TC Energy Corporation TRP reported third-quarter 2024 adjusted earnings of 76 cents per share, which beat the Zacks Consensus Estimate of 70 cents. The bottom line slightly increased from 75 cents reported in the year-ago period. This better-than-expected performance was driven by robust results from the company's Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Power and Energy Solutions segments.
This North America’s energy infrastructure provider's quarterly revenues of $4 billion outpaced the Zacks Consensus Estimate by $168 million. The figure also increased 36% year over year, driven by strong segmental revenue contribution.
TC Energy Corporation Price, Consensus and EPS Surprise
TC Energy Corporation price-consensus-eps-surprise-chart | TC Energy Corporation Quote
TC Energy’s comparable EBITDA of C$2.8 billion was up from C$2.6 billion reported in the prior-year quarter.
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In this quarter, TC Energy completed the successful spinoff of its Liquids Pipelines business (the spinoff transaction) on Oct. 1, 2024. The company also reduced its outstanding long-term debt by approximately $7.6 billion in October 2024, utilizing proceeds from South Bow Corporation debt issuance and other sources.
Additionally, the company lowered the capital cost estimate for the Southeast Gateway pipeline project to a range of $3.9-$4.1 billion, reduced from the original estimate of $4.5 billion. The project is on track to be commercially in service no later than mid-2025.
The company received approval from the Canada Energy Regulator for a five-year negotiated revenue requirement settlement for the NGTL System, effective from Jan. 1, 2025. TRP also filed a Section 4 Rate Case with the Federal Energy Regulatory Commission on Columbia Gas, requesting an increase to the maximum transportation rates, which is expected to take effect on Apr. 1, 2025, subject to refund.
Furthermore, the company completed approximately C$1.6 billion in asset divestitures year to date, including the sale of the Portland Natural Gas Transmission System (“PNGTS”) for pre-tax proceeds of approximately C$1.1 billion ($0.8 billion). This transaction included the assumption by the purchaser of $250 million in senior notes outstanding at PNGTS, as well as a CFE equity injection of C$340 million and non-cash consideration for a 13.01% equity interest in TGNH.
TRP’s board of directors announced a quarterly dividend of 82.25 Canadian cents per common share. The dividend is payable on Jan. 31, 2025, to its shareholders of record at the close of business on Dec 31, 2024. The declared dividend reflects TC Energy’s proportionate allocation following the spinoff transaction.
The Keystone Pipeline System achieved 95% operational reliability in the third quarter of 2024. Bruce Power achieved 98% availability, while the cogeneration power plant fleet reached 85% availability, factoring in a planned outage at the MacKay River Cogeneration Plant.
TRP’s Segmental Information
Canadian Natural Gas Pipelines reported a comparable EBITDA of C$845 million, up 8.2% from the year-ago quarter’s level. The figure beat our estimate of C$806.8 million. This year-over-year increase in EBITDA was driven by increased rate-based earnings on the NGTL System and Foothills.
U.S. Natural Gas Pipelines reported a comparable EBITDA of C$1 billion, indicating a 7.5% increase from the prior-year quarter’s actual. The growth in EBITDA was due to increased earnings from new projects, higher equity earnings and additional contract sales. However, the figure missed our estimate of C$1.05 billion.
Mexico Natural Gas Pipelines reported a comparable EBITDA of C$265 million, up 14.2% from the year-ago quarter’s reported figure of C$232 million. The figure exceeded our estimate of C$220.6 million.This rise can be attributed to higher equity earnings from Sur de Texas, influenced by peso-denominated financial exposure. Furthermore, the incremental earnings from the lateral section of the Villa de Reyes pipeline, which commenced service in the third quarter of 2023, also contributed to this increase.
Liquids Pipelines’ comparable EBITDA of C$360 million increased from the prior-year quarter’s level of C$232 million. This increase was mainly due to reduced margins in liquids marketing activities. Additionally, the figure beat our projection of C$355.4 million.
Power and Energy Solutions registered a comparable EBITDA of C$326 million, up 27.3% from the year-ago quarter’s level of C$256 million. The growth was mainly driven by higher contributions from Bruce Power, resulting from increased generation and a higher contract price. The figure also beat our projection of C$251 million.
TRP’s Expenditure and Balance Sheet
As of Sept. 30, 2024, TC Energy’s capital investments amounted to C$2.1 billion.
TRP had cash and cash equivalents worth C$3.8 billion and long-term debt of C$55.6 billion, with a debt-to-capitalization of 64% as of the same date.
TRP’s 2024 Guidance
TC Energy expects comparable EBITDA to be at the upper end of its C$11.2 billion to C$11.5 billion range. On a post-spinoff basis (excluding the Liquids Pipelines contribution for 2024), the company expects this to equate in the range of C$9.9 billion to C$10.1 billion.
The company expects comparable earnings per common share to remain consistent with the guidance provided in its 2023 Annual Report.
Capital expenditures are expected to be between C$8.1 billion and C$8.4 billion on a gross basis, or C$7.4 billion to C$7.7 billion on a net basis after accounting for non-controlling interests. This is lower than the previous outlook of C$8.5 billion to C$9 billion on a gross basis, or C$8 billion to C$8.5 billion on a net basis.
TRP currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Energy Earnings So Far
Right in the middle of earnings season, there have been a few key energy releases so far. Let us glance through a couple of them.
Liberty Energy LBRT, the Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Energy infrastructure provider, Kinder Morgan, Inc. KMI reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.
KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.
Schlumberger Limited SLB, a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents. The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.
SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had approximately $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.
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