AltaGas Q2 Earnings Call Highlights

AltaGas TSE: ALA reported record second-quarter results, supported by stronger performance in its Midstream and Utilities businesses, and raised its full-year 2026 financial guidance. President and Chief Executive Officer Vern Yu said normalized EBITDA totaled CAD 391 million in the second quarter, up 14% from a year earlier, while normalized earnings per share rose 15% to CAD 0.31. The company said its Midstream results benefited from historically high global export spreads and physical-sale premiums. AltaGas increased its 2026 normalized EBITDA guidance by 4% to a range of CAD 2.0 billion to CAD 2.1 billion. It raised normalized EPS guidance by 6% to CAD 2.35 to CAD 2.60 per share. The revised midpoint implies more than 10% year-over-year EBITDA growth, according to Chief Financial Officer Sean Brown. The company ended the quarter with adjusted net debt to normalized EBITDA of 4.4 times, below its stated target range of 4.5 times to 5.0 times. Brown said leverage is expected to move toward the midpoint of that range as the company advances its capital program through the year.

AltaGas's Midstream segment generated CAD 285 million of normalized EBITDA, an increase of 33% from the prior-year quarter. The business exported a record 144,000 barrels per day of liquefied petroleum gas across 23 very large gas carriers from its Ferndale and RIPET terminals, up 13% year over year. Ferndale exports approached 60,000 barrels per day, aided by improved rail-switching efficiency and higher rail, refinery and truck-in volumes. RIPET exported about 84,000 barrels per day of propane and continued operating near capacity. Montney volumes also increased, with throughput excluding the impact of planned maintenance at Harmattan up 9% year over year. North Pine throughput in northeast British Columbia rose 23% from a year earlier and remained near its 25,000-barrel-per-day capacity, while the Pipestone II complex averaged roughly 90% utilization. Brown said approximately 91% of AltaGas's expected remaining 2026 global export volumes are either tolled or financially hedged. Non-tolled volumes are hedged at an average Far East Index-to-North America spread of approximately US$21.81 per barrel, while 9% of volumes remain exposed to market pricing. The company also said all of its 2026 Baltic freight exposure is hedged through time charters, financial instruments and tolling arrangements. Yu said disruptions to LPG exports through the Strait of Hormuz have tightened global markets, with exports through the waterway more than 70% below pre-conflict levels. AltaGas said more than 160 million barrels of LPG have been displaced from global trade since the disruption began, supporting demand for Canadian supply in markets including Japan, South Korea, China and other Asian countries.

AltaGas said construction of its Ridley Island Energy Export Facility, or REEF, is 85% complete. However, the company pushed the expected startup date to before the end of the first quarter of 2027 and increased the project's estimated capital cost by 12% to approximately CAD 1.5 billion. Yu said onshore work has progressed ahead of plan, with all major equipment installed and uplands commissioning expected to begin in late August. But in-water work has been affected by extreme weather, ocean swells and marine mammal activity. Since work began in fall 2024, AltaGas has lost more than 450 rig days, exceeding normal contingency expectations. The company said the jetty and loading platform are about 80% complete, with most remaining in-water work expected to be completed within six weeks. All 48 piles for the jetty piers have been completed, while five piles remain for the loading platform. The rail loop and utility corridor are...