AltaGas Ltd.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the UltaGas fourth quarter 2023 financial results conference call. My name is Sylvie and I will be your conference operator today. 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 the operator's 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. And I would like to turn the conference call 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' fourth quarter and full year 2023 financial results conference call. Speaking on the call this morning will be Vern Yu, President and Chief Executive Officer, and James Harbalus, 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, Blue 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 has taken the opportunity to review the press release and our fourth quarter results. This call is being webcast, so I encourage those of you listening on the phone lines to follow along in the supporting slides that can be found on our website. As always, today's prepared remarks will be followed by an analyst question and answer period, and 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 an update on the business and progress on our strategic priorities, followed by James Harbalis providing a more detailed walkthrough of our fourth quarter financial results, our near-term outlook, and 2020 for guidance. And then we'll leave plenty of time 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, and more fully within our public disclosing filings on CDAR. And with that, I'll now turn the call over to Bern.

Thanks, Adam, and good morning, everyone. It's great to be here today to discuss AltaGas's fourth quarter financial results. I'm going to start by updating you on our operations and our recent corporate developments. 2023 was a very busy and productive year for AltaGas. We made strong progress on our strategic priorities. We advanced a number of growth projects, we delevered, and we de-risked our commercial operations. All of these actions will drive long-term value creation. I'll start by discussing our 2023 achievements. Then I'll provide an update on our major projects, discuss the outlook for natural gas and LPGs, and then talk about our 2024 strategic priorities. Let's start with slide four. We delivered normalized EBITDA of $1.575 billion for the year, which puts us in the upper half of our 2023 EBITDA guidance range. This represents a 2.5% increase year over year, despite losing EBITDA with the sale of the Alaskan utility. Excluding this impact, 2023 EBITDA increased by roughly 7% year over year. 2023 normalized EPS came in at $1.90 per share, which is slightly below the midpoint of our guidance range, principally due to higher short-term debt costs. Commercially, we made strong progress de-risking the business. In the midstream segment, we grew tolling contracts in our global export business from around 25% of the start of the year to 40% at year end. This aligns with our long-term strategic goal of growing the take-or-pay cost-to-service portion of our business mix. We are striving to get to around 90% of AltaGas's total EBITDA under these types of contracts over the next couple of years. We entered a five-year transportation agreement with CN that supports our growing LPG exports. This agreement provides us with a strong predictability for our existing exports at Ripit and provides cost certainty that will extend to our reef project as well. We commissioned a new VLGC time charter in December, which made its maiden voyage in the fourth quarter, and we commissioned our third time charter in Q1 of this year. These time charters reduce our total shipping cost to Asia by approximately 25% when compared to standard shipping rates. The vessels remove volatility from our marine shipping costs on a long-term basis. In total, we have three time charters operating in 2024, and when combined with our financial hedges and tolling contracts, we have effectively eliminated all of our exposure to Baltic freight in 2024. We also signed an agreement for a fourth time charter in 2023, which is currently under construction and set to be commissioned in the first half of 2026. We significantly strengthened our midstream value chain through the acquisition of the Pipestone assets. This deal supports our long-term strategy and adds complementary assets that strengthen our footprint in the Alberta and provides additional liquids for global exports. A big highlight for us in 2023 was our joint venture with Volpac to develop the reef project, where we've become the project's operator. We're actively advancing reef through commercial, engineering, regulatory and stakeholder work streams. The completion of all this work will position us to make a final positive FID's decision in 2024. Brief allows us to meaningfully grow our global export platform for many years to come. Our utilities business was also very active in 2023. Here we took meaningful steps to maximize long-term value creation as well. We made significant investments in our network, focused on new customer connections and system modernization. We invested $745 million in 2023, which enhanced our system's safety and reliability, while extending the network to new residential and commercial customers. We closed the sale of our Alaskan utility, which provided more than a billion dollars of cash to reduce debt, significantly strengthening our balance sheet. We took active steps on cost management to ensure unnecessary costs were removed from operations, And that will continue to be a focus in 2024. We also made progress on our climate initiatives. Our RNG deal with Opal Fuels will add RNG into Dilligial's system, providing low carbon fuel for our customers. All of these actions helped draw strong shareholder returns. During 2023, Altagas outperformed our peer group by roughly 22% on a TSR basis. In addition to our ongoing investments in the utilities, we added two major midstream projects, which are shown on slide 5. The first is Pipestone 2, which is a deep cut sour gas processing plant in the Alberta Montney. We reached a positive FID last December with 100% of the capacity contracted under long term take or pay contracts. We have spud the acid gas injection well for the facility in February. We will be starting pipeline and facilities construction this spring, and we look forward to adding much needed gas processing and liquids handling capacity to the region. The second new project is reef, where we continue to move towards a late Q2 FID decision. With reef, the most significant gating items relate to One, commercial agreements for the project. Here we are in advanced negotiations with producers, end users, and NGL aggregators. We're seeing very strong commercial interest for long-term tolling arrangements. And two, engineering and procurement, where we are more than 75% complete and expect of a final class three cost estimate in the coming months. In parallel, We're also advancing procurement and EPC contracting to definitive terms. We're very excited about both of these projects, which will be very important for Midstream and provide long-term earnings and cash flow growth. Let's move to slide six. Gas utilities are irreplaceable and a key part of the ongoing energy evolution. Demand for natural gas within AltaGas's jurisdiction represents 70% of total household energy consumption. Natural gas accounts for nearly 70% of US household energy demand, yet only represents a third of home energy costs. As such, natural gas is the most cost-effective home energy source. In fact, switching to electricity would increase home energy costs by more than 300% in the US. Natural gas is critical in the long term to ensure that we have affordable and reliable energy. Natural gas has been the biggest driver in reducing emissions in the U.S. for the last two decades. It's our job to make sure these realities are understood and to advocate for an energy evolution that provides safe, reliable, and affordable energy, and to make this energy ever greener for the customers that we serve. Slide 7 shows that the fundamentals for our Canadian midstream business are equally compelling. Although we are in a period of low gas prices due to warm weather across North America and excess drilling in Western Canada before West Coast LNG, the multi-year outlook for natural gas is extremely robust as Canada expands markets to Asia. WCSB natural gas production is poised for significant growth through 2030. West Coast LNG facilities such as LNG Canada and Wood Fibre LNG are game changers that brings a structural tailwind for supply. All of this activity will create the need for additional midstream infrastructure across BC and Alberta. At the same time, Asian LPG demand is expected to grow significantly over the next two decades, positioning our global export business as the most economically attractive outlet for growing Western Canadian LPG supply. Turning to slide eight, we are excited about the road ahead and advancing our 2024 priorities. This includes operating under an equity self-funding model. achieving our four and a half times leverage target and operating with strong capital discipline, where we ensure that only the best capital projects go forward. In utilities, our number one objective is to improve returns and close the ROE gap at WGL. We made good strides to date, but the journey continues. The recent regulatory decisions in Maryland and D.C. were mixed for us. So to close the ROE gap, we'll have to be even more vigilant on how we deploy capital and manage our costs. We will also need to continue to be very proactive and timely with our rate filings. We'll continue to work on modernizing our aging infrastructure to reduce leaks and improve system safety and reliability. We will continue to invest in and explore growth opportunities related to climate initiatives, such as RNG and energy efficiency programs. Finally, you'll see us ramp up our advocacy for natural gas and our utilities. Within Midstream, our near-term priorities are clear. First, we need to integrate the Pipestone assets into our system and build Pipestone 2 on time and on budget. Second, we need to advance Reef to FID, which we are targeting for late Q2. Finally, we need to continue to de-risk the business. We made good progress in 2023 by adding additional take or pay contracts, adding more tolling agreements, and systematically hedging our remaining exposure. Our plan is to continue down this road again in 2024. All of these actions will improve our profit margins, reduce our debt balance, and lower our commercial risk profile. collectively improving AltaGas's value proposition. We're excited that all of these actions are in our own control, and our job is to execute on them. And with that, I'll turn the call over to James to talk more specifically about Q4 2023 and our 2024 outlook.