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2020-02-14 11:30:00

TC ENERGY NET INCOME $4 BLN

TC ENERGY NET INCOME $4 BLN

TC ENERGYTC Energy reports record 2019 financial results 

CALGARY, Alberta, Feb. 13, 2020 — TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced net income attributable to common shares for fourth quarter 2019 of $1.1 billion or $1.18 per share compared to net income of $1.1 billion or $1.19 per share for the same period in 2018. For the year ended December 31, 2019, net income attributable to common shares was $4.0 billion or $4.28 per share compared to net income of $3.5 billion or $3.92 per share in 2018. Comparable earnings for fourth quarter 2019 were $970 million or $1.03 per common share compared to $946 million or $1.03 per common share for the same period in 2018. For the year ended December 31, 2019, comparable earnings were $3.9 billion or $4.14 per common share compared to $3.5 billion or $3.86 per common share in 2018. TC Energy's Board of Directors also declared a quarterly dividend of $0.81 per common share for the quarter ending March 31, 2020, equivalent to $3.24 per common share on an annualized basis, an increase of eight per cent. This is the twentieth consecutive year the Board has raised the dividend. 

"We are very pleased with the performance of our diversified portfolio of regulated and long-term contracted assets which generated record financial results again in 2019," said Russ Girling, TC Energy’s President and Chief Executive Officer. "Despite significant asset sales that accelerated the strengthening of our balance sheet, comparable earnings per share increased seven per cent compared to 2018 while comparable funds generated from operations of $7.1 billion were nine per cent higher. The increases reflect the strong performance of our legacy assets and contributions from approximately $8.7 billion of growth projects that entered service in 2019. Those increases were partially offset by lower contributions from approximately $3.4 billion of assets that were monetized during the year." 

TC Energy exited 2019 having attained targeted credit metrics and in a position to fund its $30 billion portfolio of secured growth projects without the issuance of additional common shares. The Company's strong financial position will be further bolstered by the completion of pending portfolio management and project financing expected in the first half of 2020. 

In July 2019, the Company entered into an agreement to sell its Ontario natural gas-fired power plants including Napanee, Halton Hills and a 50 per cent interest in Portlands Energy Centre for approximately $2.87 billion. The transaction is anticipated to close by the end of first quarter 2020. 

In December 2019, the Company also entered into an agreement to sell a 65 per cent equity interest in its $6.6 billion Coastal GasLink Pipeline Project. Under the terms of the sale, TC Energy will receive upfront proceeds that include reimbursement of its partners' proportionate share of the project costs incurred to the date of close as well as additional payment streams through construction and operation of the pipeline. Concurrent with the sale, the Company expects that Coastal GasLink will finalize a secured construction credit facility with a syndicate of banks to fund up to 80 per cent of the project's capital expenditures during construction. Both transactions are expected to close in the first half of 2020 and substantially satisfy the Company's funding requirements through project completion. TC Energy will continue to be responsible for constructing and operating the pipeline. 

"Over the past several years, we have taken significant steps to high-grade our asset base through organic growth, acquisitions and divestitures, as well as return our balance sheet to its position of historical strength," added Girling. "The Company's footprint is comprised of irreplaceable corridors of critical energy infrastructure that are expected to contribute to the continuous replenishment of our growth portfolio in the years ahead. Management remains focused on further enhancing the quality and longevity of the Company's earnings and cash flow profile by seeking to turn our remaining merchant revenues into contracted annuity streams as well as increase regulatory certainty through long-term settlements with our customers." 

Looking forward, TC Energy will 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 organic growth opportunities emanating from our five operating businesses across North America, along with our $30 billion secured capital program, is expected to support annual dividend growth of eight to 10 per cent in 2021 and five to seven per cent thereafter. 

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

  • Fourth quarter 2019 financial results
    • Net income attributable to common shares of $1.1 billion or $1.18 per common share
    • Comparable earnings of $970 million or $1.03 per common share
    • Comparable EBITDA of $2.3 billion
    • Net cash provided by operations of $1.8 billion
    • Comparable funds generated from operations of $1.8 billion
  • For the year ended December 31, 2019
    • Net income attributable to common shares of $4.0 billion or $4.28 per common share
    • Comparable earnings of $3.9 billion or $4.14 per common share
    • Comparable EBITDA of $9.4 billion
    • Net cash provided by operations of $7.1 billion
    • Comparable funds generated from operations of $7.1 billion
  • Fourth quarter and other recent highlights
    • TC Energy's Board of Directors approved an eight per cent increase in the quarterly common share dividend to $0.81 per common share for the quarter ending March 31, 2020
    • Discontinued the issuance of common shares from treasury at a discount to satisfy purchases under the Dividend Reinvestment and Share Purchase Plan (DRP) commencing with the dividends declared October 31
    • Exited 2019 having brought $8.7 billion of new assets into service, realized $3.4 billion from portfolio management activities and attained targeted credit metrics in the year
    • Entered into an agreement in December to sell a 65 per cent equity interest in Coastal GasLink which, when combined with the establishment of a secured construction credit facility, is expected to substantially satisfy the Company's funding requirements through to in-service
    • Placed $1.1 billion of the North Montney project in service in January 2020
    • In February 2020, approved the $0.9 billion 2023 NGTL Intra-Basin System Expansion for contracted incremental intra-basin firm delivery capacity and the US$0.3 billion Alberta XPress project, an expansion of the ANR Pipeline system
    • In January 2020, received a Federal Energy Regulatory Commission (FERC) certificate for the US$0.2 billion Buckeye XPress project on our Columbia Gas system
    • Filed an application for approval of a six-year unanimous negotiated settlement on the Canadian Mainline tolls with the Canada Energy Regulator (CER)
    • Received approval of the Columbia Gulf rate settlement from FERC
    • Received Final Supplementary Environmental Impact Statement (SEIS) for the Keystone XL project in December 2019 and approval from the U.S. Bureau of Land Management in February 2020.

 Net income attributable to common shares for the three months ended December 31, 2019 was $1.1 billion or $1.18 per share compared to $1.1 billion or $1.19 per share for the same period last year. For the year ended December 31, 2019, net income attributable to common shares was $4.0 billion or $4.28 per share compared to $3.5 billion or $3.92 per share in 2018. Per share results reflect the dilutive impact of common shares issued under our Corporate At-The-Market (ATM) program in 2018 and under our DRP. Net income attributable to common shares includes a number of specific items that we believe are significant but not reflective of our underlying operations in the period. More information on these items which are excluded from comparable earnings can be found in the table entitled "Reconciliation of net income to comparable earnings" later in the document. 

Comparable EBITDA decreased by $138 million to $2.3 billion for the three months ended December 31, 2019 compared to the same period in 2018 primarily due to the net effect of the following: 

  • lower contribution from Canadian Natural Gas Pipelines primarily reflecting lower flow-through income taxes and depreciation as well as lower incentive earnings in the Canadian Mainline due to recording the full-year impact of the Canadian Mainline 2018-2020 Tolls Review (NEB 2018 Decision) in fourth quarter 2018. Due to the flow-through treatment of certain expenses including income taxes and depreciation on our Canadian rate-regulated pipelines, the decrease in these expenses impacts our comparable EBITDA despite having no significant effect on net income
  • lower contribution from Liquids Pipelines primarily due to decreased volumes on the Keystone Pipeline System, lower margins on liquids marketing activities and the impact of the sale of an 85 per cent equity interest in Northern Courier on July 17, 2019
  • higher contribution from U.S. Natural Gas Pipelines mainly due to incremental earnings from Columbia Gas growth projects placed in service, partially offset by decreased earnings from the sale of certain Columbia midstream assets on August 1, 2019 and from Bison (wholly owned by TC PipeLines, LP) following a 2018 agreement with two customers to pay out their future contract revenues and terminate the contracts
  • higher contribution from Power and Storage primarily due to increased Bruce Power results from a higher realized power price and higher volumes, partially offset by lower results from our Alberta cogeneration plants and the sale of the Coolidge generating station on May 21, 2019
  • higher equity earnings from our investment in the Sur de Texas pipeline which was placed in service in September 2019, at which time we began recording equity income from operations. Prior to in-service, Sur de Texas equity income primarily reflected an allowance for funds used during construction (AFUDC), net of our proportionate share of interest expense on inter-affiliate loans from its partners. Our share of this interest expense is fully offset in Interest income and other. 

Comparable earnings increased by $24 million to $970 million for the three months ended December 31, 2019 compared to the same period in 2018 and were primarily due to the net effect of: 

  • changes in comparable EBITDA described above
  • higher interest income and other as a result of lower realized losses in 2019 compared to 2018 on derivatives used to manage our net exposure to foreign exchange rate fluctuations on U.S. dollar-denominated income
  • lower income tax expense primarily due to lower flow-through income taxes in Canadian rate-regulated pipelines and lower comparable earnings before income taxes, partially offset by lower foreign tax rate differentials
  • lower depreciation largely in Canadian Natural Gas Pipelines which is fully recovered in tolls as reflected in comparable EBITDA above, therefore having no significant impact on comparable earnings. This was partially offset by increased depreciation in U.S. Natural Gas Pipelines reflecting new projects placed in service
  • lower AFUDC primarily due to Columbia Gas and Columbia Gulf growth projects placed in service, partially offset by capital expenditures on our NGTL System and continued investment in our Mexico projects. 

Comparable earnings per common share for the three months ended December 31, 2019 was consistent with 2018 at $1.03 and reflects the dilutive impact of common shares issued under our DRP in fourth quarter 2018 and throughout 2019. 

Comparable EBITDA in 2019 increased by $803 million to $9.4 billion compared to the same period in 2018 primarily due to the net effect of the following: 

  • increased contribution from U.S. Natural Gas Pipelines mainly attributable to incremental earnings from Columbia Gas and Columbia Gulf growth projects placed in service, partially offset by decreased earnings from Bison (wholly owned by TC PipeLines, LP) contract terminations and from the sale of certain Columbia midstream assets on August 1, 2019
  • increased contribution from Liquids Pipelines primarily resulting from higher volumes on the Keystone Pipeline System and earnings from liquids marketing activities, partially offset by decreased earnings as a result of the sale of an 85 per cent equity interest in Northern Courier on July 17, 2019
  • higher contribution from Power and Storage primarily attributable 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 late 2018 and the sale of the Coolidge generating facility on May 21, 2019
  • lower contribution from Canadian Natural Gas Pipelines mainly due to lower flow-through income taxes on the Canadian Mainline reflecting the impact of the NEB 2018 Decision and on the NGTL System as a result of accelerated tax depreciation, enacted by the Canadian federal government, partially offset by higher rate base earnings and depreciation on the NGTL System as additional facilities were placed in service. Due to the flow-through treatment of certain expenses, including income taxes and depreciation on our Canadian rate-regulated pipelines, the accelerated tax depreciation changes in 2019 and increased depreciation expense impacts our comparable EBITDA despite having no significant effect on net income
  • foreign exchange impact of a stronger U.S. dollar on the Canadian dollar equivalent earnings from our U.S. operations. 

Comparable earnings in 2019 increased by $371 million or $0.28 per common share to $3.9 billion or $4.14 per common share compared to 2018 primarily due to the net effect of: 

  • changes in comparable EBITDA described above
  • higher income tax expense due to increased comparable earnings before income taxes and lower foreign tax rate differentials, partially offset by lower flow-through income taxes on the Canadian Mainline reflecting the impact of the NEB 2018 Decision and on the NGTL System from the effect of accelerated tax depreciation
  • higher depreciation largely in U.S. Natural Gas Pipelines reflecting new projects placed in service. Canadian Natural Gas Pipelines' depreciation also increased, however it is fully recovered in tolls on a flow-through basis as discussed in comparable EBITDA above, and therefore it has no significant impact on comparable earnings
  • increased interest expense primarily as a result of long-term debt issuances, net of maturities, the foreign exchange impact on translation of U.S. dollar-denominated interest and higher levels of short-term borrowings, partially offset by higher capitalized interest
  • lower AFUDC primarily due to Columbia Gas and Columbia Gulf growth projects placed in service, partially offset by capital expenditures on our NGTL System and continued investment in our Mexico projects. 

Comparable earnings per share in 2019 and 2018 were impacted by the dilutive impact of common shares issued under our Corporate ATM program in 2018 and under our DRP.

TC Energy 4th quarter 2019 financial results 

Full PDF version

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Earlier: 

TC ENERGY NET INCOME $928 MLN
2019, November, 5, 14:05:00
TC ENERGY NET INCOME $928 MLN
TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced net income attributable to common shares for third quarter 2019 of $739 million or $0.79 per share compared to net income of $928 million or $1.02 per share for the same period in 2018. Comparable earnings for third quarter 2019 were $970 million or $1.04 per common share compared to $902 million or $1.00 per common share in 2018.
 
 TC ENERGY NET INCOME $1.1 BLN
2019, August, 2, 11:15:00
TC ENERGY NET INCOME $1.1 BLN
TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) 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.
 
 TC ENERGY SELLS $2.87 BLN
2019, July, 31, 13:25:00
TC ENERGY SELLS $2.87 BLN
TC Energy Corporation (TSX:TRP) (NYSE:TRP) (TC Energy) announced that it has entered into an agreement through its wholly-owned subsidiary, TransCanada Energy Ltd., to sell interests in three Ontario natural gas-fired power plants to a subsidiary of Ontario Power Generation Inc., for approximately $2.87 billion.

 

Tags: TC ENERGY, TRANSCANADA