TC Energy Corp. Q1 FY2024 earnings call

• TC Energy had three priorities for 2024: maximizing asset value, project execution, and enhancing balance sheet strength and continued to deliver on these. - Saw record earnings with comparable EBITDA up 11% year-over-year. - Secured capital program progressed on plan, with projects like Gillis Access placed into service in March 2024 and nearly $1 billion of projects put into service so far this year. - Advancing $3 billion asset divestiture program, with recent sale of PNGTS expected to bring pre-tax proceeds of approximately Canadian $1.1 billion. - Planning to spin off South Bow, with shareholder vote scheduled for June 4. - Sean O’Donnell to become Executive Vice President and Chief Financial Officer effective May 15. - In Mexico, Southeast Gateway project offshore pipe installation over 70% complete, onshore critical permits obtained and landfall sites constructed, tracking schedule and expected cost of $4.5 billion. - First quarter saw continued high utilizations across natural gas systems with record deliveries to power generators.

TC Energy saw comparable EBITDA up 11% compared to the first quarter of last year. In the power and energy solutions segment, comparable EBITDA increased by 14% driven by increased availability. The liquids business had a 28% increase in comparable EBITDA due to higher utilizations on Keystone and Marketlink systems. In Canada, total NGTL system deliveries averaged 15.3 Bcf a day, with a new daily record high of 17.3 Bcf in January. In the U.S., daily average flows of 30 Bcf were up 5% compared to the first quarter of last year. In Mexico, average daily throughput was nearly 3.0 Bcf per day, up 13% versus the first quarter of last year. The power business had comparable EBITDA increase of 14% versus the first quarter of last year, with Bruce Power having 92% availability in the first quarter and expected average availability in the low 90s percent range for 2024.

• Reaffirmed 2024 outlook not considering the proposed liquids pipeline spinoff. - Expect comparable EBITDA to be between $11.2 billion and $11.5 billion in 2024, driven by increase in NGTL system, full year impact of projects placed into service last year, and approximately $7 billion of new projects expected to be placed into service this year. - Comparable earnings per common share expected to be lower than 2023 due to higher net income attributable to non-controlling interests. - Total net capital expenditures for 2024 are expected to be approximately $8 billion to $8.5 billion.

• Potential impact of credit rating agency downgrades. While engaged with rating agencies and deleveraging plans remain intact, no market reaction was seen when peers were downgraded recently, but uncertainty exists regarding specific agency actions.

Q: Ben Pham of BMO asked about asset sales, potential additional asset sales, impact of federal budget on NGTL and First Nations loan guarantee, and if CFE purchase is included in $3 billion target.

A: Francois Poirier responded that things are progressing well on divestiture program, CFE's purchase of an equity interest in TGNH is included in the number, CFE has received approvals and is negotiating documentation, budget has no impact on divestiture plans in Canada, and more divestitures could be announced in second quarter.

Q: Rob Hope of Scotiabank asked about power demand driving gas demand, opportunities in gas pipeline and power business, and Ontario storage project.

A: Stan Chapman and Annesley Wallace responded that there's strong growth in deliveries across jurisdictions, data centers present growth opportunity, focus on nuclear and pumped hydro in power, and Ontario Pump Storage project has community support but mindful of cost recovery framework.