TC Energy reports record 2023 operating and financial results driven by solid execution

CALGARY, Alberta, Feb. 16, 2024 (GLOBE NEWSWIRE) -- TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) released its fourth quarter results today. François Poirier, TC Energy’s President and Chief Executive Officer commented, “By remaining focused on a clearly defined set of priorities emphasizing project execution, safety and operational excellence, we delivered record operational performance and financial results. 2023 marks one of the most transformational years for TC Energy – we reached mechanical completion on the Coastal GasLink pipeline project, announced our intention to spin off the Liquids Pipelines business and enhanced our financial strength through our asset divestiture program. Underpinned by our strong performance, TC Energy’s Board of Directors approved a dividend increase of 3.2 per cent for the quarter ending March 31, 2024, equivalent to $3.84 per common share on an annualized basis. This represents our twenty-fourth consecutive year of dividend growth.” Poirier continued, “As we look to 2024, our strategic priorities remain in pursuit of maximizing the value of our assets, safely executing our major projects on time and budget and further enhancing our balance sheet strength and flexibility.”

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

• Fourth quarter 2023 financial results:
  • Delivered approximately 16 per cent growth in comparable EBITDA¹ of $3.1 billion compared to $2.7 billion in fourth quarter 2022 and segmented earnings of $2.3 billion compared to segmented losses of $1.0 billion in fourth quarter 2022
  • Comparable earnings per common share¹ of $1.35 in fourth quarter 2023 increased 22 per cent compared to $1.11 in fourth quarter 2022 and net income per common share of $1.41 in fourth quarter 2023 compared to net loss per common share of $1.42 in fourth quarter 2022
• Year ended December 31, 2023 financial results:
  • Delivered approximately 11 per cent growth in 2023 comparable EBITDA of $11.0 billion compared to $9.9 billion in 2022 and segmented earnings of $6.1 billion compared to $3.6 billion in 2022
  • Five per cent increase in comparable earnings per common share of $4.52 in 2023 compared to $4.30 in 2022 and net income per common share of $2.75 in 2023 compared to $0.64 in 2022
• Strong fourth quarter 2023 results were underpinned by the continued reliability, availability and exceptional operational performance of our assets. While our Natural Gas Pipelines business is not exposed to material volumetric or commodity price risks, strong utilization rates demonstrate the demand for our services and the longer-term criticality of our assets
  • Total NGTL System deliveries averaged 14.5 Bcf/d, largely consistent relative to fourth quarter 2022
  • U.S. Natural Gas Pipelines deliveries to power generators continued to grow, setting a record of 2.8 Bcf/d during fourth quarter 2023, up 16 per cent relative to fourth quarter 2022
  • U.S. Natural Gas Pipelines daily average flows were 27.7 Bcf/d, in line with fourth quarter 2022
  • Gas Transmission Northwest (GTN) system achieved an all-time delivery record of 3.1 Bcf on November 11, 2023
  • The Keystone Pipeline System achieved approximately 92 per cent operational reliability during fourth quarter 2023
  • Continued strong demand across the Keystone Pipeline System
  • Bruce Power achieved approximately 85 per cent availability in fourth quarter 2023 reflecting a planned outage on Unit 8, and approximately 92 per cent overall availability in 2023, with Unit 6 returning to service in September 2023 ahead of schedule and within budget
  • Alberta cogeneration power plant fleet achieved 98.7 per cent availability
• Following mechanical completion, required pipeline commissioning activities were completed on the Coastal GasLink project and the pipeline was ready to deliver natural gas to the LNG Canada facility in fourth quarter 2023. These milestones entitle Coastal GasLink LP to receive a $200 million incentive payment from LNG Canada. In accordance with the contractual terms between the Coastal GasLink LP partners, this amount accrues in full to TC Energy as the project developer, was recorded in fourth quarter 2023 and was settled through a cash distribution on February 12, 2024
  • Excluding earnings from Coastal GasLink related to the recognition of the $200 million incentive payment, TC Energy delivered approximately nine per cent growth in comparable EBITDA in 2023 compared to 2022
• Reaffirming 2024 outlook:
  • Comparable EBITDA outlook for 2024 is expected to be $11.2 to $11.5 billion and remains consistent with our November 2023 Investor Day, with growth related to increased comparable EBITDA from the NGTL System due to the advancement of expansion programs, the full-year impact of projects placed into service in 2023, including Bruce Power Unit 6 which returned to service in September, along with new projects anticipated to be placed in service in 2024
  • Comparable earnings per common share is expected to be lower than 2023 due to the net impact of higher net income attributable to non-controlling interests as a result of 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) in 2023, partially offset by increased comparable EBITDA and higher AFUDC related to increased capital expenditures on the Southeast Gateway pipeline project
  • Our 2024 comparable EBITDA and comparable earnings per common share outlooks reflect a full year impact of contributions from the Liquids Pipelines business and does not take into consideration the potential impact of the $3.0 billion capital rotation program or proposed spinoff of the Liquids Pipelines business (the spinoff Transaction) that is subject to TC Energy shareholder and court approvals, favourable tax rulings, other regulatory approvals and satisfaction of other customary closing conditions
  • 2024 capital expenditures are anticipated to be approximately $8.5 to $9.0 billion on a gross basis including capitalized interest, or approximately $8.0 to $8.5 billion on a net basis after considering non-controlling interests. The majority of our 2024 program is focused on the advancement of the Southeast Gateway pipeline project, U.S. Natural Gas Pipelines projects, post-construction and reclamation activities on the Coastal GasLink pipeline project, the Bruce Power Major Component Replacement (MCR) programs, and normal course maintenance capital expenditures
• TC Energy’s Board of Directors approved a 3.2 per cent increase in the quarterly common share dividend to $0.96 per common share for the quarter ending March 31, 2024, equivalent to $3.84 per common share on an annualized basis
• Placed approximately $5.3 billion of projects in service in 2023 on budget, and expect to place approximately $7.0 billion of new projects in service in 2024
• Advanced our capital rotation program in 2023, with $3.0 billion of incremental asset sales expected to be completed by year end 2024
• Closed the sale of a 40 per cent non-controlling equity interest in Columbia Gas and Columbia Gulf to Global Infrastructure Partners (GIP) for total cash proceeds of $5.3 billion (US$3.9 billion). Preceding the close of the equity sale, on August 8, 2023, Columbia Pipelines Operating Company LLC and Columbia Pipelines Holding Company LLC issued US$4.6 billion and US$1.0 billion of long-term, senior unsecured debt, respectively. Net proceeds from the offerings were used to repay existing intercompany indebtedness with TC Energy entities and directed towards reducing leverage
• Named Van Dafoe as incoming Senior Vice-President and Chief Financial Officer (CFO) and Lori Muratta as incoming Senior Vice-President and General Counsel (GC) at South Bow Corporation (South Bow) to continue to progress the spinoff Transaction. The Company has received a favourable tax ruling from the IRS on the spinoff Transaction and is continuing to work collaboratively with the CRA on obtaining a favourable tax ruling in Canada
• FERC approved the VR and WR projects in November and December 2023, respectively
• Placed the US$0.1 billion Virginia Electrification project in service in February 2024, on time and on budget
• Approved the US$0.9 billion Heartland project in February 2024, which is an expansion project on our ANR System that is expected to increase capacity and improve system reliability with an anticipated in-service date in late 2027
• The final cost and schedule estimate for the Bruce Power Unit 4 MCR program was submitted to the Independent Electricity System Operator (IESO) on December 13, 2023, and received IESO approval on February 8, 2024. The Unit 4 MCR is expected to commence in first quarter 2025 and is expected to be completed in 2028
• The noted approved projects fit within the capital plan disclosed at our 2023 Investor Day. We remain committed to limiting annual net capital expenditures to $6.0 to $7.0 billion, with a bias to the lower end beyond 2024.
  
  
  

1. _{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 to 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 news release.}
2. _{Capital spending reflects cash flows associated with our Capital expenditures, Capital projects in development and Contributions to equity investments.}
3. _{Included in Financing activities in the Condensed consolidated statement of cash flows.}

CEO Message
Driven by solid execution throughout 2023, our unparalleled asset base continued to generate strong operational and financial results, delivering record comparable EBITDA and comparable earnings per common share. Our collective efforts in 2023 continued to set the stage for a transformative period for TC Energy. Guided by a clear set of strategic priorities for 2023, including project execution, enhancing balance sheet strength, and maximizing the value of our asset base, TC Energy was successful in delivering on our commitments.

Project execution
In 2023, we placed approximately $5.3 billion of projects in service on budget, including various expansion projects on our NGTL System, the lateral section of our Villa de Reyes pipeline and the Unit 6 MCR at Bruce Power, which was completed ahead of schedule and within budget.

In November 2023, the Coastal GasLink pipeline project achieved mechanical completion ahead of our year end 2023 target, completed required pipeline commissioning activities and was ready to deliver natural gas to the LNG Canada facility in fourth quarter 2023. The achievement of these monumental milestones entitle Coastal GasLink LP to receive a $200 million incentive payment from LNG Canada. In accordance with the contractual terms between the Coastal GasLink LP partners, this amount accrues in full to TC Energy as the project developer and was settled through a cash distribution on February 12, 2024. With construction and required commissioning activities now complete, post-construction and reclamation activities will continue throughout 2024. The project remains on track with its cost estimate of approximately $14.5 billion and Coastal GasLink LP will continue to pursue contractor cost recoveries.

We also achieved significant progress on the Southeast Gateway pipeline project in 2023. In addition to closing land rights, right of ways negotiation and obtaining critical permits for construction, offshore installation began in December 2023 and is progressing on schedule, along with all onshore facilities. The project continues to progress on time and on budget, with commercial in-service expected by mid-2025.

We will continue to develop quality projects within our secured capital program, with approximately $7.0 billion of assets expected to be placed in service in 2024. Our commitment to limiting annual net capital expenditures to $6.0 to $7.0 billion, with a bias to the lower end beyond 2024, will not waver. We believe that adhering to our net capital expenditure limit beyond 2024 will allow TC Energy to continue delivering an attractive and sustainable dividend growth rate of three to five per cent.

Firmly on a path to enhancing balance sheet strength
We have a clearly defined path to reach our 4.75 times debt-to-EBITDA² target by year end 2024, which represents the upper limit we will manage to. Throughout 2023, we made significant progress towards reducing leverage, including successfully completing the sale of a 40 per cent non-controlling equity interest in Columbia Gas and Columbia Gulf for total cash proceeds of $5.3 billion (US$3.9 billion). In addition, we are continuing to evaluate an incremental $3.0 billion of capital rotation opportunities, which we expect to complete by the end of 2024. Project execution and continued growth in comparable EBITDA will support further deleveraging, in addition to liability management opportunities related to the spinoff Transaction, subject to TC Energy shareholder and court approvals, favourable tax rulings, other regulatory approvals and satisfaction of other customary closing conditions.

Maximizing the value of our assets through safety and operational excellence
Throughout fourth quarter 2023, we continued to see strong, sustained demand for our assets and services that further supported the delivery of record results. Within our integrated natural gas pipelines business, total NGTL System deliveries in Canada averaged 14.5 Bcf/d and various pipelines in the U.S. achieved record throughput volumes. The GTN system achieved a delivery record of 3.1 Bcf on November 11, 2023, Tuscarora Gas Transmission System achieved a delivery record of 0.2 Bcf on November 30, 2023, and the Portland Natural Gas Transmission System achieved a delivery record of 0.5 Bcf on December 12, 2023. Within the Liquids Pipelines business, the Keystone Pipeline System achieved approximately 92 per cent operational reliability during the quarter, consistent with the Keystone Pipeline System’s full-year 2023 operational reliability. Bruce Power achieved approximately 85 per cent availability during the quarter reflecting a planned outage on Unit 8, and approximately 92 per cent overall availability in 2023, while our Alberta cogeneration power plant fleet experienced 98.7 per cent availability during the quarter.

Advancing proposed Liquids Pipelines business spinoff
The Separation Management Office continues to make important progress on the spinoff Transaction. Van Dafoe has been named incoming Senior Vice-President and CFO at South Bow. With over 30 years of experience in the energy industry, including serving as CFO of a public company for eight years, Van will be instrumental in managing South Bow's finance, accounting, risk, investor relations activities and information services. On February 1, 2024, Lori Muratta was named as incoming Senior Vice-President and General Counsel at South Bow. With over 20 years of experience in the energy industry and 30 years practicing law, Lori will be instrumental in overseeing South Bow's legal, compliance and regulatory activities. The Company has received a favourable tax ruling from the IRS on the spinoff Transaction and is continuing to work collaboratively with the CRA on obtaining a favourable tax ruling in Canada.

We continue to identify experienced board candidates for South Bow and anticipate the full slate of directors and other information to be described in the Management Information Circular to be filed prior to the shareholder meeting and related vote, which remains on track to take place in mid-2024.

Dividend declaration, 2024 outlook and strategic priorities
Based on the confidence of our business plans, TC Energy’s Board of Directors declared a quarterly dividend of $0.96 per common share for the quarter ending March 31, 2024, equivalent to $3.84 per common share on an annualized basis, an increase of 3.2 per cent. This is the twenty-fourth consecutive year the Board has raised the dividend. Looking to our 2024 outlook, 2024 comparable EBITDA is expected to be $11.2 to $11.5 billion and remains consistent with our November 2023 Investor Day, with growth related to increased comparable EBITDA from the NGTL System due to the advancement of expansion programs, the full-year impact of projects placed in service in 2023 and anticipated projects to be placed in service in 2024. We expect 2024 comparable earnings per common share to be lower than 2023 due to the net impact of higher net income attributable to non-controlling interests as a result of the sale of a 40 per cent non-controlling equity interest in Columbia Gas and Columbia Gulf in 2023, partially offset by the increase in comparable EBITDA and higher AFUDC related to the Southeast Gateway pipeline project. We anticipate our net capital expenditures³ in 2024 to be approximately $8.0 to $8.5 billion after consideration of non-controlling interests in the capital expenditures of the entities we control.

We will remain focused on our clearly defined set of strategic priorities as we look to 2024. TC Energy is steadfast in our commitment to executing projects on time and on budget, enhancing our balance sheet strength and flexibility as we continue to achieve our debt-to-EBITDA leverage target, and maximizing the value of our assets while continuing to safely, reliably and affordably deliver the energy the world needs, every day.

Teleconference and Webcast
We will hold a teleconference and webcast on Friday, February 16, 2024 at 6:30 a.m. (MST) / 8:30 a.m. (EST) to discuss our fourth 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/investors/events or via the following URL: https://www.gowebcasting.com/13118. The webcast will be available for replay following the meeting.

A replay of the teleconference will be available two hours after the conclusion of the call until midnight EST on February 23, 2024. Please call 1.855.669.9658 and enter passcode 0635.

The audited annual 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 Energy
We’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 – while innovating and modernizing to reduce emissions from our business. 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 Information
This 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 regarding Coastal GasLink, Southeast Gateway and GTN XPress projects, including mechanical completion, offshore installations, in-service dates and costs thereof, our expected comparable EBITDA and comparable earnings per common share and targeted debt-to-EBITDA leverage metric for 2024, and the sources thereof, expectations with respect to our capital rotation program, our expected net capital expenditures and dividend outlook and the spinoff Transaction, 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 and future-oriented financial information 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 financial 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 2023 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 Measures
This release contains references to the following non-GAAP measures: comparable EBITDA, comparable earnings, comparable earnings per common share, comparable funds generated from operations and net capital expenditures. 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 is a non-GAAP measure. 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) the 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) the 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 also 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 we believe 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, 2022 and 2023.

Reconciliation
The following is a reconciliation of adjusted debt and adjusted comparable EBITDAⁱ.

1. _{Adjusted debt and adjusted comparable EBITDA are non-GAAP financial measures. Management methodology. Individual rating agency calculations will differ.}
2. _{50 per cent debt treatment on $2.5 billion of preferred shares as of December 31, 2023.}
3. _{50 per cent equity treatment on $10.3 billion of junior subordinated notes as of December 31, 2023. U.S. dollar-denominated notes translated at December 31, 2023, U.S./Canada foreign exchange rate of 1.32.}
4. _{Comparable EBITDA is a non-GAAP financial measure. See the Forward-looking information and Non-GAAP measures sections for more information.}

Media Inquiries:
Media Relations
media@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/tce-2023-q4-quarterly-report.pdf

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