TC ENERGY NET INCOME $1.1 BLN

TC Energy   - CALGARY, Alberta, Aug. 01, 2019  -- TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced net income attributable to common shares for second quarter 2019 of $1.1 billion or $1.21 per share compared to net income of $785 million or $0.88 per share for the same period in 2018. Comparable earnings for second quarter 2019 were $924 million or $1.00 per common share compared to $768 million or $0.86 per common share in 2018. TC Energy's Board of Directors also declared a quarterly dividend of $0.75 per common share for the quarter ending September 30, 2019, equivalent to $3.00 per common share on an annualized basis.

"During the second quarter of 2019, our diversified portfolio of critical energy infrastructure assets continued to perform very well,” said Russ Girling, TC Energy’s President and Chief Executive Officer. "Comparable earnings per share increased 16 per cent compared to the same period last year while comparable funds generated from operations of $1.7 billion were 14 per cent higher. The increases reflect the strong performance of our legacy assets and contributions from approximately $5.6 billion of growth projects that entered service in the first half of 2019."

"With our existing assets benefiting from continued high utilization rates and $32 billion of secured growth projects underway, approximately $7 billion of which are expected to be completed by the end of the year, we expect our strong operating and financial performance to continue. They are underpinned by regulated or long-term contracted business models that are expected to support annual dividend growth of eight to 10 per cent through 2021,” added Girling. “We have invested $11 billion in these projects to date and are well positioned to fund the remainder of our secured growth program."

During the last few months we advanced a number of portfolio management activities including the partial monetization of the Northern Courier Pipeline as well as the sale of certain Columbia Midstream assets and our Ontario natural gas-fired power plants. These initiatives, combined with the sale of the Coolidge generating station which closed in late May, are expected to result in approximately $6.3 billion of proceeds from announced asset sales in 2019. When combined with significant internally generated cash flow, access to capital markets and potential additional portfolio management, we are well positioned to prudently fund our capital program with a strong focus on per share measures and in a manner that is consistent with achieving targeted credit metrics including debt-to-EBITDA in the high four times area in 2019 and thereafter.

"Looking forward, we continue to progress more than $20 billion of projects under development including Keystone XL and the Bruce Power life extension program. Success in advancing these and other growth initiatives that are expected to emanate from our five operating businesses and exceptional footprint across North America could extend our growth outlook well into the next decade," concluded Girling.

Highlights

(All financial figures are unaudited and in Canadian dollars unless otherwise noted)

• Second quarter 2019 financial results
• ◦   Net income attributable to common shares of $1.1 billion or $1.21 per common share
  ◦   Comparable earnings of $924 million or $1.00 per common share
  ◦   Comparable earnings before interest, taxes, depreciation and amortization of $2.3 billion
  ◦   Net cash provided by operations of $1.7 billion
  ◦   Comparable funds generated from operations of $1.7 billion
  ◦   Comparable distributable cash flow of $1.5 billion or $1.64 per common share
• Declared a quarterly dividend of $0.75 per common share for the quarter ending September 30, 2019
• Continued construction activities on the Coastal GasLink pipeline project; on July 26, 2019 the National Energy Board (NEB) issued its decision affirming provincial jurisdiction for the project
• Placed approximately $0.3 billion of NGTL System projects in service in the first half of 2019
• Placed the White Spruce pipeline in northeast Alberta in service in May 2019
• Achieved necessary milestones to move Louisiana XPress and Grand Chenier XPress into secured projects at a combined cost of approximately US$0.6 billion
• Received NEB approval of the North Bay Junction Long Term Fixed Price (NBJ LTFP) service, as filed
• Closed the sale of our Coolidge generating station in Arizona for US$448 million
• Entered into an agreement to sell certain Columbia Midstream assets for approximately US$1.3 billion
• Issued $1.0 billion of 30-year fixed-rate medium-term notes
• Completed the partial monetization of the Northern Courier pipeline for aggregate gross proceeds of approximately $1.15 billion in July 2019
• On July 30, 2019, announced an agreement to sell our interests in three Ontario natural gas-fired power plants for approximately $2.87 billion.

Net income attributable to common shares increased by $340 million or $0.33 per common share to $1.1 billion or $1.21 per share for the three months ended June 30, 2019 compared to the same period last year. Per share results reflect the dilutive impact of common shares issued under our Dividend Reinvestment Plan (DRP) in 2018 and 2019 and our Corporate At-The-Market (ATM) program in 2018. Second quarter 2019 results included an after-tax gain of $54 million related to the sale of our Coolidge generating station in May 2019, a deferred tax benefit of $32 million related to the impact of an Alberta corporate income tax rate reduction on our Canadian businesses not subject to rate-regulated accounting and an after-tax gain of $6 million related to our U.S. Northeast power marketing contracts. Second quarter 2018 results included an after-tax loss of $11 million related to our U.S. Northeast power marketing contracts. These specific items, as well as unrealized gains and losses from changes in risk management activities, are excluded from comparable earnings.

Comparable EBITDA increased by $333 million for the three months ended June 30, 2019 compared to the same period in 2018 primarily due to the net effect of the following:

• higher contribution from Liquids Pipelines primarily due to higher volumes on the Keystone Pipeline System and increased earnings from liquids marketing activities
• higher contribution from U.S. Natural Gas Pipelines mainly due to increased earnings from Columbia Gas and Columbia Gulf growth projects placed in service
• higher contribution from Power and Storage primarily due to increased Bruce Power results from a higher realized power price, partially offset by the sale of our interests in the Cartier Wind power facilities in 2018
• lower flow-through income taxes on the NGTL System and the Canadian Mainline as a result of accelerated tax depreciation enacted in June 2019, partially offset by increased depreciation and higher incentive earnings for the Canadian Mainline in 2019
• foreign exchange impact of a stronger U.S. dollar on the Canadian dollar equivalent earnings from our U.S. and Mexico operations.

Due to the flow-through treatment of income taxes on our Canadian rate-regulated pipelines, the beneficial income tax change on these assets related to accelerated tax depreciation reduces our comparable EBITDA despite having no impact on net income.

Comparable earnings increased by $156 million or $0.14 per common share for the three months ended June 30, 2019 compared to the same period in 2018 and was primarily the net effect of:

• changes in comparable EBITDA described above
• higher depreciation largely in Canadian Natural Gas Pipelines, which is fully recovered in tolls as reflected in the comparable EBITDA discussion above, therefore having no impact on comparable earnings. In addition, higher consolidated depreciation reflects new projects placed in service
• lower interest income and other due to realized losses in 2019 on derivatives used to manage exposure to foreign exchange rate fluctuations on U.S. dollar-denominated income
• higher income tax expense due to higher comparable earnings before income taxes and lower foreign tax rate differentials, partially offset by lower flow-through income taxes in our Canadian rate-regulated pipelines
• higher interest expense primarily as a result of higher levels of short-term borrowings, long-term debt issuances, net of maturities, and the foreign exchange impact on translation of U.S. dollar-denominated interest.

Comparable earnings per common share for the three months ended June 30, 2019 also reflects the dilutive impact of common shares issued under our DRP in 2018 and 2019 and our Corporate ATM program in 2018.

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