Rebounds from loss to a $1.4bn profit in Q4, boosting its dividend amid LNG demand surges
TC Energy Corp. reported a significant turnaround in its financial performance, announcing a nearly $1.5bn profit in the fourth quarter, a stark contrast to the $1.4bn loss in the same period a year earlier.
This impressive result was primarily driven by high demand for liquefied natural gas (LNG). The Calgary-based pipeline company's income per share rose to $1.41 in the quarter ending December 31, up from a loss of $1.42 per share in the final quarter of 2022.
In response, the company declared a quarterly dividend of 96 cents per common share, an increase from the previous 93 cents.
In 2023, TC Energy's earnings amounted to $2.8bn, significantly higher than the $641m earned in 2022. François Poirier, the chief executive, described 2023 as one of the company's “most transformational years.”
This period saw the mechanical completion of the Coastal Gaslink pipeline project and the announcement of plans to spin off its liquid pipeline business.
During a conference call, the company discussed the potential impact of the United States' decision to pause pending export permits for LNG, made in January.
Stanley Chapman, the executive vice-president, and chief operating officer, emphasized the company's “geographical diversity” as a strategic advantage. He noted that while the US decision affects about 20 projects under approval, it does not impact already approved projects set to launch in the next two years.
TC Energy's financial performance in the fourth quarter exceeded analysts' expectations. Its comparable earnings per share of $1.35 surpassed the anticipated $1.08, and its EBITDA (earnings before interest, taxes, depreciation, and amortization) of $3.1bn also exceeded the expected $2.8bn.
The company reported strong EBITDA figures across its operations. Canadian gas pipelines generated $1.03bn in EBITDA, surpassing the Bank of Montreal's estimate due to a significant incentive payment for Coastal GasLink.
US gas pipelines brought in $1.22bn, closely aligning with estimates. However, its Mexican pipeline EBITDA was slightly below expectations at $208m, and the liquid pipelines segment underperformed against estimates, recording $379m in EBITDA.
Conversely, the power and energy solutions segment exceeded expectations with earnings of $266m.
Looking ahead to 2024, TC Energy reaffirmed its EBITDA outlook of $11.2bn to $11.5bn. However, earnings per common share are expected to be lower than in 2023 due to the sale of some non-controlling equity interests.
The company plans capital expenditures of approximately $8.5bn to $9bn, focusing on various pipeline projects, including the Southeast Gateway pipeline project and the Bruce Power Major Component Replacement programs, alongside standard maintenance capital expenditures.
