Core Viewpoint - TC Energy is highlighted as a strong investment choice in the energy sector, particularly for investors seeking steady income due to its extensive pipeline network and power generation capabilities [1]. Group 1: Company Overview - TC Energy is headquartered in Calgary, Alberta, and operates nearly 58,000 miles of natural gas pipelines [1]. - The company manages seven power-generation facilities that can supply energy to over 4 million homes [1]. Group 2: Performance Metrics - TC Energy has seen a Relative Strength (RS) Rating upgrade to 71, indicating improving technical performance [3]. - The company has reached an RS Rating benchmark of 80-plus, showcasing its strong market position [3]. Group 3: Market Position - TC Energy is noted for offering a rare combination of high yield and steady stock performance, making it an attractive option for investors [3].

Core Insights - The report from BMO Capital Markets highlights a significant divergence in institutional investor interest in the Canadian energy infrastructure sector over the past month, reflecting struggles in traditional pipeline asset valuations amid macroeconomic headwinds and a market eager to reprice new growth opportunities in the context of energy transition [1][2] Group 1: Key Topics - Pembina Pipeline (PBA.US) is a focal point, with two major discussions surrounding it: the potential sale of KKR & Co's 40% stake in Pembina Gas Infrastructure and the upcoming investment decision for a data center project in partnership with Greenlight, which is expected to have a power capacity of 900 MW [1] - Brookfield Renewable Partners LP (BEP.US) has gained attention due to an $8 billion investment in the U.S. nuclear power sector and strategic partnerships, leading BMO to raise its target price to $36, indicating an implied upside of nearly 18% from the current market price of $30.54 [2] - Alberta's forward electricity prices have surged, with contracts for 2028-2030 reaching $80-90 per MWh, more than doubling from the average of about $43 per MWh since 2025, prompting a reevaluation of local generation asset values [2] Group 2: Sector Performance - The pipeline index has underperformed the utility sector by 11 percentage points (-7% vs +4%), indicating investor skepticism regarding the long-term growth prospects of traditional fossil fuel infrastructure, despite stable cash flows in the sector [2] - Storage facilities are entering an expansion phase, with companies like Enbridge (ENB.US) and Canadian Utilities expanding their capacities, prompting a reassessment of the strategic value of these seasonal assets [3] - In the pipeline sector, Pembina is highlighted for its strategic moves, while Keyera (KEY.US) has underperformed by an additional 4 percentage points, raising questions about its fundamentals [3] Group 3: Utility Sector Dynamics - Capital Power has monetized its 375 MW AESO Phase I project allocation, and the market is keen to see how it will engage in larger opportunities [4] - TransAlta is seen as a bellwether for rising electricity prices in Alberta, with institutions requesting updates on its net asset value under optimistic scenarios reflecting future electricity prices and demand from large data centers [4] - Boralex has seen increased investor inquiries as it remains one of the few covered stocks not yet experiencing price increases, leading to efforts to clarify its relative weakness [4]

Core Insights - TC Energy Corporation (TRP) reported third-quarter 2025 adjusted earnings of 56 cents per share, matching the Zacks Consensus Estimate, but down from 76 cents in the same period last year, primarily due to weak performance in the Power and Energy Solutions segment [1] - The company's quarterly revenues reached $3.7 billion, exceeding the Zacks Consensus Estimate by $49 million, although this represents a 10.1% decrease year over year [2] Financial Performance - Comparable EBITDA for TC Energy was C$2.7 billion, down from C$2.8 billion in the prior year and missing the estimate of C$2.8 billion [2] - The board declared a quarterly dividend of 85 Canadian cents per common share, translating to an annualized rate of $3.40 [3] Segment Performance - Canadian Natural Gas Pipelines reported a comparable EBITDA of C$913 million, an 8% increase from the previous year, driven by contributions from Coastal GasLink, but missed the estimate of C$979 million [4] - U.S. Natural Gas Pipelines reported a comparable EBITDA of C$1,062 million, a 6% increase year over year, primarily due to higher earnings from Columbia Gas and increased transportation rates [6][7] - Mexico Natural Gas Pipelines saw a comparable EBITDA of C$416 million, up 57% from C$265 million in the prior year, exceeding the estimate of C$314.2 million, driven by higher earnings from TGNH following the completion of the Southeast Gateway pipeline [9][10] - Power and Energy Solutions reported a comparable EBITDA of C$266 million, down 18.4% from C$326 million in the previous year, missing the estimate of C$328 million, mainly due to lower contributions from Bruce Power and reduced power prices [11] Operational Metrics - Canadian Natural Gas Pipelines averaged deliveries of 23.0 Bcf/d, a 2% increase year over year, with NGTL system receipts averaging 14.0 Bcf/d, reflecting a 1% increase [5] - U.S. Natural Gas Pipelines maintained average daily flows of 26.3 Bcf/d, unchanged from the previous year, with LNG-related activity increasing to an average of 3.7 Bcf/d, a 15% year-over-year rise [8] Capital Expenditures and Guidance - As of September 30, 2025, TC Energy's capital investments totaled C$1.5 billion, with cash and cash equivalents of C$1.8 billion and long-term debt of C$44.4 billion, resulting in a debt-to-capitalization ratio of 59.5% [13] - The company expects 2025 comparable EBITDA to be between C$10.8 billion and C$11 billion, with capital expenditures trending toward the lower end of the $6.1 billion to $6.6 billion guidance [14] - Looking ahead to 2026, TC Energy anticipates EBITDA to rise to C$11.6 billion to C$11.8 billion, indicating a 6-8% year-over-year increase [15]

Core Insights - The article emphasizes the author's extensive experience in investment banking, particularly in equity research and corporate finance within the Canadian electric utilities and infrastructure sectors [1] Group 1: Professional Background - The author has over twenty years of experience in sell-side equity research, corporate and project finance, M&A, and valuations [1] - Ten years were spent as an equity research analyst at global banks, including UniCredit Securities and HSBC Global Markets, where the author was recognized as a top-rated analyst [1] - Prior to the investment banking career, the author worked for ten years in a Canadian corporate environment focusing on power projects and M&A [1] Group 2: Investment Philosophy - The author believes in actionable investment ideas and the importance of compelling narratives and clear arguments [1] - There is an intention to share insights and stories to contribute to a smarter and richer world [1] - The author actively publishes short actionable notes on investing and portfolio revisions on platforms like Seeking Alpha and Substack [1]

Core Insights - The article emphasizes the author's extensive experience in investment banking, particularly in equity research and corporate finance within the Canadian electric utilities and infrastructure sectors [1] Group 1: Experience and Background - The author has over twenty years of experience in sell-side equity research, corporate and project finance, M&A, and valuations [1] - Ten years were spent as an equity research analyst at global banks, including UniCredit Securities and HSBC Global Markets, where the author was recognized as a top-rated analyst [1] - Prior to the investment banking career, the author worked for ten years in a Canadian corporate environment focusing on power projects and M&A [1] Group 2: Investment Philosophy - The author believes in actionable investment ideas and the importance of compelling narratives and clear arguments [1] - There is an intention to share insights and stories to contribute to a smarter and richer world [1] - The author publishes short actionable notes on investing and portfolio revisions on a Substack platform [1]

Core Viewpoint - TC Energy slightly missed analyst estimates for Q3 earnings but anticipates significant growth in North American natural gas demand due to rising U.S. LNG exports and increased power demand from data centers and coal-to-gas conversions [1][4]. Company Performance - TC Energy's Q3 earnings in the U.S. natural gas pipelines segment fell to US$568 million (C$801 million), down from US$943 million (C$1.33 billion) a year earlier [2]. - The power and energy solutions segment also experienced a nearly 50% decline in earnings compared to the previous year [3]. - Comparable earnings for TC Energy were reported at US$0.55 (C$0.77) per common share, slightly below the analyst consensus estimate of US$0.56 (C$0.79) [3]. Future Outlook - The company projects North American natural gas demand to increase by 45 billion cubic feet per day (Bcf/d) by 2035, driven by a tripling of LNG exports and unprecedented power demand [6]. - TC Energy's president and CEO highlighted favorable structural trends in North America's energy landscape, including growing demand and regulatory support, which reinforce confidence in long-term growth [5]. - A Goldman Sachs report indicates that natural gas is well-positioned to capture growth due to its flexibility and status as an abundant domestic resource [7].

Core Insights - TC Energy reported quarterly earnings of $0.56 per share, matching the Zacks Consensus Estimate, but down from $0.76 per share a year ago [1] - The company generated revenues of $2.69 billion for the quarter, exceeding the Zacks Consensus Estimate by 1.87%, but down from $2.99 billion year-over-year [2] - TC Energy's stock has increased by approximately 8.2% since the beginning of the year, compared to a 15.6% gain in the S&P 500 [3] Earnings Performance - The company has surpassed consensus EPS estimates two times in the last four quarters [1] - TC Energy has topped consensus revenue estimates three times over the last four quarters [2] Future Outlook - The company's earnings outlook will be influenced by management's commentary during the earnings call [3] - Current consensus EPS estimate for the upcoming quarter is $0.70 on revenues of $2.95 billion, and for the current fiscal year, it is $2.61 on revenues of $10.91 billion [7] Industry Context - The Alternative Energy - Other industry, to which TC Energy belongs, is currently ranked in the bottom 37% of over 250 Zacks industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions [5]

Financial Data and Key Metrics Changes - Comparable EBITDA increased by 10% year over year, reaching $2.7 billion in the third quarter [34] - The company expects 2025 net capital expenditures to be at the low end of the $5.5 billion-$6 billion range, with a long-term target of 4.75 times debt to EBITDA [7][36] - The company reaffirmed its 2025 outlook for comparable EBITDA growth of 7%-9% from 2024 to 2025 [36] Business Line Data and Key Metrics Changes - The natural gas pipelines segment saw a 13% increase in EBITDA, while the power and energy solutions segment experienced an 18% reduction [34] - Bruce Power achieved 94% availability, aligning with the expected annual availability in the low 90% range for full year 2025 [34] - The U.S. natural gas business recorded a 15% increase in LNG flows, setting a new peak delivery record of 4 bcf per day [32] Market Data and Key Metrics Changes - In Canada, natural gas demand from power generation has increased by 80% over the past five years [15] - The Mexican government plans to add 8 gigawatts of new installed natural gas capacity by 2030, with TC Energy's assets positioned to support this growth [9] - The natural gas forecast has been revised 5 bcf a day higher, anticipating a 45 bcf a day increase in demand by 2035 [9] Company Strategy and Development Direction - The company is focused on low-risk, high-return growth, emphasizing brownfield in-corridor expansions [11][41] - A disciplined approach to capital allocation is maintained, ensuring investments maximize returns and long-term value for shareholders [12][41] - The company is leveraging technological innovations and operational excellence to enhance project execution and capital efficiency [21][23] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the supportive regulatory environment across North America, which is expected to facilitate project delivery [8] - The company anticipates continued strong performance driven by increasing demand for natural gas and power generation [36][41] - Management highlighted the importance of human capital and execution excellence in maintaining growth momentum [46][70] Other Important Information - The company sanctioned $5.1 billion in new projects over the last 12 months, with a weighted average build multiple of 5.9 times [6][12] - The company is the only midstream operator with significant interest in nuclear power generation, positioning it uniquely in the energy market [10][14] Q&A Session Summary Question: Long-term EBITDA growth trajectory - Management indicated that if current return levels are maintained, mid-single-digit CAGR growth could continue beyond 2028 [44] Question: Potential for increased capital expenditure - Management stated that while the current target is $6 billion, there may be opportunities to exceed this level depending on project execution and market conditions [46] Question: Size and complexity of projects - Management noted that projects are becoming larger but remain straightforward, with average project sizes around $500 million [52] Question: Project backlog and capacity - Management confirmed that they have not turned down any projects due to capital constraints and expect to maintain a robust project backlog [55] Question: Strategic decision to focus on transmission - Management explained that focusing on transmission allows for lower-risk, compelling returns while meeting the needs of utility customers [59]

Financial Data and Key Metrics Changes - Comparable EBITDA increased by 10% year-over-year, reaching $2.7 billion in the third quarter [31] - The company expects 2025 net capital expenditures to be at the low end of the $5.5 billion-$6 billion range, with a long-term target of 4.75x debt to EBITDA [7][39] - The company generated over $5 billion in new high-quality executable projects sanctioned over the last 12 months [10][12] Business Line Data and Key Metrics Changes - The U.S. natural gas business saw LNG flows increase by 15% this quarter, setting a new peak delivery record of 4 bcf per day [30] - Bruce Power achieved 94% availability, contributing to the overall performance of the power and energy solutions segment [31] - EBITDA from the natural gas pipelines network increased by 13%, while the power and energy solutions segment saw an 18% reduction [31] Market Data and Key Metrics Changes - Natural gas demand from power generation in Alberta increased by 80% over the past five years [14] - The company is positioned to supply 20% of Mexico's gas-to-power plants and will feed 80% of new public tender natural gas generation projects entering service over the next five years [15] - The natural gas forecast has been revised 5 bcf a day higher, now calling for a 45 bcf a day increase in natural gas demand by 2035 [9] Company Strategy and Development Direction - The company is focused on maximizing asset value through safety and operational excellence while leveraging commercial and technological innovation [39] - The strategy includes prioritizing low-risk, high-return growth and maintaining financial strength and agility [39] - The company aims to capitalize on the growing demand for power generation and data centers, with a pipeline of origination opportunities exceeding 7 billion cu ft per day [17] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the supportive regulatory environment in Canada and the U.S., which is expected to streamline project delivery [8] - The company anticipates continued strong performance with year-over-year growth of 6%-8% expected in 2026 [33] - Management highlighted the importance of human capital and execution excellence in maintaining project performance [44][66] Other Important Information - The company has sanctioned an additional $5.1 billion of primarily brownfield projects, predominantly in the U.S. natural gas pipeline business unit [35] - The company is leveraging AI and technology to enhance operational efficiency and reduce emissions [20][21] - The Bruce Power Major Component Replacement program is expected to extend reactor life until at least 2064, improving availability and financial results [24][28] Q&A Session Summary Question: Long-term EBITDA growth trajectory - Management indicated that if current return levels remain, mid-single-digit CAGR growth could be sustained beyond 2028 [41][42] Question: Potential for increased capital expenditure - Management stated that while the current target is $6 billion, there may be opportunities to scale up if project execution remains strong and human capital is sufficient [43][44] Question: Size and complexity of projects - Management clarified that while projects are becoming larger, they remain straightforward in execution, with an average project size around $500 million [49][50] Question: Project backlog and capacity - Management confirmed that they have not turned down any projects due to capital constraints and expect to grow their backlog alongside EBITDA growth [51][53] Question: Strategic decision to focus on transmission - Management explained that focusing on transmission allows for lower-risk, compelling returns while meeting the needs of utility customers [57] Question: Status of Bruce C project - Management reported progress towards FID for Bruce C, with ongoing assessments and funding discussions [58][60] Question: Rate cases and potential toll increases - Management confirmed that several rate cases are in process, with conservative estimates included in forecasts [63] Question: Challenges with contractors and market pressures - Management noted that while industry backlogs are building, they have not faced material impacts yet and are actively monitoring suppliers [64][66]

Financial Data and Key Metrics Changes - Comparable EBITDA increased by 10% year over year, reaching $2.7 billion in the third quarter [30] - The company expects 2025 net capital expenditures to be at the low end of the $5.5 billion-$6 billion range, with a clear line of sight to achieving a long-term target of 4.75 times debt to EBITDA [5][10] - The implied weighted average unlevered after-tax IRR of the sanctioned portfolio increased to approximately 12.5%, up from 8.5% a few years ago [10] Business Line Data and Key Metrics Changes - The U.S. natural gas business saw LNG flows increase by 15% this quarter, setting a new peak delivery record of 4 bcf per day [29] - Bruce Power achieved 94% availability, aligning with the expected annual availability in the low 90% range for full year 2025 [30] - The power and energy solutions segment experienced an 18% reduction in EBITDA, primarily due to the dual-unit Major Component Replacement (MCR) outage program [30] Market Data and Key Metrics Changes - In Canada, natural gas demand from power generation has increased by 80% over the past five years [12] - Mexico's daily gas imports are averaging 4% higher in 2025 than in 2024, with the highest peak import day recorded at over 8 bcf a day [29] - The natural gas forecast has been revised 5 bcf a day higher, now calling for a 45 bcf a day increase in natural gas demand by 2035 [7] Company Strategy and Development Direction - The company remains focused on low-risk, high-return growth, emphasizing the execution of projects on time and on budget [38] - The strategic focus includes maximizing the value of existing assets through safety and operational excellence while leveraging commercial and technological innovation [38] - The company is positioned to capture growth in the energy market, particularly in natural gas and power generation, with a strong emphasis on brownfield in-corridor expansions [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the supportive regulatory environment across North America, which is expected to enhance project delivery timelines [6] - The company anticipates continued strong performance with year-over-year growth of 6%-8% expected in 2026 [32] - The outlook for natural gas and power demand is trending higher, with significant opportunities in the energy market [10][11] Other Important Information - The company sanctioned $5.1 billion in new projects over the last 12 months, capitalizing on the demand for power generation and data centers [5] - The company has developed enhancements that have improved capital allocation and project development rigor, increasing capital efficiency and cost management [20] - The company is leveraging AI and advanced algorithms to optimize pipeline configurations and improve operational performance [17][18] Q&A Session Summary Question: Long-term EBITDA growth trajectory - Management indicated that if current return levels remain true, mid-single-digit CAGR guidance could be sustained beyond 2028 [40][41] Question: Potential for increased CapEx - Management stated that while the current CapEx is set at $6 billion, there is potential to consider increasing it based on project backlog and execution capabilities [42][43] Question: Size and complexity of projects - Management noted that projects are becoming larger but remain straightforward in execution, with average project sizes around $500 million [46][48] Question: Project backlog and capital constraints - Management confirmed that no projects have been turned down due to capital constraints, and there is room to expand the backlog [50][51] Question: Strategic decision to focus on transmission - Management explained that the focus on transmission rather than competing in power generation is driven by strong utility relationships and low-risk returns [52] Question: Status of Bruce C project - Management provided an update on the Bruce C project, indicating progress towards FID with ongoing assessments and funding considerations [54] Question: Rate cases and potential toll increases - Management confirmed that several rate cases are in process, with conservative estimates included in budgeting and forecasting [57] Question: Challenges with contractors and market pressures - Management acknowledged that while market pressures have not materially impacted operations, they are monitoring suppliers and contractors closely [58][60]