TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company)
released its third quarter results today. François Poirier, TC
Energy’s President and Chief Executive Officer commented, “During
the third quarter, we made monumental progress on Coastal GasLink
and have achieved mechanical completion ahead of our year-end
target. The team’s exceptional safety and construction execution on
this challenging project means that we have reached 100 per cent
pipeline installation, including the successful hydrotesting of the
full 670 km pipeline length. The project remains on track with the
approximately $14.5 billion cost estimate." Poirier continued, "We
are also delivering on our 2023 strategic priorities, including
strengthening the balance sheet with the recent receipt of $5.3
billion of asset sale proceeds that will be utilized for debt
repayment and funding, along with maximizing the value of our
assets with the announced intention to spin off our Liquids
Pipelines business. Our focus on safety and the reliability of our
assets continues to deliver strong year-over-year growth, and we
remain on track to deliver a record year for 2023 comparable EBITDA
despite macroeconomic headwinds.”
Highlights
(All financial figures are unaudited and in
Canadian dollars unless otherwise noted)
- Delivered approximately seven per cent comparable EBITDA1
growth of $2.6 billion in third quarter 2023 compared to $2.5
billion in third quarter 2022. Segmented earnings were $0.6 billion
in third quarter 2023 compared to $1.8 billion in third quarter
2022, largely due to the after-tax impairment charge of $1,179
million for the three months ended September 30, 2023 related to TC
Energy's equity investment in Coastal GasLink Pipeline Limited
Partnership (Coastal GasLink LP)
- Third quarter 2023 results were underpinned by solid
utilization and reliability across our assets. While our Natural
Gas Pipelines business does not carry material volumetric or price
risk, strong utilization rates demonstrate the demand for our
services and the longer-term criticality of our assets
- NGTL System receipts averaged 14.0 Bcf/d, up 0.5 Bcf/d from
third quarter 2022
- NGTL System daily receipts reached 14.6 Bcf on August 6, 2023,
the highest single day average on the pipeline
- U.S. Natural Gas Pipelines LNG deliveries averaged 3.1 Bcf/d,
up 1.4 per cent from third quarter 2022
- U.S. Natural Gas Pipelines business achieved a new record of
deliveries to power generators of 5.2 Bcf on July 28, 2023
- Gas Transmission Northwest (GTN) system achieved an all-time
delivery record of 2.96 Bcf on July 25, 2023
- Keystone Pipeline System achieved 93.7 per cent operational
reliability year-to-date
- Successfully completed two open seasons on Marketlink,
supporting the sustained demand for Canadian crude on the Keystone
Pipeline and Marketlink systems
- Alberta cogeneration power plant fleet achieved approximately
98 per cent peak price availability
- Bruce Power achieved 94 per cent availability and successfully
completed the Unit 6 Major Component Replacement (MCR) within
budget and ahead of schedule
- Third quarter 2023 financial results:
- Net losses attributable to common shares of $0.2 billion or
$0.19 per common share compared to net income of $0.8 billion or
$0.84 per common share in third quarter 2022. Comparable earnings2
of $1.0 billion or $1.00 per common share compared to $1.1 billion
or $1.07 per common share in 2022
- Comparable EBITDA of $2.6 billion compared to $2.5 billion in
2022 and segmented earnings of $0.6 billion compared to $1.8
billion in 2022
- Reflecting strong year-to-date operational and financial
performance, we now expect 2023 comparable EBITDA to be at the
upper end of the five to seven per cent outlook compared to 2022,
while 2023 comparable earnings per common share is expected to be
generally consistent with 2022
- Year to date, we have placed approximately $5 billion of
projects into service on our natural gas and liquids pipeline
systems, as well as the Bruce Power Unit 6 MCR which was declared
commercially operational on September 14, 2023
- Placed the lateral section of the Villa de Reyes (VdR) pipeline
in commercial service
- Placed substantially all assets of the NGTL System/Foothills
West Path Delivery Program into service on November 1, 2023
- On October 4, 2023, we successfully completed the sale of a 40
per cent non-controlling equity interest in Columbia Gas
Transmission, LLC (Columbia Gas) and Columbia Gulf Transmission,
LLC (Columbia Gulf) systems to Global Infrastructure Partners (GIP)
for total cash proceeds of $5.3 billion (US$3.9 billion), which
were directed towards reducing leverage
- Coastal GasLink has achieved mechanical completion, ahead of
its year-end target and the project remains on track with the cost
estimate of approximately $14.5 billion
- The Southeast Gateway Pipeline project continues to progress to
our US$4.5 billion cost estimate and schedule. Land rights and
rights of way negotiations have closed and all critical permits for
onshore construction have been received. We are advancing
construction of on-shore facilities and landfalls. Offshore
engineering is complete and offshore installation expected to
commence prior to the end of 2023
- Approved the Bison XPress expansion project on Northern Border
and Bison systems that will replace and upgrade certain facilities
and provide production egress from the Bakken basin to a delivery
point at the Cheyenne Hub
- GTN XPress project received FERC approval to expand the GTN
system that will provide for the transport of incremental
contracted export capacity facilitated by the NGTL System/Foothills
West Path Delivery Program
- John E. Lowe will be appointed as TC Energy's Board Chair,
effective January 1, 2024
- Progressing proposed Liquids Pipelines spinoff with the
announcement of the Board Chair and company name, South Bow
Corporation
- Declared a quarterly dividend of $0.93 per common share for the
quarter ending December 31, 2023.
|
|
three months ended September 30 |
|
nine months ended September 30 |
(millions of $, except per share amounts) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Income |
|
|
|
|
|
|
|
|
Net income (loss) attributable
to common shares |
|
|
(197 |
) |
|
|
841 |
|
|
|
1,366 |
|
|
|
2,088 |
|
per common share – basic |
|
($0.19 |
) |
|
$0.84 |
|
|
$1.33 |
|
|
$2.11 |
|
|
|
|
|
|
|
|
|
|
Segmented earnings
(losses) |
|
|
|
|
|
|
|
|
Canadian Natural Gas
Pipelines |
|
|
(799 |
) |
|
|
409 |
|
|
|
(782 |
) |
|
|
1,152 |
|
U.S. Natural Gas
Pipelines |
|
|
782 |
|
|
|
714 |
|
|
|
2,576 |
|
|
|
1,735 |
|
Mexico Natural Gas
Pipelines |
|
|
210 |
|
|
|
113 |
|
|
|
646 |
|
|
|
395 |
|
Liquids Pipelines |
|
|
253 |
|
|
|
268 |
|
|
|
702 |
|
|
|
801 |
|
Power and Energy
Solutions |
|
|
234 |
|
|
|
289 |
|
|
|
741 |
|
|
|
535 |
|
Corporate |
|
|
(36 |
) |
|
|
(9 |
) |
|
|
(74 |
) |
|
|
12 |
|
Total segmented earnings (losses) |
|
|
644 |
|
|
|
1,784 |
|
|
|
3,809 |
|
|
|
4,630 |
|
|
|
|
|
|
|
|
|
|
Comparable
EBITDA |
|
|
|
|
|
|
|
|
Canadian Natural Gas
Pipelines |
|
|
781 |
|
|
|
713 |
|
|
|
2,301 |
|
|
|
2,038 |
|
U.S. Natural Gas
Pipelines |
|
|
968 |
|
|
|
926 |
|
|
|
3,160 |
|
|
|
2,948 |
|
Mexico Natural Gas
Pipelines |
|
|
232 |
|
|
|
204 |
|
|
|
597 |
|
|
|
542 |
|
Liquids Pipelines |
|
|
398 |
|
|
|
332 |
|
|
|
1,078 |
|
|
|
1,002 |
|
Power and Energy
Solutions |
|
|
256 |
|
|
|
295 |
|
|
|
754 |
|
|
|
704 |
|
Corporate |
|
|
(3 |
) |
|
|
(9 |
) |
|
|
(9 |
) |
|
|
(16 |
) |
Comparable EBITDA |
|
|
2,632 |
|
|
|
2,461 |
|
|
|
7,881 |
|
|
|
7,218 |
|
Depreciation and amortization |
|
|
(690 |
) |
|
|
(653 |
) |
|
|
(2,061 |
) |
|
|
(1,914 |
) |
Interest expense included in
comparable earnings |
|
|
(865 |
) |
|
|
(666 |
) |
|
|
(2,413 |
) |
|
|
(1,866 |
) |
Allowance for funds used
during construction |
|
|
164 |
|
|
|
116 |
|
|
|
443 |
|
|
|
254 |
|
Foreign exchange gains
(losses), net included in comparable earnings |
|
|
(25 |
) |
|
|
6 |
|
|
|
78 |
|
|
|
32 |
|
Interest income and other
included in comparable earnings |
|
|
63 |
|
|
|
35 |
|
|
|
157 |
|
|
|
93 |
|
Income tax (expense) recovery
included in comparable earnings |
|
|
(220 |
) |
|
|
(202 |
) |
|
|
(749 |
) |
|
|
(554 |
) |
Net (income) loss attributable
to non-controlling interests |
|
|
(1 |
) |
|
|
(8 |
) |
|
|
(18 |
) |
|
|
(28 |
) |
Preferred share dividends |
|
|
(23 |
) |
|
|
(21 |
) |
|
|
(69 |
) |
|
|
(85 |
) |
Comparable earnings |
|
|
1,035 |
|
|
|
1,068 |
|
|
|
3,249 |
|
|
|
3,150 |
|
Comparable earnings per common share |
|
$1.00 |
|
|
$1.07 |
|
|
$3.16 |
|
|
$3.19 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operations |
|
|
1,824 |
|
|
|
1,701 |
|
|
|
5,408 |
|
|
|
4,350 |
|
Comparable funds generated
from operationsi |
|
|
1,755 |
|
|
|
1,637 |
|
|
|
5,575 |
|
|
|
5,068 |
|
Capital spendingii |
|
|
3,289 |
|
|
|
2,594 |
|
|
|
9,313 |
|
|
|
5,822 |
|
|
|
|
|
|
|
|
|
|
Dividends
declared |
|
|
|
|
|
|
|
|
per common share |
|
$0.93 |
|
|
$0.90 |
|
|
$2.79 |
|
|
$2.70 |
|
|
|
|
|
|
|
|
|
|
Basic common shares
outstanding (millions) |
|
|
|
|
|
|
|
|
– weighted average for the
period |
|
|
1,035 |
|
|
|
1,000 |
|
|
|
1,028 |
|
|
|
988 |
|
–
issued and outstanding at end of period |
|
|
1,037 |
|
|
|
1,012 |
|
|
|
1,037 |
|
|
|
1,012 |
|
i Comparable funds generated from operations is a
non-GAAP measure used throughout this release. This measure does
not have any standardized meaning under GAAP and therefore is
unlikely to be comparable in similar measures presented by other
companies. The most directly comparable GAAP measure is Net cash
provided by operations. For more information on non-GAAP measures,
refer to the Non-GAAP Measures section of this
release. ii Includes Capital expenditures, Capital
projects in development and Contributions to equity investments.
Refer to the Financial condition – Cash (used in) provided by
investing activities section for additional information.
CEO Message
In the third quarter of 2023, we made significant
progress towards our 2023 strategic priorities that include safely
executing on major projects including Coastal GasLink and Southeast
Gateway, bringing other capacity capital projects into service,
accelerating our deleveraging by advancing our $5+ billion asset
divestiture program, and continuing to maximize the value and
performance of our assets through safe operations and reliable
service.
Project execution: Coastal GasLink achieves
mechanical completion, while continuing to advance Southeast
GatewayWe are pleased to announce that the Coastal GasLink
project has achieved mechanical completion ahead of our year-end
target. In October, the project achieved 100 per cent pipe
installation following the final weld at the base of Cable Crane
Hill. This monumental milestone includes the installation of all
800 water crossings and the successful hydrotesting of the full
length of the 670 km pipeline. Achieving mechanical completion
allows us to safely commence the introduction of natural gas. With
the most challenging work completed, we have substantially
mitigated the remaining risks associated with the project, and with
the cost estimate of approximately $14.5 billion remains on track.
Throughout the remainder of 2023, the project will complete
pipeline commissioning activities to be ready to deliver
commissioning gas to the LNG Canada facility by the end of the
year, and we will continue reclamation work in 2024. In Mexico, our
team made important progress on the Southeast Gateway Pipeline
project. Land rights and rights of way negotiations have closed,
and all critical permits for onshore construction have been
received. Onshore construction at the three landfall sites
continues to progress on plan, with all land acquisitions complete.
Offshore engineering is complete and concrete coating is on track,
supporting offshore installation which is expected to commence
prior to the end of 2023. We also placed the lateral section of the
VdR pipeline into commercial service, serving power generation in
the state of Guanajuato. With the support of the Comisión Federal
de Electricidad (CFE) and state governments, we are targeting the
south section of VdR to be in-service by the second half of
2024.
Accelerating deleveraging by advancing our
$5+ billion asset divestiture programOn October 4, we
announced the successful completion of the sale of a 40 per cent
non-controlling equity interest in our Columbia Gas and Columbia
Gulf systems to GIP, for total cash proceeds of $5.3 billion
(US$3.9 billion). Cash proceeds from this transaction were directed
towards reducing our year-end 2023 debt-to-EBITDA3 metric by over
0.4 times. Closing of this transaction is a major step towards
reaching TC Energy’s 2024 year-end leverage target of 4.75 times
debt-to-EBITDA. As we announced in July, we continue to evaluate an
incremental $3 billion of capital rotation opportunities to further
support our deleveraging targets. Collectively, these actions are
expected to enable TC Energy to continue strengthening its balance
sheet and reinforce long-term, sustainable annual dividend growth
of three to five per cent.
Demand for our services during nine months
of the year drives nine per cent year-over-year growth in
comparable EBITDAStrong operational performance during the
third quarter is a testament to our ability to safely and reliably
deliver essential services across North America. Within our
integrated Natural Gas Pipelines business, total NGTL System
receipts averaged 14.0 Bcf/d and the NGTL System achieved record
single-day receipts of 14.6 Bcf on August 6. U.S. Natural Gas
(USNG) LNG deliveries averaged 3.1 Bcf/d during the quarter, up 1.4
per cent compared to third quarter 2022, and our USNG business
achieved a new record for deliveries to power generators of 5.2 Bcf
on July 28. Our GTN system also achieved an all-time delivery
record of 2.96 Bcf on July 25. In October, FERC approved our GTN
XPress project, an expansion of the GTN system that will provide
for incremental contracted export capacity facilitated by the NGTL
System/Foothills West Path Delivery Program with an anticipated
in-service date in 2024. The Liquids Pipelines business has
delivered approximately eight per cent comparable EBITDA growth
year-to-date compared 2022. Ensuring the continued delivery of all
contracted volumes, the Keystone Pipeline System has achieved 93.7
per cent operational reliability year-to-date. Marketlink
throughput increased over 250,000 Bbl/d year-over-year, driven by
strong demand and additional last-mile connectivity. Throughout the
year we have successfully completed two open seasons on Marketlink,
supporting the sustained demand for Canadian crude on the Keystone
Pipeline and Marketlink systems. Within Power and Energy Solutions,
the Alberta cogeneration power plant fleet reached approximately 98
per cent peak price availability, while Bruce Power achieved 94 per
cent availability in the quarter. Highlighting our shared
commitment to project execution, Bruce Power announced the
successful completion of the Unit 6 MCR within budget and ahead of
schedule. Unit 6 has fully returned to service, achieving a
significant milestone in Ontario’s largest clean-energy initiative
and one of Canada’s largest infrastructure projects.
2023 outlook and dividend
declarationReflecting strong year-to-date operational and
financial performance, we now expect 2023 comparable EBITDA to be
at the upper end of the five to seven per cent outlook compared to
2022 and 2023 comparable earnings per share to be generally
consistent with 2022. Total capital expenditures for 2023 are now
expected to be approximately $12.0 billion to $12.5 billion. While
the estimated capital costs associated with our major projects
remains consistent, the increase from the range as outlined in our
2022 Annual Report is primarily related to shifts in timing for
some of our growth projects and maintenance capital expenditures in
our natural gas pipelines businesses, as well as the foreign
exchange impact of a stronger U.S. dollar. We continue to work on
cost mitigation strategies and assess developments in our
construction projects and market conditions for changes to our
overall capital program. To date, we have placed approximately $5
billion of assets into service on budget, further supporting
comparable EBITDA growth. Beyond 2024, we remain committed to
limiting annual sanctioned net capital expenditures to $6 billion
to $7 billion. At this level, we believe we can continue to grow
our business at a commensurate rate with our dividend growth
outlook of three to five per cent, while also providing the
optionality to further reduce leverage and/or return incremental
capital to shareholders. TC Energy’s Board of Directors declared a
quarterly dividend of $0.93 per common share for the quarter ending
December 31, 2023, equating to $3.72 on an annualized basis.
Executing on commitment of enhanced
governanceOn November 8, TC Energy announced on behalf of
its Board of Directors that John E. Lowe will be appointed as Chair
of the Board, effective January 1, 2024. Delivering on his
commitment to align with TC Energy’s revised governance guidelines
regarding board commitments as outlined in the 2023 Management
Information Circular, Siim A. Vanaselja has announced he will be
stepping down as Board Chair effective December 31, 2023. Mr.
Vanaselja joined the Board of Directors in 2014 and was appointed
as Board Chair in 2017. He will continue to serve as a valued
member of the Board to ensure an orderly succession and allow TC
Energy the continued benefit of his expertise. Mr. Lowe has been a
member of TC Energy’s Board of Directors since 2015 and currently
serves as Chair of the Governance committee, a member of the
Health, Safety, Sustainability and Environment committee, and has
previously served as Chair of the Audit committee. Mr. Lowe’s
extensive governance experience is paired with over 25 years of
various executive and management positions within the midstream and
energy industry.
Progressing our proposed Liquids Pipelines
spinoffWe have already achieved significant milestones in
the few short months following our July 27 announcement to spin off
our Liquids Pipelines business to create two independent,
investment-grade, publicly listed companies. First, we announced
that Hal Kvisle has agreed to be appointed as Chair of South Bow
Corporation Board of Directors. Hal has extensive industry
experience and intimate knowledge of TC Energy’s highly competitive
North American liquids system. Second, we remain on track with all
major separation activities to successfully execute the transaction
during the second half of 2024, including required regulatory and
tax status applications. And third, we are excited to announce
South Bow Corporation as the name of the new Liquids Pipeline
Company. This name symbolizes the historical roots of the company
in Alberta, Canada, while acknowledging the pipeline system's
strategic corridor, which enables the company to deliver a premium
service to the strongest U.S. demand markets. This
symbolism—grounded in history and pointing towards our future—is
reflective of the new company's vision, which is rooted in safety
and operational excellence and guided by a team dedicated to
providing highly competitive service to our customers and
ultimately, North America.
The series of announcements TC Energy has made in
recent months are complementary efforts. When taken together,
spinning off the Liquids Pipelines business, integrating our
natural gas businesses and advancing deleveraging targets through
asset sales, all directly serve our long-term strategy and
commitment to maximizing the value of our assets. As we look
forward, we are aligning our portfolio mix and strategy to protect
and enhance the value of our strategic corridors to deliver long
term enduring shareholder value.
Teleconference and WebcastWe will
hold a teleconference and webcast on Wednesday, November 8,
2023 at 6:30 a.m. (MST) / 8:30 a.m. (EST) to discuss our third
quarter 2023 financial results and company developments. Presenters
will include François Poirier, President and Chief Executive
Officer; Joel Hunter, Executive Vice-President and Chief Financial
Officer; and other members of the executive leadership team.
Members of the investment community and other
interested parties are invited to participate by calling
1.800.319.4610. No passcode is required. Please
dial in 15 minutes prior to the start of the call. Alternatively,
participants may pre-register for the call here. Upon registering,
you will receive a calendar booking by email with dial in details
and a unique PIN. This process will bypass the operator and avoid
the queue. Registration will remain open until the end of the
conference call.
A live webcast of the teleconference will be
available on TC Energy's website at www.TCEnergy.com/events or
via the following URL: https://www.gowebcasting.com/12930. The
webcast will be available for the replay following the meeting.
A replay of the teleconference will be available
two hours after the conclusion of the call until midnight EST on
November 15, 2023. Please call 1.855.669.9658 and enter passcode
0502.
The unaudited interim Condensed
consolidated financial statements and Management’s Discussion and
Analysis (MD&A) are available on our website at
www.TCEnergy.com and will be filed
today under TC Energy's profile on SEDAR+ at
www.sedarplus.ca and with the U.S.
Securities and Exchange Commission on EDGAR at
www.sec.gov.
About TC EnergyWe’re a team of
7,000+ energy problem solvers working to move, generate and store
the energy North America relies on. Today, we’re taking action to
make that energy more sustainable and more secure. We’re innovating
and modernizing to reduce emissions from our business. And, we’re
delivering new energy solutions – from natural gas and renewables
to carbon capture and hydrogen – to help other businesses and
industries decarbonize too. Along the way, we invest in communities
and partner with our neighbours, customers and governments to build
the energy system of the future.
TC Energy's common shares trade on the Toronto
(TSX) and New York (NYSE) stock exchanges under the symbol TRP. To
learn more, visit us at www.TCEnergy.com
Forward-Looking InformationThis
release contains certain information that is forward-looking and is
subject to important risks and uncertainties and is based on
certain key assumptions. Forward-looking statements are usually
accompanied by words such as "anticipate", "expect", "believe",
"may", "will", "should", "estimate" or other similar words.
Forward-looking statements in this document may include, but are
not limited to, statements on the progress of Coastal GasLink,
Southeast Gateway and GTN XPress projects, including mechanical
completion, offshore installations and in-service dates, our
projected comparable EBITDA and debt-to-EBITDA leverage metrics for
2023 and 2024, our targeted leverage metrics, and our expected
capital expenditures and dividend outlook and the proposed Liquids
Pipelines spinoff, including the structure, conditions, timing and
tax effect thereof. Our forward-looking information is subject to
important risks and uncertainties and is based on certain key
assumptions. Forward-looking statements in this document are
intended to provide TC Energy security holders and potential
investors with information regarding TC Energy and its
subsidiaries, including management's assessment of TC Energy's and
its subsidiaries' future plans and financial outlook. All
forward-looking statements reflect TC Energy's beliefs and
assumptions based on information available at the time the
statements were made and as such are not guarantees of future
performance. As actual results could vary significantly from the
forward-looking information, you should not put undue reliance on
forward-looking information and should not use future-oriented
information or financial outlooks for anything other than their
intended purpose. We do not update our forward-looking information
due to new information or future events, unless we are required to
by law. For additional information on the assumptions made, and the
risks and uncertainties which could cause actual results to differ
from the anticipated results, refer to the most recent Quarterly
Report to Shareholders and the 2022 Annual Report filed under TC
Energy's profile on SEDAR+ at
www.sedarplus.ca and with the U.S. Securities
and Exchange Commission at www.sec.gov and
the "Forward-looking information" section of our Report on
Sustainability and our GHG Emissions Reduction Plan which are
available on our website at www.TCEnergy.com.
Non-GAAP MeasuresThis release
contains references to the following non-GAAP measures: comparable
EBITDA, comparable earnings, comparable earnings per common share
and comparable funds generated from operations. It also contains
references to debt-to-EBITDA, a non-GAAP ratio, which is calculated
using adjusted debt and adjusted comparable EBITDA, each of which
are non-GAAP measures. These non-GAAP measures do not have any
standardized meaning as prescribed by GAAP and therefore may not be
comparable to similar measures presented by other entities. These
non-GAAP measures are calculated by adjusting certain GAAP measures
for specific items we believe are significant but not reflective of
our underlying operations in the period. These comparable measures
are calculated on a consistent basis from period to period and are
adjusted for specific items in each period, as applicable except as
otherwise described in the Condensed consolidated financial
statements and MD&A. Refer to: (i) each business segment for a
reconciliation of comparable EBITDA to segmented earnings (losses);
(ii) Consolidated results section for reconciliations of comparable
earnings and comparable earnings per common share to Net income
attributable to common shares and Net income per common share,
respectively; and (iii) Financial condition section for a
reconciliation of comparable funds generated from operations to Net
cash provided by operations. Refer to the Non-GAAP Measures section
of the MD&A in our most recent quarterly report for more
information about the non-GAAP measures we use, the MD&A is
included in this release. The MD&A can be found on SEDAR+ at
www.sedarplus.ca under TC Energy's
profile.
With respect to non-GAAP measures used in the
calculation of debt-to-EBITDA, adjusted debt is defined as the sum
of Reported Total debt, including Notes payable, Long-term debt,
Current portion of long-term debt and Junior subordinated notes, as
reported on our Consolidated balance sheet as well as Operating
lease liabilities recognized on our Consolidated balance sheet and
50 per cent of Preferred shares as reported on our Consolidated
balance sheet due to the debt-like nature of their contractual and
financial obligations, less Cash and cash equivalents as reported
on our Consolidated balance sheet and 50 per cent of Junior
subordinated notes as reported on our Consolidated balance sheet
due to the equity-like nature of their contractual and financial
obligations. Adjusted comparable EBITDA is calculated as comparable
EBITDA excluding operating lease costs recorded in Plant operating
costs and other in our Consolidated statement of income and
adjusted for Distributions received in excess of (income) loss from
equity investments as reported in our Consolidated statement of
cash flows which is more reflective of the cash flows available to
TC Energy to service our debt and other long-term commitments. We
believe that debt-to-EBITDA provides investors with useful
information as it reflects our ability to service our debt and
other long-term commitments. See the Reconciliation section for
reconciliations of adjusted debt and adjusted comparable EBITDA for
the years ended December 31, 2021 and 2022.
ReconciliationThe following is a
reconciliation of adjusted debt and adjusted comparable
EBITDAi.
|
|
year ended December 31 |
(millions of Canadian $) |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Reported total
debt |
|
58,300 |
|
|
52,766 |
|
Management adjustments: |
|
|
|
|
Debt treatment of preferred
sharesii |
|
1,250 |
|
|
1,744 |
|
Equity treatment of junior
subordinated notesiii |
|
(5,248 |
) |
|
(4,470 |
) |
Cash and cash equivalents |
|
(620 |
) |
|
(673 |
) |
Operating lease liabilities |
|
433 |
|
|
429 |
|
Adjusted debt |
|
54,115 |
|
|
49,796 |
|
|
|
|
|
|
Comparable EBITDAiv |
|
9,901 |
|
|
9,368 |
|
Operating lease cost |
|
106 |
|
|
105 |
|
Distributions received in excess of (income) loss from equity
investments |
|
(29 |
) |
|
77 |
|
Adjusted Comparable EBITDA |
|
9,978 |
|
|
9,550 |
|
|
|
|
|
|
Adjusted Debt/Adjusted Comparable EBITDAi |
|
5.4 |
|
|
5.2 |
|
i Comparable EBITDA is a non-GAAP measure.
Management methodology. Individual rating agency calculations will
differ.ii 50 per cent debt treatment on $2.5 billion of preferred
shares as of December 31, 2022.iii 50 per cent equity treatment on
$10.5 billion of junior subordinated notes as of December 31, 2022.
U.S. dollar-denominated notes translated at December 31, 2022,
U.S./Canada foreign exchange rate of 1.35.iv Comparable EBITDA is a
non-GAAP financial measure. See the Forward-looking information and
Non-GAAP measures sections for more information.
Media Inquiries:Media
Relationsmedia@tcenergy.com 403.920.7859 or 800.608.7859
Investor & Analyst
Inquiries: Gavin
Wylie / Hunter Mau
investor_relations@tcenergy.com 403.920.7911 or
800.361.6522
Download full report here:
https://www.tcenergy.com/siteassets/pdfs/investors/reports-and-filings/annual-and-quarterly-reports/2023/tc-2023-q3-quarterly-report.pdf
1 Comparable EBITDA is a non-GAAP measure used
throughout this news release. This measure does not have any
standardized meaning under GAAP and therefore is unlikely to be
comparable to similar measures presented by other companies. The
most directly comparable GAAP measure is Segmented earnings. For
more information on non-GAAP measures, refer to the Non-GAAP
Measures section of this news release.
2 Comparable earnings and comparable earnings per
common share are non-GAAP measures used throughout this news
release. These measures do not have any standardized meaning under
GAAP and therefore are unlikely to be comparable to similar
measures presented by other companies. The most directly comparable
GAAP measures are Net income attributable to common shares and Net
income per common share, respectively. For more information on
non-GAAP measures, refer to the Non-GAAP Measures section of this
news release.
3 Debt-to-EBITDA is a non-GAAP ratio. Adjusted debt
and adjusted comparable EBITDA are non-GAAP measures used to
calculate debt-to-EBITDA. See the Forward-looking information,
Non-GAAP measures and Reconciliation sections for more
information.
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