Calgary, Alberta (October 31, 2018) – AltaGas Canada Inc. (“ACI”) (TSX: ACI) today announced third quarter 2018 financial results for the period ended September 30, 2018.
- With the completion of ACI’s Initial Public Offering (“IPO”), ACI is set to deliver on continued rate base growth at its Utilities;
- ACI expects to deliver a compound annual growth rate of five percent on net income to its shareholders from 2019 through to 2023;
- Combined Utilities rate base grew to approximately $850 million as at September 30, 2018. ACI has a robust growth capital program in place for the remainder of 2018 with approximately $330 million planned between 2019 - 2023;
- By 2023, ACI expects its combined Utility rate base will grow to over $1 billion; and
- The Board of Directors declared its first dividend of $0.1744 for the period of October 25, 2018 to December 31, 2018, which on an annualized basis would yield $0.95 per common share.
In the third quarter of 2018, normalized EBITDA1 was $15.9 million compared to $16.5 million for the same period in 2017. Third quarter 2018 net income after taxes was $0.5 million compared to $1.9 million for the same period in 2017. The results were driven primarily by ACI’s Utilities which delivered rate base and customer growth and also benefitted from colder weather, offset by lower wind generation at the Bear Mountain Wind Park and lower results from the Northwest Hydro Facilities due to unseasonably cool, dry weather.
ACI completed its initial public offering on October 25, 2018 and as such, these results are attributable to AltaGas Ltd. and may not be directly comparable to future results primarily due to the change in ACI’s capital structure.
“With the IPO successfully completed and a solid asset base in place, we are focused on bringing value to our shareholders,” said Jared Green, President and Chief Executive Officer of ACI. “As we look forward to the next five years, we are confident in our ability to deliver a five percent compound annual growth rate on net income. We are also pleased to announce that the Board of Directors declared our very first dividend.”
2018 Capital Program
For nine months ended September 30, 2018, ACI’s net invested capital was $47.5 million. For the full year 2018 ACI expects to spend approximately $80 million across its Utilities.
Between 2019 and 2023, ACI expects to spend approximately $330 million at its Utilities and expects to grow rate base to over $1 billion. ACI expects to fund this capital program utilizing internally generated cash flow and a small amount of incremental debt.
ACI Dividend Declaration
The Board of Directors of ACI declared a dividend of $0.1744 per common share, payable on December 31, 2018 to shareholders of record at the close of business on or about November 30, 2018. This dividend is an eligible dividend for Canadian income tax purposes.
ACI is a Canadian company with natural gas distribution utilities and renewable power generation assets. ACI serves approximately 130,000 customers, delivering low carbon energy, safely and reliably. For more information visit: www.altagascanada.ca.
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 Non-GAAP measure; see discussion in the advisories of this news release.
FORWARD LOOKING INFORMATION
This news release contains forward-looking information (forward-looking statements). Words such as "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "expect", "project", "target", "potential", "objective", "continue", "outlook", "opportunity" and similar expressions suggesting future events or future performance, as they relate to ACI or any affiliate of ACI, 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. Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect to the following: continued rate base growth at ACI’s Utilities; expected compound annual growth rate; expected rate base growth; expected growth capital spending; and expected funding sources for the capital program.
ACI’s forward-looking statements are subject to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without limitation: legislative and regulatory environment; demand for natural gas; access to and use of capital markets; market value of ACI’s securities; ACI’s ability to pay dividends; ACI’s ability refinance its debt; prevailing economic conditions; the potential for service interruptions and physical damage to infrastructure; natural gas supply; ability of the company to maintain, replace and expand its regulated assets; and impact of labour relations and reliance on key personnel. Applicable risk factors are discussed more fully under the heading "Risk Factors" in ACI’s prospectus dated October 18, 2018.
Many factors could cause ACI’s actual results, performance or achievements to vary from those described in this news release, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. 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, expected, projected or targeted and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any one assumption, risk, uncertainty or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and ACI’s future decisions and actions will depend on management’s assessment of all information at the relevant time. Such statements speak only as of the date of this news release. ACI does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this news release are expressly qualified by these cautionary statements.
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 ACI’s Management's Discussion and Analysis (MD&A) as at and for the nine months ended September 30, 2018. These non-GAAP measures provide additional information that management believes is meaningful regarding ACI’s operational performance, liquidity and capacity to fund dividends, capital expenditures, and other investing activities. The specific rationale for and incremental information associated with non-GAAP measures are discussed in ACI’s most recent MD&A. 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.
Normalized EBITDA is a measure of ACI’s operating profitability prior to how business activities are financed, assets are amortized, or earnings are taxed. Normalized EBITDA is calculated using net income adjusted for pre-tax depreciation and amortization, interest expense, and income tax expense, accretion expenses, and foreign exchange gains (losses). Normalized EBITDA is frequently used by analysts and investors in the evaluation of entities within the industry as it excludes items that can vary substantially between entities depending on the accounting policies chosen, the book value of assets and the capital structure. Normalized EBITDA should not be viewed as an alternative to net income after taxes or other measures of income calculated in accordance with U.S. GAAP as an indicator of performance.