1
Financial Overview
2
Forward-Looking Statements
Statements in this presentation that are not historical facts, including statements regarding our estimates, beliefs, expectations,
intentions, strategies or projections, may be “forward-looking statements” as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements involve matters that are not historical facts and because these statements involve
anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," “believe,” "can,"
"could," "estimate," "expect," "forecast," “future,” “goal,” "indicate," "intend," "may," “outlook,” "plan," “potential,” "predict,"
"project,” "seek," "should," "target," "will," "would," or similar expressions. Our expectations are not guarantees and are based on
currently available competitive, financial and economic data along with our operating plans. While we believe that our
expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our
expectations. Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural
gas and related products, impact of changes in state and federal legislation and regulation, actions taken by government
agencies on rates and other matters, concentration of credit risk, utility and energy industry consolidation, costs and timelines of
construction projects may be affected by government and other approvals, development project delays, adequacy of supply of
diversified vendors, unexpected changes in project costs including the cost of funds to finance these projects, impact of
acquisitions and divestitures, direct or indirect effects on AGL Resources' business, financial condition or liquidity resulting from a
change in our credit ratings or the credit ratings of our counterparties or competitors, interest rate fluctuations, financial market
conditions and general economic conditions, uncertainties about environmental issues and the related impact of such issues,
impacts of changes in weather upon the temperature-sensitive portions of the business, impacts of natural disaster such as
hurricanes upon the supply or price of gas, acts of war or terrorism, and other factors which can be found in our filings with the
Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not
undertake any obligation to update these statements to reflect subsequent changes.
intentions, strategies or projections, may be “forward-looking statements” as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements involve matters that are not historical facts and because these statements involve
anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," “believe,” "can,"
"could," "estimate," "expect," "forecast," “future,” “goal,” "indicate," "intend," "may," “outlook,” "plan," “potential,” "predict,"
"project,” "seek," "should," "target," "will," "would," or similar expressions. Our expectations are not guarantees and are based on
currently available competitive, financial and economic data along with our operating plans. While we believe that our
expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our
expectations. Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural
gas and related products, impact of changes in state and federal legislation and regulation, actions taken by government
agencies on rates and other matters, concentration of credit risk, utility and energy industry consolidation, costs and timelines of
construction projects may be affected by government and other approvals, development project delays, adequacy of supply of
diversified vendors, unexpected changes in project costs including the cost of funds to finance these projects, impact of
acquisitions and divestitures, direct or indirect effects on AGL Resources' business, financial condition or liquidity resulting from a
change in our credit ratings or the credit ratings of our counterparties or competitors, interest rate fluctuations, financial market
conditions and general economic conditions, uncertainties about environmental issues and the related impact of such issues,
impacts of changes in weather upon the temperature-sensitive portions of the business, impacts of natural disaster such as
hurricanes upon the supply or price of gas, acts of war or terrorism, and other factors which can be found in our filings with the
Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not
undertake any obligation to update these statements to reflect subsequent changes.
Management does not affirm or update earnings guidance during private and one-on-one meetings with investors, but only
updates or confirms earnings guidance through public disclosure and filing with the commission. Earnings guidance is only
effective as of the date it is given. The company further disclaims any duty to update its guidance.
updates or confirms earnings guidance through public disclosure and filing with the commission. Earnings guidance is only
effective as of the date it is given. The company further disclaims any duty to update its guidance.
3
Non-GAAP Measures
Company management evaluates segment financial performance based on earnings before interest and taxes (EBIT), which
includes the effects of corporate expense allocations. EBIT is a non-GAAP (accounting principles generally accepted in the
United States of America) financial measure. Items that are not included in EBIT are financing costs, including debt and interest
expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our
businesses from an operational perspective, exclusive of the costs to finance those activities and exclusive of income taxes,
neither of which is directly relevant to the efficiency of those operations.
includes the effects of corporate expense allocations. EBIT is a non-GAAP (accounting principles generally accepted in the
United States of America) financial measure. Items that are not included in EBIT are financing costs, including debt and interest
expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our
businesses from an operational perspective, exclusive of the costs to finance those activities and exclusive of income taxes,
neither of which is directly relevant to the efficiency of those operations.
Operating margin is a non-GAAP measure calculated as revenues minus cost of gas, excluding operation and maintenance
expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's
calculation of operating income. The company believes operating margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas is generally passed directly through to customers.
expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's
calculation of operating income. The company believes operating margin is a better indicator than operating revenues of the
contribution resulting from customer growth, since cost of gas is generally passed directly through to customers.
We also use EBIT and operating margin internally to measure performance against budget and in reports for management and
the Board of Directors. Projections of forward-looking EBIT and operating margin are used in our internal budgeting process,
and those projections are used in providing forward-looking business segment EBIT and operating margin projections to
investors. We are unable to reconcile our forward-looking EBIT and operating margin business segment guidance to GAAP
earnings per share because we do not predict the future impact of unusual items and mark-to-market gains or losses on energy
contracts. The impact of these items could be material to our operating results reported in accordance with GAAP.
the Board of Directors. Projections of forward-looking EBIT and operating margin are used in our internal budgeting process,
and those projections are used in providing forward-looking business segment EBIT and operating margin projections to
investors. We are unable to reconcile our forward-looking EBIT and operating margin business segment guidance to GAAP
earnings per share because we do not predict the future impact of unusual items and mark-to-market gains or losses on energy
contracts. The impact of these items could be material to our operating results reported in accordance with GAAP.
EBIT and operating margin should not be considered as alternatives to, or more meaningful indicators of, the company's
operating performance than operating income or net income as determined in accordance with GAAP. In addition, the
company's EBIT or operating margin may not be comparable to similarly titled measures of another company.
operating performance than operating income or net income as determined in accordance with GAAP. In addition, the
company's EBIT or operating margin may not be comparable to similarly titled measures of another company.
Reconciliation of non-GAAP financial measures referenced in this presentation are available on the company’s website at
www.aglresources.com under the Investor Relations section.
www.aglresources.com under the Investor Relations section.
4
2008 Earnings Guidance
Unfavorable
Favorable
2008 EPS Guidance = $2.75 to $2.85 per share
* Development expenses are included in the Energy Investments segment for financial reporting purposes.
($ millions)
5
Diversified Earnings Mix
Note: Corporate EBIT excluded from calculations.
6
Long-Term Capital Investment
Development/Expansion Projects | Status | Est. CapEx ($MM) | In-Service |
Golden Triangle Storage (TX) | Execution | $250 - $265 | 2010 - 2012 |
Hampton Roads Crossing (VA) | Execution | $100 - $115 | 2009 |
Magnolia Project (Elba Island to Atlanta) | Execution* | $40 - $50 | 2009 |
Other Storage Projects | Development | -- | -- |
Total Current Project CapEx | $390 - $430 |
• We will generate between $450 million and $500 million
annually in funds from operations (FFO) over the next five years
annually in funds from operations (FFO) over the next five years
• Cash flow generation provides stable platform for returning
near-term value to shareholders (dividend growth, share
repurchase) while investing for long-term growth of the business
near-term value to shareholders (dividend growth, share
repurchase) while investing for long-term growth of the business
*Pending FERC approval.
7
Strong Balance Sheet to Pursue Opportunities
8
Commitment to Shareholder Value
Annualized Per Share
Dividend Growth
Dividend Growth
(6-year CAGR = 7.6%)
• Repurchased 2 million
shares in 2007
shares in 2007
• Have repurchased more
than 3 million shares
since March 2006
than 3 million shares
since March 2006
ATG
Peers
S&P 500
83%
77%
90%
Share Repurchase Program
5-Year Total Shareholder Return
9
Relative Valuation
We trade at a discount to
the peer group on a P/E
basis ...
the peer group on a P/E
basis ...
But more in line with the
group on an EV/EBITDA basis
group on an EV/EBITDA basis
Sources: Bloomberg and SNL Research. Data as of March 27, 2008.
10
Key Takeaways
• Primarily regulated asset base provides stable earnings growth
• Non-regulated investments provide complementary upside
potential
potential
• Strong investment-grade balance sheet and stable cash flows
• Track record of delivering value
• Well-positioned for long-term growth
• Attractive dividend yield and payout ratio
• Low-risk investment in natural gas/energy space