TRANSCANADA NET INCOME DOWN 48%
TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) announced a net loss attributable to common shares for third quarter 2016 of $135 million or $0.17 per share compared to net income of $402 million or $0.57 per share for the same period in 2015. Third quarter 2016 results included a $656 million after-tax goodwill impairment charge related to our U.S. Northeast Power business. Excluding the net loss on the goodwill impairment and certain other specific items, comparable earnings for third quarter 2016 were $622 million or $0.78 per share compared to $440 million or $0.62 per share for the same period in 2015. TransCanada's Board of Directors also declared a quarterly dividend of $0.565 per common share for the quarter ending December 31, 2016, equivalent to $2.26 per common share on an annualized basis.
"Excluding specific items, comparable earnings per share for the quarter were significantly higher than last year as a result of the Columbia acquisition and continued solid performance from our large portfolio of high-quality energy infrastructure assets," said Russ Girling, TransCanada's president and chief executive officer. "Since completing the Columbia transaction, we have made significant progress in integrating its operations with our existing U.S. natural gas pipeline business and are well on track to realize the targeted US$250 million of annualized benefits associated with the acquisition."
On July 1, 2016, TransCanada completed the acquisition of Columbia Pipeline Group, Inc. (Columbia) for US$13 billion. Columbia operates a portfolio of approximately 24,000 km (15,000 miles) of regulated natural gas pipelines, 300 Bcf of natural gas storage facilities and related midstream assets.
"The addition of Columbia reinforces our position as one of North America's leading energy infrastructure companies with an extensive pipeline network that links the continent's most prolific natural gas supply basins to its most attractive markets," added Girling. "Looking forward, the addition of Columbia's US$7.7 billion growth program brings our industry-leading portfolio of near-term capital projects to over $25 billion. As these projects progress through the permitting and construction phases and into operation over the balance of the decade, they are expected to generate significant growth in earnings and cash flow and support an expected annual dividend growth rate at the upper end of the Company's previous expectation of eight to 10 per cent through 2020."
(All financial figures are unaudited and in Canadian dollars unless noted otherwise)
- Third quarter financial results
- Net loss attributable to common shares of $135 million or $0.17 per share
- Comparable earnings of $622 million or $0.78 per share
- Comparable earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.9 billion
- Comparable funds generated from operations of $1.4 billion
- Comparable distributable cash flow of $1.0 billion or $1.29 per common share
- Declared a quarterly dividend of $0.565 per common share for the quarter ending December 31, 2016
- On July 1, 2016, we closed the US$13 billion acquisition of Columbia comprised of a purchase price of approximately US$10.3 billion and Columbia debt of approximately US$2.7 billion
- On July 4, 2016, 96.6 million subscription receipts were exchanged into the same number of common shares
- Announced the reinstatement of issuance of common shares from treasury at a two per cent discount under TransCanada's Dividend Reinvestment Plan commencing with the dividends declared on July 27, 2016
- Issued US$1.2 billion of junior subordinated notes in the United States that mature in 2076
- Announced that ANR filed a comprehensive settlement of its current Natural Gas Act Section 4 rate case with the Federal Energy Regulatory Commission (FERC)
- Launched an open season on the Canadian Mainline seeking binding commitments on a new long-term, fixed price tolling option
- On November 1, 2016, we announced the following strategic updates:
- Expect to realize approximately US$3.7 billion from the monetization of our U.S. Northeast Power business.
- The decision to maintain our current ownership interest in our growing Mexican natural gas pipeline business.
- An agreement to purchase all of the common units of Columbia Pipeline Partners LP (CPPL) for US$17.00 per common unit for a total amount of approximately US$915 million.
- A bought deal offering of TransCanada common shares.
These initiatives, along with our stable base business and $25 billion of secured near-term growth, position us to deliver an expected annual dividend growth rate at the upper end of the Company's previous expectation of eight to 10 per cent through 2020.
Net income attributable to common shares decreased by $537 million to a net loss of $135 million or $0.17 per share for the three months ended September 30, 2016 compared to the same period last year. Third quarter 2016 included a $656 million after-tax goodwill impairment charge, an after-tax charge of $67 million related to costs associated with the acquisition of Columbia, a $50 million after-tax charge related to risk management activities, recognition of $28 million of income tax recoveries resulting from a third party sale of Keystone XL project assets, a $9 million after-tax charge related to Keystone XL maintenance and liquidation costs and $3 million of after-tax costs related to the sale of our U.S. Northeast Power business. All of these specific items are excluded from comparable earnings.
Comparable earnings for third quarter 2016 were $622 million or $0.78 per share compared to $440 million or $0.62 per share for the same period in 2015, an increase of $182 million or $0.16 per share. The increase was primarily the net effect of a higher contribution from U.S. Pipelines primarily due to incremental earnings from Columbia following the acquisition on July 1, 2016 and a higher ANR transportation and storage revenue resulting from higher rates effective August 1, 2016; a higher contribution from Mexican pipelines primarily due to earnings from Topolobampo beginning in July 2016; higher interest income and other due to realized gains in 2016 compared to realized losses in 2015 on derivatives used to manage our net exposure to foreign exchange rate fluctuations on U.S. dollar-denominated income; higher earnings from U.S. Power mainly due to incremental earnings from the Ironwood power plant acquired in February 2016 and higher sales to customers in the PJM market partially offset by lower capacity revenues in New York; higher earnings from Bruce Power mainly due to lower depreciation and our increased ownership interest partially offset by higher losses from contracting activities; and higher earnings from Canadian Pipelines primarily due to a higher NGTL investment base and incentive earnings from the Canadian Mainline and NGTL. These gains were partially offset by higher interest expense from debt issuances and lower capitalized interest as well as lower earnings from Liquids Pipelines due to the net effect of higher contracted and lower uncontracted volumes on Keystone Pipeline and lower volumes on Marketlink.