TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company)
released its first quarter results today. François Poirier, TC
Energy’s President and Chief Executive Officer commented, “First
quarter 2023 results continue to demonstrate the resiliency of our
business and our ability to generate sustainable cash flow growth
while advancing our clearly defined funding program. Comparable
EBITDA1 was $2.8 billion, up 16 per cent from first quarter 2022
and segmented earnings were $2.2 billion compared to $1.2 billion
in first quarter 2022.” Poirier continued, “Our priorities for 2023
are clear – safely and reliably deliver essential energy across
North America, advance our critical energy infrastructure projects
and successfully execute our asset divestiture program to
accelerate deleveraging objectives.”
Highlights(All financial figures are unaudited
and in Canadian dollars unless otherwise noted)
- First quarter 2023 results were underpinned by strong
utilization and demand for our assets and services
- NGTL System total deliveries averaged 14.5 Bcf/d, up compared
to first quarter 2022
- Throughput across U.S. Natural Gas Pipelines averaging 28.5
Bcf/d with several assets performing at near record levels during
peak demand
- U.S. Natural Gas Pipelines achieved a new all-time record for
deliveries to LNG export facilities
- Alberta cogeneration power plant fleet reached 100 per cent
peak price availability in February
- Bruce Power achieved 95 per cent availability
- First quarter 2023 financial results:
- Net income attributable to common shares of $1.3 billion or
$1.29 per common share compared to $0.4 billion or $0.36 per common
share in first quarter 2022. Comparable earnings1 of $1.2 billion
or $1.21 per common share compared to $1.1 billion or $1.12 per
common share in 2022
- Segmented earnings of $2.2 billion compared to segmented
earnings of $1.2 billion in 2022 and comparable EBITDA of $2.8
billion compared to $2.4 billion in 2022
- Reaffirmed our 2023 financial outlook with comparable EBITDA
expected to be five to seven per cent higher than 2022
- Declared a quarterly dividend of $0.93 per common share for the
quarter ending June 30, 2023
- Dividend Reinvestment and Share Repurchase Plan (DRP)
participation rate amongst common shareholders was approximately 38
per cent, resulting in $363 million reinvested in common equity
from the dividends declared on February 13, 2023
- Continuing to advance our industry leading secured capital
program, placing $1.4 billion of projects in service in first
quarter 2023 and on track to place $6.0 billion in service during
2023
- Canadian Natural Gas Pipelines brought $1.1 billion of projects
in service in first quarter 2023, enabling 700 MMcf/d of additional
market access with an incremental 500 MMcf/d expected in second
quarter 2023
- Placed Port Neches Link Pipeline System in service in March
2023 providing last mile connectivity to key demand markets
- Acquired 155 MW Fluvanna Wind Farm for US$99 million in cash,
before post-closing adjustments in Scurry County, Texas. Entered
into an agreement to acquire 148 MW Blue Cloud Wind Farm for US$125
million in cash, before post-closing adjustments in Bailey County,
Texas. Closing of the Blue Cloud acquisition is pending regulatory
approval
- Received FERC approval for ANR Section 4 Rate Case on April 11,
2023
- Bruce Power Unit 3 removed from
service March 1, 2023 to begin its Major Component Replacement
(MCR) outage with return to service expected in 2026.
|
|
|
|
|
three months ended March 31 |
(millions of $, except per share amounts) |
|
2023 |
|
2022 |
|
|
|
|
|
Income |
|
|
|
|
Net income attributable to common shares |
|
1,313 |
|
|
358 |
|
per common share – basic |
|
$1.29 |
|
|
$0.36 |
|
|
|
|
|
|
Segmented
earnings |
|
|
|
|
Canadian Natural Gas Pipelines |
|
411 |
|
|
358 |
|
U.S. Natural Gas Pipelines |
|
1,079 |
|
|
310 |
|
Mexico Natural Gas Pipelines |
|
254 |
|
|
120 |
|
Liquids Pipelines |
|
176 |
|
|
272 |
|
Power and Energy Solutions |
|
252 |
|
|
76 |
|
Corporate |
|
(2 |
) |
|
31 |
|
Total segmented earnings |
|
2,170 |
|
|
1,167 |
|
|
|
|
|
|
Comparable
EBITDA |
|
|
|
|
Canadian Natural Gas Pipelines |
|
740 |
|
|
644 |
|
U.S. Natural Gas Pipelines |
|
1,267 |
|
|
1,107 |
|
Mexico Natural Gas Pipelines |
|
172 |
|
|
148 |
|
Liquids Pipelines |
|
317 |
|
|
329 |
|
Power and Energy Solutions |
|
281 |
|
|
157 |
|
Corporate |
|
(2 |
) |
|
3 |
|
Comparable EBITDA |
|
2,775 |
|
|
2,388 |
|
Depreciation and amortization |
|
(677 |
) |
|
(626 |
) |
Interest expense included in comparable earnings |
|
(757 |
) |
|
(580 |
) |
Allowance for funds used during construction |
|
131 |
|
|
75 |
|
Foreign exchange gains (losses), net included in comparable
earnings |
|
33 |
|
|
32 |
|
Interest income and other |
|
42 |
|
|
35 |
|
Income tax (expense) recovery included in comparable earnings |
|
(280 |
) |
|
(179 |
) |
Net income attributable to non-controlling interests |
|
(11 |
) |
|
(11 |
) |
Preferred share dividends |
|
(23 |
) |
|
(31 |
) |
Comparable earnings |
|
1,233 |
|
|
1,103 |
|
Comparable earnings per common share |
|
$1.21 |
|
|
$1.12 |
|
|
|
|
|
|
Net cash provided by
operations |
|
2,074 |
|
|
1,707 |
|
Comparable funds generated
from operations |
|
2,066 |
|
|
1,865 |
|
Capital spending1 |
|
3,033 |
|
|
1,737 |
|
|
|
|
|
|
Dividends
declared |
|
|
|
|
per common share |
|
$0.93 |
|
|
$0.90 |
|
|
|
|
|
|
Basic common shares
outstanding (millions) |
|
|
|
|
– weighted average for the period |
|
1,021 |
|
|
981 |
|
– issued and outstanding at end of period |
|
1,023 |
|
|
983 |
|
1 Includes
Capital expenditures, Capital projects in development and
Contributions to equity investments. Refer to the Financial
condition – Cash (used in) provided by investing activities section
for additional information. |
|
CEO MessageOperational excellence
drives 16 per cent increase in first quarter comparable
EBITDA First quarter 2023 results were underpinned by the
strong demand for our assets and our ability to safely and reliably
deliver essential energy services across North America. Comparable
EBITDA was $2.8 billion, up 16 per cent compared to first quarter
2022, and segmented earnings were $2.2 billion compared to $1.2
billion in first quarter 2022. Comparable earnings per share for
the quarter was $1.21, up eight per cent compared to $1.12 in first
quarter 2022. Net income per common share was $1.29, up from $0.36
in first quarter 2022.
Reaffirming 2023 outlook and dividend
declaration We reaffirm our 2023 comparable EBITDA growth
outlook of five to seven per cent relative to 2022, while
comparable earnings per common share is expected to be modestly
higher than 2022, showcasing the resiliency and sustainability of
our earnings and cash flows. In addition, we expect capital
spending in 2023 to continue to be $11.5 to $12.0 billion. Our 2023
outlook reflects our commitment to driving long-term growth and
value for our shareholders. Based on the confidence of our business
and growth outlook, TC Energy’s Board of Directors declared a
quarterly dividend of $0.93 per common share for the quarter ending
June 30, 2023, equivalent to $3.72 per common share on an
annualized basis. We expect to continue to grow the common share
dividend at an annual rate of three to five per cent, enabling our
shareholders to benefit from our growth and success in the coming
years.
Focusing on project execution: advancing industry
leading secured capital programMajor project execution
continues to be a central priority and during the quarter we made
meaningful progress on the Coastal GasLink and Southeast Gateway
pipeline projects, as well as advancing our MCR program at Bruce
Power. We continue to advance our $34 billion secured capital
program and have placed $1.4 billion of our planned $6.0 billion of
projects in service in 2023, further supporting comparable EBITDA
growth and deleveraging objectives.
Bruce Power achieved 95 per cent availability
during the quarter. On March 1, Unit 3 was removed from service to
begin its MCR outage. In addition, the Unit 6 MCR is proceeding on
budget and schedule and is now in the final stages of the
installation phase, which will be followed by commissioning. Unit 6
is expected to return to service in the fourth quarter of 2023,
while Unit 3 has an expected return to service date in 2026.
The Southeast Gateway Pipeline project, our
second offshore pipeline project in Mexico, continues to track to
cost and schedule with a targeted in service date of mid-2025. As a
result of our strategic partnership with the Comisión Federal de
Electricidad (CFE), the first critical milestones were achieved in
early 2023 with the acquisition of land for the main offshore pipe
landfalls and compressor stations, as well as obtaining key federal
environmental authorizations and local permits. We anticipate
commencing onshore construction for our compressor stations this
summer and offshore pipe installation toward the end of 2023.
Critical long-lead items and the offshore vessel have been secured,
pipe and equipment are being delivered, and approximately 70 per
cent of total project costs are under fixed price contracts. Once
complete, we expect that the project will play a critical role in
advancing a reliable and secure energy transition in key demand
centers in southeast Mexico.
Over the winter construction season, the Coastal
GasLink project progressed in line with our revised cost
and schedule and is now approximately 87 per cent complete. The
entire project route has been cleared, grading is approximately 99
per cent complete, welding is approximately 95 per cent complete
and we continue to target mechanical completion in late 2023. We
are pleased to announce that construction has progressed through
the winter on plan and the compressor station at Wilde Lake has
commenced commissioning work, including the recent introduction of
natural gas as part of the transition of the facility to
operations. Despite the high elevation and winter conditions, we
safely completed excavation of Cable Crane Hill ahead of schedule
and are now installing the final pipe through this critical path
section. More than 85 per cent of all classified water crossings on
the project are now complete and, in the first quarter alone, we
safely completed the Clore River, Crystal, Lamprey and Owen Creek
crossings. To date, over 567 km of the approximately 670 km
pipeline has been backfilled with restoration activities underway
in many areas. At this stage, the majority of the long-linear
pipeline installation is complete and activity is shifting toward
discrete work fronts with high criticality. We continue to
systematically mitigate the remaining execution risks and remain
focused on executing the project on time and with the highest
standards of safety, quality and environmental protection. At this
time there is no change to the comprehensive cost and schedule risk
analysis (CSRA) described in our 2022 Annual Report.
Following the December 2022 Milepost 14
incident on the Keystone Pipeline System, approximately 98 per cent
of the released volume has been recovered and clean-up is
approximately 90 per cent complete. The Keystone Pipeline System is
operating at a reduced pressure while continuing to deliver our
contracted volumes of approximately 585,000 Bbl/d. A Root Cause
Failure Analysis has been conducted by an independent third party
and findings have been posted to our website. Our focus remains on
the safe operations of the system and remediation.
Progressing our $5+ billion asset divestiture program
while maintaining our low-risk business profile Our team
remains laser focused on execution and managing capital spending
while advancing our $5+ billion asset divestiture program to
accelerate our deleveraging target and provide a source of funding
for high quality growth opportunities. Our asset divestiture
program is underway and we will be in a position to provide more
details as the program progresses.
We continue to optimize system availability and throughput while
simultaneously looking for new ways to maximize the value of our
existing assets. The North American energy mix continues to evolve
which will allow us to expand and extend our existing services and
originate additional low-carbon solutions while living within our
means. Our diverse and strategically positioned portfolio and ‘all
of the above’ strategy will meet society’s needs, regardless of the
pace or direction of the energy transition. Going forward, TC
Energy will remain steadfast in prioritizing project execution,
deleveraging and capital discipline while safely and reliably
delivering the energy people need, every day.
Teleconference and WebcastWe will hold a
teleconference and webcast on Friday,
April 28, 2023 at 6:30 a.m. (MDT) /
8:30 a.m. (EDT) to discuss our first quarter 2023
financial results and company developments. Presenters will include
François Poirier, President and Chief Executive Officer; Joel
Hunter, Executive Vice-President and Chief Financial Officer; and
other members of the executive leadership team.
Members of the investment community and other interested parties
are invited to participate by calling
1.800.319.4610. No passcode is required. Please
dial in 15 minutes prior to the start of the call. A live webcast
of the teleconference will be available on TC Energy's website at
www.TCEnergy.com/events or via the following URL:
http://www.gowebcasting.com/12502.
A replay of the teleconference will be available two hours after
the conclusion of the call until midnight EDT on May 5, 2023.
Please call 1.855.669.9658 and enter pass code 9998.
The unaudited interim Condensed consolidated financial
statements and Management’s Discussion and Analysis (MD&A) are
available on our website at
www.TCEnergy.com and will be filed
today under TC Energy's profile on SEDAR at
www.sedar.com and with the U.S.
Securities and Exchange Commission on EDGAR at
www.sec.gov.
About TC EnergyWe’re a team of 7,000+ energy
problem solvers working to move, generate and store the energy
North America relies on. Today, we’re taking action to make that
energy more sustainable and more secure. We’re innovating and
modernizing to reduce emissions from our business. And, we’re
delivering new energy solutions – from natural gas and renewables
to carbon capture and hydrogen – to help other businesses and
industries decarbonize too. Along the way, we invest in communities
and partner with our neighbours, customers and governments to build
the energy system of the future.
TC Energy's common shares trade on the Toronto (TSX) and New
York (NYSE) stock exchanges under the symbol TRP. To learn more,
visit us at www.TCEnergy.com.
Forward-Looking InformationThis release
contains certain information that is forward-looking, including the
sustainability commitments and targets contained in our 2022 Report
on Sustainability and our GHG Emissions Reduction Plan, and is
subject to important risks and uncertainties (such statements are
usually accompanied by words such as "anticipate", "expect",
"believe", "may", "will", "should", "estimate", "intend" or other
similar words). Forward-looking statements in this document are
intended to provide TC Energy security holders and potential
investors with information regarding TC Energy and its
subsidiaries, including management's assessment of TC Energy's and
its subsidiaries' future plans and financial outlook. All
forward-looking statements reflect TC Energy's beliefs and
assumptions based on information available at the time the
statements were made and as such are not guarantees of future
performance. As actual results could vary significantly from the
forward-looking information, you should not put undue reliance on
forward-looking information and should not use future-oriented
information or financial outlooks for anything other than their
intended purpose. We do not update our forward-looking information
due to new information or future events, unless we are required to
by law. For additional information on the assumptions made, and the
risks and uncertainties which could cause actual results to differ
from the anticipated results, refer to the most recent Quarterly
Report to Shareholders and the 2022 Annual Report filed under TC
Energy's profile on SEDAR at www.sedar.com and with the U.S.
Securities and Exchange Commission at www.sec.gov and the
"Forward-looking information" section of our 2022 Report on
Sustainability and our GHG Emissions Reduction Plan which are
available on our website at www.TCEnergy.com.
Non-GAAP MeasuresThis release contains
references to the following non-GAAP measures: comparable EBITDA,
comparable earnings, comparable earnings per common share and
comparable funds generated from operations. These non-GAAP measures
do not have any standardized meaning as prescribed by GAAP and
therefore may not be comparable to similar measures presented by
other entities. These non-GAAP measures are calculated by adjusting
certain GAAP measures for specific items we believe are significant
but not reflective of our underlying operations in the period.
These comparable measures are calculated on a consistent basis from
period to period and are adjusted for specific items in each
period, as applicable except as otherwise described in the
Condensed consolidated financial statements and MD&A. Refer to:
(i) each business segment for a reconciliation of comparable EBITDA
to segmented earnings (losses); (ii) Consolidated results section
for reconciliations of comparable earnings and comparable earnings
per common share to Net income attributable to common shares and
Net income per common share, respectively; and (iii) Financial
condition section for a reconciliation of comparable funds
generated from operations to Net cash provided by operations. Refer
to the Non-GAAP measures section of the MD&A in our most recent
quarterly report for more information about the non-GAAP measures
we use, the MD&A is included in this release. The MD&A can
be found on SEDAR (www.sedar.com) under TC Energy's profile.
Media Inquiries:Media
Relationsmedia@tcenergy.com403.920.7859 or 800.608.7859
Investor & Analyst
Inquiries: Gavin
Wylie / Hunter Mau investor_relations@tcenergy.com403.920.7911 or
800.361.6522
Download full report here:
https://www.tcenergy.com/siteassets/pdfs/investors/reports-and-filings/annual-and-quarterly-reports/2023/tc-2023-q1-quarterly-report.pdf
________________1 Comparable EBITDA, comparable earnings,
comparable earnings per common share and comparable funds generated
from operations are non-GAAP measures used throughout this news
release. These measures do not have any standardized meaning under
GAAP and therefore are unlikely to be comparable to similar
measures presented by other companies. The most directly comparable
GAAP measures are Segmented earnings, Net income attributable to
common shares, Net income per common share and Net cash provided by
operations, respectively. For more information on non-GAAP
measures, refer to the Non-GAAP Measures section of this news
release.
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