Performance Due to Strong Midstream Execution, Record First Quarter Global Export Volumes, and Continued Advancement of Major Strategic Priorities CALGARY, AB, May 2, 2024 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX:ALA) today reported first quarter 2024 financial results and provided an update on its operations and other corporate developments. HIGHLIGHTS (all financial figures are unaudited and in Canadian dollars unless otherwise noted) Normalized EPS1 was $1.14 in the first quarter of 2024 compared to $0.99 in the first quarter of 2023, representing a 15 percent year-over-year increase, while GAAP EPS2 was $1.38 in the first quarter of 2024 compared to $1.58 in the first quarter of 2023. Normalized EPS was ahead of AltaGas' expectations due to strong Midstream performance, including robust global exports volumes partially due to favorable timing of ships at the end of the first quarter, and continued cost management.   Normalized EBITDA1 was $660 million in the first quarter of 2024 compared to $582 million in the first quarter of 2023, while income before income taxes was $541 million in the first quarter of 2024 compared to $619 million in the first quarter of 2023. The quarter included strong Midstream performance while Utilities results were in line with expectations.  Normalized FFO per share1 was $1.73 in the first quarter of 2024 compared to $1.63 in the first quarter of 2023, while cash from operations per share3 was $1.89 in the first quarter of 2024 compared to $2.10 in the first quarter of 2023. The Utilities segment reported normalized EBITDA of $437 million in the first quarter of 2024 compared to $401 million in the first quarter of 2023, while income before income taxes was $384 million in the first quarter of 2024 compared to $590 million in the first quarter of 2023. The largest drivers of the year-over-year growth in Utilities normalized EBITDA included strong performance from WGL's Retail business, contribution from AltaGas' continued investment in rate base, customer additions, and the positive impact of the District of Columbia ("D.C.") rate case. These positive factors were partially offset by the lost contribution of the Alaska Utilities due to its divestiture on March 1, 2023 and associated gain on debt defeasance. The Midstream segment reported normalized EBITDA of $247 million in the first quarter of 2024 compared to $183 million in the first quarter of 2023, while income before income taxes was $297 million in the first quarter of 2024 compared to $138 million in the first quarter of 2023. The largest drivers of the year-over-year increase in Midstream normalized EBITDA included strong performance in the global exports business, including record first quarter volumes, the benefit from Allowance for Funds Used During Construction ("AFUDC") associated with the construction of the Mountain Valley Pipeline ("MVP"), strong marketing performance, and the addition of the newly acquired Pipestone assets.  AltaGas exported a first quarter record of 115,108 Bbl/d of liquified petroleum gases ("LPGs") to Asia in the quarter, which represented a 16 percent year-over-year increase. Growth was underpinned by strong execution at the Ridley Island Propane Export Terminal ("RIPET") and Ferndale Terminal ("Ferndale"), continued strong demand in Asia, and increased LPG supply in Western Canada. AltaGas continued to advance key Midstream growth projects in the quarter. This included the Company drilling the first acid gas injection well for the Pipestone II expansion project and continuing to advance key activities on the Ridley Island Energy Export Facility ("REEF"). Site clearing work at REEF has progressed as expected, while key commercial agreements are progressing. AltaGas continues to expect a positive final investment decision ("FID") during the second quarter of 2024. AltaGas is pleased with the construction progress on MVP. The pipeline is more than 99 percent complete and is expected to be placed into service in June of 2024, where it will provide critical energy security to customers in the Eastern U.S. As previously disclosed, AltaGas does not consider its equity stake in MVP as core and will consider value maximizing opportunities once the pipeline is fully operational. In the first quarter of 2024, AltaGas commissioned one new very large gas carrier ("VLGC"), the Boreal Voyager, under a seven-year contract with optional extensions, and extended an existing contract for one VLGC time charter with Astomos, with whom AltaGas has had a long-standing partnership since RIPET was commissioned. This follows the commissioning of the Boreal Pioneer in December 2023, which is also operating under a seven-year agreement. These three time charters will reduce and de-risk shipping costs with materially all of AltaGas' expected Baltic freight exposure protected through time charters, financial hedges, and tolled volumes in 2024. AltaGas had two financings in the first quarter of 2024, including: On January 8, 2024, AltaGas issued $400 million of senior unsecured medium-term notes with a 4.67 percent coupon, due on January 8, 2029. The net proceeds were used to pay down existing indebtedness under AltaGas' credit facilities (part of which was incurred to fund the debt portion of the Pipestone Acquisition), to fund working capital, and for general corporate purposes. On March 14, 2024, AltaGas issued $350 million of senior unsecured medium-term notes with a 5.14 percent coupon, due on March 14, 2034 and $250 million of senior unsecured medium-term notes with a 5.60 percent coupon, due on March 14, 2054. The net proceeds were used to refinance AltaGas' March 2024 medium-term note maturities, pay down other existing indebtedness, fund working capital, and for general corporate purposes. Following a strong first quarter, AltaGas is reiterating the Company's 2024 full year guidance, including normalized EPS1 of $2.05 to $2.25, and normalized EBITDA1 of $1,675 million to $1,775 million. (1) Non-GAAP measure; see discussion and reconciliation to US GAAP financial measures in the advisories of this news release or in AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended March 31, 2024, which is available on www.sedarplus.ca. (2) GAAP EPS is equivalent to Net income applicable to common shares divided by shares outstanding. (3) GAAP FFO per share is equivalent to cash from operations divided by shares outstanding. CEO MESSAGE "We're pleased with our first quarter performance and continued execution of our long-term strategic plan" said Vern Yu, President and Chief Executive Officer of AltaGas. "Performance in the quarter was ahead of our expectations and reflected the purposeful actions we have taken to leverage our growth opportunities, optimize our assets, de-risk the business commercially and financially, and deliver long-term value for our stakeholders. "Performance in our Utilities was in line with our expectations and continued to deliver stable and growing earnings for the enterprise, despite warmer-than-normal weather throughout much of the quarter. In addition to the strong Retail performance, the quarter included the benefit of continued modernization investments, customer growth, and the D.C. rate case. We continued to make strong investments in our Utilities during the quarter to meet the needs of our expanding customer base and support long-term safety and reliability needs through ongoing asset modernization programs. Our natural gas Utilities have a bright future as the lowest cost and most reliable form of residential and commercial heating across our jurisdictions. "Performance in our Midstream segment was robust, including strong execution in global exports and the addition of the Pipestone assets. We also benefited from AFUDC on MVP as the pipeline completes the final stage of construction and should be brought into service in June. Long-term fundamentals for the sector remain strong, despite soft natural gas prices during the quarter, as the industry prepares for large increases in globally-connected egress for Western Canadian natural gas. We completed a successful natural gas liquids ("NGL") re-contracting season on April 1, 2024, with a high level of LPG supply contracted for the coming year we have made solid progress toward our medium-term target, with 56 percent of expected global exports volumes now tolled, starting in the second quarter of 2024. We continue to see attractive brownfield and greenfield growth opportunities across the Midstream value chain and look forward to leveraging these opportunities in the years ahead. "We remain focused on executing our strategic priorities that will drive long-term value for our stakeholders. This includes operating with an equity self-funding model, commercially de-risking the business through increasing our tolling, take-or-pay and fee-for-service contracts, continued balance sheet deleveraging, optimizing our assets for the best risk-adjusted returns, and executing with a high degree of capital discipline. In the near-term, we are also focused on executing the construction of the Pipestone Phase II expansion project, which we reached a positive FID in December 2023, and look forward to completing the final milestones to reach a positive FID on REEF during the second quarter of 2024." RESULTS BY SEGMENT Normalized EBITDA (1) Three Months Ended March 31 ($ millions) 2024 2023 Utilities $             437 $              401 Midstream 247 183 Corporate/Other (24) (2) Normalized EBITDA (1) $             660 $             582 (1)     Non‑GAAP financial measure; see discussion in Non‑GAAP Financial Measures section of this news release. Income (Loss) Before Income Taxes Three Months Ended March 31 ($ millions) 2024 2023 Utilities $             384 $             590 Midstream 297 138 Corporate/Other (140) (109) Income Before Income Taxes $             541 $              619 BUSINESS PERFORMANCE Utilities The Utilities segment reported normalized EBITDA of $437 million in the first quarter of 2024 compared to $401 million in the first quarter of 2023, while income before income taxes was $384 million in the first quarter of 2024 compared to $590 million in the first quarter of 2023. The largest drivers of the year-over-year growth in Utilities normalized EBITDA included strong Retail performance, contributions from AltaGas' continued investment in rate base on behalf of its customers through the Company's various Accelerated Replacement Programs ("ARPs"), new customer additions, and the positive impact of the D.C. rate case. These positive factors were partially offset by the lost contribution of the Alaska Utilities due to its divestiture on March 1, 2023, which had contributed $16 million during the first quarter of 2023, and the absence of the gain from the debt defeasance associated with the Alaska Utilities sale. AltaGas continues to make investments across its Utilities network to improve the safety and reliability of the system on behalf of its customers. During the first quarter of 2024 AltaGas invested $179 million across the Utilities network, including approximately $85 million within the Company's various asset modernization programs. These investments continue to be directed towards improving the safety and reliability of the system and connecting customers to the critical energy they require to carry out everyday life. These investments should also reduce leak rates and bring long-term operating cost benefits to our customers. AltaGas will continue to make these critical investments, while balancing the need for ongoing customer affordability, which is particularly important during the current economic environment of higher interest rates and affordability challenges. AltaGas continues to be acutely focused on cost management across the Utilities platform, managing capital investments, and driving the best outcomes for its customers and stakeholders. During the quarter, the Public Service Commission of Maryland ("PSC of MD") issued an order to amend Washington Gas' most recent Maryland rate case order that was issued on December 14, 2023. The amendment resulted in an increase in rates of approximately US$13MM, instead of the US$10.0 million increase that was named in the December 14, 2023 rate order. On April 1, 2024, SEMCO Energy submitted its MRP and IRIP amendment application, seeking approval from the MPSC to extend these modernization programs for approximately US$46 million and US$68 million, respectively, for the period from 2025 to 2027. This will allow AltaGas to make critical long-term investments in Michigan to reinforce our network and deliver safe and reliable operations. Midstream The Midstream segment reported normalized EBITDA of $247 million in the first quarter of 2024 compared to $183 million in the first quarter of 2023, while income before income taxes was $297 million in the first quarter of 2024 compared to $138 million in the first quarter of 2023. The largest drivers of the year-over-year increase in Midstream normalized EBITDA was strong performance in the global exports business, including record first quarter volumes, the benefit from AFUDC associated with the construction of MVP, strong marketing performance, and contribution from the Pipestone Assets that were acquired in the fourth quarter of 2023. These factors were partially offset by the absence of the favourable resolution of certain acquisition related commercial disputes and contingencies in the first quarter of 2023, and lower earnings at the extraction facilities due to the impact of higher re-injection of volumes and lower realized frac spreads. AltaGas has continued to add longer-term contracts in recent months as part of the Company's strategic focus on increasing tolling within the global exports business and providing customers the benefit of direct market access in Asia. AltaGas exported 115,108 Bbls/d of LPGs to Asia in the first quarter of 2024, including 12 VLGCs at RIPET, and 7 VLGCs at Ferndale. This represented a 16 percent year-over-year increase from the first quarter of 2024 and was underpinned by strong execution at both terminals, continued strong demand in Asia, increased LPG supply in Western Canada, and favorable ship timing. On the latter, this included AltaGas benefiting from one delayed ship in the fourth quarter of 2023 that was loaded at the beginning of the first quarter of 2024, and one ship loaded at the end of the first quarter of 2024 that was previously expected to be loaded at the beginning of the second quarter of 2024. This latter ship loading had the net impact of shifting certain profits that were previously expected in the second quarter of 2024 to the first quarter of 2024 with no net impact on the full-year volumes or expected profits. Subsequent to quarter-end, AltaGas completed a successful NGL re-contracting season on April 1, 2024 with strong LPG supply contracted for the coming year, while also making considerable tolling progress within our global exports business in recent months. This includes 56 percent of expected global exports now tolled, starting in the second quarter of 2024. These tolling contracts will provide AltaGas' customers with direct access to Asian markets, which traditionally trade at strong premiums to the domestic Canadian market, while providing AltaGas the benefit of stable and predictable contracted cash flows. As part of this tolling success, AltaGas crystallized certain financial hedges to avoid an imbalance of financial and physical merchant barrels in the coming quarters. This resulted in a positive gain on settlements in the first quarter of 2024, which had the effect of shifting profits associated with merchant barrels that would have been realized in the future quarters into the first quarter of 2024. Over the longer-term, AltaGas continues to see growing demand for LPG exports driven by the Company's structural shipping advantage to Asia and access to low-cost Canadian supply. This structural advantage was amplified in recent quarters due to the restricted vessel traffic through the Panama Canal, which has resulted in additional demand for reliable and ratably-sourced Canadian LPGs. Although shipping volumes through the Panama Canal have now normalized, the risk of future reduced throughput traffic remains. This highlights the mutual benefits of a growing Canadian-Pacific energy partnership and the critical role Canada can play in providing long-term energy security. Performance across the balance of the Midstream platform was strong but included partially curtailed gas processing volumes due to cold weather and maintenance related outages at certain facilities. The Pipestone assets have been integrated and AltaGas welcomed its new employees who joined the Company as part of the transaction. AltaGas is now focused on leveraging the long-term growth opportunities and delivering on the returns that can be generated with the Pipestone assets, which are now part of AltaGas' value chain. The Company is pleased with the transition of operatorship and progress realized to date. AltaGas continued to advance key Midstream growth projects during and subsequent to the quarter. This included AltaGas having drilled the first acid gas injection well for the Pipestone II expansion project during the quarter, having spud the second acid gas injection well subsequent to the quarter-end, and the Company continuing to advance key activities on REEF during and subsequent to the first quarter of 2024. Logging, clearing, and drainage work at REEF has progressed as expected, while key commercial agreements also progress. As such, AltaGas continues to expect a positive FID during the second quarter of 2024. AltaGas is pleased with the construction progress on MVP. The pipeline is more than 99 percent complete and expected to be placed into service in June of 2024, where it will provide critical energy security to customers in the Eastern U.S. As previously disclosed, AltaGas does not consider its equity stake in MVP as core and will consider value maximizing opportunities once the pipeline is fully operational. AltaGas is well-hedged for 2024 with approximately 90 percent of the remaining 2024 expected global export volumes tolled or financially hedged. Merchant volumes are hedged at an average Far East Index ("FEI") to North American financial hedge price of approximately US$16.82/Bbl. This includes AltaGas entering the year with approximately 40 percent of forward global export volumes tolled with the expectation of reaching 50 percent or higher tolling by the end of 2024. Based on AltaGas' signed deals, the Company expects to exceed these tolling levels with 56 percent of 2024 expected annual global exports now tolled, starting in the second quarter of 2024. Approximately 83 percent of the Company's 2024 expected frac exposed volumes are hedged at approximately $25.84/Bbl, prior to transportation costs. AltaGas continues to actively manage risk across the Midstream platform through commercial constructs and a systematic hedging program that covers key revenue and operating costs. Midstream Hedge Program Q2 2024 Q3 2024 Q4 2024 Remainder of 2024 Global Exports volumes hedged (%) (1) 92 96 82 90 Average propane/butane FEI to North America hedge ...