AltaGas Ltd.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the AltaGas Second Quarter 2023 Financial Results Conference Call. My name is Sergio, and I will be your operator for today's call. All lines have been placed on mute to prevent any background noise. If you have any difficulties hearing the conference, please press star zero for operator assistance at any time. After the speaker's remarks, there will be a question and answer session. As a reminder, this conference call is being broadcast live on the internet and recorded. I would now like to turn the conference over to Adam McKnight, Director, Investor Relations. Please go ahead, Mr. McKnight.

Thanks, and good morning, everyone. Thank you for joining us today for AltaGas' second quarter 2023 financial results conference call. Speaking on the call this morning will be Vern Yu, President and Chief Executive Officer, and James Harbalis, Executive Vice President and Chief Financial Officer. We're also joined here this morning by Randy Toon, Executive Vice President and President of our midstream business, Lou Jenkins, Executive Vice President and President of our Utilities Business, and John Morrison, Senior Vice President, Corporate Development and Investor Relations. We'll proceed on the basis that everyone is taking the opportunity to review the press release and our second quarter results. Similar to previous quarters, we've published an earnings summary presentation that you can find on our website. The presentation walks through the quarter and highlights some of the key year-over-year variances and non-recurring items that we thought would be helpful for the market to understand. As always, today's prepared remarks will be followed by an analyst question and answer period. I'll remind everyone that we will be available after the call for any follow-up or detailed modeling questions that you might have. As for the structure of the call, we'll start with Vern Yu providing some comments on our financial performance and progress on our strategic priorities. followed by James Harbalist providing a more detailed walkthrough of our second quarter financial results, near-term outlook, and 2023 guidance. And then we'll provide lots of opportunity at the end for Q&A. Before we begin, I'll remind everyone that we will refer to forward-looking information on today's call. This information is subject to certain risks and uncertainties, as outlined in the forward-looking information disclosure on slide two of our investor presentation, which can be found on our website. and more fully within our public disclosure filings on CDAR. And with that, I'll now turn the call over to Vern.

Thanks, Adam, and good morning, everyone. It's great to be here today to discuss our Q2 results and update you on our operations and other corporate developments. But before we do that, let's spend a few minutes on why I think AltaGas' future is very bright. I've already had the opportunity to take a deep dive into the business, visiting our offices and operations, and have connected with our employees, customers, partners, and shareholders. This has enhanced my already bullish view of Altagas, and I'm excited to leverage the company's exceptional assets in the months and years ahead. I came to Altagas because I saw an opportunity to create a highly sustainable and growing infrastructure platform with a robust investment proposition. We are positioned to deliver industry-leading dividend growth through stable and growing cash flows, and we will be able to improve our risk profile as we re-contract commercial agreements in midstream, file timely rate cases, continue to optimize our capital spend while managing our costs in our utilities segment. In utilities, we're modernizing the network with our accelerated pipe replacement program and adding new customers across the DMV. In midstream, we continue to see growth in volumes for global exports and value chain optimization opportunities. I believe the long-term fundamentals for AltaGas's businesses are strong. Western Canada will deliver significant growth in both natural gas and NGL production as industry ramps up production to feed LNG Canada and other export facilities. These growing NGL volumes will need additional West Coast egress to maximize value for our customers. The good news is Ripit and Ferndale can deliver this today, and our reef project will provide even more egress when it's up and running in late 2026. The future of our utility segment is also very bright. Natural gas remains the largest energy source for homes in the DMV. and the electrical substitution costs for this energy are more than three times that of natural gas. As we continue our conversation on the energy transition, we need to be mindful and balance the critical needs of energy affordability and energy reliability with our regional and national climate goals. All of this cements the fact that natural gas is a key part of today's energy mix and will be part of that energy mix for decades to come. Q2 was impacted both financially and operationally by the devastating wildfires across Alberta and BC. Our thoughts are with the people and the communities affected by these fires. I want to thank our dedicated employees who were involved in wildfire relief and helped with the recovery efforts across the communities where we operate. Their actions reflect the values of our company. So let's talk about the quarter. Alpha Gas continued to execute on its long-term strategy during Q2. The wildfire and the timing of some of our hedges had a negative impact financially in Q2. Despite these results, the first half of 2023 was in line with our expectations, and today I'm going to reiterate our 2023 full-year guidance, with normalized EPS in the range of $1.85 to $2.05, and normalized EBITDA in the range of $1.5 to $1.6 billion. The company continues to show steady progress in our long-term deleveraging plan, where we're now approaching our near-term target of being less than five times on a debt-to-EBITDA basis and we have line of sight to get to four and a half. We're pleased with the progress shown on removing the milestones remaining to complete the Mountain Valley project, including the receipt of all remaining permits to finish construction and start operation of the pipeline. This was reinforced by the US Supreme Court ruling yesterday to vacate the stays that were placed on the pipeline by the Fourth Circuit. The partners now have a clear path to the pipeline being completed by the end of the year. In the second quarter, we've delivered normalized EBITDA of $239 million and EPS of $0.06 per share, compared to $276 million of normalized EBITDA and $0.14 per share of EPS in the second quarter of 2022. Midstream results were inclusive of $7 million from negative wildfire impacts, and another $12 million due to hedge and ship timing impacts, which will reverse the next couple quarters. This should increase second half EBITDA by $12 million, normalized EPS by $0.03 per share, and normalized FFO by $0.04 per share in the second half of 2023. In the utility segment, operating performance was relatively in line with expectations, but did include another 4 million of negative weather impacts stemming from warmer than normal weather in Michigan and DC. Midstream delivered strong volume performance in the quarter. Total gas inlet volumes grew by 11%. Fractionation volumes increased by 32%. and global exports were 4% higher, all on a year-over-year basis. Some of these volumes were impacted by the wildfires, where we saw a backup in global exports and outages at our North Pine fractionator. We're very excited about the long-term opportunity associated with growing our global exports business and providing Canada with more global connectivity for LPGs as we increase throughput at Ripit and Ferndale. Reef will add to that. It's a very exciting project for us. It will further bolster our leading LPG export business by adding even more EUS for the basin. We continue to refine the engineering and construction plans for the projects, and we're hoping to have a positive FID for the project either at the end of this year or early next year. And with that, I'll turn the call over to James.