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2020-05-06 11:45:00

TC ENERGY NET INCOME $1.15 BLN

TC ENERGY NET INCOME $1.15 BLN

TC ENERGYMay 01, 2020  — TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today 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. Comparable earnings for first quarter 2020 were $1.1 billion or $1.18 per common share compared to $1.0 billion or $1.07 per common share in 2019. TC Energy's Board of Directors also declared a quarterly dividend of $0.81 per common share for the quarter ending June 30, 2020, equivalent to $3.24 per common share on an annualized basis.

“We are living in unprecedented times with the COVID-19 pandemic having a significant impact on millions of people around the world,” said Russ Girling, TC Energy’s President and Chief Executive Officer. “On behalf of everyone at TC Energy, I’d like to express my appreciation to all the front-line health care and other essential service workers who are risking their personal well-being to ensure that testing, treatment and care is provided to those directly impacted by COVID-19. We also offer our equally sincere gratitude to those ensuring that critical delivery systems and supply chains continue to operate. Your selfless acts to keep people safe, fed and comfortable during this difficult time are truly courageous.

“At TC Energy, we remain focused on the health and safety of our employees, contractors and the communities in which we operate and on maintaining the reliability of our critical energy delivery systems,” continued Girling. “Business continuity plans were implemented across all of our operations in early March and we continue to effectively operate our assets and execute on our capital programs which are essential to meeting the energy needs of people across North America.

“The availability of our infrastructure has remained largely unimpacted by recent events with utilization levels robust and in line with historical norms. With approximately 95 per cent of our comparable EBITDA generated from regulated assets and/or long-term contracts, we are largely insulated from short-term volatility associated with volume throughput and commodity prices,” added Girling. “During the first quarter of 2020, our diversified portfolio continued to perform very well. Comparable earnings per share increased 10 per cent compared to the same period last year while comparable funds generated from operations of $2.1 billion were 17 per cent higher. The increases reflect the robust performance of our legacy assets and contributions from the approximately $1.6 billion of capacity projects that have entered service to date in 2020.”

Despite near-term market uncertainty, we continue to believe that access to abundant, responsibly-produced energy from one of the world’s largest reserves and a country with top ESG performance will be crucial to North America’s economy, energy security and standard of living over the longer term. As a result, at the end of March, the Company announced that it was moving forward with construction of the Keystone XL pipeline project which will require an additional investment of approximately US$8.0 billion. The pipeline is expected to enter service in 2023 and will play a critical role in connecting the world's third largest oil reserves in the Canadian oil sands with the continent's largest refining market in the U.S. Gulf Coast. It is underpinned by new 20-year contracts for 575,000 barrels per day that are expected to generate approximately US$1.3 billion of incremental EBITDA on an annual basis when the pipeline enters service. TC Energy has partnered with the Government of Alberta who will invest approximately US$1.1 billion in equity and fully guarantee a US$4.2 billion project-level credit facility through construction. Once the project is completed and placed into service, the Company expects to acquire the Government of Alberta’s equity interest and refinance the credit facility.

“We appreciate the ongoing backing of landowners, customers, Indigenous groups and numerous partners in the U.S. and Canada who helped us secure project support and key regulatory approvals as this important energy infrastructure project is poised to put thousands of people to work, generate substantial economic benefits and strengthen the continent’s energy security,” said Girling. “In addition, we thank the many government officials across North America for their advocacy without which, individually and collectively, this project could not have advanced.”

While capital markets conditions have been significantly impacted by COVID-19, over the course of April, the Company has enhanced its liquidity by in excess of $9 billion through offerings of $2.0 billion of medium term notes in Canada and US$1.25 billion of senior unsecured notes in the U.S., establishment of an incremental US$2.0 billion of committed credit facilities and completion of the $2.8 billion sale of its Ontario natural gas-fired power plants. This is expected to be further supplemented by funds received from closing the Coastal GasLink joint venture and project financing transactions in the second quarter.

“Our strong financial position and continued access to capital markets will enable us to prudently fund our now $43 billion secured capital program in a manner that is consistent with maintaining our solid credit ratings and targeted credit metrics," added Girling. "Once completed, approximately 98 per cent of the Company’s consolidated 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."

Highlights

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

  • First quarter 2020 financial results
    ◦   Net income attributable to common shares of $1.15 billion or $1.22 per common share
    ◦   Comparable earnings of $1.1 billion or $1.18 per common share
    ◦   Comparable EBITDA of $2.5 billion
    ◦   Net cash provided by operations of $1.7 billion
    ◦   Comparable funds generated from operations of $2.1 billion
  • Declared a quarterly dividend of $0.81 per common share for the quarter ending June 30, 2020
  • Placed approximately $1.5 billion of NGTL System and $0.1 billion of Canadian Mainline capacity projects in service
  • Completed construction and commissioning activities and placed Napanee in service on March 13
  • Continued construction activities on the $6.6 billion Coastal GasLink pipeline and advanced funding plans for the project
  • Announced on March 31 that we will build Keystone XL and commenced construction in April
  • Received approval for all elements of the NGTL System Rate Design and Services Application in March
  • Received approval for the Canadian Mainline's six-year negotiated settlement in April
  • Reached a five-year negotiated revenue requirement settlement for the NGTL System on April 24
  • Completed the sale of the Ontario natural gas-fired power plants for net proceeds of $2.8 billion on April 29
  • Issued $2.0 billion of seven-year fixed-rate medium term notes and US$1.25 billion of 10-year fixed-rate senior unsecured notes and arranged for an additional US$2.0 billion of committed credit facilities in April 2020.

Net income attributable to common shares increased by $144 million or $0.13 per common share to $1.15 billion or $1.22 per share for the three months ended March 31, 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. First quarter 2020 results included an income tax valuation allowance release of $281 million following our reassessment of deferred tax assets that are deemed more likely than not to be realized as a result of our decision to proceed with the Keystone XL project, and an incremental after-tax loss of $77 million related to the Ontario natural gas-fired power plant assets held for sale. First quarter 2019 results included an after-tax loss of $12 million related to the U.S. Northeast power marketing contracts which were sold in May 2019. 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 these transactions or adjustments to be a part of our underlying operations.

Comparable EBITDA increased by $152 million for the three months ended March 31, 2020 compared to the same period in 2019 primarily due to the net effect of the following:

  • increased contribution from Mexico Natural Gas Pipelines mainly due to higher earnings from our investment in the Sur de Texas pipeline which was placed into service in September 2019. This includes revenues of US$55 million from one-time fees earned from the Sur de Texas joint venture associated with our successful completion of the pipeline compared to contract targets
  • higher contribution from U.S. Natural Gas Pipelines primarily due to incremental earnings from the Columbia Gas and Columbia Gulf growth projects placed in service in 2019, offset in part by the sale of certain Columbia midstream assets in August 2019
  • higher Power and Storage earnings mainly attributable to increased Bruce Power results due to a higher realized power price and generation volumes as well as incremental earnings from Napanee which was placed in service on March 13, 2020. These increases were partially offset by losses in Bruce Power on funds invested for post-retirement benefits and lower earnings in Canadian Power largely as a result of an outage at our Mackay River cogeneration facility and the sale of our Coolidge generating station in May 2019
  • higher contribution from Canadian Natural Gas Pipelines primarily resulting from increased rate base earnings, flow-through depreciation and financial charges on the NGTL System from additional facilities placed in service, partially offset by lower flow-through income taxes on both the NGTL System and the Canadian Mainline
  • decreased contribution from Liquids Pipelines due to lower uncontracted volumes on the Keystone Pipeline System, lower contributions from liquids marketing activities and decreased earnings as a result of the sale of an 85 per cent equity interest in Northern Courier in July 2019.

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 increased by $122 million or $0.11 per common share for the three months ended March 31, 2020 compared to the same period in 2019 and was primarily the net effect of:

  • changes in comparable EBITDA described above
  • lower allowance for funds used during construction (AFUDC) primarily due to Columbia Gas growth projects placed in service and the suspension of recording AFUDC on the Tula project due to continuing construction delays
  • higher depreciation largely in Canadian Natural Gas Pipelines and U.S. Natural Gas Pipelines reflecting new projects placed in service. 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
  • higher Interest income and other primarily from unrealized foreign exchange gains on peso-denominated deferred income tax liabilities reflecting the weakening of the Mexican peso in first quarter 2020
  • a decrease in income tax expense due to lower flow-through income taxes on Canadian rate-regulated pipelines, partially offset by lower foreign income tax rate differentials.

Comparable earnings per common share for the three months ended March 31, 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 were put 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. At the current time, our businesses are broadly considered essential or critical businesses in Canada, the United States and Mexico given the important role our infrastructure plays in delivering energy to North American markets. We anticipate that changes to work practices and other restrictions put in place by government and health authorities in response to COVID-19 will have an impact on certain projects. We generally believe this will not be material, but the ultimate impact is uncertain at this time.

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 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 utilization of our assets. While it is too early to ascertain any long-term impact that COVID-19 may have on our capital program, directionally we expect some slowdown of our construction activities and capital expenditures in 2020.

Capital market conditions in 2020 have been significantly impacted by COVID-19 resulting in periods of heightened volatility and reduced liquidity. Despite these challenging conditions, we secured in excess of $9 billion of incremental liquidity in April 2020, demonstrating our continued access to capital markets under stressed conditions. Combined with our predictable and growing cash flows from operations, cash on hand, substantial committed credit facilities, and various other financing levers available to us, we believe we are well positioned to continue to fund our obligations, capital program and dividends through a prolonged period of disruption, should it occur.

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

 

Full PDF version

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Earlier:

TC ENERGY INVESTMENT $8 BLN
2020, April, 1, 12:20:00
TC ENERGY INVESTMENT $8 BLN
TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) today announced that it will proceed with construction of the Keystone XL Pipeline Project (the Project), resulting in an investment of approximately US$8.0 billion into the North American economy.
 
 TC ENERGY NET INCOME $4 BLN
2020, February, 14, 11:30:00
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TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) 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.
 
 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.

 

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