TC Energy(TRP) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2021, comparable earnings reached a record $4.2 billion or $4.27 per common share, compared to $3.9 billion or $4.20 per share in 2020, reflecting a strong operational performance despite a weaker U.S. dollar impacting EBITDA by approximately $400 million [14][30] - Comparable EBITDA for the fourth quarter was $2.4 billion, a 3% increase from $2.3 billion in the same period in 2020 [31] - Net income attributable to common shares for Q4 2021 was $1.1 billion or $1.14 per share, consistent with the previous year's $1.1 billion or $1.20 per share [29] Business Line Data and Key Metrics Changes - U.S. Gas Pipelines' comparable EBITDA increased due to higher earnings from Columbia Gas, attributed to increased transportation rates effective February 1, 2021 [32] - Liquids Pipelines' comparable EBITDA declined mainly due to lower volumes on the U.S. Gulf Coast section of the Keystone Pipeline System [32] - The Power and Storage segment's comparable EBITDA is expected to remain consistent with 2021, with Bruce Power equity income anticipated to be similar due to offsetting factors [42] Market Data and Key Metrics Changes - The NGTL system in Alberta reached a decade-level high for average export flows, with an all-time record of 8.1 Bcf on January 5, 2022 [12] - U.S. network set an all-time send-out record of 34.9 Bcf on January 20, 2022, representing approximately one-fourth of total U.S. daily supply [12] - Keystone system achieved record throughput of 602,000 barrels per day in 2021, up 6% from 2020 [13] Company Strategy and Development Direction - The company is advancing a $24 billion capital program, including approximately $7 billion of new high-quality growth opportunities sanctioned in 2021 [15] - Focus on sustainability with targets to reduce GHG emission intensity by 30% by 2030 and achieve net-zero emissions by 2050 [11] - Plans to sanction more than $5 billion of new projects annually in the coming years, with a focus on energy transition and decarbonization [19][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver EBITDA growth of 5% through 2026, supported by a strong capital program and diversified asset base [46][48] - The company remains focused on optimizing operations and enhancing returns on invested capital while maintaining financial strength and flexibility [24][78] - Management highlighted the importance of a strong balance sheet to respond to energy transition needs and opportunities [78] Other Important Information - The company declared a first quarter 2022 dividend of $0.90 per common share, a 3.4% increase over the previous year, marking the 22nd consecutive year of dividend growth [21] - Recent management changes include the expansion of Bevin Wirzba's role to Executive Vice President, Strategy and Corporate Development [25][26] Q&A Session Summary Question: On the Power business and renewable procurement - Management discussed the ability to aggregate load and create economies of scale, enhancing returns without significant capital investment [54][55] Question: Status of white space in the pipeline network - Management indicated limited exposure to inflation and highlighted growth opportunities in existing basins, particularly in natural gas pipelines [68][69] Question: Capital allocation and leverage strategy - Management plans to maintain steady debt levels while using internally generated cash to fund dividends and capital programs, targeting a long-term leverage of 4.75 debt to EBITDA [76][78] Question: Update on Coastal GasLink project - Management confirmed progress on the project, with nearly 60% completion and ongoing discussions with customers to ensure alignment [111][112]