Tc Energy Corporation · TSX:TRP
Tc Energy — Q1 2023 Earnings Presentation
22 slides from Tc Energy's earnings presentation, Apr 28, 2023
Slide 1: First quarter 2023 conference call
First quarter 2023 conference call A PRIL 2 8, 2 0 23
Slide 2: Call participants
Call participants François Poirier - President and Chief Executive Officer Joel Hunter - Executive Vice-President and Chief Financial Officer Stanley G. Chapman, III - Executive Vice-President and Group Executive, U.S. and Mexico Natural Gas Pipelines Corey Hessen - Executive Vice-President and Pres
Slide 3: Forward-looking information and non-GAAP measures
Forward-looking information and non-GAAP measures Thi s presentation includes certain forward-looking information, including butnot limited to, our financial and operational performance, including the performance of our subsidiaries, expectations about s trategies and goals for growth a nd expansion
Slide 4: François Poirier
François Poirier President and Chief Executive Officer
Slide 5: 2023 priorities are clear
2023 priorities are clear PROJECT EXECUTION ENHANCING BALANCE SHEET MAXIMIZING THE VALUE OF OUR STRENGTH AND FLEXIBILITY ASSETS THROUGH SAFETY AND OPERATIONAL EXCELLENCE • Remain on track to place $6 billion • Advancing $5+ billion asset • Reiterating 2023 comparable of projects into service in 2023
Slide 6: Focusing on operational performance
Q1 OPERATIONAL HIGHLIGHTS Focusing on operational performance OUR OBJECTIVES Q1 HIGHLIGHTS • Placed $1.4 billion of projects into service • Placed $1.1 billion of Canadian Natural Gas projects in service • Place $6 billion of assets into service in 2023 o Enabling 700 mmcf/d of additional market acc
Slide 7: Major milestones achieved
Q1 DEVELOPMENTS Major milestones achieved MILEPOST 14 • Root cause analysis now complete • Recovered 98% of release volume • 90% of cleanup activities complete COASTAL GASLINK SOUTHEAST GATEWAY PIPELINE • Approximately 87% complete • Critical long-lead items including offshore vessel secured • No cr
Slide 8: Disciplined capital allocation
CAPITAL DISCIPLINE Disciplined capital allocation • $7 billion annual sanctioned capital spending limit beyond 2024 • Allows flexibility to capture highest-value opportunities, further reduce leverage or buy back shares • Enhanced governance practices for sanctioning capital projects o Class 3 estim
Slide 9: Resiliency grounded in long-term fundamentals
NORTH AMERICAN ENERGY MIX Resiliency grounded in long-term fundamentals 2022 2030 2050 5% 6% 5% 8% 6% 9% 19% 31% 38% 8% 38% 10% 3% 6% 1% 33% 37% 37% Oil Natural gas pipelines Coal Nuclear Renewables and hydro Other(1) 9% 14% (2) Natural Gas Pipelines Liquids Pipelines 77% Power & Energy Solutions .
Slide 10: Joel Hunter
Joel Hunter Executive Vice-President and Chief Financial Officer
Slide 11: First quarter comparable EBITDA up 16 per cent year-over-year
EARNINGS GROWTH BREAKDOWN First quarter comparable EBITDA(1) up 16 per cent year-over-year $Millions Comparable EBITDA $Millions Comparable Earnings(1) 16% 1,500 12% 2,800 -5 2,775 -51 124 1,400 2,700 -12 24 -177 1 7 2,600 1,300 387 56 160 -101 8 1,233 2,500 1,200 96 2,400 2,388 1,103 1,100 2,300 1,
Slide 12: Aligning strong demand and operational performance
Q1 OPERATIONAL HIGHLIGHTS Aligning strong demand and operational performance CANADIAN NATURAL GAS PIPELINES U.S. NATURAL GAS PIPELINES MEXICO NATURAL GAS PIPELINES • Net income(1) up 11% vs. Q1 2022 • Comparable EBITDA(2) up 14% vs. • Comparable EBITDA(2) up 16% vs. Q1 2022 Q1 2022 • Average NGTL Sy
Slide 13: Aligning strong demand and operational performance
Q1 OPERATIONAL HIGHLIGHTS Aligning strong demand and operational performance LIQUIDS PIPELINES POWER & ENERGY SOLUTIONS • Keystone System continues to deliver • Alberta cogeneration assets achieved 100% contracted volumes availability in February • Robust Alberta power prices, avg. $142/MWh • Keysto
Slide 14: 2023E Comparable EBITDA outlook & sensitivities
REITERATING EXPECTED SUSTAINABLE GROWTH IN 2023 2023E Comparable EBITDA(1) outlook & sensitivities Comparable EBITDA Interest rate: Δ +/- 25 bps $Billions Comparable EBITDA expected to • Financial charges: $20MM be ~5-7% higher • Comparable EPS(1): ~$0.02/share 6% 9.9 Foreign exchange: Δ +/- $0.01 U
Slide 15: Continued access to capital amidst market volatility
INTEREST RATE TRENDS Continued access to capital amidst market volatility 4.5% • Access to debt capital at competitive rates 4.0% remains strong o Issued $2.25 billion Canadian 3.5% ∆~-80 bps medium-term notes 3.0% o Issued US$1.25 billion senior notes ∆~-90 bps 2.5% o Completed US$2.3 billion Mexic
Slide 16: Funding our capital program
2023 – 2026E OUTLOOK Funding our capital program $Billions Net long-term debt • Excludes the impact of asset 50 DRP proceeds 4 divestitures aimed at reducing 1 net long-term debt requirements 40 Commercial paper and enhancing financial strength and other and flexibility Capital 2 expenditures 30 30
Slide 17: Executing on growth through multiple economic cycles
OUR VALUE PROPOSITION Executing on growth through multiple economic cycles Maintaining dividend growth Comparable EBITDA(1) 23 consecutive years of common share dividend increases 2000-2023E with 3-5% expected future growth per annum 12 Russia- Ukraine $3.72* COVID-19 war & OPEC 10 MLP distress CAGR
Slide 18: 2023 strategic priorities
2023 strategic priorities PROJECT EXECUTION ENHANCING BALANCE SHEET MAXIMIZING THE VALUE OF OUR STRENGTH AND FLEXIBILITY ASSETS THROUGH SAFETY AND OPERATIONAL EXCELLENCE Execute on our industry-leading Accelerate our deleveraging target Safely, reliably and affordably secured capital program deliver
Slide 19: Appendix
First quarter 2023 conference call Appendix A PRIL 28, 2023
Slide 20: Appendix – Non-GAAP reconciliations
Q1 2023 FINANCIALS Appendix – Non-GAAP reconciliations (Millions of dollars) Three months ended March 31 2023 2022 Comparable EBITDA(1) 2,775 2,388 Depreciation and amortization (677) (626) Interest expense included in comparable earnings (757) (580) Allowance for funds used during construction 131
Slide 21: Appendix – Non-GAAP reconciliations
Q1 2023 FINANCIALS Appendix – Non-GAAP reconciliations (Millions of dollars, except per share amounts) Three months ended March 31 2023 2022 Net income attributable to common shares 1,313 358 Specific items (net of tax): Expected credit loss provision on net investment in leases and certain (72) - c
Slide 22: Appendix – Non-GAAP reconciliations
Q1 2023 FINANCIALS Appendix – Non-GAAP reconciliations (Millions of dollars) Three months ended March 31 2023 2022 Net cash provided by operations 2,074 1,707 Increase (decrease) in operating working capital (60) (40) Funds generated from operations(1) 2,014 1,667 Specific items: Keystone FERC decis