TC Energy Corp (TRP) Q1 2025 Earnings Call Highlights: Strong Start with Strategic Project ...

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02-05-2025

Net Capital Expenditures: Expected to be between $5.5 billion and $6 billion for 2025.
Assets into Service: $8.5 billion of assets expected to be placed into service in 2025.
EBITDA Outlook 2025: Reaffirmed at $10.7 billion to $10.9 billion, representing a 7% to 9% increase over 2024.
EBITDA Outlook 2027: Targeted at $11.7 billion to $11.9 billion, implying a 5% to 7% three-year growth rate.
Bruce Power Availability: Achieved 87% availability in Q1, with full-year 2025 expected in the low 90% range.
Alberta Cogen Fleet Availability: Delivered 98% availability in Q1.
Average Realized Price: $106 per megawatt hour, up $12 from Q1 2024.
Dividend Growth: 25 consecutive years of dividend growth.
Warning! GuruFocus has detected 11 Warning Signs with TRP.
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Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
TC Energy Corp (NYSE:TRP) reported a strong start to 2025 with safety incident rates at five-year lows.
The company completed the Southeast Gateway project 13% below budget, enhancing long-term cash flow.
TC Energy Corp (NYSE:TRP) is on track to place $8.5 billion of assets into service in 2025, with projects tracking approximately 15% below budget.
The Northwoods project, a $900 million expansion of the ANR pipeline system, is backed by a 20-year take-or-pay contract.
The Bruce Power Major Component Replacement program is expected to add significant long-term value by extending the life of Unit 5 by over 35 years.
Approval from the National Energy Commission (CNE) is still pending for the Southeast Gateway project, delaying its in-service date.
The power and energy solutions business experienced lower contributions from Bruce due to planned outages and ongoing refurbishments.
Natural gas storage contributions were lower compared to the exceptional performance in early 2024.
The company remains above its 4.75 times debt-to-EBITDA target for 2025, indicating elevated leverage.
There is uncertainty regarding the regulatory framework in Canada, which could impact future infrastructure development and LNG projects.
Q: Given the strong origination pipeline for US gas projects, how is TC Energy considering CapEx and potentially going to the high end of the $6 billion to $7 billion annual range? A: Francois Poirier, President and CEO, emphasized the strategic advantage of TC Energy's footprint and the focus on human capital to ensure project execution. He stated that the company is committed to maintaining a debt-to-EBITDA ratio of 4.75 times and does not expect to exceed the $6 billion annual CapEx in 2025 or 2026.
Q: Can you clarify the payment mechanics for the Southeast Gateway project once operational, and is CNE approval a gating item for service to start? A: Tina Faraca, EVP & COO - Natural Gas Pipelines, explained that once CNE approval is received, invoicing will follow a normal 30-day cycle. Francois Poirier added that CNE approval is necessary for regulated rates to commence service, but a total adjustment mechanism preserves the NPV of payments, ensuring no impact on the 2025 outlook.
Q: What is driving the increased cadence of project announcements through 2025, and are these projects mainly data center related? A: Tina Faraca noted that power generation, including coal-to-gas conversions and data center demand, is a bright spot for growth. Francois Poirier added that the guidance on project cadence is based on specific projects in late stages of negotiation, not just macro trends.
Q: How does TC Energy view the potential for partnerships in new projects to manage capital needs and leverage levels? A: Sean O'Donnell, EVP & CFO, indicated a shift towards partnerships rather than asset sales, especially for larger projects towards the end of the decade. Francois Poirier highlighted the importance of involving indigenous communities in Canada for new projects.
Q: How does the volatility from trade policy and Canadian election results impact TC Energy's risk-adjusted returns and growth plans? A: Francois Poirier stated that TC Energy's projects are insulated from volumetric and commodity price risks. The company focuses on delivering projects on time and on budget, with the US offering the best risk-adjusted returns. He emphasized the need for policy stability and collaboration to attract capital for Canadian LNG projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.