Tc Energy Corporation · TSX:TRP
Tc Energy — Q3 2022 Earnings Presentation
28 slides from Tc Energy's earnings presentation, Nov 9, 2022
Slide 1: Third quarter 2022 conference call
Third quarter 2022 conference call NOVEMBER 9, 2022
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, TC Energy Corporation, and Chairman, TC PipeLin
Slide 3: Forward-looking information and non-GAAP measures
Forward-looking information and non-GAAP measures This presentation includes certain forward looking information, including but not limited to, statements related to future dividend and earnings growth, future EBITDA growth, the future growth of our core businesses, our anticipated capital programs,
Slide 4: François Poirier, President and CEO
FRANÇOIS POIRIER, PRESIDENT AND CEO 4
Slide 5: Q3 2022 Strong EBITDA and record flows
Q3 2022 Strong EBITDA and record flows Revising 2022 EBITDA Operational Delivering long-term outlook higher excellence value • Anticipate a ~4% year- • Record flows on U.S. • Sanctioned $7.8 over-year Comparable and Canadian billion of high-quality EBITDA(1) growth rate systems capital projects year
Slide 6: Capital rotation is a core competency
Capital rotation is a core competency Expected goal through 2023: Raise $5 billion+ from the sale of discrete non-core assets and/or minority interests Objectives Considerations for Proven track record capital rotation • Accelerate deleveraging* • Valuation • Between 2017 and 2020, target of 4.75x f
Slide 7: U.S. Natural Gas Pipelines: Delivering growth and record flows
U.S. Natural Gas Pipelines Delivering growth and record flows Q3 and year-to-date accomplishments • Tracking to 6th consecutive year of record EBITDA Q3 2022 USNG LNG Flows (avg.) RECORD SYSTEM FLOWS 3Bcf/d Bcf/d, Average Daily 28 • US$1+ billion of new growth projects sanctioned, including Gillis A
Slide 8: Mexico Natural Gas Pipelines: A transformative year
Mexico Natural Gas Pipelines A transformative year 1 Q3 and year-to-date accomplishments 2 • VdR North and Tula East in-service in Q3 2022 4 • Recovery on/of all capital on projects with phased in-service • Sanctioned US$4.5 billion Southeast Gateway Pipeline Operating 6 15 7 • Refinanced Sur de Tex
Slide 9: Canadian Natural Gas Pipelines
Q3 and year-to-date accomplishments Canadian Natural Gas • Sanctioned VNBR project utilizing non-emitting electric Pipelines compression to connect migrating supply • ~500 MMcf/d of incremental capacity • Executed revised agreements with LNG Canada, mitigating Expanding and extending the reach proje
Slide 10: Liquids Pipelines
Highlights • Liquids Pipelines Commercialized 30,000 Bbl/d YTD of contracted volumes on Keystone Pipeline • Successful Marketlink open season underpinned by investment grade customers Maximizing value through operational excellence • Market headwinds related to the SPR release are expected to abate
Slide 11: Power and Energy Solutions
Power and Energy Solutions Peak availability during peak demand $/MWh 2022 Alberta Pool Price – • Alberta Power pool prices averaged $222/MWh during all hours average 300 Q3 2022 $266 YTD 2022 • MCR Unit 6: remains on-time and on-budget Comparable 200 • MCR Unit 3: scheduled to start refurbishment i
Slide 12: 2022 Priorities and progress
2022 Priorities and progress Safely deliver the energy people need, every day Q3 and other highlights Increase return on capital invested in existing assets Started generating revenue on VdR and Tula projects Increased long-haul volumes on Keystone System Place $6.5 billion of assets in service Plac
Slide 13: Published 2022 Report on Sustainability, ESG Data Sheet and Reconciliation Action Plan
Published 2022 Report on Sustainability, ESG Data Sheet and Reconciliation Action Plan Key highlights What’s new • Exceeded gender target for Board composition (38% in 2022) • Conducted independent 3rd party limited assurance • Increased number of women and visible minorities in leadership for great
Slide 14: Joel Hunter, Executive Vice-President and CFO
JOEL HUNTER, EXECUTIVE VICE-PRESIDENT AND CFO 14
Slide 15: Comparable EBITDA up 10 per cent year-over-year
Comparable EBITDA(1) up 10 per cent year-over-year Comparable EBITDA(1) Comparable Earnings(1) $Millions $Millions 10% 1,200 10% 2,500 2,461 -43 -2 2,400 129 -70 1,100 35 33 223 -50 1,068 -55 36 -7 0 10 2,300 82 1,000 2,238 970 2,200 900 2,100 800 2,000 Q3 2021 Comparable Depreciation Interest AFUDC
Slide 16: Revising 2022E outlook higher
Revising 2022E outlook higher Comparable EBITDA(1) $Millions Interest Rates • 25 bps change in interest rate = $15 million impact on financial Comparable charges; ~$0.01 impact on EPS EBITDA(1) expected to be ~4% higher Foreign Exchange • $0.01 change in USD/CAD FX rate = $45 million impact on EBITD
Slide 17: Reiterating Comparable EBITDA outlook 2021-2026E
Reiterating Comparable EBITDA(1) outlook 2021-2026E $Billions Additional growth 14 opportunities and enhancements 12 10 6% 8 CAGR 6 4 2 0 2021 2026E Power and Energy Solutions Liquids Pipelines Mexico Natural Gas Pipelines U.S. Natural Gas Pipelines Canadian Natural Gas Pipelines (1) Comparable EBIT
Slide 18: Industry leading $34 billion, fully sanctioned secured capital program
Industry leading Portfolio expected to deliver a $34 billion, fully sanctioned weighted average unlevered secured capital program after-tax IRR of 7-9 per cent $Billions Villa de Reyes – Regulated Recoverable lateral and south maintenance maintenance Columbia Gas Delivery Bruce Power sections US$2.4
Slide 19: Funding program outlook 2022-2026E
Funding program outlook 2022-2026E $Billions • Sustainable growth in long-term cash flows drives: 70 • Deleveraging • Incremental long-term debt and hybrid capacity 60 Debt maturities • Funding for accretive growth projects and redemptions Commercial paper, 50 Long-term debt Equity Issuance DRP, ass
Slide 20: Stable and consistent dividend growth
Stable and consistent dividend growth Declared a fourth quarter 2022 dividend of $0.90 per share, equivalent to $3.60 per share annually TC’s current share price implies a ~6.0% dividend yield(1) 3.60* CAGR 7% 0.80 2000 2022 Twenty-two consecutive years of common share dividend increases with 3-5% e
Slide 21: Reaffirming our value proposition
Reaffirming our value proposition • LONG-TERM VIEW – Strategic outlook is grounded in fundamentals Our unique value • DISCIPLINED APPROACH – Adherence to well-established, conservative risk preferences proposition • CAPITAL ALLOCATION – Balances sustainable dividend growth and reinvestment • RESILIE
Slide 22: Third quarter 2022 conference call: Appendix
Third quarter 2022 conference call Appendix NOVEMBER 9, 2022 22
Slide 23: Demonstrating strong financial results
Demonstrating strong financial results(1) Three months ended September 30, 2022 Comparable earnings Comparable EBITDA(1) Comparable funds generated per common share(1) (millions of dollars) from operations(1) (dollars) (millions of dollars) 2,461 2,238 1.07 1,637 0.99 1,556 2021 2022 2021 2022 2021
Slide 24: Consolidated results of operations
Consolidated results of operations (millions of dollars, except per share amounts) Three months ended Sept 30 2022 2021 Net income attributable to common shares 841 779 Specific items (net of tax): Expected credit loss provision for net investment in leases 50 - Bruce Power unrealized fair value adj
Slide 25: Appendix A – Financial results GAAP measures
Appendix A – Financial results GAAP measures Three months ended September 30, 2022 Net Income per Common Share Segmented Earnings Net Cash Provided by Operations (dollars) (millions of dollars) (millions of dollars) 1,784 1,544 1,712 1,701 0.80 0.84 2021 2022 2021 2022 2021 2022 25
Slide 26: Appendix B – Business segment results GAAP measure
Appendix B – Business segment results GAAP measure Millions of dollars Three months ended Sept 30 2022 2021 Segmented earnings Canadian Natural Gas Pipelines 409 343 U.S. Natural Gas Pipelines 714 692 Mexico Natural Gas Pipelines 113 144 Liquids Pipelines 268 285 Power and Storage 289 116 Corporate
Slide 27: Appendix C – Comparable EBITDA and comparable earnings GAAP measure
Appendix C – Comparable EBITDA and comparable earnings GAAP measure Millions of dollars Three months ended Sept 30 2022 2021 Comparable EBITDA(1) 2,461 2,238 Depreciation and amortization (653) (610) Interest expense included in comparable earnings (666) (596) Allowance for funds used during constru
Slide 28: Appendix D – Funds generated from operations and comparable funds generated from operations
Appendix D – Funds generated from operations and comparable funds generated from operations GAAP measure Millions of dollars Three months ended Sept 30 2022 2021 Net cash provided by operations 1,701 1,712 (Decrease)/Increase in operating working capital (67) (227) Funds generated from operations(1)