Revenue and Income - Revenue for Q2 2025 was $524 million, a decrease of 5% from $554 million in Q2 2024; for the first half of 2025, revenue was $1,022 million, down 7% from $1,098 million in the same period of 2024[8][32][33] - Income before income taxes for Q2 2025 increased to $126 million from $110 million in Q2 2024; however, for the first half of 2025, it decreased to $240 million from $256 million in the same period of 2024[15][25] - Revenue for the Keystone Pipeline System decreased by 7% to $794 million for the six months ended June 30, 2025, primarily due to lower throughput volumes[55] - Marketing segment revenue decreased by 21% to $106 million in Q2 2025, attributed to lower volumes sold at lower prices[62] EBITDA and Cash Flow - Normalized EBITDA for Q2 2025 was $250 million, up from $241 million in Q2 2024; for the first half of 2025, it decreased to $516 million from $539 million in the same period of 2024[19][29] - Distributable cash flow for Q2 2025 was $167 million, significantly higher than $90 million in Q2 2024; for the first half of 2025, it increased to $324 million from $276 million in the same period of 2024[8] - Cash from operating activities increased to $194 million in Q2 2025 from $91 million in Q2 2024, primarily due to lower non-cash operating working capital[69] - The company modified the definition of distributable cash flow in Q2 2025, which now excludes adjustments for interest income and other, aiming for a more accurate reflection of cash generated from operations[137] Capital Expenditures - Capital expenditures for Q2 2025 were $34 million, compared to $20 million in Q2 2024; for the first half of 2025, capital expenditures were $66 million, up from $32 million in the same period of 2024[8] - The company invested $27 million in the Blackrod Connection Project during Q2 2025, alongside other capital expenditures related to information systems[68] - Capital expenditures for the Intra-Alberta & Other segment increased by 48% to $37 million in Q2 2025, reflecting investments in maintenance and growth[65] - The company invested $27 million in growth capital expenditures for the Blackrod Connection Project in Q2 2025, compared to $7 million in Q2 2024, reflecting a significant increase in capital investment[89] Debt and Financial Position - Total long-term debt as of June 30, 2025, was $5,774 million, unchanged from June 30, 2024[8][10] - Net debt as of June 30, 2025, was $4,903 million, down from $5,578 million as of June 30, 2024; net debt-to-normalized EBITDA ratio improved to 4.6 from 5.0[8][10] - The net debt-to-normalized EBITDA ratio increased to 4.6 times at June 30, 2025, compared to 4.5 times at December 31, 2024, due to lower normalized EBITDA[53] - The total long-term debt as of June 30, 2025, was $5,774 million, a slight increase from $5,716 million at the end of 2024[145] Dividends - Dividends declared in Q2 2025 amounted to $104 million, with dividends per share at $0.50; for the first half of 2025, total dividends declared were $208 million, with dividends per share at $1.00[8] - The company declared a quarterly dividend of $0.50 per share on May 15, 2025, payable on July 15, 2025, to shareholders of record on June 30, 2025[85] Operational Performance - Keystone Pipeline throughput for Q2 2025 was 544 Mbbl/d, down from 623 Mbbl/d in Q2 2024; for the first half of 2025, throughput was 578 Mbbl/d, down from 633 Mbbl/d in the same period of 2024[8][32] - The Keystone System Operating Factor was 93% for Q2 2025, a decrease from 94% in Q2 2024, indicating a slight decline in operational efficiency[181] - The Company completed cleanup and reclamation of the MP-171 incident site in early June 2025, with ongoing remedial actions[188] Guidance and Outlook - South Bow's 2025 guidance for normalized EBITDA is approximately $1.01 billion, with a range of +1% to -2%, supported by highly contracted cash flows[105] - The company expects distributable cash flow for 2025 to be $590 million, reflecting a 3% variability[102] - South Bow revises its outlook for distributable cash flow to $590 million, reflecting a three percent range adjustment due to lower expected current taxes[107] - The Company anticipates a financial outlook for 2025, including normalized EBITDA, interest expenses, and capital expenditures, with specific guidance for Q3 2025[196] Incident and Costs - The Company incurred $54 million in costs related to the MP-171 incident during Q2 2025, with an additional $4 million provision for expected costs[112] - Separation costs associated with the Spinoff are expected to be approximately $30 million to $40 million in 2025, down from a previous estimate of $40 million to $50 million[109] - The company incurred separation costs of $6 million for the six months ended June 30, 2025, down from $10 million in the same period of 2024[135] Other Financial Metrics - The company’s interest expense for the six months ended June 30, 2025, was $164 million, compared to $189 million for the same period in 2024, reflecting a decrease of 13.2%[132] - The company recorded a normalized EBITDA of $250 million for Q2 2025, compared to $241 million for Q2 2024[131] - The company’s income from equity investments for the six months ended June 30, 2025, was $(26) million, slightly higher than $(25) million in the same period of 2024[140]
South Bow Corporation(SOBO) - 2025 Q2 - Quarterly Report