TC Energy(TRP) - 2025 Q3 - Earnings Call Transcript

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]