AltaGas Ltd. ((TSE:ALA)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for AltaGas Ltd. painted a picture of both growth and challenges. The company celebrated significant achievements in its utilities segment and record export volumes, while also acknowledging financial hurdles in the midstream segment and market volatility due to global tariff issues. This mixed sentiment underscores the dynamic environment in which AltaGas operates.
Record Global Export Volume
AltaGas achieved a remarkable milestone in its export operations, reporting a record first-quarter global export volume of over 119,000 barrels per day of LPGs to Asia. This achievement highlights the company’s robust export capabilities and its strategic focus on expanding its global footprint.
Utilities Segment Growth
The Utilities segment of AltaGas demonstrated impressive growth, delivering a normalized EBITDA of $501 million, which marks a 15% increase year-over-year. This growth was primarily driven by colder weather conditions and effective cost management, showcasing the segment’s resilience and operational efficiency.
Strong Progress on Midstream Projects
AltaGas continues to make significant strides in its midstream projects, particularly the REEF and Pipestone II projects. The company reported substantial advancements in both construction and contracting, indicating a positive trajectory for these key growth initiatives.
Normalized EBITDA Increase
The company reported a normalized EBITDA of $689 million, reflecting a 4% increase from Q1 2024. This increase is indicative of AltaGas’s ongoing efforts in business optimization and its ability to adapt to changing market conditions.
Increased Long-term Contracting
AltaGas has surpassed its global exports tolling target of 100,000 barrels per day for 2027, demonstrating strong demand and contract stability. This achievement underscores the company’s strategic foresight and its ability to secure long-term commitments in a competitive market.
Midstream Segment Financial Decline
Despite overall growth, the Midstream segment faced financial challenges, with normalized EBITDA decreasing to $197 million from $247 million year-over-year. This decline was attributed to lower global export margins and the absence of favorable one-time items, highlighting the segment’s vulnerability to market fluctuations.
Impact of Tariff War
Global trade uncertainties, particularly the ongoing tariff war, have impacted propane pricing and export dynamics, creating market volatility. This has posed challenges for AltaGas, as it navigates the complexities of international trade and its effects on the energy sector.
Lower Contribution from Mountain Valley Pipeline
The post-service equity earnings from the Mountain Valley Pipeline were lower due to depreciation and amortization, compared to the previous construction phase. This decrease reflects the transition from construction to operational status and its financial implications.
Forward-looking Guidance
Looking ahead, AltaGas has outlined its strategic priorities and financial expectations for 2025. The company plans to deploy $1.4 billion in capital, with significant investments in its Utilities and Midstream segments. AltaGas aims to reduce financial leverage and has set a target net debt to normalized EBITDA metric of 4.65 times. The guidance includes a normalized EPS range of $2.10 to $2.30 and normalized EBITDA between $1.775 billion and $1.875 billion, reflecting a strong outlook for the year.
In summary, AltaGas Ltd.’s earnings call highlighted a mix of achievements and challenges. The company is making significant strides in its utilities and export operations, while also addressing financial pressures in the midstream segment and navigating global market volatility. With a clear strategic focus and robust forward-looking guidance, AltaGas is poised to continue its growth trajectory in the coming years.