- Increased dividend by $0.0125 per share per month ($1.92 per share annualized) beginning with the June 15, 2015 payment;
- $178 million in normalized EBITDA;
- $140 million in normalized funds from operations;
- $57 million in normalized net income;
- Strong operating results from Forrest Kerr and Volcano Creek; and
- McLymont Creek nears completion.
AltaGas Ltd. (“AltaGas”) today reported first quarter normalized EBITDA of $178 million, compared to $179 million in the same period 2014. Normalized funds from operations were $140 million ($1.05 per share) for the first quarter 2015, compared to $132 million ($1.07 per share) in the same period 2014. Normalized net income was $57 million ($0.43 per share), compared to $74 million ($0.60 per share) in first quarter 2014.
“Throughout the quarter we faced one of the weakest energy environments we have ever seen, including the lowest power prices in Alberta since deregulation. Despite this, we still delivered on cash flow growth driven by our diverse infrastructure assets,” said David Cornhill, Chairman and CEO of AltaGas. “Our Forrest Kerr and Volcano Creek hydroelectric facilities performed better than expected in the quarter and with the addition of McLymont Creek mid-year we expect significant growth in cash flow in 2015 and 2016. Our dividend increase underscores our commitment to creating shareholder value.”
For first quarter 2015, cash flow was driven by higher contributions in the Power segment from Blythe and the addition of Forrest Kerr and Volcano Creek. Cash flow was also driven by seasonally strong results and growth at the utilities, and higher throughput at some of our key gas processing facilities including Gordondale and Blair Creek. Cash flow also benefitted from favourable foreign exchange. Cash flow was partially offset by the low spot power prices in Alberta and significantly lower frac spread and frac exposed volumes compared to first quarter 2014.
Earnings were impacted by higher depreciation and interest expense primarily as a result of bringing Forrest Kerr and Volcano Creek into service in the second half of 2014, as well as a higher effective tax rate in the quarter as a result of a higher proportion of US earnings subject to a higher tax rate.
AltaGas maintains financial strength and flexibility, an investment grade credit rating, and ready access to capital markets. At the end of the first quarter, AltaGas had $341 million in cash and short-term investments and $1.8 billion available on its credit facilities.
On a GAAP basis, net income applicable to common shares was $66 million ($0.49 per share) in first quarter 2015, compared to $40 million ($0.33 per share) for same period 2014. In first quarter 2015, net income applicable to common shares was normalized for after-tax amounts related to unrealized gains on risk management contracts and development costs incurred for the energy export projects. In first quarter 2014, net income applicable to common shares was normalized for after-tax amounts related to unrealized losses on risk management contracts and development costs incurred for the energy export projects as well as costs incurred for early redemption of MTN’s, provision on assets and gains on asset dispositions.
At the 66-MW McLymont Creek project, construction of the seven kilometre intake access road is complete and intake construction is underway. Excavation of the McLymont power tunnel has been completed. Construction of the powerhouse and installation of the turbine generators are complete. Early commissioning has commenced with backfeed scheduled for second quarter 2015. The project is expected to be in service mid-2015.
Townsend Gas Processing Facility
All permit applications have been submitted and detailed engineering is nearing completion for the 198 Mmcf/d shallow-cut gas processing Townsend facility. Long-lead equipment orders including compressors, refrigeration packages and major pipe for project pipelines have been released. Site clearing has been completed and preliminary civil construction activities have commenced. Full scale construction is expected to commence in third quarter 2015 subject to receipt of regulatory approvals, and is expected to be in service by mid-2016, in advance of Painted Pony’s production requirements.
LPG Export Business
AltaGas has also significantly advanced its liquefied petroleum gas (LPG) export initiatives. The Ferndale LPG export facility located in the State of Washington and owned by Petrogas has been modified to export both propane and butane. The number of shipments from the Ferndale facility is expected to ramp up over the next several years to approximately 30,000 Bbls/d.
Monthly Common Share Dividend and Quarterly Preferred Share Dividend
- The Board of Directors approved a dividend of $0.16 per common share. The dividend will be paid on June 15, 2015, to common shareholders of record on May 25, 2015. The ex-dividend date is May 21, 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 April 1, 2015 and ending June 30, 2015, on AltaGas’ outstanding Series A Preferred Shares. The dividend will be paid on June 30, 2015 to shareholders of record on June 16, 2015. The ex-dividend date is June 12, 2015;
- The Board of Directors approved a dividend of US$0.275 per share for the period commencing April 1, 2015 and ending June 30, 2015, on AltaGas’ outstanding Series C Preferred Shares. The dividend will be paid on June 30, 2015 to shareholders of record on June 16, 2015. The ex-dividend date is June 12, 2015;
- The Board of Directors also approved a dividend of $0.3125 per share for the period commencing April 1, 2015, and ending June 30, 2015, on AltaGas’ outstanding Series E Preferred Shares. The dividend will be paid on June 30, 2015 to shareholders of record on June 16, 2015. The ex-dividend date is June 12, 2015; and
- The Board of Directors also approved a dividend of $0.296875 per share for the period commencing April 1, 2015, and ending June 30, 2015, on AltaGas’ outstanding Series G Preferred Shares. The dividend will be paid on June 30, 2015 to shareholders of record on June 16, 2015. The ex-dividend date is June 12, 2015.
CONSOLIDATED FINANCIAL REVIEW
|(unaudited)||Three months ended
|Normalized operating income(1)||125||137|
|Net income applicable to common shares||66||40|
|Normalized net income(1)||57||74|
|Total long-term liabilities||3,954||4,044|
|Net additions to property, plant and equipment||110||154|
|Normalized funds from operations(1)||140||132|
|Three months ended
|($ per share, except shares outstanding)||2015||2014|
|Net income – basic||0.49||0.33|
|Net income – diluted||0.49||0.32|
|Normalized net income(1)||0.43||0.60|
|Normalized funds from operations(1)||1.05||1.07|
|Shares outstanding – basic (millions)|
|During the period(3)||134||123|
|End of period||135||123|
|(1) Non-GAAP financial measure; see discussion in Non-GAAP Financial Measures section of the 2014 annual MD&A.|
|(2) Dividends declared per common share per month of $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 first quarter financial results, progress on construction projects and other corporate developments.
Members of the media, investment communities and other interested parties may dial (416) 340-2218 or call toll free at 1-866-225-2055. There is no passcode. Please note that the conference call will also be webcast. To listen, please go to http://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 1360547. The replay will expire at midnight (Eastern) on May 7, 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
This news release contains forward-looking statements. When used in this news release, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar expressions, as they relate to AltaGas or an affiliate of AltaGas, 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. 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 or regulatory developments, general economic conditions and other factors set out in AltaGas’ public disclosure documents. 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.