AltaGas Q4 Revenue Nearly Doubles, Swings to Loss

AltaGas Ltd (TSE: ALA) reported higher revenues in the fourth quarter, but it swung to a loss from a profit. The Calgary-based company transports and distributes natural gas.

Revenue & Earnings

Revenue came in at C$3.14 billion for the quarter ended December 31, an increase of 85.6% from C$1.69 billion in the prior-year quarter.

Net loss amounted to C$162 million (C$0.56 per share) in Q4 2021, compared to a profit of C$74 million (C$0.17 per share) in Q4 2020.

Normalized EPS were C$0.38 in the quarter, down from C$0.53 a year earlier.

Normalized funds from operations reached C$1.03 in the quarter, down from C$1.17 in the fourth quarter of 2020.

AltaGas recorded a pre-tax provision on its equity investments of about C$271 million during the period, which is the result of legal and regulatory challenges over the Mountain Valley pipeline.

The oil and gas company has agreed to sell an interest in certain midstream processing facilities to a customer for C$234 million, which is expected to close in the next quarter.

AltaGas confirmed its guidance for 2022, forecasting normalized EPS of between C$1.80 and C$1.95.

CEO Commentary

AltaGas president and CEO Randy Crawford said, “Our Midstream platform delivered a very strong year, despite the large challenges associated with the devastating floods in British Columbia and Washington state during the fourth quarter. We continued to build on the momentum that has been demonstrated since 2019 through robust LPG export growth, exceeding our cost synergy targets at Petrogas, and continuing to fill latent capacity across the platform. During the quarter, we increased our fractionation and liquids handling volumes by 37 percent year-over-year and our gathering and processing volumes by 9 percent year-over-year, clearly demonstrating the advantage of our industry-leading footprint in Northeastern B.C. With the logistical challenges associated with the flooding in the fourth quarter behind us, the platform is well-positioned to achieve our 2022 export target of 97,000 Bbls/d.”

Wall Street’s Take

Last month, Scotiabank analyst Robert Hope kept a Buy rating on ALA and raised its price target to C$31 (from C$30). This implies 7.8% upside potential.

Overall, consensus on the Street is that ALA is a Strong Buy based on nine Buys. The average AltaGas price target of C$31.87 implies 10.8% upside potential to current levels.

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