Tc Energy Corporation · TSX:TRP
Tc Energy — Investor Day (November 2024)
64 slides from Tc Energy's investor day presentation, Nov 19, 2024
Slide 1: 2024 Investor Day
2024 Investor Day November 19, 2024
Slide 2: Land acknowledgement & safety moment
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Land acknowledgement & safety moment Gavin Wylie Vice-President, Investor Relations 2
Slide 3: Forward-looking information and non-GAAP measures
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Forward-looking information and non-GAAP measures This presentation includes certain forward-looking information, including future oriented financial information or financial outlook, which is intended to help current and potential investors understand mana
Slide 4: Today's Agenda
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Land acknowledgement & safety moment – Gavin Wylie Strategic outlook – François Poirier Today’s Agenda Natural Gas Pipelines Presentations – Stanley G. Chapman, III 8:00 – 9:00 am EST Power and Energy Solutions Q&A – Annesley Wallace 9:00 – 10:00 am EST Fin
Slide 5: Strategic outlook
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Strategic outlook François Poirier President and Chief Executive Officer 5
Slide 6: TC Energy Investor Day Key Takeaways
TC Energy Investor Day Key Takeaways: Focused natural gas and power company Opportunities to capture highest-value projects with visibility to the end of the decade Disciplined capital allocation supports above average growth with below average risk Compressor station in Alberta, Canada 6
Slide 7: Solid execution and focused priorities delivering value
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Solid execution and focused priorities delivering value TRP stock performance year-to-date(6) Maximizing the value of Project execution Enhancing balance sheet our assets through safety on time and on budget strength and flexibility and operational excellen
Slide 8: The world needs more energy to meet wide-scale electrification
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY The world needs more energy to meet wide-scale electrification Cumulative final energy consumption(1) MMtoe, calculated from actual 2023 levels North American natural gas demand forecast to reach ~160 Bcf/d by 2035(2) Natural gas 300 Bcf/d +40 Bcf/d 250 200
Slide 9: Our North American footprint connects critical growth markets
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Our North American footprint connects critical growth markets Unique footprint and portfolio mix 93,000 km 3 countries 6,400 MW(1) Key facts Incumbent positions in key The only company delivering Nuclear power generation natural gas supply and natural gas i
Slide 10: Low risk portfolio highly aligned to long-term fundamentals
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Low risk portfolio highly aligned to long-term fundamentals TC Energy business mix Natural gas exposure(2) 2025E comparable EBITDA(1) (% of 2024E comparable EBITDA) Business risk profile:(3) Excellent Strong 3% 7% Peer 1 Natural Gas Pipelines Bruce Power Ot
Slide 11: Building our high-value project pipeline
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Building our high-value project pipeline 2023 – 2035 TC Energy Strategic pillar Growth Potential Secured capital program(1) Next wave LNG +26 Bcf/d $Billions LNG connectivity across Canada, North America 9 Bcf/d the U.S. and Mexico LNG demand Up to Power ge
Slide 12: Disciplined capital allocation that supports optimal returns and repeatable performance
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Disciplined capital allocation that supports optimal returns and repeatable performance $Billions Allocate to the highest-value opportunities among: High-grade projects, debt reduction and share buybacks Growth and Internally compete for capital dollars on
Slide 13: Returns on sanctioned projects continue to increase
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Returns on sanctioned projects continue to increase Weighted average unlevered after-tax IRR(1) of projects sanctioned by year Newly announced projects ~11.0 % Pulaski Project ~10.0 ~9.5 ~8.5 ~8.5 Maysville Project SE Virginia Energy Storage Project Bruce P
Slide 14: Sustainable growth of high-quality cash flows
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Sustainable growth of high-quality cash flows Comparable EBITDA(1) Sustainable growth underpinned by $Billions rate-regulation and long-term contracts 5% – 7% CAGR 11.7 – 11.9 3% 9.9 – 10.1 20% Beyond-2027 targeting AFFO 2025E per share growth at the 4% – 5
Slide 15: Our 2025 strategic priorities
3 I N V E S TO R D AY TC ENERGY 2024 Our 2025 strategic priorities MAXIMIZE THE VALUE OF OUR EXECUTE OUR ENSURE ASSETS THROUGH SAFETY AND SELECTIVE PORTFOLIO OF FINANCIAL STRENGTH OPERATIONAL EXCELLENCE GROWTH PROJECTS AND AGILITY Promote safe operating practices to Execute high quality secured capi
Slide 16: Natural Gas Pipelines
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Natural Gas Pipelines Stanley G. Chapman, III Executive Vice-President and Chief Operating Officer, Natural Gas Pipelines 16
Slide 17: Unique among our peers
3 I N V E S TO R D AY TC ENERGY 2024 Unique among our peers Extensive and historic operations across North America Key connectivity to supply and demand centers Transport up to 30% of North American LNG feedgas demand 165+ direct connections to power generators across North America Directly connect
Slide 18: Multiple drivers support a long runway of growth
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Multiple drivers support a long runway of growth 2023 – 2035 TC Energy TC Energy Strategic pillar Growth Potential In development(2) North American natural gas demand Next wave LNG +26 Bcf/d forecast to reach ~160 Bcf/d by 2035(1) LNG connectivity across Ca
Slide 19: Capturing next wave LNG opportunities across the continent
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Capturing next wave LNG opportunities across the continent Global LNG demand to reach 85+ Bcf/d by 2035 North America LNG demand forecast 9 TC Energy Potential Bcf/d Bcf/d (2023 – 2035) 40 3x 39 Gillis Access US$0.7 billion capital cost 3.4 Bcf/d capacity 3
Slide 20: Unrivaled footprint supporting growth in power demand
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Unrivaled footprint supporting growth in power demand Power sector continues to set records, supporting upside over the long term Incremental natural Power generation +65% gas generation with minimal total load growth (2010 – 2023) +20% growth driven by ene
Slide 21: Data centers seeking the reliability of natural gas
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Data centers seeking the reliability of natural gas Approximately two-thirds of 350+ data centers being built are within 50 miles of our assets 2 + Bcf/d TC Energy North American data center opportunities in origination LDCs, power generators and direct con
Slide 22: Significant opportunity in coal retirements
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Significant opportunity in coal retirements 225 operating coal plants in the U.S. with over 25% of capacity slated to retire by 2040 Pulaski Project Maysville Project US$0.4 billion capital cost US$0.4 billion capital cost 0.2 Bcf/d capacity 0.2 Bcf/d capac
Slide 23: Meeting Mexico's natural gas demand growth
3 I N V E S TO R D AY TC ENERGY 2024 Meeting Mexico’s natural gas demand growth Robust fundamentals underpin demand growth driven by power sector buildout Mexico natural gas demand forecast Southeast Gateway US$3.9 – US$4.1 billion capital cost 1.3 Bcf/d capacity 8.5 6.8x build multiple(1) Bcf/d Mid
Slide 24: Natural gas plays an important role in power sector emissions reductions
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Natural gas plays an important role in power sector emissions reductions Managing methane emissions through operational innovation U.S. power sector emissions reductions(1) TC Energy absolute methane emissions reductions(3) 2019 – 2023 Million tonnes CO2, a
Slide 25: Pipeline and storage capacity underpin energy reliability for LDCs
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Pipeline and storage capacity underpin energy reliability for LDCs LDC customers secure capacity to meet peak day demands SE Virginia Energy Storage Project 50+ Bcf/d difference between annual average and peak day U.S. LDC demand Serving LDC peak US$0.3 bil
Slide 26: Connecting the lowest-cost supply to highest-value markets
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Connecting the lowest-cost supply to highest-value markets North American production to increase nearly 40 Bcf/d by 2035 North America production outlook – key basins (Bcf/d) 18 23 of North American production WCSB Appalachia Haynesville 2023 2035 ~60% in 2
Slide 27: Clear growth visibility
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Clear growth visibility Cedar Link Canadian Natural Gas Pipelines 10.1% ROE(1) CER rate-regulated through 2030 Valhalla North & Berland River Coastal GasLink Multi-Year Growth Plan Next Wave LNG Gillis Access Project | 2024 – 2027 GTN XPress Coastal GasLink
Slide 28: Unique among our peers
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Unique among our peers Longstanding, extensive operations across North America with visible growth through 2030 and beyond Safety Currently experiencing the best safety performance in the past 5 years Operational Excellence Natural Gas Pipelines integration
Slide 29: Power and Energy Solutions
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Power and Energy Solutions Annesley Wallace Executive Vice-President, Strategy and Corporate Development and President, Power and Energy Solutions 29
Slide 30: Maximizing the value of our Power and Energy Solutions portfolio
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Maximizing the value of our Power and Energy Solutions portfolio Nuclear power generation Natural gas power generation Anchored by investment in Bruce Power Wind power generation Solar power generation 48.3% ownership +6,500 MW gross generating capacity(1)
Slide 31: Electricity demand in Ontario to grow 75% by 2050
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Electricity demand in Ontario to grow 75% by 2050(1) Ontario energy adequacy outlook(2) Nuclear power and storage are critical to meeting Ontario’s (without continued availability of resources with expired contracts) TWh growing electricity demand and decar
Slide 32: Bruce Power – a world class nuclear generation facility
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Bruce Power – a world class nuclear generation facility Bruce Power site; Ontario, Canada Solid growth Low risk Repeatable performance Non-emitting energy serving ~30% of Long-term contract with Ontario IESO Safe, reliable operations for over Ontario electr
Slide 33: MCR program – a repeatable model driving value
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY MCR program – a repeatable model driving value 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Unit 6 Unit 3 Unit 4 Unit 5 Unit 7 Unit 8 Planned outage Completed/underway MCR-related price increase(1) MCR program highlights B
Slide 34: Optimizing existing assets to drive significant growth
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Optimizing existing assets to drive significant growth Bruce Power capacity forecast with Project 2030 Equity income expected to nearly double post-MCR and 700+ MW incremental output Project 2030(1) MW delivered through three stages 7,200 Stage 1: +150 MW $
Slide 35: Leverage and enhance capabilities for lower-carbon growth
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Leverage and enhance capabilities for lower-carbon growth Positioning TC Energy for a lower carbon future by: Building internal capabilities in technologies adjacent to our core Natural Gas Pipelines business Enhancing and preserving value of Pilot developm
Slide 36: Solid growth, low risk, repeatable performance
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Solid growth, low risk, repeatable performance Anchored by nuclear power ~$1 billion annual investment in Bruce Power through MCR program and Project 2030 expected to generate solid returns Continued optionality for future investment opportunities Maximizin
Slide 37: Financial outlook
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Financial outlook Sean O’Donnell Executive Vice-President and Chief Financial Officer 37
Slide 38: Our core principles
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Our core principles Long-term view Adherence to conservative Disciplined capital Financial strength grounded in fundamentals risk preferences allocation and agility 93,000 km of irreplaceable ~97% of comparable Maintain commitment to Manage to upper limit o
Slide 39: Organically delivering 2024E – 2027E comparable EBITDA CAGR of 5% – 7%
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Organically delivering 2024E – 2027E comparable EBITDA CAGR of 5% – 7% Comparable EBITDA(1) outlook (excludes Liquids Pipelines) $Billions ~5% – 7% 3-year CAGR (2024 – 2027) ~8% 3-year CAGR 11.7 – 11.9 (2021 – 2024) 10.7 – 10.9 9.9 – 10.1 8.5 Beyond-2027 ta
Slide 40: Canadian Natural Gas Pipelines
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Canadian Natural Gas Pipelines Solid growth underpinned by rate-regulation Net Income Comparable EBITDA(1) ~3% 10.1% CAGR $Billions $Billions 3.7 – 3.8 ROE(2) CER rate- ~3.4 regulated ~$150 – $200 million annual expected increase in comparable EBITDA under
Slide 41: U.S. Natural Gas Pipelines
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY U.S. Natural Gas Pipelines Significant opportunities to maximize risk-adjusted returns TARGET BUILD Comparable EBITDA(1) MULTIPLE(2) 5.0 – 5.2 $Billions ~4% 5 – 7x CAGR ~4.5 ATIRR(3) 10 – 12% ~US$4 billion of gross growth projects coming into service betwee
Slide 42: Mexico Natural Gas Pipelines
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Mexico Natural Gas Pipelines Material inflection in 2025 TARGET BUILD Comparable EBITDA(1) MULTIPLE(2) 1.7 – 1.8 $Billions 5 – 7x ATIRR(3) ~25% 10 – 12% CAGR US$3.9 – US$4.1 billion Southeast Gateway ~0.9 pipeline project expected to be in-service no later
Slide 43: Power and Energy Solutions
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Power and Energy Solutions High quality, long-term growth visibility Comparable EBITDA(1) LOW $Billions 1.6 – 1.7 DOUBLE-DIGIT ~4% ATIRR(2) AT CAGR BRUCE POWER ~1.2 1.1 – 1.2 1.0 Largely underpinned by long-term contracts 0.9 with creditworthy counterpartie
Slide 44: Realizing capital efficiencies and optimization
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Realizing capital efficiencies and optimization Net sanctioned and pending approval capital expenditures(1) $Billions 2024E 2025E 2026E – 2027E Reduced $8.0 – $8.5 ~8% $7.4 – $7.7 Optimization of our capital Reduced expenditure forecast: $6.0 – $6.5 ~8% Con
Slide 45: Disciplined and strategic sanctioned capital spending
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Disciplined and strategic sanctioned capital spending Net sanctioned capital expenditures(1) Ability to sanction $Billions incremental high-value projects Average project size(2) Targeted $6 – $7 billion annual ~$450 million net capital expenditure range Se
Slide 46: Funding our capital program 2025E – 2027E
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Funding our capital program 2025E – 2027E $Billions Comparable EBITDA(3) Low-risk business model provides Net long-term debt, stability of cash flows hybrids, commercial growth in timeframe paper & other: 7 implies < 4x incremental Capital debt-to-EBITDA(4)
Slide 47: Organic deleveraging phase ensures 4.75 times debt-to-EBITDA upper limit
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Organic deleveraging phase ensures 4.75 times debt-to-EBITDA upper limit Levers to manage to upper Year-end debt-to-EBITDA(1) limit of 4.75x debt-to-EBITDA 5.4x Optimize capital expenditures Outperform comparable 2022 5.1x EBITDA(2) expectations Partial yea
Slide 48: Low-risk, utility-like business supports leverage
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Low-risk, utility-like business supports leverage Average debt-to-EBITDA(1) vs. credit rating % rate-regulated or take-or-pay vs. average debt-to-EBITDA(1) 100 % rate-regulated or take-or-pay 2024E comparable EBITDA(2) Utilities Peer Debt-to-EBITDA Average:
Slide 49: Solid growth, low risk, repeatable performance
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Solid growth, low risk, repeatable performance $74.80 Long-term sustainable dividend growth: 3% – 5% $76.06 $6.97(2)/$34.87(3) $3.84(4) $65.25 $65.26 $5.85(2)/$29.25(3) $67.83 $59.40 24 consecutive years $52.79 of dividend increases $48.94 $0.80 2/20/2020 7
Slide 50: Q&A panel
Q&A panel François Poirier Sean O’Donnell President and Executive Vice-President and Chief Executive Officer Chief Financial Officer Stanley G. Chapman, III Annesley Wallace Executive Vice-President and Executive Vice-President, Strategy and Chief Operating Officer, Corporate Development and Preside
Slide 51: TC Energy Investor Day Key Takeaways
TC Energy Investor Day Key Takeaways: Focused natural gas and power company Opportunities to capture highest-value projects with visibility to the end of the decade Disciplined capital allocation supports above average growth with below average risk Compressor station in Alberta, Canada
Slide 52: Please scan the QR code to complete the post-event survey
Please scan the QR code to complete the post-event survey. A link to the post-event survey is also available on the home page of the webcast platform
Slide 53: Modelling notes
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Modelling notes Debt portfolio ~94% fixed rate; long-term debt with average term of ~17 years to final maturity Regulatory and commercial arrangements mitigate impact of rate movements Interest rates Interest rate sensitivity: Δ +/- 25 bps • Financial charg
Slide 54: Debt portfolio notes
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Debt portfolio notes Portfolio weighted average pre-tax Debt maturities 2025E – 2027E Debt portfolio(1) coupon vs. 10-year yields(1) $Billions 6.6 94% fixed-rate debt Weighted average rate of ~$2.7 billion ~5% of bonds 4.3 3.8 called in 2024 6% floating-rat
Slide 55: Appendix
TC E N E R G Y 2 0 2 4 I N V E S TO R D AY Appendix Non-GAAP reconciliations Appendix A: Comparable EBITDA Appendix B: Net Income (loss) to comparable earnings Appendix C: Net cash provided by operations to comparable funds generated from operations Appendix D: Adjusted debt/adjusted comparable EBIT
Slide 56: Appendix A – Non-GAAP reconciliations – comparable EBITDA
Appendix A – Non-GAAP reconciliations – comparable EBITDA(1) (Millions of dollars) Year ended December 31 2023 2022 Total segmented earnings (losses) 6,136 3,632 Interest expense (3,263) (2,588) Allowance for funds used during construction 575 369 Foreign exchange gains (losses), net 320 (185) Inter
Slide 57: Appendix B – Net income (loss) to comparable earnings
Appendix B – Non-GAAP reconciliations – Net income (loss) to comparable earnings Year ended (Millions of dollars, except per share amounts) December 31 2023 2022 Net income (loss) attributable to common shares 2,829 641 Specific items (net of tax): Coastal GasLink impairment charge 1,943 2,643 Keyst
Slide 58: Appendix C – Net cash provided by operations to comparable funds generated from operations
Appendix C – Non-GAAP reconciliations – Net cash provided by operations to comparable funds generated from operations(1) (Millions of dollars) Year ended December 31 2023 2022 Net cash provided by operations 7,268 6,375 Increase (decrease) in operating working capital (207) 639 Funds generated from
Slide 59: Appendix D – Adjusted debt/adjusted comparable EBITDA
Appendix D – Non-GAAP reconciliations – adjusted debt/adjusted comparable EBITDA (Debt-to-EBITDA) Adjusted debt and adjusted comparable EBITDA are non-GAAP measures used to compute the debt-to-EBITDA multiple. Each of adjusted debt and adjusted comparable EBITDA measures does not have any standardiz
Slide 60: Appendix D – Adjusted debt/adjusted comparable EBITDA (debt-to-EBITDA)
Appendix D – Non-GAAP reconciliations – adjusted debt/adjusted comparable EBITDA(1) (debt-to-EBITDA) (Millions of dollars) Year ended December 31 2023 2022 2021 Reported total debt 63,201 58,300 52,766 Management adjustments: Debt treatment of preferred shares(2) 1,250 1,250 1,744 Equity treatment o
Slide 61: Appendix E – AFFO reconciliation
Appendix E – Non-GAAP reconciliations – AFFO reconciliation AFFO or “adjusted funds generated from operations” represents comparable FGFO, adjusted to reflect non-controlling interest distributions before capex contributions and debt recapitalization. AFFO is a non-GAAP measure which does not have a
Slide 62: Appendix E – AFFO reconciliation
Appendix E – Non-GAAP reconciliations – AFFO reconciliation (Millions of dollars) Year ended December 31 2023 2022 Net cash provided by operations 7,268 6,375 Increase (decrease) in operating working capital (207) 639 Funds generated from operations(1) 7,061 7,014 Specific items: Current income tax
Slide 63: Appendix F – Segmented earnings and comparable EBITDA
Appendix F – Non-GAAP reconciliations – segmented earnings and comparable EBITDA Comparable EBITDA(1) outlook (excludes Liquids Pipelines) (Billions of dollars) Segmented earnings Comparable EBITDA(1) Canadian Natural Gas Pipelines U.S. Natural Gas Pipelines Mexico Natural Gas Pipelines Power and En
Slide 64: Appendix G – Unlevered after-tax internal rate of return
Appendix G – Non-GAAP measures – Unlevered after-tax internal rate of return Unlevered after-tax internal rate of return or “ATIRR” represents the expected compound annual return of a project or investment, and prior to any assumption of debt and/or equity financing. ATIRR may be calculated using di