canada will deliver significant natural gas and NGL production growth in years ahead; the expectation that there will be numerous customer-backed opportunities to add infrastructure supporting LNG projects on the Canadian west coast and the anticipated timing thereof; the belief that there will be opportunities to connect increasing Canadian LPGs and other vital energies to markets in Asia; AltaGas' commitment to working towards a lower carbon future including reducing its GHG emissions; AltaGas ESG goals; 2024 normalized EPS guidance of $2.05 - $2.25; 2024 normalized EBITDA guidance of $1,675 million to $1,775 million; the expectation that the Utilities segment will generate approximately 55 percent of 2024 normalized EBITDA driven by positive contribution from the Maryland and District of Columbia rate cases, continued rate base growth through ongoing capital investments through various ARPs, new customer meter growth, normal 2024 weather and ongoing cost management; anticipated incremental annual revenue from the requested rates in Maryland and the District of Columbia and anticipated timing for such rates to take effect; expected new meter growth across AltaGas' Utilities jurisdictions and the timing thereof; anticipated rate base CAGR through 2028 in the Utilities segment; the factors determining the ultimate growth rate that the Utilities segment will expand in the year ahead; the expectation that the Midstream segment will generate approximately 45 percent of 2024 normalized EBITDA driven by the Pipestone and Dimsdale asset acquisition, strong global export volumes and higher margins, higher utilization at the Company's existing Northeastern B.C. facilities and the absence of wildfires in Alberta; the expectation that positive factors driving the Midstream segment's contribution to AltaGas' normalized EBITDA will be partially offset by lower contribution from AFUDC on the MVP and lower co-generation revenue at Harmattan; the belief that there is a strong outlook for natural gas and NGLs production growth in Western Canada in the coming years; AltaGas' focus on de-risking its business commercially through long-term tolling contracts and managing commodity price exposure; the belief that AltaGas has a clear path to 60% or higher tolling over a multi-year horizon; AltaGas' hedging program for remaining merchant export volumes; AltaGas' commitment to de-risking the Global Exports supply chain; the expectation that AltaGas will take delivery of two new VLGCs in December 2023 and March 2024 and the benefits thereof; the expectation that AltaGas will have three Time Charters operating in 2024; and anticipated construction of a fourth Time Charter and the timing thereof.

Such statements reflect AltaGas' current expectations, estimates, and projections based on certain material factors and assumptions at the time the statement was made. Material assumptions include: anticipated timing of asset sale and acquisition closings, including the Pipestone acquisition; the U.S/Canadian dollar exchange rate; inflation; interest rates; credit ratings; financing initiatives, the performance of the businesses underlying each sector; expected commodity supply, demand and pricing; volumes and rates; weather; frac spread; access to capital; regulatory policies and timing and receipt of regulatory approvals; seasonality; planned and unplanned plant outages; timing of in-service dates of new projects and acquisition and divestiture activities; taxes; operational expenses; returns on investments; dividend levels; and transaction costs.

AltaGas' forward-looking statements are subject to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without limitation: health and safety risks; operating risks; natural gas supply risk; volume throughput; service interruptions; regulatory risks; cyber security, information, and control systems; litigation risk; climate-related risks, including carbon pricing; changes in law; political uncertainty and civil unrest; risks related to conflict in Eastern Europe; infrastructure risks; decommissioning, abandonment and reclamation costs; reputation risk; weather data; Indigenous land and rights claims; crown duty to consult with Indigenous peoples; capital market and liquidity risks; general economic conditions; internal credit risk; foreign exchange risk; debt financing, refinancing, and debt service risk; interest rates; technical systems and processes incidents; dependence on certain partners; growth strategy risk; construction and development; transportation of petroleum products; impact of competition in AltaGas' businesses; counterparty credit risk; market risk; inflation; composition risk; collateral; rep agreements; market value of common shares and other securities; variability of dividends; potential sales of additional shares; volume throughput; risk management costs and limitations; underinsured and uninsured losses; commitments associated with regulatory approvals for the acquisition of WGL; securities class action suits and derivative suits; electricity and resource adequacy prices; cost of providing retirement plan benefits; labor relations; key personnel; failure of service providers; and the other factors discussed under the heading "Risk Factors" in the Corporation's Annual Information Form (AIF) for the year ended December 31, 2022 and set out in AltaGas' other continuous disclosure documents.

Many factors could cause AltaGas' or any particular business segment's actual results, performance or achievements to vary from those described in this press release, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, expected, projected or targeted and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and AltaGas' future decisions and actions will depend on management's assessment of all information at the relevant time. Such statements speak only as of the date of this news release. AltaGas does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this news release are expressly qualified by these cautionary statements.

Financial outlook information contained in this news release about prospective financial performance, financial position, or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on AltaGas management's (Management) assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.

Additional information relating to AltaGas, including its quarterly and annual Management's Discussion and Analysis (MD&A) and Consolidated Financial Statements, AIF, and press releases are available through AltaGas' website at www.altagas.ca or through SEDAR+ at www.sedarplus.ca.

This news release contains references to certain financial measures that do not have a standardized meaning prescribed by US GAAP and may not be comparable to similar measures presented by other entities. The non-GAAP measures and their reconciliation to US GAAP financial measures are shown in AltaGas' MD&A as at and for the period ended September 30, 2023. These non-GAAP measures provide additional information that management believes is meaningful regarding AltaGas' operational performance, liquidity and capacity to fund dividends, capital expenditures, and other investing activities. Readers are cautioned that these non-GAAP measures should not be construed as alternatives to other measures of financial performance calculated in accordance with US GAAP.

EBITDA is a measure of AltaGas' operating profitability prior to how business activities are financed, assets are amortized, or earnings are taxed. EBITDA is calculated from the Consolidated Statements of Income (Loss) using net income (loss) adjusted for pre‑tax depreciation and amortization, interest expense, and income tax expense (recovery). Normalized EBITDA includes additional adjustments for transaction costs related to acquisitions and dispositions, unrealized losses (gains) on risk management contracts, gains on investments, gains on sale of assets, restructuring costs, dilution loss on equity investment, provisions (reversal of provisions) on assets, provisions on investments accounted for by the equity method, foreign exchange gains, and accretion expenses related to asset retirement obligations. AltaGas presents normalized EBITDA as a supplemental measure. Normalized EBITDA is used by Management to enhance the understanding of AltaGas' earnings over periods. The metric is frequently used by analysts and investors in the evaluation of entities within the industry as it excludes items that can vary substantially between entities depending on the accounting policies chosen, the book value of assets, and the capital structure.

Normalized EPS is calculated as normalized net income divided by the average number of shares outstanding during the period. Normalized net income is calculated from the Consolidated Statements of Income (Loss) using net income (loss) applicable to common shares adjusted for transaction costs related to acquisitions and dispositions, unrealized losses (gains) on risk management contracts, non-controlling interest portion of non-GAAP adjustments, gains on investments, gains on sale of assets, provisions on assets, restructuring costs, dilution loss on equity investment, and provisions on investments accounted for by the equity method. Normalized net income per share is used by Management to enhance the comparability of AltaGas' earnings, as these metrics reflect the underlying performance of AltaGas' business activities.

Net debt is used by the Corporation to monitor its capital structure and financing requirements. It is also used as a measure of the Corporation's overall financial strength and is presented to provide this perspective to analysts and investors. Net debt is defined as short-term debt (excluding third-party project financing obtained for the construction of certain energy management services projects), plus current and long-term portions of long-term debt, less cash and cash equivalents.

SOURCE AltaGas Ltd.

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