AltaGas Ltd.
TSX : ALA

AltaGas Ltd.

February 26, 2015 07:45 ET

AltaGas Ltd. Reports 2014 Fourth Quarter and Year End Results

Highlights

- A record $546 million in normalized EBITDA in 2014;

- A record $472 million in normalized funds from operations in 2014, a 17 percent increase over 2013;

- Increased annual dividend by 16 percent to $1.77 in May 2014;

- Completed 195 MW Forrest Kerr and 16 MW Volcano Creek hydroelectric projects in 2014;

- Acquired Blythe II and Blythe III projects to potentially triple AltaGas' generating capacity in California;

- Commenced LPG exports to Asia; and

- Gained partial ownership and control of the Douglas Channel LNG export project.

CALGARY, ALBERTA--(Marketwired - Feb. 26, 2015) - AltaGas Ltd. ("AltaGas") (TSX:ALA) today reported normalized EBITDA in 2014 increased $37 million to $546 million, compared to 2013. Normalized funds from operations increased 17 percent to $472 million ($3.72 per share) for 2014, compared to $402 million ($3.47 per share) in 2013. Normalized net income was $165 million ($1.30 per share) in 2014, compared to $176 million ($1.51 per share) in 2013.

"AltaGas significantly grew its competitive position as a leading North American energy infrastructure company in 2014," said David Cornhill, Chairman and CEO of AltaGas. "We built a competitive service offering across the midstream value chain, from wellhead to export markets, delivering LPG to the global marketplace for the first time through exports to Asia. We also developed a strategic alliance with a significant producer in the Montney to provide access to Asian markets for WCSB natural gas. Finally, we completed our Forrest Kerr and Volcano Creek projects, significantly increasing our long-life, low-risk energy infrastructure which provides stable cash flow."

For the year, AltaGas achieved record cash flow. The increase in cash flow was driven by strong performance in the Gas and Utilities segments, distributions from Petrogas, and contribution from Forrest Kerr. Cash flow was partially impacted by lower contribution from the Alberta power assets.

Earnings for the year were also driven by strong performance in the Gas and Utilities segments. AltaGas realized increased volumes from Gas assets, positive earnings contribution from Petrogas and continued rate base and customer growth at Utilities. Earnings also benefited from favorable foreign exchange rates on U.S. business results. However, earnings were impacted by lower Alberta power results and from Forrest Kerr partly due to the delay in the Northwest Transmission Line and slower ramp up than expected.

For fourth quarter 2014, normalized EBITDA was $155 million, compared to $153 million in fourth quarter 2013. Normalized funds from operations were $156 million ($1.17 per share) in fourth quarter 2014, compared to $123 million ($1.01 per share) in fourth quarter 2013. Normalized net income was $48 million ($0.36 per share) in fourth quarter 2014, compared to $60 million ($0.49 per share) in fourth quarter 2013.

Cash flow in fourth quarter 2014 increased compared to fourth quarter 2013 due to strong performance in the Gas and Utilities segments, distributions from Petrogas, and the cash contribution from Forrest Kerr.

Earnings in the fourth quarter were also driven by strong contributions from AltaGas' Gas and Utilities segments and an income tax recovery. Earnings were impacted by lower Power results.

In 2015, the company expects to benefit from a full year of Forrest Kerr and Volcano Creek, a partial year of McLymont Creek, the investment in Petrogas, and other growth projects coming into service. Two thirds of AltaGas' business consists of regulated Utilities and highly contracted power generation. The other third is AltaGas' Gas business which is also highly contracted. AltaGas maintains financial strength and flexibility, an investment grade credit rating, and ready access to capital markets. Coming into 2015, AltaGas had approximately $420 million in cash and $1.7 billion available on its credit facilities.

"We are well positioned for 2015 and we have business diversity and financial strength to weather the weaker economic environment," said Cornhill. "2015 will be another exciting year as we see our first full year of operations from Forrest Kerr and Volcano, commission our McLymont Creek project, start construction of Townsend, and continue to advance our energy exports."

Net income applicable to common shares for 2014 was $96 million ($0.75 per share) compared to $182 million ($1.56 per share) for 2013. Net income applicable to common shares for 2014 was normalized for after-tax amounts related to provisions taken for certain assets, impact from the sale of non-core assets, unrealized gain or loss on mark-to-market adjustments, realized and unrealized losses on long-term investments, costs associated with the early redemption of MTNs, transaction costs related to acquisitions and development costs incurred for the energy export projects. Net income applicable to common shares for 2013 was normalized for similar extraordinary items as in 2014, excluding the costs associated with the early redemption of MTNs. Results in 2013 were also normalized for the impact of statutory tax rate changes.

On a GAAP basis, net income applicable to common shares was $10 million ($0.08 per share) in fourth quarter 2014, compared to $53 million ($0.44 per share) for same period 2013. Net income applicable to common shares for the fourth quarter 2014 includes the impact of a $70 million pre-tax provision taken for certain gas processing assets.

Project Updates

McLymont Creek

At the 66 MW McLymont Creek project, construction of the 7-kilometre intake access road is complete and intake construction is underway. Excavation of the McLymont power portal has been completed. Construction of the powerhouse is advancing ahead of schedule and installation of the turbines is underway. The project is expected to be in service in mid-2015.

LNG Export Business

AltaGas continues to progress on its liquefied natural gas (LNG) export initiatives. On January 28, 2015, AltaGas Idemitsu Joint Venture Limited Partnership (AIJVLP), EDF Trading Limited and EXMAR NV (the "Consortium") announced that it has full ownership and control of the Douglas Channel LNG project as a result of the Plan of Arrangement completed under the Companies' Creditors Arrangement Act proceeding. All useful assets of the former Douglas Channel LNG project were transferred to the Consortium and all creditor claims have been settled. The Consortium has executed long-term lease agreements with the Haisla Nation regarding land and tenure and with Pacific Northern Gas Ltd. for long-term pipeline capacity to supply gas to the project. The project will have a nameplate capacity of 0.55 million tonnes per annum. The Consortium targets a final investment decision in fourth quarter 2015 and commercial operations in 2018.

LPG Export Business

AltaGas has also significantly advanced its liquefied petroleum gas (LPG) export initiatives. In 2014, AIJVLP completed the acquisition of two-thirds of Petrogas, which provides key infrastructure, supply logistics, and marketing expertise required to pursue LPG exports. LPG exports to Asia began in 2014 through Petrogas' Ferndale facility. The number of shipments from the Ferndale facility is expected to ramp up over the next several years to approximately 30,000 Bbls/d.

Through AIJVLP, AltaGas is also developing a greenfield LPG terminal on the west coast of Canada. Site evaluation studies are being conducted and expected to be completed in 2015. Terminal sites and refrigeration technology are being evaluated. AIJVLP is in discussions with key stakeholders to determine project timing, and with market participants to develop sales and logistics agreements.

Monthly Common Share Dividend and Quarterly Preferred Share Dividends

  • The Board of Directors approved a dividend of $0.1475 per common share. The dividend will be paid on April 15, 2015, to common shareholders of record on March 25, 2015. The ex-dividend date is March 23, 2015. This dividend is an eligible dividend for Canadian income tax purposes;
  • The Board of Directors approved a dividend of $0.3125 per share for the period commencing January 31, 2015 and ending March 31, 2015, on AltaGas' outstanding Series A Preferred Shares. The dividend will be paid on March 31, 2015 to shareholders of record on March 17, 2015. The ex-dividend date is March 13, 2015;
  • The Board of Directors approved a dividend of US$0.275 per share for the period commencing January 1, 2015 and ending March 31, 2015, on AltaGas' outstanding Series C Preferred Shares. The dividend will be paid on March 31, 2015 to shareholders of record on March 17, 2015. The ex-dividend date is March 13, 2015; and
  • The Board of Directors also approved a dividend of $0.3125 per share for the period commencing January 1, 2015, and ending March 31, 2015, on AltaGas' outstanding Series E Preferred Shares. The dividend will be paid on March 31, 2015 to shareholders of record on March 17, 2015. The ex-dividend date is March 13, 2015.
  • The Board of Directors also approved a dividend of $0.296875 per share for the period commencing January 1, 2015, and ending March 31, 2015, on AltaGas' outstanding Series G Preferred Shares. The dividend will be paid on March 31, 2015 to shareholders of record on March 17, 2015. The ex-dividend date is March 13, 2015.

CONSOLIDATED FINANCIAL REVIEW

Three months ended
December 31
Years ended
December 31
Years ended December 31 ($ millions) 2014 2013 2014 2013
Revenue
667

581

2,406

2,043
Net revenue(1) 285 265 1,019 960
Normalized operating income(1) 105 112 366 353
Normalized EBITDA(1) 155 153 546 509
Net income applicable to common shares 10 53 96 182
Normalized net income(1) 48 60 165 176
Total assets 8,413 7,284 8,413 7,284
Total long-term liabilities 4,074 3,727 4,074 3,727
Net additions to property, plant and equipment 183 223 605 1,145
Dividends declared(2) 59 47 215 174
Cash flows
Normalized funds from operations(1) 156 123 472 402
Three months ended
December 31
Years ended
December 31
($ per share, except shares outstanding) 2014 2013 2014 2013
Normalized EBITDA(1) 1.16 1.26 4.31 4.38
Net income - basic 0.08 0.44 0.75 1.56
Net income - diluted 0.08 0.43 0.74 1.52
Normalized net income(1) 0.36 0.49 1.30 1.51
Dividends declared(2) 0.44 0.38 1.69 1.50
Cash flows
Normalized funds from operations(1) 1.17 1.01 3.72 3.47
Shares outstanding - basic (millions)
During the period(3) 134 122 127 116
End of period 134 122 134 122
(1) Non-GAAP financial measure.
(2) Dividends declared per common share per month of $0.12 beginning September 10, 2012, $0.125 beginning April 24, 2013, $0.1275 beginning July 31, 2013 and $0.1475 beginning on May 26, 2014.
(3) Weighted average.

CONFERENCE CALL AND WEBCAST DETAILS:

AltaGas will hold a conference call today at 9:00 a.m. MT (11:00 a.m. ET) to discuss 2014 fourth quarter and year end financial results, progress on construction projects and other corporate developments.

Members of the media, investment community and other interested parties may dial (416) 340-8527 or call toll free at 1-866-852-2121. There is no passcode. Please note that the conference call will also be webcast. To listen, please go to www.altagas.ca/investors/presentations_and_events. The webcast will be archived for one year.

Shortly after the conclusion of the call, a replay will be available by dialing (905) 694-9451 or 1-800-408-3053. The passcode is 8426115. The replay will expire at midnight (Eastern) on March 5, 2015.

AltaGas is an energy infrastructure business with a focus on natural gas, power and regulated utilities. AltaGas creates value by acquiring, growing and optimizing its energy infrastructure, including a focus on clean energy sources. For more information visit www.altagas.ca.

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