HIGHLIGHTS

  • Normalized EBITDA rose to three hundred and eighty-nine million dollars from two hundred and sixty-eight million dollars a year earlier.
  • Global LPG exports reached a record of about one hundred and forty-seven thousand barrels per day across the Ridley Island and Ferndale terminals.
  • AltaGas declared a quarterly common Dividend of thirty-three point four cents per share, payable on December thirty-first.

AltaGas Ltd. (TSX:ALA) reported record third-quarter results before the market opened on Thursday, October twenty-ninth, with normalized EBITDA of three hundred and eighty-nine million dollars, up about forty-five per cent from two hundred and sixty-eight million dollars a year earlier. The North American infrastructure company credited its Midstream business, where liquefied petroleum gas exports to Asia set a new record. Management said it expects full-year results toward the high end of its recently raised guidance, despite a labour strike at a neighbouring terminal, and the board declared the regular quarterly common dividend.

Normalized Earnings Surge While Reported Results Show a Loss

Normalized Net Income climbed to ninety-one million dollars from eleven million dollars, and normalized Earnings Per Share rose to twenty-nine cents from four cents. Normalized funds from operations reached two hundred and forty-nine million dollars, or eighty cents per share, compared with one hundred and forty-eight million dollars, or forty-nine cents, in the prior-year quarter. Revenue increased to about three point four three billion dollars from roughly two point six billion dollars.

On a reported basis, the picture differed. AltaGas recorded a net loss applicable to common shares of twenty-one million dollars, or seven cents per share, compared with a loss of eight cents a year earlier. The company attributed the reported loss to higher unrealized losses on risk management contracts, increased Depreciation and amortization and foreign exchange losses. For the first nine months of the year, normalized EBITDA totalled about one point six billion dollars and normalized earnings per share reached one dollar and ninety-three cents.

Record LPG Volumes Drive the Midstream Segment

Midstream normalized EBITDA reached three hundred and thirty-seven million dollars, up roughly sixty-five per cent from two hundred and four million dollars. Global LPG exports averaged a record of about one hundred and forty-seven thousand barrels per day, shipped to Asia on twenty-four very large gas carriers, an increase of eleven per cent. The Ridley Island Propane Export Terminal handled roughly eighty-nine thousand barrels per day and the Ferndale terminal about fifty-eight thousand barrels per day.

Upstream of the terminals, Montney gathering and processing volumes rose twenty per cent, and the Pipestone complex averaged ninety-four per cent utilisation. AltaGas took delivery of a fourth contracted very large gas carrier in October, with two further time charters due in later years. Chief executive Vern Yu described the Canadian energy outlook as exceptionally strong, pointing to the second phase of LNG Canada and growing egress capacity as supports for both LPG Supply and export demand.

Utilities Deliver Steady Contributions

The Utilities segment, which includes Washington Gas and SEMCO in the United States, generated normalized EBITDA of sixty-six million dollars, broadly in line with sixty-eight million dollars a year earlier. The third quarter is seasonally quieter for gas distribution because heating Demand is low, so the segment's contribution tends to be weighted toward the winter months.

Regulatory outcomes during the period were constructive. The Virginia State Corporation Commission approved an annual rate increase of seventy-four million United States dollars for Washington Gas, with an allowed Return on Equity midpoint of nine point eight per cent, up from nine point six five per cent. In Michigan, regulators approved an annual revenue increase of thirty-three million United States dollars for SEMCO, effective at the start of the coming year, at a nine point eight five per cent return on equity, and extended its mains replacement programs. SEMCO also agreed to acquire Xcel Energy's Upper Peninsula gas operations, serving about five thousand eight hundred customers.

Guidance Toward the Upper End Despite the Trigon Strike

AltaGas maintained full-year guidance for normalized EBITDA of two to two point one billion dollars and normalized earnings per share of two dollars and thirty-five cents to two dollars and sixty cents, and said it expects results toward the high end of those recently raised ranges. The Capital program for the year is about one point eight billion dollars, excluding asset retirement obligations, and is fully self-funded.

A labour strike at Trigon Pacific Terminals has been under way since October second. AltaGas said there has been no material impact on its Ridley Island operations so far, but it expects some effect in the coming weeks and has mitigation measures in progress. Hedging provides a degree of insulation: about ninety-one per cent of remaining expected export volumes for the year are tolled or financially hedged, and about eighty-six per cent of remaining fractionation volumes are hedged.

Leverage Falls Below the Target Range

The Balance Sheet strengthened during the quarter. Adjusted net Debt to trailing normalized EBITDA fell to four point three times from four point seven times at the end of last year, moving below the company's target range of four and a half to five times. Adjusted net debt stood at about nine point three billion dollars, with cash of two hundred and nineteen million dollars.

Lower Leverage provides flexibility for a company with a substantial growth program. For investors who follow Canadian Utility stocks, balance sheet metrics are often watched alongside dividend coverage, since regulated utilities and midstream operators typically fund growth with a combination of Operating Cash Flow and debt.

Dividend Declarations and Payment Dates

The board declared a quarterly common dividend of thirty-three point four cents per share, payable on December thirty-first to shareholders of record on December sixteenth. A dividend on the Series G Preferred Shares was declared for the same dates. The common dividend reflects AltaGas's position as a regular income payer within the Canadian infrastructure group.

Coverage of the dividend can be assessed against normalized funds from operations, which reached eighty cents per share in the quarter, well above the quarterly common payment. The company's self-funded capital program and reduced leverage also bear on the sustainability of distributions, because a Business that does not need to issue equity to fund growth faces less pressure on per-share cash flow. Payment of the dividend remains subject to the board's quarterly declaration.

Projects Lined Up for the Coming Year

The Ridley Island Energy Export Facility is about ninety per cent complete, with commercial operations expected in the first quarter of the coming year. A first optimisation phase would add about thirty thousand barrels per day of propane export capacity in the second half of that year, and a second phase would add sixty thousand barrels per day, with key permits secured. In Utilities, the Dimsdale storage expansion, the Keweenaw Connector Pipeline and MVP Southgate are scheduled for completion around year-end, while two data centre projects are under agreement in Maryland and Virginia.

Within the Canadian market, the [S&P/TSX Capped Utilities] index is a common benchmark for regulated utility companies, although AltaGas's large Midstream business gives it greater Commodity and export exposure than a pure regulated utility.