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2020-10-29 16:35:00

TC ENERGY NET INCOME $904 MLN

TC ENERGY NET INCOME $904 MLN

TC ENERGYOct. 29, 2020  — TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced net income attributable to common shares for third quarter 2020 of $904 million or $0.96 per share compared to net income of $739 million or $0.79 per share for the same period in 2019. For the nine months ended September 30, 2020, net income attributable to common shares was $3.3 billion or $3.55 per share compared to net income of $2.9 billion or $3.09 per share for the same period in 2019. Comparable earnings for third quarter 2020 were $893 million or $0.95 per common share compared to $970 million or $1.04 per common share in 2019. For the nine months ended September 30, 2020, comparable earnings were $2.9 billion or $3.05 per common share compared to $2.9 billion or $3.11 per common share for the same period in 2019. TC Energy's Board of Directors also declared a quarterly dividend of $0.81 per common share for the quarter ending December 31, 2020, equivalent to $3.24 per common share on an annualized basis.

"During the first nine months of 2020, our diversified portfolio of essential energy infrastructure continued to perform very well,” said Russ Girling, TC Energy’s President and Chief Executive Officer. ”Results once again highlight the resiliency of our assets despite significant volatility in global energy markets. We continue to deliver the energy and advance projects vital to powering the North American economy in a safe and reliable manner, employing thousands of people and fulfilling our obligations to all stakeholders in these unprecedented times."

Despite the challenges brought about by COVID-19, TC Energy's assets have been largely unimpacted. Across our extensive North American operations, flows and utilization levels generally remain in line with historical and seasonal norms, underscoring the importance of our assets to the North American economy. Given the regulated and/or long-term contracted nature of our portfolio, we continue to be largely insulated from volatility associated with volume throughput and commodity prices. As a result, the Company's outlook for full year 2020 is essentially unchanged.

TC Energy also continues to advance its industry leading $37 billion secured capital program and placed over $3 billion of assets into service during the first nine months of 2020. Importantly, all of our capital projects are underpinned by long-term contracts highlighting the market need for this critical new infrastructure while at the same time giving us visibility to the earnings and cash flow they will generate as they enter service over the next four years. Looking beyond the current suite of projects, we are well positioned to capture future growth opportunities associated with our extensive asset footprint and deep organizational capabilities as well as others that may arise as the world both consumes more energy and transitions to a cleaner energy future.

“Our significant internally generated cash flow, strong financial position and continued access to capital markets will enable us to prudently fund our secured capital program in a manner that is consistent with maintaining our strong credit profile and targeted metrics," added Girling. "Once completed, approximately 98 per cent of the Company’s EBITDA is expected to come from regulated and/or long-term contracted assets. Success in advancing these and other organic growth opportunities emanating from our five operating businesses across North America is expected to support annual dividend growth of eight to 10 per cent in 2021 and five to seven per cent thereafter in this historically low-interest rate environment."

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

  • Third quarter 2020 financial resultsDeclared a quarterly dividend of $0.81 per common share for the quarter ending December 31, 2020
    • Net income attributable to common shares of $904 million or $0.96 per common share
    • Comparable earnings of $893 million or $0.95 per common share
    • Comparable EBITDA of $2.3 billion
    • Net cash provided by operations of $1.8 billion
    • Comparable funds generated from operations of $1.7 billion
  • Announced the retirement of our President and CEO, Russ Girling, effective December 31, 2020 and named his successor, François Poirier, currently Chief Operating Officer and President, Power & Storage
  • Placed approximately $3.0 billion of NGTL System and $0.1 billion of Canadian Mainline capacity projects in service in the first nine months of 2020
  • Continued to advance $37 billion secured capital program by investing $2.3 billion in various projects during the third quarter
  • Received approval for the NGTL System 2021 Expansion Program which will add incremental capacity of 1.45 Bcf/d
  • Approved the US$0.2 billion Wisconsin Access project on October 28 to replace, upgrade and modernize certain ANR facilities
  • Received approval from the Canada Energy Regulator (CER) in August for the NGTL System's 2020-2024 Revenue Requirement Settlement Application as filed
  • Announced a non-binding offer to acquire all of the publicly-held outstanding common units of TC PipeLines, LP in exchange for TC Energy common shares.

Net income attributable to common shares increased by $165 million or $0.17 per common share to $904 million or $0.96 per share for the three months ended September 30, 2020 compared to the same period last year. Per share results reflect the dilutive impact of common shares issued under our Dividend Reinvestment and Share Purchase Plan (DRP) in 2019. Third quarter 2020 results included an incremental after-tax loss of $45 million related to the sale of the Ontario natural gas-fired power plants on April 29, 2020 and a $6 million reduction to the after-tax gain related to the sale of a 65 per cent equity interest in Coastal GasLink. Third quarter 2019 included an after-tax loss of $133 million related to the sale of the Ontario natural gas-fired power plants, an after-tax loss of $133 million due to the sale of certain Columbia Midstream assets and an after-tax gain of $115 million related to the partial sale of Northern Courier. These specific items, as well as unrealized gains and losses from changes in risk management activities, are excluded from comparable earnings as we do not consider them to be reflective of our underlying operations.

Comparable EBITDA decreased by $50 million for the three months ended September 30, 2020 compared to the same period in 2019 primarily due to the net effect of the following:

  • decreased earnings from Liquids Pipelines as a result of lower uncontracted volumes on the Keystone Pipeline System and reduced contributions from liquids marketing activities
  • lower Power and Storage earnings mainly attributable to decreased Bruce Power results due to the planned removal from service of Unit 6 on January 17, 2020 for the Major Component Replacement (MCR) program and decreased Canadian Power earnings largely as a result of the sale of our Ontario natural gas-fired power plants on April 29, 2020
  • higher comparable EBITDA from Canadian Natural Gas Pipelines primarily due to the impact of increased NGTL System rate base earnings and flow-through depreciation from additional facilities placed in service as well as higher financial charges on the NGTL System, plus Coastal GasLink development fees, partially offset by lower flow-through income taxes on the NGTL System
  • lower operating costs in U.S. Natural Gas Pipelines on Columbia Gas and Columbia Gulf and increased earnings from ANR as a result of the sale of natural gas from certain gas storage facilities
  • increased Mexico Natural Gas Pipelines results mainly due to higher earnings from our investment in the Sur de Texas pipeline which was placed in service in September 2019
  • foreign exchange impact of a stronger U.S. dollar on the Canadian dollar equivalent earnings in our U.S. and Mexico operations.

Due to the flow-through treatment of certain expenses including income taxes, financial charges and depreciation on our Canadian rate-regulated pipelines, changes in these expenses impact our comparable EBITDA despite having no significant effect on net income.

Comparable earnings decreased by $77 million or $0.09 per common share for the three months ended September 30, 2020 compared to the same period in 2019 and was primarily the net effect of:

  • changes in comparable EBITDA described above
  • a decrease in Income tax expense mainly due to lower pre-tax earnings, a reduction in the Alberta corporate income tax rate and decreased flow-through income taxes on Canadian rate-regulated pipelines
  • lower Interest expense as a result of higher capitalized interest mainly related to Keystone XL, net of the impact of Napanee completing construction in first quarter 2020, and lower interest rates on reduced levels of short-term borrowings, partially offset by the effect of long-term debt issuances, net of maturities
  • higher depreciation largely in Canadian Natural Gas Pipelines and U.S. Natural Gas Pipelines reflecting new assets placed in service
  • lower AFUDC predominantly due to NGTL System expansions placed in service
  • lower Interest income and other primarily related to the peso-denominated inter-affiliate loan receivable from the Sur de Texas joint venture reflecting lower interest rates and the weakening of the Mexican peso in 2020.

Depreciation in Canadian Natural Gas Pipelines is recoverable in tolls on a flow-through basis as discussed in comparable EBITDA above, and therefore has no significant impact on comparable earnings. Similarly, the interest income and our share of the interest expense on the Sur de Texas inter-affiliate loans offset within each reporting period, resulting in no impact on comparable earnings. Comparable earnings per common share for the three months ended September 30, 2020 also reflects the dilutive impact of common shares issued under our DRP in 2019.

On March 11, 2020, the World Health Organization declared the novel coronavirus, or COVID-19, a global pandemic. Company business continuity plans are in place across our organization and we continue to effectively operate our assets, conduct commercial activities and execute on projects with a focus on health, safety and reliability. Our businesses are broadly considered essential in Canada, the United States and Mexico given the important role our infrastructure plays in providing energy to North American markets. We are confident that our robust continuity and business resumption plans for critical teams, including liquids and gas control as well as commercial and field operations, will continue to ensure the safe and reliable delivery of energy for our customers.

With approximately 95 per cent of our comparable EBITDA generated from rate-regulated assets and/or long-term contracts, we are largely insulated from the short-term volatility associated with fluctuations in volume throughput and commodity prices. Aside from the impact of maintenance activities and normal seasonal factors, to date we have not seen any pronounced changes in the utilization of our assets, with the exception of the Keystone Pipeline System which has experienced a reduction in uncontracted volumes that we expect to remain until market conditions rebalance and normalize. To date, we have not encountered any significant impacts on our supply chain. While it is too early to ascertain any long-term impact that COVID-19 may have on our capital program, directionally we have observed some slowdown of our construction activities and capital expenditures in 2020, largely due to permitting delays as regulators have been unable to process permits and conduct consultations in time frames that were originally anticipated. In March 2020, as a result of COVID-19 impacts, Bruce Power declared force majeure with respect to its Unit 6 MCR and certain Asset Management work. As the MCR and Asset Management activities continue to progress, the ultimate impact of the Unit 6 force majeure will depend on the extent and duration of the pandemic and their ability to implement mitigation measures.

The full extent and lasting impact of the COVID-19 pandemic on the global economy is as yet undetermined but to date has included extreme volatility in financial markets and commodity prices, a significant reduction in overall economic activity, widespread extended shutdowns of businesses and supply chain disruptions. The degree to which COVID-19 has a more pronounced longer-term impact on our operations and growth projects will depend on future developments, policies and actions, all of which remain highly uncertain.

 

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Earlier: 

 TC ENERGY NET INCOME $1.3 BLN
2020, July, 31, 09:50:00
TC ENERGY NET INCOME $1.3 BLN
TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced net income attributable to common shares for second quarter 2020 of $1.3 billion
 
 TC ENERGY SELLS $2.1 BLN
2020, May, 26, 10:15:00
TC ENERGY SELLS $2.1 BLN
TC Energy Corporation has completed the sale of a 65 per cent equity interest in the Coastal GasLink Pipeline Project
 
 TC ENERGY NET INCOME $1.15 BLN
2020, May, 6, 11:45:00
TC ENERGY NET INCOME $1.15 BLN
TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) announced net income attributable to common shares for first quarter 2020 of $1.15 billion or $1.22 per share compared to net income of $1.0 billion or $1.09 per share for the same period in 2019.

 

Tags: TC ENERGY, TRANSCANADA