Bay Street News

AltaGas Ltd. Reports Strong Second Quarter 2017 Results

Bay Street

CALGARY, ALBERTA–(Marketwired – July 27, 2017) –

Highlights

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

  • Achieved record second quarter normalized EBITDA1 of $166 million, an increase of approximately 8 percent over the second quarter of 2016;
  • Increased normalized funds from operations1 by approximately 8 percent to $123 million in the second quarter;
  • Significantly advanced over $700 million in gas construction projects including the Ridley Island Propane Export Terminal (RIPET), Townsend 2A, and North Pine;
  • Announced a joint venture partnership pursuant to which Royal Vopak obtained a 30 percent interest in RIPET;
  • Modified take-or-pay agreement with Birchcliff Energy Ltd. (Birchcliff) to incent volumes solely above the existing take-or-pay commitment at Gordondale;
  • Filed regulatory applications with the public utility commissions in Maryland, Virginia and Washington D.C. in connection with AltaGas’ pending acquisition of WGL Holdings, Inc. (WGL Acquisition);
  • Received Federal Energy Regulatory Commission (FERC) approval for the WGL Acquisition, and the waiting period expired pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act); and
  • As part of the financing plan for the pending WGL Acquisition, AltaGas is launching the first phase of its asset sale process, which includes large-scale, gas-fired power generation assets in California, together with smaller non-core assets.

AltaGas Ltd. (AltaGas) (TSX:ALA) today reported that normalized EBITDA in the second quarter of 2017 increased $13 million to $166 million, compared to the same quarter in 2016. Normalized funds from operations were $123 million ($0.72 per share) for the second quarter of 2017, compared to $114 million ($0.75 per share) in the same period of 2016. On a U.S. GAAP basis, net loss applicable to common shares for the second quarter of 2017 was $8 million ($0.05 per share) compared to net income applicable to common shares of $16 million ($0.10 per share) in the second quarter of 2016. Normalized net income1 was $28 million ($0.17 per share) for the second quarter of 2017, compared to $29 million ($0.19 per share) in the same period of 2016.

1 Non-GAAP measure; see discussion in the advisories of this news release

“The performance of AltaGas’ diversified asset base and the consistent operational excellence demonstrated across our three business segments has driven another solid quarter for the company. Given these strong results, we now expect to deliver low double digit percentage growth in normalized EBITDA and high single digit percentage growth in normalized funds from operations over 2016,” said David Harris, President and Chief Executive Officer of AltaGas. “We remain steadfast in our commitment to our vision of being a leading diversified North American energy infrastructure company with a long-term strategy of maintaining a balanced portfolio between gas, power and utilities. Due to the strong performance of our projects under construction and several new opportunities we see this year, we are excited about the remainder of 2017. As we continue to build on this momentum, the Board will make a decision on the increase to the dividend in the fourth quarter. We are committed to driving value for our shareholders.”

Year-to-date all three of AltaGas’ business segments have generated increased results over the same period in 2016. AltaGas is actively working on construction and/or growth opportunities in each segment.

Gas

AltaGas has significantly advanced its major construction projects for its northeast B.C. and energy export strategies. The 99 Mmcf/d Townsend 2A shallow-cut natural gas processing facility is currently tracking on-time and on budget and is expected to begin commercial operations in October 2017. The 10,000 Bbls/d North Pine NGL Separation Facility continues to track ahead of its original schedule and is expected online early in the first quarter of 2018. At RIPET, crews are currently working to pour the foundation for the propane tank and have assembled the two tower cranes that will be used in the civil construction works. Over the next few months, the propane tank will start to take shape. This involves eight concrete pours with the final pour scheduled near the end of 2017. RIPET is expected to be in service by the first quarter of 2019.

On May 5, 2017, AltaGas announced a joint venture with Royal Vopak, a leading independent tank storage company with a global network of terminals located at strategic locations along major trade routes, pursuant to which Royal Vopak obtained a 30 percent interest in RIPET. As part of the formation of the joint venture, AltaGas will provide construction and operating services to the joint venture. AltaGas has entered into negotiations with a number of producers and suppliers and expects to underpin at least 40 percent of RIPET’s annual expected capacity under tolling arrangements with producers and other suppliers.

“We are excited to see all of the development and logistics surrounding our northeast B.C. strategy start to take shape. We are building strong relationships with producers and suppliers that will provide sustainable growth opportunities and benefits for all parties,” said Mr. Harris. “We are also excited about our joint venture with Vopak as they are a very strategic global tank storage company and bring significant experience in terminals worldwide. We look forward to working with them on RIPET as well as considering future opportunities to build out our joint venture.”

On June 29, 2017, AltaGas modified its existing take-or-pay agreement with Birchcliff to incent increased utilization of AltaGas’ 135 Mmcf/d Gordondale deep-cut natural gas processing facility until late 2020. The modifications made apply solely to volumes above the existing take-or-pay volume commitments. AltaGas continues to have positive discussions with a number of producers in the area to expand the Gordondale gas gathering system to fill capacity and potentially expand the facility.

Power

AltaGas continues to pursue opportunities to enhance the value of its California power position. As it relates to both Blythe, following its PPA expiration in July 2020, and the current development project Sonoran, AltaGas continues to have bilateral discussions with public owned utilities, investor owned utilities, community choice aggregators, municipalities, and corporations for multi-year agreements, while also considering resource adequacy market pricing, potential energy and ancillary service offerings, and alternative configurations (gas, combined with solar and energy storage) using the multiple transmission options and capacity available to best serve AltaGas’ potential customers in the Desert Southwest region.

AltaGas also continues to pursue energy storage opportunities driven by the needs of load serving entities. AltaGas is well suited to develop additional brownfield and greenfield sites in load-constrained areas.

Utilities

AltaGas continues to invest in its five wholly-owned utilities, primarily through system betterment opportunities as well as the addition of new customers.

On December 15, 2016, SEMCO Gas filed an application with the Michigan Public Service Commission (MPSC) seeking approval to construct, own, and operate the Marquette Connector Pipeline (MCP). The MCP is a proposed new pipeline that will connect the Great Lakes Gas Transmission pipeline to the Northern Natural Gas pipeline in Marquette, Michigan, which will provide system redundancy and increase deliverability, reliability and diversity of supply to SEMCO Gas’ approximately 35,000 customers in Michigan’s Western Upper Peninsula. A MPSC decision is expected in 2017. The MCP is estimated to cost between US$135 to $140 million with an anticipated in-service date in 2020.

“We have a lot to look forward to as we start to bring some of our construction projects online later this year and continue to execute on new growth opportunities,” said Mr. Harris. “The strategic positioning and advantages we have in each of our business segments allows us to continue to grow and provide long-term sustainable value.”

Strategic Pending Acquisition of WGL Holdings Inc. (WGL Acquisition)

On January 25, 2017, AltaGas announced it had entered into a definitive agreement to indirectly acquire WGL Holdings, Inc. (WGL), a diversified energy infrastructure company. The combination will bring together high quality, low-risk, long-lived infrastructure assets in North America with approximately $5 billion in secured growth projects and approximately $2 billion of growth opportunities through 2021 which are in advanced stages of development.

“WGL is strongly aligned with our vision and strategy and will significantly increase the scale of all three of our business segments,” said Mr. Harris. “Combined, we will have gas operations in the two most prolific natural gas plays in North America, the Montney and the Marcellus/Utica, power generation in over 20 states and provinces, and utility operations in growing jurisdictions.” Mr. Harris continued, “Each of our business segments will now have a premier footprint in both Canada and the U.S., providing us with even greater growth opportunities in each segment while further improving our diversification. With our enhanced footprint we expect there will be further growth opportunities over time even beyond what we have identified to date. We will look to execute on those opportunities while staying true to our strategy of a balanced portfolio of gas, power and utility assets and a low-risk value proposition for our shareholders.”

The WGL Acquisition is expected to provide material accretion to earnings per share (8 – 10 percent) and to normalized funds from operations per share1 (15 – 20 percent) on average through 2021. Starting with the first full year (2019), the WGL Acquisition is also expected to support visible dividend growth of 8 – 10 percent per annum through 2021, while allowing AltaGas to maintain a conservative payout of 50 – 60 percent of normalized funds from operations.

1 Non-GAAP measure; see discussion in the advisories of this news release

On April 24, 2017, AltaGas filed regulatory applications with the public utility commissions in Maryland, Virginia and Washington D.C. On the same date, AltaGas and WGL also filed their voluntary Joint Notice to the Committee on Foreign Investment in the United States (CFIUS), and an application with the United States FERC. In addition, on June 15, 2017, a pre-merger Notification and Report Form on the WGL Acquisition was filed in accordance with the requirements of the HSR Act. To the extent required, hearings related to the state regulatory applications are anticipated to begin in the fourth quarter of 2017 with final decisions anticipated to follow through the first half of 2018. AltaGas anticipates that the CFIUS review will be completed by the end of September 2017. On July 6, 2017, the FERC found that the transaction is consistent with the public interest and is now approved. Also, as of July 17, 2017, when the waiting period required by Section 7A(b)(1) of the HSR Act expired, the merger was deemed approved by the Federal Trade Commission and the Department of Justice, such approval being valid for one year. WGL shareholders voted in favor of the Merger Agreement governing the proposed acquisition on May 10, 2017.

Financial Update

Normalized EBITDA in the second quarter increased 8 percent to $166 million as compared to $153 million for the same quarter of 2016. The Gas segment benefitted from the commencement of commercial operations at the Townsend Facility in the third quarter of 2016 and higher frac exposed volumes. Results for the Utilities were positively impacted by colder weather experienced in Alaska and Alberta, rate and customer growth, insurance proceeds received by SEMCO’s non-regulated operations, and an early termination payment from one of SEMCO’s non-regulated customers moving from a fixed fee to a volumetric-based contract. The Power segment benefitted from a full quarter of contributions from the Pomona Energy Storage Facility which commenced commercial operations on December 31, 2016, and the timing of the Blythe Energy Center outage. Both the Power and Utilities segments benefitted from the stronger U.S. dollar on reported results of the U.S. assets. The overall increases in normalized EBITDA were partially offset by the impact of planned turnarounds at EEEP and Turin, the impact of the sale of the EDS and JFP transmission assets in the first quarter of 2017, lower equity earnings from Petrogas, lower ethane revenues due to lower volumes, warmer weather at the Michigan and Nova Scotia Utilities and lower interruptible storage service revenue at CINGSA.

Normalized funds from operations were $123 million ($0.72 per share) in the second quarter of 2017, up from $114 million ($0.75 per share) in the second quarter of 2016. The increase was driven by the increase in normalized EBITDA, partially offset by lower distributions from Petrogas.

For the second quarter of 2017, AltaGas recorded income tax expense of $8 million compared to $4 million in the same quarter of 2016. The increase was primarily due to unrealized losses on certain risk management contracts not being tax deductible.

On a U.S. GAAP basis, net loss applicable to common shares for the second quarter of 2017 was $8 million ($0.05 per share) compared to net income applicable to common shares of $16 million ($0.10 per share) for the same quarter in 2016. The decrease was mainly due to the transaction costs incurred on the pending WGL Acquisition, higher unrealized losses recognized on risk management contracts, higher income tax, interest, depreciation and amortization expense, higher preferred share dividends, and the unrealized loss recognized upon ceasing to account for the Tidewater investment using the equity method, partially offset by the same previously referenced factors resulting in the increase in normalized EBITDA.

Normalized net income was $28 million ($0.17 per share) for the second quarter of 2017, compared to $29 million ($0.19 per share) reported for the same quarter in 2016. The decrease was mainly due to higher depreciation and amortization expense, and higher preferred share dividends, partially offset by the same previously referenced factors resulting in the increase in normalized EBITDA. Normalizing items in the second quarter of 2017 included after-tax amounts related to transaction costs on acquisitions, unrealized losses on risk management contracts and long-term investments, gain on sale of assets, provision on assets, and financing costs associated with the bridge facility for the pending WGL Acquisition. In the second quarter of 2016, normalizing items included after-tax amounts related to unrealized losses on risk management contracts and restructuring costs.

For the six months ended June 30, 2017, AltaGas reported normalized EBITDA of $394 million compared to $332 million for the same period in 2016. The increase was mainly due to the commencement of commercial operations at the Townsend Facility in the third quarter of 2016, higher earnings from Petrogas including the dividend income from the Petrogas Preferred Shares, colder weather experienced at certain of the Utilities, higher realized frac spread and frac exposed volumes, higher revenue from NGL marketing, higher natural gas storage margins, the absence of equity losses from the Sundance B PPAs, the interim and refundable rate increases at ENSTAR, contributions from the Pomona Energy Storage Facility which commenced commercial operations on December 31, 2016, an early termination payment from one of SEMCO’s non-regulated customers moving from a fixed fee to a volumetric-based contract, and insurance proceeds received by SEMCO’s non-regulated operations. These increases were partially offset by the impact of planned turnarounds at EEEP and Turin in the second quarter of 2017 and the impact of the sale of the EDS and JFP transmission assets.

Normalized funds from operations for the first half of 2017 were $294 million ($1.74 per share), compared to $248 million ($1.66 per share) for the same period in 2016, reflecting the same drivers as normalized EBITDA, partially offset by lower cash distributions from Petrogas and higher interest expense. In the first half of 2017, AltaGas received $6 million of dividend income from the Petrogas Preferred Shares (2016 – $nil) and $2 million of common share dividends from Petrogas (2016 – $12 million). Petrogas retained cash to fund its growth capital program and for general corporate purposes.

AltaGas recorded income tax expense of $29 million for the first half of 2017 compared to $10 million in the same period of 2016. The increase was primarily due to the absence of the $10 million tax recovery related to the Tidewater Gas Asset Disposition recorded in the first quarter of 2016. In addition, a portion of transaction costs incurred on the pending WGL Acquisition and unrealized losses on certain risk management contracts were not tax deductible.

In March 2017, AltaGas completed the sale of the EDS and the JFP transmission assets to Nova Chemicals for net proceeds of approximately $67 million, resulting in a pre-tax loss on disposition of $3 million.

Net income applicable to common shares for the first half of 2017 was $24 million ($0.14 per share) compared to $71 million ($0.48 per share) for the same period in 2016. The decrease was mainly due to the transaction costs incurred on the pending WGL Acquisition, higher unrealized losses on risk management contracts, the unrealized loss recognized upon ceasing to account for the Tidewater investment using the equity method, higher income tax, interest, depreciation and amortization expense, higher preferred share dividends, and higher losses on sale of assets, partially offset by the same previously referenced factors resulting in the increase in normalized EBITDA. In addition, net income per common share decreased for the first half of 2017 compared to the same period in 2016 as a result of the same factors impacting net income, as well as the increase in common shares outstanding in 2017.

Normalized net income was $93 million ($0.55 per share) for the first half of 2017, compared to $68 million ($0.46 per share) reported for the same period in 2016. The increase was driven by the same factors impacting normalized EBITDA, partially offset by higher income tax, interest, depreciation and amortization expense, and higher preferred share dividends. Normalizing items in the first half of 2017 included after-tax amounts related to transaction costs on acquisitions, unrealized losses on risk management contracts and long-term investments, losses on sale of assets, provision on assets, and financing costs associated with the bridge facility for the pending WGL Acquisition. In the first half of 2016, normalizing items included after-tax amounts related to transaction costs incurred on acquisitions, unrealized losses on risk management contracts, gains on sale of assets, dilution loss recognized on investment accounted for by the equity method, provision on investment accounted for by the equity method, and restructuring costs.

2017 OUTLOOK

Based on strong performance year-to-date and an assessment for the remainder of the year, AltaGas now expects to deliver low double digit percentage normalized EBITDA growth in 2017 compared to 2016. All three business segments are expected to drive the annual growth in 2017 compared to 2016, with the Gas segment expecting to generate the highest normalized EBITDA percentage growth, followed by the Power segment and the Utilities segment. The Power and Utilities segments are expected to generate approximately 75 percent of 2017 normalized EBITDA. The Gas segment is expected to increase from 23 percent of total 2016 normalized EBITDA to approximately 25 percent of total 2017 normalized EBITDA. The following are the key drivers contributing to the expected normalized EBITDA growth in 2017:

  • First full year of commercial operations at the Townsend Facility;
  • Higher earnings from frac exposed volumes as a result of higher commodity prices;
  • Higher expected earnings from the Northwest Hydro Facilities due to contractual price increases and continued improvements in operational efficiency resulting in higher volumes and lower operating costs;
  • Actual weather in the first half of 2017 was colder at certain of the Utilities compared to the warmer weather experienced in 2016, with normal weather expected for the remainder of 2017;
  • Contributions from the Pomona Energy Storage Facility, which entered commercial operation on December 31, 2016;
  • Higher earnings from renewables primarily due to stronger wind generation at the Bear Mountain Wind Facility and fewer planned outages at the Craven Biomass Facility;
  • Higher earnings from energy services primarily due to higher revenue from NGL marketing and higher natural gas storage margins;
  • Higher expected volumes at the Gordondale Facility following the modifications made to the take-or-pay agreement for volumes solely above the existing take-or-pay commitment to incent Birchcliff to deliver additional volumes. AltaGas continues to have positive discussions with a number of producers in the area to expand the Gordondale gas gathering system to fill capacity and potentially expand the facility;
  • Decrease in administrative expenses as a result of various cost savings initiatives, including the savings from the Workforce Restructuring that occurred in 2016; and
  • Partial contributions from Townsend 2A entering commercial operations in the fourth quarter of 2017.

The overall forecasted EBITDA growth in 2017 includes the negative impact from the sale of the EDS and JFP transmission assets to Nova Chemicals, which was completed in March 2017, and scheduled turnarounds at EEEP and the Turin facility, which occurred in the second quarter of 2017. A turnaround at the Gordondale facility is scheduled in the third quarter of 2017 but is not expected to have a material impact on normalized EBITDA due to the majority of costs being capitalized and revenues being billed under a take-or-pay arrangement.

Normalized funds from operations are expected to grow by a high single digit percentage, driven by the same factors noted above for normalized EBITDA growth, but partially offset by higher current tax expenses and lower common share dividends from Petrogas, as Petrogas is expected to retain a portion of its cash to fund its capital program and for general corporate purposes.

AltaGas continues to focus on enhancing productivity and streamlining businesses. As part of the financing strategy for the WGL Acquisition, AltaGas is launching the first phase of its asset sale process, which includes large-scale, gas-fired power generation assets in California, together with smaller non-core assets. Depending on the closing date of the asset sales, the 2017 outlook for normalized EBITDA and normalized funds from operations may be adversely impacted.

In the Gas segment, additional earnings in 2017 are expected to be driven by a full year of contributions from the Townsend Facility, higher frac exposed volumes and commodity prices, a full year of income from the Petrogas Preferred Share dividends, higher NGL marketing revenue and natural gas storage margins, higher volumes expected at the Gordondale facility due to the modifications made to the take-or-pay agreement with Birchcliff, and a partial year contribution from Townsend 2A entering commercial operations in the fourth quarter of 2017. The additional earnings are partially offset by the closing of the sale of the EDS and JFP transmission pipelines in the first quarter of 2017, lower ethane revenue at EEEP and the Pembina Empress Extraction Plant (PEEP), and scheduled turnarounds at EEEP and the Turin facility in the second quarter of 2017. Based on current commodity prices, AltaGas estimates an average of approximately 9,500 Bbls/d will be exposed to frac spreads prior to hedging activities. For the remainder of 2017, AltaGas has frac hedges in place for approximately 5,500 Bbls/d at an average price of approximately $23/Bbl excluding basis differentials.

In the Power segment, increased earnings are expected to be driven by higher expected earnings from the Northwest Hydro Facilities due to contractual price increases and continued improvements in productivity resulting in higher volumes generated and lower operating costs, contributions from a full year of operations at the Pomona Energy Storage Facility, fewer planned outages expected at Blythe and at the Craven Biomass Facility, and higher earnings from the Bear Mountain Wind Facility due to stronger wind generation. The earnings and cash flows from the Northwest Hydro Facilities are expected to be seasonally stronger through the end of the third quarter and are expected to decline in the fourth quarter based on seasonal water flow patterns. Actual seasonal water flow will vary with regional temperatures and precipitation levels.

The Utilities segment is expected to report increased earnings in 2017 mainly driven by the colder weather in the first half of 2017 at certain of the Utilities and normal weather assumed for the second half of 2017, compared to the warmer weather experienced at all of the Utilities in 2016. In addition, higher customer usage at certain of the Utilities and lower expenses are expected to benefit earnings. These increases are expected to be partially offset by lower interruptible storage service revenue at CINGSA. Earnings at all of the Utilities (except PNG) are affected by weather in their franchise areas, with colder weather generally benefiting earnings. If the weather varies from normal weather, earnings at the Utilities would be affected. In addition, earnings from the Utilities segment are impacted by regulatory decisions and the timing of these decisions. In 2017, ENSTAR expects EBITDA to increase by approximately $3 million as a result of the interim refundable rate increase approved in 2016 by the Regulatory Commission of Alaska, with final rates expected to be set in the third quarter of 2017.

Earnings generated from AltaGas’ U.S. assets are exposed to fluctuations in the U.S./Canadian dollar exchange rate. In general, the strengthening of the U.S. dollar compared to the Canadian dollar will have a positive impact on earnings. The weakening of the U.S. dollar will have the opposite effect. To the extent AltaGas has outstanding U.S. dollar denominated debt and/or preferred shares, fluctuations in the U.S./Canadian dollar exchange rate will have the opposite effect as compared to the impact on earnings generated from AltaGas’ U.S. assets.

Monthly Common Share Dividend and Quarterly Preferred Share Dividends

  • The Board of Directors approved a dividend of $0.175 per common share. The dividend will be paid on September 15, 2017, to common shareholders of record on August 25, 2017. The ex-dividend date is August 23, 2017. This dividend is an eligible dividend for Canadian income tax purposes;
  • The Board of Directors approved a dividend of $0.21125 per share for the period commencing June 30, 2017 and ending September 29, 2017, on AltaGas’ outstanding Series A Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017;
  • The Board of Directors approved a dividend of $0.20101 per share for the period commencing June 30, 2017 and ending September 29, 2017, on AltaGas’ outstanding Series B Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017;
  • The Board of Directors approved a dividend of US$0.275 per share for the period commencing June 30, 2017 and ending September 29, 2017, on AltaGas’ outstanding Series C Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017;
  • The Board of Directors approved a dividend of $0.3125 per share for the period commencing June 30, 2017, and ending September 29, 2017, on AltaGas’ outstanding Series E Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017;
  • The Board of Directors approved a dividend of $0.296875 per share for the period commencing June 30, 2017, and ending September 29, 2017, on AltaGas’ outstanding Series G Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017;
  • The Board of Directors approved a dividend of $0.328125 per share for the period commencing June 30, 2017, and ending September 29, 2017, on AltaGas’ outstanding Series I Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017; and
  • The Board of Directors approved a dividend of $0.3125 per share for the period commencing June 30, 2017, and ending September 29, 2017, on AltaGas’ outstanding Series K Preferred Shares. The dividend will be paid on September 29, 2017 to shareholders of record on September 15, 2017. The ex-dividend date is September 13, 2017.

Consolidated Financial Review

Three Months Ended
June 30		 Six Months Ended
June 30
($ millions) 2017 2016 2017 2016
Revenue 539 426 1,310 1,036
Normalized EBITDA(1) 166 153 394 332
Net income (loss) applicable to common shares (8 ) 16 24 71
Normalized net income(1) 28 29 93 68
Total assets 10,099 9,858 10,099 9,858
Total long-term liabilities 4,670 4,561 4,670 4,561
Net additions to property, plant and equipment 125 126 127 206
Dividends declared(2) 89 76 178 148
Normalized funds from operations(1) 123 114 294 248
Three Months Ended
June 30		 Six Months Ended
June 30
($ per share, except shares outstanding) 2017 2016 2017 2016
Net income (loss) per common share – basic (0.05 ) 0.10 0.14 0.48
Net income (loss) per common share – diluted (0.05 ) 0.10 0.14 0.48
Normalized net income – basic(1) 0.17 0.19 0.55 0.46
Dividends declared(2) 0.53 0.50 1.05 0.99
Normalized funds from operations(1) 0.72 0.75 1.74 1.66
Shares outstanding – basic (millions)
During the period(3) 170 152 169 149
End of period 171 163 171 163
(1) Non-GAAP financial measure; see discussion in Non-GAAP Financial Measures section of this MD&A.
(2) Dividends declared per common share per month: $0.165 beginning on October 26, 2015 and $0.175 beginning on August 25, 2016.
(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 2017 second quarter results, progress on construction projects, the pending WGL Acquisition and other corporate developments.

Members of the investment community and other interested parties may dial 1-703-318-2220 or call toll free at 1-844-543-5238. The passcode is 35926799. Please note that the conference call will also be webcast. To listen, please go to http://www.altagas.ca/invest/events-and-presentations. The webcast will be archived for one year.

Shortly after the conclusion of the call, a replay will be available by dialing 1-404-537-3406 or 1-855-859-2056. The passcode is 35926799. The replay will expire at 2:00 p.m. (Eastern) on July 29, 2017.

Additional information relating to AltaGas’ results can be found in the Management’s Discussion and Analysis and unaudited condensed interim consolidated financial statements for the three months and six months ended June 30, 2017 available through AltaGas’ website at www.altagas.ca or through SEDAR at www.sedar.com.

AltaGas is an energy infrastructure company 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

FORWARD LOOKING INFORMATION

This news release contains forward-looking statements. When used in this news release the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “further”, “continue”, “look forward”, “future”, “pursue”, “grow” “believe”, “achieve”, “aim”, “advance”, “seek”, “propose”, “position”, “estimate”, “forecast”, “expect”, “project”, “launch”. “target”, “on track”, “potential” and similar expressions suggesting future events or future performance, as they relate to the Corporation or any affiliate of the Corporation, are intended to identify forward-looking statements.

In particular, this news release contains forward-looking statements with respect to, among other things, business objectives; AltaGas’ vision and strategy; expected growth and drivers of growth; capital expenditures (including in respect of the 2017 capital program; expected allocation per business segment and project and anticipated sources of financing thereof); results of operations; operational and financial performance; business projects; opportunities; strategic position of assets, ability to provide long-term sustainable value; financial results, expectations regarding 2017 normalized EBITDA (including expected contributions per business segment and sources of generation); projected growth in normalized EBITDA and normalized funds from operations (including per business segment); AltaGas’ continuation of advancement of its strategic initiatives; AltaGas’ ability to acquire, grow and optimize energy infrastructure, expectations with respect to the WGL Acquisition including the expected closing date, ability to obtain, and timeline for obtaining, regulatory and other approvals, AltaGas’ ability to sell assets (including AltaGas’ ability to launch and complete asset sales in phases), anticipated benefits of the WGL Acquisition including the alignment with AltaGas’ vision and strategy, footprint, portfolio and scale of assets of the combined entity, nature, number, value and quality of the assets, the nature, number, value, quality, timing and stage of development of growth projects and opportunities and AltaGas’ ability to execute on projects and opportunities, the strategic focus of the business, EPS accretion and normalized FFOPS accretion, both in the first full year following the WGL Acquisition and over the period to 2021, growth on an absolute dollar and per share basis, strength of earnings (including, without limitation, EPS, FFOPS and EBITDA growth rate through 2021), annual dividend growth rate, dividend payout ratios, compatibility, strength and focus of the combined entity, complimentary nature of businesses, ability to increase scale and provide diversity;
AltaGas’ ability to maintain a balanced portfolio among business segments; expectations regarding current projects under construction and new opportunities for 2017 driving shareholder value; expectations with respect to the Townsend Facility including, expected earnings and impact on earnings; expectations with respect to Townsend 2A including expected timeline for completion of construction and commercial operations and contribution to earnings; expectations with respect to RIPET including timing of construction completion and commercial operations, AltaGas’ ability to construct and operate, sources of propane supply, ability to underpin capacity, tolling arrangements, strength of relationships with producers and suppliers and potential benefits to be derived from such relationships, strategic nature of the joint venture, future opportunities for the joint venture and Vopak’s terminal experience; expectations regarding take or pay arrangements with Birch Cliff; expectations relating to the North Pine Facility including timeline for construction and commercial operation; expectations relating to the Marquette Connector Pipeline including timeline for MPSC approval, construction and in-service date; cost, location, connection capability to existing pipelines and gas supply opportunities; expectations relating to AltaGas’ ability to fund its projects and business; expectations to enhance the value of AltaGas’ California power position; expectations regarding opportunities for Blythe and Sonoran including re-contracting, re-configuring, offering resource adequacy, energy and ancillary services, using multiple transmission options, serving several western U.S. states, entering into multi-year agreements and pursuing opportunities through bilateral discussions or otherwise; expectations relating to potential future energy storage opportunities and AltaGas’ suitability to develop; expectations relating to the Northwest Hydro Facilities including expected generation, operational efficiency, operating costs, contributions to earnings and seasonality impacts (including water flow patterns);
expected impact on earnings of the Tidewater Gas Asset Disposition; expectations regarding gas processing volumes and disposition of smaller non-core assets; expectations regarding Petrogas including dividends from Petrogas, and Petrogas’ retention of cash and contributions; expectations regarding the U.S. dollar exchange rate, foreign exchange forward contracts, commodity hedge gains, frac spread exposure, frac exposed volumes, NGL marketing revenue, storage margins, recovery in commodity prices, weather, wind generation and operating and administrative costs; expectations regarding the impact on earnings of the sale of EDS and JFP pipelines; impact of facility turnarounds and outages on earnings and timing of turnarounds and outages; expectations regarding volumes at the Gordondale facility and expansion of the gas gathering system and facility; expectations regarding the utilities segment including opportunities for system betterment and customer growth, earnings from the utilities segment including from rate base and customer growth and higher customer usage and impact on earnings from lower interruptible storage service revenue from CINGSA and regulatory decisions and timing of regulatory decisions (including in respect of ENSTAR’s 2016 rate case and expected decision date and expected revenue increase); AltaGas’ ability to focus on enhancing productivity and streamlining businesses; expectations regarding dividends (including dividend increases and the payment of dividends) and expectations regarding timing of the conference call.

These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Such statements reflect AltaGas’ current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties including, without limitation, changes in market competition, governmental, aboriginal or regulatory developments, changes in tax legislation, fluctuations in commodity prices, interest or foreign exchange rates, access to capital markets, general economic conditions, changes in the political environment, changes to environmental and other laws and regulations, cost for labour, equipment and materials and other factors set out in AltaGas’ continuous disclosure documents, including the Annual Information Form and the MD&A as at and for the year ended December 31, 2016.

Many factors could cause AltaGas’ actual results, performance or achievements to vary from those described in this news release, including, without limitation, those listed above. 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 or expected, and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. 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. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

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 management’s 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.

This news release contains references to certain financial measures that do not have a standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other entities. The non-GAAP measures and their reconciliation to GAAP financial measures are shown in AltaGas’ Management’s Discussion and Analysis (MD&A) as at and for the period ended June 30, 2017. 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. The specific rationale for and incremental information associated with each non-GAAP measure is discussed in AltaGas’ MD&A as at and for the period ended June 30, 2017. Readers are cautioned that these non-GAAP measures should not be construed as alternatives to other measures of financial performance calculated in accordance with GAAP.

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