Slide 1: Fourth Quarter 2018 Conference Call
Fourth Quarter 2018 Conference Call February 14, 2019
Slide 2: Forward Looking Information and Non-GAAP Measures
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 management’s assessment of our future plans and
Slide 3: On The Call Today
On The Call Today Russ Girling Don Marchand Tracy Robinson Stan Chapman Paul Miller Francois Poirier Glenn Menuz David Moneta 3
Slide 4: Russ Girling, President & CEO
Russ Girling President & CEO 4
Slide 5: 2018 Accomplishments
2018 Accomplishments Generated record financial results • Net income attributable to common shares was $1.19 per share in the fourth quarter, $3.92 per share in 2018 • Comparable earnings were $1.03 per common share in fourth quarter, $3.86 per common share in 2018 • High‐quality, diversified asset
Slide 6: Financial Highlights – Three Months Ended December 31 (Non-GAAP)
Financial Highlights – Three Months Ended December 31 (Non‐GAAP) Comparable Comparable Comparable Funds Earnings per Common Share* EBITDA* Generated From Operations* (Dollars) ($ Millions) ($ Millions) 26% Increase 29% Increase 30% Increase 2,453 1.03 0.82 1,903 1,881 1,450 2017 2018 2017 2018 2017
Slide 7: Financial Highlights – Year Ended December 31 (Non-GAAP)
Financial Highlights – Year Ended December 31 (Non‐GAAP) Comparable Comparable Comparable Funds Earnings per Common Share* EBITDA* Generated From Operations* (Dollars) ($ Millions) ($ Millions) 25% Increase 16% Increase 16% Increase 8,563 3.86 6,522 7,377 3.09 5,641 2017 2018 2017 2018 2017 2018 * C
Slide 8: Common Share Dividend Increased 8.7 Percent Over 2018
Common Share Dividend Increased 8.7 Percent Over 2018 Quarterly dividend of $0.75 per share equivalent to $3.00 per share annually Nineteenth Consecutive Annual Dividend Increase * Annual rate based on first quarter dividend declared of $0.75 per share 8
Slide 9: Canadian Natural Gas Pipelines
Canadian Natural Gas Pipelines NGTL System • Transported 12.3 Bcf/d in 2018, up from 11.4 Bcf/d in 2017 • Advancing $8.6 billion capital program which adds 3.2 Bcf/d of (3.2 Bcf/d) incremental delivery capacity by the end of 2022 Canadian Mainline (2.1 Bcf/d) • Delivered 5.2 Bcf/d in 2018, up from 4
Slide 10: U.S. Natural Gas Pipelines
U.S. Natural Gas Pipelines Broad National Network • Strategically connected to low cost supply basins • Unparalleled connectivity to key markets Serves ~25% of U.S. Natural Gas Demand • Winter deliveries averaging 24.5 Bcf/d • Set peak day delivery record on January 30, 2019 of 33.1 Bcf Advanced US$
Slide 11: Mexico Natural Gas Pipelines
Mexico Natural Gas Pipelines Four pipelines in operation • Tamazunchale • Mazatlán • Guadalajara • Topolobampo Three new projects expected to enter service in 2019 and 2020 • Sur de Texas – US$1.5 billion* • Villa de Reyes – US$0.8 billion • Tula – US$0.7 billion All underpinned by U.S. dollar denom
Slide 12: Liquids Pipelines
Liquids Pipelines Assets producing strong operating results • Keystone throughput averaged ~590,000 Bbl/d in 2018 • U.S. Gulf Coast segment capacity increased throughout 2018 • Fourth quarter volumes averaged ~700,000 Bbl/d • Liquids marketing benefiting from improved volumes and margins • Intra‐Alb
Slide 13: Energy
Energy Napanee Power Plant (900 MW) • Construction is substantially complete and commissioning activities are underway • Expected to enter service in second quarter 2019 Bruce Power Unit 6 Major Component Replacement • Work expected to start in early 2020 and be completed in late 2023 • TransCanada
Slide 14: Advancing $36 Billion Secured Capital Program Through 2023
Advancing $36 Billion Secured Capital Program Through 2023 Estimated Invested to Expected Project Capital Cost* Date* In‐Service Date* Mountaineer XPress US 3.2 US 2.9 2019 Gulf XPress US 0.6 US 0.5 2019 Sur de Texas** US 1.5 US 1.4 2019 Napanee 1.7 1.6 2019 NGTL System 2.8 1.4 2019 Villa de Reyes U
Slide 15: Secured Capital Program Drives Significant Growth
Secured Capital Program Drives Significant Growth Comparable EBITDA Outlook ($Billions) ~95% of Comparable EBITDA to come from Regulated Assets or Long‐Term Contracts 15
Slide 16: Dividend Growth Outlook
Dividend Growth Outlook Annual Growth of 8 to 10 Per Cent through 2021 Supported by Expected Growth in Earnings and Cash Flow and Continued Strong Coverage Ratios * Annual rate based on first quarter dividend declared of $0.75 per share 16
Slide 17: Key Takeaways
Key Takeaways Proven Strategy – Low Risk Business Model • ~95% of Comparable EBITDA from regulated assets or long‐term contracts Businesses Produced Record Results in 2018 • Strong performance expected to continue in 2019 Visible Growth • Advancing $36 billion of secured growth projects • Over $20 b
Slide 18: Don Marchand, Executive VP & CFO
Don Marchand Executive VP & CFO 18
Slide 19: Consolidated Results of Operations
Consolidated Results of Operations (millions of dollars, except per share amounts) Three months ended Three months ended Year ended December 31 Year ended December 31 December 31 December 31 2018 2017 2018 2017 2018 2017 2018 2017 Per Common Share Per Common Share Net Income Attributable to Common S
Slide 20: Business Segment Results
Business Segment Results(1) (millions of dollars) Three months Year ended ended December 31 December 31 2018 2017 2018 2017 Comparable EBITDA(2) Canadian Natural Gas Pipelines 818 569 2,379 2,144 U.S. Natural Gas Pipelines 812 604 3,035 2,357 Mexico Natural Gas Pipelines 152 116 607 519 Liquids Pipe
Slide 21: Other Income Statement Items
Other Income Statement Items(1) (millions of dollars) Three months Year ended ended December 31 December 31 2018 2017 2018 2017 Comparable EBITDA(2) 2,453 1,903 8,563 7,377 Depreciation and amortization (681) (516) (2,350) (2,048) Comparable EBIT(2) 1,772 1,387 6,213 5,329 Interest expense(3) (603)
Slide 22: Comparable Distributable Cash Flow
Comparable Distributable Cash Flow (millions of dollars, except per share amounts) Three months Year ended ended December 31 December 31 2018 2017 2018 2017 Comparable Funds Generated From Operations(1) 1,881 1,450 6,522 5,641 Dividends on preferred shares (40) (39) (158) (155) Distributions paid to
Slide 23: Fourth Quarter 2018 Funding Activity
Fourth Quarter 2018 Funding Activity Strong, predictable and growing cash flow from operations • Comparable funds generated from operations of $1.9 billion in the quarter; $6.5 billion for the year Access to capital markets on compelling terms • Issued US$1.4 billion of Senior Unsecured Notes in Oct
Slide 24: Funding Program Outlook 2019-2021
Funding Program Outlook 2019‐2021 $Billions Numerous Levers Available to Fund Secured Capital Program • Strong, predictable and growing cash flow from operations • Dividend Reinvestment Plan • Access to capital markets including: • Senior debt • Hybrid securities and preferred shares • Portfolio man
Slide 25: 2019 Comparable Earnings Per Share and Capital Spending Outlook
2019 Comparable Earnings Per Share and Capital Spending Outlook Canadian Natural Gas Pipelines Higher primarily due to growth in NGTL’s average investment base U.S. Natural Gas Pipelines Higher driven by Columbia Gas and Columbia Gulf projects coming in service Mexico Natural Gas Pipelines Sur de Te
Slide 26: Delivering Long-Term Shareholder Value
Delivering Long‐Term Shareholder Value Track Visible Attractive, Growing Strong Record Growth Dividend Financial Position 12% average annual $36 billion secured Dividend raised 8.7% Numerous levers total shareholder to 2023 in February 2019 available to fund return since 2000 5.4% yield future growt
Slide 27: Question & Answer Period
Question & Answer Period Russ Girling Don Marchand Tracy Robinson Stan Chapman Paul Miller Francois Poirier Glenn Menuz David Moneta
Slide 28: Fourth Quarter 2018 Conference Call
Fourth Quarter 2018 Conference Call February 14, 2019
Slide 29: Appendix – Reconciliation of Non-GAAP Measures
Appendix – Reconciliation of Non‐GAAP Measures (millions of dollars) Three months Year ended ended December 31 December 31 2018 2017 2018 2017 Comparable EBITDA(1) 2,453 1,903 8,563 7,377 Depreciation and amortization (681) (516) (2,350) (2,048) Comparable EBIT(1) 1,772 1,387 6,213 5,329 Specific it
Slide 30: Appendix – Reconciliation of Non-GAAP Measures continued
Appendix – Reconciliation of Non‐GAAP Measures continued (millions of dollars) Three months Year ended ended December 31 December 31 2018 2017 2018 2017 Net Cash Provided by Operations 2,039 1,390 6,555 5,230 (Decrease)/Increase in operating working capital (28) 49 102 273 Funds Generated from Opera