• Comparable EBITDA Growth: Increased by 6% compared to 2023.
• Net Capital Expenditures: Reduced by 10%.
• Quarterly EBITDA Growth (Power & Energy Solutions): Increased by 28%.
• Comparable Earnings: $1.1 billion, 8% lower than Q4 2023.
• Record EBITDA from Continuing Operations: Over $10 billion in 2024.
• 2025 Comparable EBITDA Outlook: $10.7 billion to $10.9 billion, a 7% to 9% increase year-over-year.
• Debt-to-EBITDA Ratio: 4.8 times at year-end 2024.
• Dividend Increase: 3.3% increase to $0.85 per common share, $3.40 annualized.

• Warning! GuruFocus has detected 10 Warning Signs with TRP.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TC Energy Corp (NYSE:TRP) reported the best safety performance in the past five years, which is believed to drive superior operational and financial results.
• The company increased comparable EBITDA from continuing operations by 6% compared to 2023.
• Successfully completed the spinoff of the liquids business and declared commercial service for Coastal GasLink.
• Placed $7 billion of assets into service while reducing net capital expenditures by 10%, with additional capital reductions identified for 2026 and 2027.
• Announced five new growth projects with attractive build multiples, including investments in coal-to-gas conversions and energy storage projects.

Negative Points

• Comparable earnings were 8% lower than the fourth quarter of 2023, primarily due to higher interest expenses and one-time charges.
• The company faces potential impacts from ongoing trade negotiations and tariffs between the US, Canada, and Mexico.
• Prolonged tariffs could impact capital allocation decisions, although the company is working to mitigate these risks.
• The company's debt-to-EBITDA ratio was slightly above the target due to FX timing differentials.
• There is uncertainty around the timing and cost of bringing mothballed capacity on the Canadian Mainline back into service.

Q & A Highlights

Q: Can you provide an update on the Southeast Gateway project, specifically regarding the in-service date and any potential delays with interconnecting pipelines? A: (Stanley Chapman, Executive Vice President and Group Executive, U.S. and Mexico Natural Gas Pipelines) The in-service date for Southeast Gateway is set for May 1, which aligns with our guidance. The CFE has received budgetary approvals to fund the project from this date. The interconnecting pipelines, such as the Meyoken pipeline, are expected to be completed in phases, with full connectivity by Q3 2027. We are aligned with CFE on the May 1 in-service date.

Q: How does TC Energy view the potential for integrated gas-to-power projects, especially with the rise in data center demand? A: (Francois Poirier, President, Chief Executive Officer, Director) We are exploring opportunities to offer bundled solutions that include both pipeline infrastructure and power generation. While we are not looking to grow an independent power producer business, we are interested in projects that complement our existing operations. We are very bullish on data center demand and are actively engaging with stakeholders to develop solutions.

Q: What are the next steps for the Bruce C nuclear project, and how does it fit into your long-term strategy? A: (Francois Poirier, President, Chief Executive Officer, Director) Bruce C is in the early stages of development, with several years of assessment work ahead. We are bullish on nuclear's role in Ontario's energy future, given the projected capacity shortfall. However, we would not take on significant cost or schedule risk for new builds, preferring a cost-of-service model.

Q: How is TC Energy addressing its leverage and balance sheet concerns, particularly with S&P's recent rating outlook? A: (Sean O'Donnell, Chief Financial Officer, Executive Vice President, Director) We are focused on delivering projects on time and within budget, which is crucial for our deleveraging efforts. Our capital plan remains within the $6 billion to $7 billion range, and we are committed to maintaining our financial discipline to improve our credit outlook.

Q: Can you elaborate on the potential impact of tariffs on TC Energy's capital allocation decisions? A: (Francois Poirier, President, Chief Executive Officer, Director) While prolonged tariffs could influence capital allocation, the majority of our future discretionary capital is directed towards U.S. projects, which are less affected by tariffs. We are monitoring the situation and will adjust our strategies as needed to ensure competitive project execution.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.