AltaGas Ltd.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the AltaGas fourth quarter 2024 financial results conference call. My name is Sylvie 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 then zero for the operator 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 Aaron Swanson, Vice President, Investor Relations. Please go ahead, Mr. Swanson.

Good morning, and thank you for joining AltaGas's fourth quarter 2024 results conference call. Speaking this morning will be Vern Yu, President and Chief Executive Officer, and James Harbalas, Executive Vice President and Chief Financial Officer. We're also joined here today by Randy Thune, president of our midstream business, Blue Jenkins, president of our utilities business, and John Morrison, senior vice president of corporate development and investor relations. This call is being webcast, and we encourage following along with the supporting slides that can be found on our website. 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 in the presentation. Prepared remarks will be followed by a question and answer session. I'll now turn the call over to Vern.

Thanks, Aaron, and good morning. It's great to be here today to discuss our strong performance for Q4 and 2024 as a whole. I'll share key highlights from the year, provide an update on our two major midstream growth projects, talk about some recent commercial successes, and close by discussing some of the macroeconomic trends that are creating bigger tailwinds for AltaGas's growth. Then I'll turn it over to James, who will provide detailed review of our Q4 financial performance and review our strategic priorities. I want to start by thanking our employees and contractors for our strong results and doing it safely. Safety performance improved by 33% in 2024 over 2023, which gave us our best safety year ever. Delivering strong results and doing it safely is paramount, so thank you. Let's turn to slide four. We delivered 2024 normalized EBITDA of $1.77 billion, which was up 12% year over year. And this was at the top end of our 2024 guidance range. Our 2024 normalized EPS of $2.18 was up 15% year over year and was in the upper half of our guidance range. We continue to execute and advance key growth projects across our business. Within Midstream, we delivered record global export volumes of more than 122,000 barrels per day of LPGs to Asia in the year, with the VLGC leaving our terminals every four to five days. Customer demand to access our terminals was strong. The actions around U.S. tariffs on Canadian energy is creating uncertainty and driving higher demand for West Coast access. This further highlights the long-term advantage of AltaGas's global export platform. With U.S. tariffs, it's even more critical to connect Canada's energy exports to Asian markets, reinforcing the need for our third West Coast export facility, Reef, which commenced construction last August. We also made material progress on Pipestone 2 in 2024, which will add much-needed gas processing and liquids handling capacity to the Alberta Montaney. Our midstream business saw important commercial successes in 2024 with the signing of three long-term integrated gas processing and liquids handling contracts at Townsend and Pipestone One. And we doubled our global export tolling in 2024 over 2023. Turning to our utilities business, we made large investments in 2024. deploying more than $730 million of capital. This allowed us to make our system safer and more reliable while expanding our network by adding more than 12,000 new customers. On the regulatory front, we filed a new rate case in DC in Q3. We also extended our current ARP modernization program in DC to the end of 2025. as we continue to work with the DC Commission to put a new three-year modernization program in place. Corporately, we continue to reduce our leverage, which provides additional financial flexibility to execute on our strategic plan. Let's turn to our major midstream growth projects, where we've made strong progress on construction. Both Pipestone 2 and Reef remain on time and on budget. Let's start with Reef on slide 5. Multiple work streams are currently underway, including uplands work, rail and utilities construction, off-site fabrication, and jetty construction. One of the key risks to the project, the earthwork site preparation is mostly behind us. We are 90% complete on overburden removal and on track to finish by the end of this month. We were able to store all of the overburden on the island, and this is a positive cost savings. Rock blasting is progressing well and on track to be complete in the next few months. Work has begun on site grading and the facility foundations. Off-site fabrication in Asia is progressing nicely with the accumulator and bullets approximately 65% complete. Compression and refrigeration fabrication is also progressing with that work being done off-site in Western Canada. All of this fabrication work is taking place in controlled manufacturing environments on a modular basis. It will then be assembled on-site. which materially reduces project execution risk. Work on the jetty is progressing. We now have 78 piles driven into the seabed. We have seen better efficiency over the past six weeks as bad weather slowed progress in December and January. As we announced in February, we have now met our reef export tolling target, which significantly de-risks our global export business. We now have the option of adding further tolling contracts at our discretion. Turning to Pipestone 2 on slide 6, the project is also progressing well. The acid gas injection wells and the gas gathering system are complete. Principally all project work has either been executed or is under fixed price EPC awards. As you can see in the pictures on the right hand side of the slide, there has been strong progress on facility assembly over the past eight months, with roughly 65% of the facility now complete. Like REEF, a significant portion of the remaining work is taking place in controlled manufacturing environments, and then will be assembled onsite following our standard project execution model. There have been no safety or quality issues experienced onsite and the project remains on track for December 2025 in service date. As a reminder, the facility is 100% backstopped by long-term take-or-pay contracts with marquee producers. Turning to slide 7, I want to discuss a recent agreement with Kiera. We view this as a positive development for both companies. The agreement leverages our respective infrastructure to drive the best industry outcomes. For AltaGas, we secured 12,500 barrels per day of export tolling volumes under a 15-year agreement, which provides our company with stable and predictable export volumes and cash flows. We also gain access to KIRA's extensive rail, storage, and logistics network in Alberta's industrial heartland, which will allow us to efficiently connect LPG volumes to our global exports network. Through this transaction, we also secured long-term capacity at KFS with take-in kind rights. LPGs from our pipestone plants will now be fractionated at KFS and then moved to global markets through our export facilities. Our agreements allowed Kiera to provide its customers increased access to Asian markets, and our committed volumes helped backstop de-bottlenecking and expansion at KFS. Slide 8 highlights our long-term tolling contracts. We expect our tolled export volumes, which have more than doubled since 2023, to remain around today's level for the next couple years. before rising to more than 100,000 barrels per day after a reef comes online. We believe this level of tolling strikes the appropriate balance of having stable and predictable cash flows, while continuing to benefit from the structural merchant spread between Canada and Asia. This results in AltaGas's long-term EBITDA coming from take-or-pay cost of service, or fee for service contracts to reach approximately 90%. Turning to slide nine, the short and long-term demand for energy continues to rise. Natural gas is and will continue to be the most reliable, affordable, and scalable solution to meet this growing energy demand in North America and globally. Natural gas continues to represent two-thirds of household energy consumed in the United States and has a three to four hundred percent cost advantage over electricity for space heating. As such, the long-term demand outlook for natural gas and our utilities is robust. When we layer in the expected increase in gas demand from coal retirements and the addition of data centers, the market is pointing to up to 25% plus increase in gas-fired power demand by 2030. The Canadian midstream outlook was equally strong, as shown on slide 9. AltaGas continues to benefit from two strong macro tailwinds. The first is growing natural gas production volumes from western Canada due to increased egress from LNG Canada. And the second is the rising demand in Asia, where LPG consumption is expected to increase by more than 40% by 2040, which will need to be satisfied with imports from North America and the Middle East. Canadian natural gas production is expected to rise 25% by 2030, which will primarily come from the Montney. This increase will deliver higher NGL volumes, that are already oversupplied in Western Canada. And all of these new NGLs will need to be exported to global markets. These tailwinds in the energy fundamentals will provide additional long-term growth opportunities for AltaGas, which James will discuss, along with providing further details on our fourth quarter performance, our forward outlook, and our strategic priorities.