TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company)
today announced net income attributable to common shares for fourth
quarter 2020 of $1.1 billion or $1.20 per share compared to net
income of $1.1 billion or $1.18 per share for the same period in
2019. For the year ended December 31, 2020, net income attributable
to common shares was $4.5 billion or $4.74 per share compared to
net income of $4.0 billion or $4.28 per share for 2019. Comparable
earnings for fourth quarter 2020 were $1.1 billion or $1.15 per
common share compared to $970 million or $1.03 per common share in
2019. For the year ended December 31, 2020, comparable earnings
were $3.9 billion or $4.20 per common share compared to $3.9
billion or $4.14 per common share for 2019. TC Energy's Board of
Directors also declared a quarterly dividend of $0.87 per common
share for the quarter ending March 31, 2021, equivalent to $3.48
per common share on an annualized basis, an increase of 7.4 per
cent. This is the twenty-first consecutive year the Board has
raised the dividend.
"We are very pleased with the performance of our diversified
portfolio of regulated and long-term contracted assets which
generated record financial results again in 2020," said François
Poirier, TC Energy’s President and Chief Executive Officer. "In the
midst of a global pandemic, our people and business remained
healthy. Our services were deemed essential given the critical role
our infrastructure plays in providing energy to North Americans and
our results demonstrate the resiliency of our assets and
utility-like business model in these unprecedented times.
Comparable earnings per share improved by 1.5 per cent compared to
what was a record 2019 while comparable funds generated from
operations of $7.4 billion were four per cent higher. The increases
reflect the strong performance of our legacy assets and
contributions from approximately $5.9 billion of growth projects
that entered service in 2020. Based on these strong results,
together with the confidence we have in our future outlook, we are
pleased to announce a 7.4 per cent increase in our common share
dividend for 2021."
Despite the challenges brought about by COVID-19, TC Energy's
operating assets have been largely unimpacted. Across our extensive
North American operations, flows and utilization levels generally
remain in line with historical and seasonal norms, underscoring the
importance of our assets to the North American economy. Given the
regulated and/or long-term contracted nature of our portfolio, we
continue to be largely insulated from volatility associated with
volume throughput and commodity prices.
“While we were disappointed with the recent action to revoke the
Presidential Permit for the Keystone XL pipeline, we have a large
and diversified asset base that continues to perform extremely well
and are advancing $20 billion of secured capital projects, together
with a substantive portfolio of other similarly high quality
opportunities under development,” continued Poirier. “Our footprint
is comprised of irreplaceable corridors of critical energy
infrastructure that are expected to contribute to the continuous
replenishment of our growth portfolio in the years ahead under all
energy mix scenarios. Through prudent financial management, our
balance sheet continues to exhibit its historical strength allowing
us to self-fund our growth program without the issuance of
additional common shares.”
Looking forward, safety remains at the forefront of all that we
do. In addition, we are committed to sustainably managing our
business and reducing or eliminating our environmental impact. As
part of our efforts, TC Energy continues to progress the
multi-billion dollar Bruce Power life extension program, a source
of significant emission-less power in Ontario, and advance other
financially, operationally and environmentally attractive
initiatives. Additional growth opportunities are expected to arise
as the world both consumes more energy and transitions to a less
carbon intensive energy mix and we are well positioned to
participate in the substantial investment that will be required.
With a deep understanding of energy markets, strong stakeholder
relationships, significant financial capacity, and extensive
technical expertise across a broad range of energy sources
including natural gas, crude oil, nuclear, hydro, wind, solar and
other emerging technologies, TC Energy expects to continue to grow
its portfolio in a manner that fully aligns with the company’s
long-established risk preferences, return expectations and
organizational capabilities. Success in advancing our secured
capital program and other organic growth opportunities emanating
from our five operating businesses across North America, is
expected to support future dividend growth of five to seven per
cent per year.
Highlights (All financial figures are
unaudited and in Canadian dollars unless otherwise
noted)
- Fourth quarter 2020 financial results
- Net income attributable to common shares of $1.1 billion or
$1.20 per common share
- Comparable earnings of $1.1 billion or $1.15 per common
share
- Comparable EBITDA of $2.3 billion
- Net cash provided by operations of $1.9 billion
- Comparable funds generated from operations of $2.1 billion
- For the year ended December 31, 2020
- Net income attributable to common shares of $4.5 billion or
$4.74 per common share
- Comparable earnings of $3.9 billion or $4.20 per common
share
- Comparable EBITDA of $9.4 billion
- Net cash provided by operations of $7.1 billion
- Comparable funds generated from operations of $7.4 billion
- Fourth quarter and other recent highlights
- François Poirier assumed the position of President and Chief
Executive Officer and joined the Board of Directors on January 1,
2021
- TC Energy's Board of Directors approved a 7.4 per cent increase
in the quarterly common share dividend to $0.87 per common share
for the quarter ending March 31, 2021
- Placed approximately $3.4 billion of NGTL System and $0.2
billion of Canadian Mainline capacity projects in service during
2020
- Received Governor in Council (GIC) approval for the NGTL System
2021 Expansion Program which will add incremental capacity of 1.45
Bcf/d
- Placed approximately US$1.9 billion of U.S. capital projects in
service during 2020 including completion of Columbia's
Modernization II program and BXP project
- Approved the US$0.2 billion Wisconsin Access Project on October
28, 2020 to replace, upgrade and modernize certain ANR
facilities
- Continued to advance the Bruce Power Major Component
Replacement (MCR) project on time and on budget
- Announced a definitive agreement and plan of merger on December
15, 2020 to acquire all the outstanding publicly-held common units
of TC PipeLines, LP in exchange for TC Energy common shares.
Net income attributable to common shares increased by $16
million or $0.02 per common share to $1.1 billion or $1.20 per
share for the three months ended December 31, 2020 compared to the
same period last year. For the year ended December 31, 2020, net
income attributable to common shares was $4.5 billion or $4.74 per
share compared to $4.0 billion or $4.28 per share in 2019, an
increase of $0.5 billion or $0.46 per common share. Per share
results reflect the dilutive impact of common shares issued under
our Dividend Reinvestment and Share Purchase Plan (DRP) in 2019.
Net income attributable to common shares includes a number of
specific items that we believe are significant but not reflective
of our underlying operations in the period. More information on
these items which are excluded from comparable earnings can be
found in the table entitled "Reconciliation of net income to
comparable earnings" later in the news release.
Comparable EBITDA of $2.3 billion increased by $8 million for
the three months ended December 31, 2020 compared to the same
period in 2019 primarily due to the net effect of the
following:
- increased earnings from U.S. Natural Gas Pipelines mainly
attributable to lower operating costs
- higher comparable EBITDA from Canadian Natural Gas Pipelines
due to the impact of increased rate-base earnings, flow-through
depreciation from additional facilities placed in service as well
as higher financial charges on the NGTL System along with Coastal
GasLink development fee revenue recognized in 2020, partially
offset by a decrease in flow-through income taxes on the NGTL
System and Canadian Mainline
- lower contribution from Liquids Pipelines primarily
attributable to reduced margins from our liquids marketing
activities
- decreased contribution from Power and Storage primarily due to
the net impact of lower Bruce Power earnings in 2020 reflecting the
commencement of the Unit 6 MCR program on January 17, 2020,
partially offset by fewer outage days on the remaining units, the
sale of our Ontario natural gas-fired power plants on April 29,
2020, and improved results from our Alberta cogeneration
plants
- foreign exchange impact of a
weaker U.S. dollar on the Canadian dollar equivalent earnings from
our U.S. dollar-denominated operations.
Due to the flow-through treatment of certain expenses including
income taxes, financial charges and depreciation on our Canadian
rate-regulated pipelines, changes in these items impact our
comparable EBITDA despite having no significant effect on net
income.
Comparable earnings of $1.1 billion or $1.15 per common share
increased by $110 million or $0.12 per common share for the three
months ended December 31, 2020 compared to the same period in
2019 and was primarily the net effect of:
- changes in comparable EBITDA described above
- a decrease in income tax expense mainly attributable to lower
flow-through income taxes on Canadian rate-regulated pipelines and
higher foreign tax rate differentials
- a decrease in interest expense primarily due to higher
capitalized interest related to Keystone XL, partially offset by
the completion of Napanee construction and the application of
equity accounting to our Coastal GasLink investment. The reduction
in interest expense was also a result of lower interest rates on
short-term borrowings and the foreign exchange impact of a weaker
U.S. dollar on translation of U.S. dollar-denominated interest
- higher Interest income and other primarily related to
derivatives used to manage our net exposure to foreign exchange
rate fluctuations on U.S. dollar-denominated income
- lower Allowance for Funds Used During Construction (AFUDC)
primarily due to NGTL System expansion projects placed in service
and the suspension of recording AFUDC on the Tula project,
partially offset by Columbia Gas growth projects
- higher depreciation in Canadian
Natural Gas Pipelines reflecting new assets placed in service as
discussed above.
Comparable earnings per share reflected the dilutive impact of
common shares issued under our DRP in 2019.
Comparable EBITDA of $9.4 billion in 2020 decreased by $15
million compared to 2019 primarily due to the net result of the
following:
- decreased earnings from Liquids Pipelines as a result of lower
uncontracted volumes on the Keystone Pipeline System, reduced
contributions from liquids marketing activities and the July 2019
sale of an 85 per cent equity interest in Northern Courier
- lower Power and Storage results mainly attributable to
decreased Bruce Power results in 2020 primarily due to the net
impact of lower overall plant generation with the commencement of
the Unit 6 MCR program on January 17, 2020, partially offset by
fewer outage days on the remaining units and a higher realized
power price. As well, reduced earnings in Canadian Power in 2020
were largely as a result of the sale of our Ontario natural
gas-fired power plants on April 29, 2020 and the May 2019 sale of
our Coolidge generating station
- higher comparable EBITDA from Canadian Natural Gas Pipelines
primarily due to the impact of increased rate-base earnings and
flow-through depreciation from additional facilities placed in
service as well as higher flow-through financial charges on the
NGTL System, along with Coastal GasLink development fee revenue
recognized in 2020, partially offset by lower flow-through income
taxes on the NGTL System and the Canadian Mainline
- increased contribution from Mexico Natural Gas Pipelines mainly
due to higher earnings from our investment in the Sur de Texas
pipeline following its September 2019 in-service. This includes
revenues of US$55 million recognized in first quarter 2020 related
to fees associated with our successful construction of Sur de
Texas
- incremental earnings in U.S. Natural Gas Pipelines from
Columbia Gas and Columbia Gulf growth projects placed in service
and from ANR due to the sale of natural gas from certain gas
storage facilities, partially offset by decreased earnings as a
result of the sale of certain Columbia Midstream assets in August
2019
- foreign exchange impact of a
stronger U.S. dollar on the Canadian dollar equivalent earnings
from our U.S. dollar-denominated operations.
Due to the flow-through treatment of certain expenses, including
income taxes and depreciation on our Canadian rate-regulated
pipelines, the accelerated tax depreciation changes in 2019 and
increased depreciation expense impacts our comparable EBITDA
despite having no significant effect on net income.
Comparable earnings of $3.9 billion or $4.20 per common share in
2020 were $94 million or $0.06 per common share higher than in
2019, and were primarily the net result of:
- changes in comparable EBITDA described above
- a decrease in income tax expense mainly due to lower
flow-through income taxes on Canadian rate-regulated pipelines and
the impact of higher foreign tax rate differentials
- lower interest expense as a result of higher capitalized
interest largely related to Keystone XL, net of the impact of
Napanee completing construction in first quarter 2020, and lower
interest rates on reduced levels of short-term borrowings. These
were partially offset by the effect of long-term debt issuances,
net of maturities, as well as the foreign exchange impact from a
stronger U.S. dollar on the translation of U.S. dollar-denominated
interest
- a decrease in AFUDC predominantly due to NGTL System expansions
placed in service and the suspension of recording AFUDC on the Tula
project resulting from continued construction delays, partially
offset by further construction of the Villa de Reyes pipeline
- higher depreciation largely in
Canadian Natural Gas Pipelines and U.S. Natural Gas Pipelines
reflecting new assets placed in service. In Canadian Natural Gas
Pipelines, however, it is fully recovered in tolls on a
flow-through basis as discussed in comparable EBITDA above, and
therefore has no significant impact on comparable earnings.
Comparable earnings per share were impacted by the dilutive
impact of common shares issued under our DRP in 2019.
Notable recent developments include:
Canadian Natural Gas Pipelines:
- NGTL System: In
2020, the NGTL System placed approximately $3.4 billion of capacity
projects in service.On February 19, 2020, the Canada Energy
Regulator issued a report recommending that the GIC approve the
2021 NGTL System Expansion Program, which the GIC approved on
October 19, 2020. The NGTL System subsequently progressed
construction activities in accordance with the regulatory
requirements resulting in compressor station field work beginning
in December 2020 and pipeline construction activities in January
2021.Once facilities are placed in service, the 2021 NGTL System
Expansion Program is expected to provide 1.59 PJ/d (1.45 Bcf/d) of
incremental system capacity underpinned by long-term receipt and
delivery contracts, connecting incremental supply to growing
intra-basin and export markets. In-service is expected to commence
in late 2021 with remaining program components completed by April
2022.
- Canadian
Mainline: During 2020, Canadian Mainline placed
approximately $0.2 billion of capacity projects in service.
- Coastal GasLink:
Due to COVID-19, on December 29, 2020, the British Columbia
Provincial Health Officer issued an order restricting the number of
workers on site for industrial projects in the Northern Health
Authority region of British Columbia. Industrial projects must
submit restart plans to the Provincial Health Officer detailing
steps to resume site work. Coastal GasLink is working with the
provincial health authorities to safely resume construction
activities in accordance with the objectives and timelines defined
in the order.The project is also working with LNG Canada on
establishing a revised project plan for Coastal GasLink. We expect
that project costs will increase significantly and the schedule
will be delayed compared to the previously disclosed estimate due
to scope increases, permit delays and the impacts from COVID-19,
including the provincial health order, although Coastal GasLink
will continue to mitigate these impacts to the extent possible.
These incremental costs will be included in the final pipeline
tolls, subject to certain conditions. We do not anticipate our
future equity contributions will increase significantly following
the conclusion of this process.
U.S. Natural Gas Pipelines:
- Wisconsin Access:
On October 28, 2020, we approved the Wisconsin Access Project that
will replace, upgrade and modernize certain facilities while
reducing emissions along portions of the ANR pipeline system. The
enhanced facilities will improve reliability of the ANR pipeline
system and also allow for additional contracted transportation
services of approximately 77 TJ/d (72 MMcf/d) to be provided to
utilities serving the Midwestern U.S. under long-term contracts.
The anticipated in-service date of the combined project is in the
second half of 2022 with an estimated cost of US$0.2 billion.
- BXP: The US$0.2
billion BXP project, a Columbia Gas project representing an
upsizing of existing pipeline replacement, in conjunction with our
modernization program, was partially placed into service in October
2020 with full in-service commencing on January 1, 2021.
- Columbia Gas Section 4
Rate Case: Columbia Gas filed a Section 4 Rate Case with
FERC on July 31, 2020 requesting an increase to Columbia Gas'
maximum transportation rates effective February 1, 2021, subject to
refund. The rate case is progressing as expected as we continue to
pursue a collaborative process to find a mutually beneficial
outcome with our customers through settlement negotiations.
Mexico Natural Gas Pipelines:
- Villa de Reyes:
Villa de Reyes project construction is ongoing. Phased in-service
has been delayed due to COVID-19 contingency measures which have
impeded our ability to obtain work authorizations as a result of
administrative closures. Subject to the timely re-opening of
government agencies, we expect to complete construction of Villa de
Reyes in 2021.
- Guadalajara: A
project to allow bidirectional flows was completed in December 2020
and the TSA with the CFE was renegotiated. The bidirectional flow
allows access to either LNG imports from the Manzanillo terminus or
access to continental natural gas at the Guadalajara terminus for
delivery to regional markets.
Liquids Pipelines:
- Keystone XL: On
January 20, 2021, U.S. President Biden revoked the existing
Presidential Permit for the Keystone XL pipeline. As a result, we
suspended the advancement of the Keystone XL pipeline project and
ceased capitalizing costs, including interest during construction,
and also ceased accruing a return on the Government of Alberta
interests as of that date, while we assess our options along with
our partner, the Government of Alberta, and other stakeholders. We
expect to record a substantive, predominantly non-cash, after-tax
charge to our earnings in first quarter 2021, which will be
excluded from comparable earnings.Accounting implications in first
quarter 2021 and beyond will depend on the assessment and
consideration of options as noted above, including the impacts that
this had on contractual arrangements. As a result, the magnitude of
the impairment charge and related recoveries cannot be quantified
at this time. The determination of the amount of the pre-tax
impairment of the Keystone XL assets will consider the
then-carrying value of the project and any associated projects,
outstanding contractual commitments, the estimated net recoverable
value of tangible plant and equipment and specified contractual
recoveries, which cannot be reasonably estimated until the options
have been assessed and next steps have been determined. The
viability of certain projects currently associated with the
Keystone XL pipeline is also being reviewed.
Power and Storage:
- Bruce Power – Life
Extension: The Unit 6 MCR outage commenced on January 17,
2020 and is expected to be completed in late 2023. On October 1,
2020, the Unit 6 MCR project achieved a major milestone with the
completion of the preparation phase and commencement of the Fuel
Channel and Feeder Replacement Program and as of December 31, 2020
the Unit 6 MCR project remains on schedule and on budget.
Operations on the remaining units continue as normal with scheduled
outages successfully completed on Units 3, 4 and 5 in second
quarter 2020 and on Unit 8 in fourth quarter 2020.
- TransCanada Turbines Ltd.
(TC Turbines): On November 13, 2020, we acquired the
remaining 50 per cent ownership interest in TC Turbines for cash
consideration of US$67 million. TC Turbines provides industrial gas
turbine maintenance, parts, repair and overhaul services. Following
the acquisition, we began to fully consolidate TC Turbines within
our financial results.
Corporate:
- Retirement and appointment
of our President and CEO: On September 21, 2020, we
announced the retirement of Russ Girling as President and CEO of TC
Energy and from our Board of Directors effective December 31, 2020.
François Poirier, previously Chief Operating Officer and President,
Power & Storage, succeeded Mr. Girling as President and CEO and
joined our Board of Directors on January 1, 2021. Mr. Girling will
assist Mr. Poirier with the transition through February 28,
2021.
- Common share
dividend: Our Board of Directors declared a quarterly
dividend of $0.87 per common share for the quarter ending March 31,
2021. The quarterly amount is equivalent to $3.48 per common share
on an annualized basis, an increase of 7.4 per cent.
- Acquisition of common
units of TC PipeLines, LP: On December 15, 2020, we
announced that we have entered into a definitive agreement and plan
of merger to acquire all the outstanding common units of TC
PipeLines, LP not beneficially owned by TC Energy or our affiliates
in exchange for TC Energy common shares. Pursuant to the agreement,
TC PipeLines, LP common unitholders will receive 0.70 common shares
of TC Energy for each issued and outstanding publicly-held TC
PipeLines, LP common unit. The exchange ratio reflects a value for
all publicly-held common units of TC PipeLines, LP of approximately
US$1.69 billion, or 38 million TC Energy common shares based on the
closing price of TC Energy's common shares on the New York Stock
Exchange on January 19, 2021. A vote on the plan of merger by the
unitholders of the publicly-held common units is scheduled for
February 26, 2021. The transaction is expected to close in late
first quarter 2021 subject to approval by the holders of a majority
of outstanding common units of TC PipeLines, LP and customary
regulatory approvals. Upon closing, TC PipeLines, LP will be wholly
owned by TC Energy and will cease to be a publicly-held master
limited partnership.
Teleconference and Webcast:
We will hold a teleconference and webcast on Thursday, February
18, 2021 to discuss our fourth quarter and year-end 2020 financial
results. François Poirier, President and Chief Executive Officer,
Don Marchand, Executive Vice-President, Strategy & Corporate
Development and Chief Financial Officer, and other members of the
executive leadership team will discuss TC Energy's financial
results and Company developments at 2 p.m. MST / 4 p.m. EST.
Members of the investment community and other interested parties
are invited to participate by calling 1.855.327.6838. No pass code
is required. Please dial in 15 minutes prior to the start of the
call. A live webcast of the teleconference will be available on TC
Energy's website at www.TCEnergy.com/events or via the
following URL: http://www.gowebcasting.com/11058.
A replay of the teleconference will be available two hours after
the conclusion of the call until midnight (EST) on February 25,
2021. Please call 1.855.669.9658 and enter pass code 5971.
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.sedar.com and with the U.S. Securities and
Exchange Commission on EDGAR at
www.sec.gov.
About TC Energy
We are a vital part of everyday life – delivering the energy
millions of people rely on to power their lives in a sustainable
way. Thanks to a safe, reliable network of natural gas and crude
oil pipelines, along with power generation and storage facilities,
wherever life happens – we’re there. Guided by our core values of
safety, responsibility, collaboration and integrity, our 7,500
people make a positive difference in the communities where we
operate across Canada, the U.S. and Mexico.
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
(such statements are usually accompanied by words such as
"anticipate", "expect", "believe", "may", "will", "should",
"estimate", "intend" or other similar words). Forward-looking
statements 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
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 Annual Report filed under TC Energy's
profile on SEDAR at www.sedar.com and with the U.S. Securities
and Exchange Commission at www.sec.gov.
Non-GAAP Measures
This news release contains references to non-GAAP measures,
including comparable earnings, comparable earnings per common
share, comparable EBITDA and comparable funds generated from
operations, that do not have any standardized meaning as prescribed
by U.S. GAAP and therefore are unlikely to be comparable to similar
measures presented by other companies. These non-GAAP 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 Annual consolidated financial statements
and MD&A. For more information on non-GAAP measures, refer to
TC Energy's Annual Report to Shareholders dated February 17,
2021.
Media Inquiries:Jaimie Harding / Hejdi
Carlsen403.920.7859 or 800.608.7859
Investor & Analyst
Inquiries: David
Moneta / Hunter Mau 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/2020/tc-2020-q4-quarterly-report.pdf
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