TC Energy(TRP) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - TC Energy reported a 6% increase in comparable EBITDA from continuing operations in 2024 compared to 2023, reaching over $10 billion [8][30] - The company successfully reduced net capital expenditures by 10$1.3 billion in capital reductions to be realized in 2026 and 2027 [9] - Comparable earnings for the fourth quarter of 2024 were $1.1 billion, which was 8$200 million incentive payment to Coastal GasLink in the fourth quarter of 2023 that was not repeated in 2024 [26] - The Mexico business posted gains primarily due to the weakening of the peso, as revenues are paid in US dollars [27] Market Data and Key Metrics Changes - The Ontario IESO projects a 69,000 megawatt shortfall in total installed capacity by 2050, driven by industrial expansion and population growth [16] - The company anticipates a threefold increase in LNG exports and strong growth in power generation due to coal retirements and data center demand [13] Company Strategy and Development Direction - TC Energy aims to maximize the value of its assets through safety and operational excellence, executing selective growth projects, and ensuring financial strength [40] - The company is focusing on filling its backlog of development projects, with a target of approximately $8 billion in capital between 2026 and 2030 [18] - The partnership with CFE on Southeast Gateway is seen as a critical component of achieving the goals outlined in Mexico's Plan 2030 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the alignment with the Mexican government's priorities and the role of natural gas deliveries [12] - The company remains focused on maintaining a debt to EBITDA ratio of 4.75 times while pursuing organic deleveraging efforts [36] - Management highlighted the importance of executing on time and on budget to improve credit ratings and maintain investor confidence [78] Other Important Information - The Board of Directors declared a first quarter 2025 dividend of$0.85 per common share, marking the 25th consecutive year of dividend growth [37] - Recent leadership changes were announced, with Tina Faraca appointed as Executive Vice President and Chief Operating Officer of Natural Gas Pipelines, and Greg Grant as Executive Vice President of Power and Energy Solutions [42][44] Q&A Session Summary Question: Update on Southeast Gateway in-service date and commercial contracts - Management confirmed the May 1 in-service date is consistent with previous guidance and discussed the status of relevant plants and potential gas supply [49][50] Question: Interest in developing integrated gas to power projects - Management indicated openness to bundled solutions but emphasized a focus on low-risk, complementary projects rather than growing an independent power generation company [56][58] Question: Next steps for Bruce C nuclear project - Management stated that while early in development, they are bullish on nuclear's role in meeting Ontario's energy demand and will not bear significant cost and schedule risk [70][72] Question: Update on leverage and balance sheet outlook - Management highlighted the importance of executing on the capital plan and maintaining a focus on organic deleveraging to improve credit ratings [78][79] Question: Update on Canadian mainline capacity and capital allocation - Management noted that spare capacity has changed due to strong demand and reiterated commitment to the $6 billion to$7 billion capital target [86][89] Question: Update on Columbia rate case - Management confirmed that rates for the Columbia gas system will go into effect in April 2025 [137]