TC Energy Exceeds Earnings Expectations in Q4 2024 but Faces Yearly Decline
TC Energy Corporation TRP reported adjusted earnings of 75 cents per share for the fourth quarter of 2024, surpassing the Zacks Consensus Estimate of 68 cents. The company’s strong performance came mainly from its Mexico Natural Gas Pipelines and Power and Energy Solutions segments, despite a decrease from 99 cents per share in the previous year due to weak results in the Canadian and U.S. Natural Gas Pipelines segments.
In terms of revenue, TC Energy generated $2.6 billion, exceeding the Zacks Consensus Estimate by $130 million. Yet, this total represented a 17.8% decline compared to the same quarter last year. The company’s comparable EBITDA fell slightly to C$2.6 billion from C$2.7 billion in the previous year.
Additionally, the board declared a quarterly dividend of 85 Canadian cents per common share for the quarter ending March 31, 2025, a 3.3% increase from last quarter. The dividend will be payable on March 31 to shareholders of record as of March 14. Following a proportional allocation after its spinoff, the annualized dividend now stands at C$3.40 per share.
Bruce Power achieved an impressive 99% availability in the fourth quarter, while the cogeneration power plant fleet reached 98% availability, aided by a decline in forced outages and successful maintenance completion.
Overview of Key Financial Metrics
TC Energy Corporation price-consensus-eps-surprise-chart | TC Energy Corporation Quote
Segment Analysis: What the Numbers Show
Canadian Natural Gas Pipelines reported comparable EBITDA of C$851 million, reflecting a 17.7% decline from last year. This decrease was influenced by lower earnings from Coastal GasLink, which saw a C$200 million incentive payment in 2023. Furthermore, this figure fell short of our estimate of C$863 million.
Deliveries from Canadian Natural Gas Pipelines averaged 25.6 billion cubic feet per day (Bcf/d), marking a 7% year-over-year increase. Notably, on February 9, 2025, total NGTL System deliveries set a record of 17.7 Bcf/d. The Canadian Mainline also reported average deliveries of 6.3 Bcf/d, an 11% rise from the same period in 2023.
U.S. Natural Gas Pipelines recorded comparable EBITDA of C$1 billion, representing a 2% decline from the prior year. This decrease stemmed from the sale of PNGTS on August 15, 2024, alongside lower earnings from the U.S. natural gas marketing business due to reduced margins. This figure was also below our estimate of C$1.2 billion.
Mexico Natural Gas Pipelines achieved a comparable EBITDA of C$234 million, a 12.5% increase from C$208 million in the year-ago quarter. This surpassed our estimate of C$135 million, driven by better U.S. dollar-denominated EBITDA, mainly due to higher equity earnings from Sur de Texas.
The average flow for Mexico Natural Gas Pipelines was 2.7 Bcf/d, with the Sur de Texas pipeline hitting a record single-day flow of over 1.7 Bcf/d on November 20, 2024, underscoring its significance as a key U.S. natural gas import route.
Power and Energy Solutions posted comparable EBITDA of C$341 million, a 28.2% increase from C$266 million in the previous year, mainly due to higher output and better contract pricing at Bruce Power. This figure exceeded our estimate of C$231.1 million.
Financial Position & Guidance
As of December 31, 2024, TC Energy’s capital investments totaled C$2.3 billion. The company held C$2.6 billion in cash and cash equivalents, while long-term debt stood at C$45 billion, reflecting a debt-to-capitalization ratio of 60%.
2025 Projections and Expectations
For 2025, TC Energy expects comparable EBITDA from continuing operations to range between C$10.7 and C$10.9 billion. This growth will be supported by new projects like the Southeast Gateway pipeline and full-year contributions from those that started in 2024.
The company anticipates an improved revenue contribution from the NGTL System, thanks to a negotiated revenue settlement, although this will be partially offset by decreased generation from Bruce Power due to Unit 4 Major Component Replacement (MCR).
Moreover, expected comparable earnings per common share will likely be lower than in 2024, mainly due to various factors such as reduced interest income, depreciating asset rates, and increased tax rates. Capital expenditures are projected between C$6.1 billion and C$6.6 billion gross, or C$5.5 billion to C$6 billion net, after accounting for non-controlling interests.
Currently, TRP holds a Zacks Rank of #3 (Hold), with a complete list of Zacks #1 Rank (Strong Buy) stocks available.
Recent Developments and Projects
Completion of Spinoff Transaction: The company successfully completed the spinoff of its Liquids Pipelines business on October 1, 2024.
Southeast Gateway Pipeline Project: As of January 20, 2025, mechanical completion of the Southeast Gateway pipeline project was achieved, with plans for an in-service date of May 1, 2025.
TC Energy Achieves Milestones with Pipeline Projects and Fiscal Reports
Coastal GasLink Pipeline Goes Live: In November 2024, TC Energy announced the Coastal GasLink pipeline became operational, allowing toll collection from customers retroactive to October 1, 2024.
Columbia Gulf System Expansion Plans: The company greenlit the Pulaski and Maysville projects on the Columbia Gulf System. These mainline extensions aim to facilitate a complete coal-to-gas conversion at two existing power plants, providing a combined capacity of 0.2 Bcf/d for gas-fired generation. The projects will be completed by 2029, with an estimated total cost of $0.7 billion.
Southeast Virginia Energy Storage Project: In addition, TC Energy approved the $0.3 billion Southeast Virginia Energy Storage Project, an LNG peaking facility in southeast Virginia. This facility will help an existing local distribution company manage growing winter peak loads, enhance operational flexibility on the Columbia Gas system, and alleviate peak-day pricing pressures. It is anticipated to be operational by 2030.
GTN XPress Project Launch: The $0.1 billion GTN XPress project was successfully placed into service in December 2024.
Bruce Power Project 2030 Developments: Bruce Power initiated Stage 3a of Project 2030, aimed at adding approximately 90 MW of capacity. TC Energy’s share of the capital required for this phase is about C$175 million, with no additional capital call expected from Bruce Power. Upon completion, Project 2030 will enhance Bruce Power’s peak output to 7,000 MW, with all output sold under a long-term agreement with the IESO.
Major Component Replacement for Unit 4: On January 31, 2025, Bruce Power’s Unit 4 was taken offline to initiate its major component replacement program. The final cost and schedule estimates for Unit 5’s major component replacement were submitted to the IESO on the same date.
Advancing the Ontario Pumped Storage Project: Finally, TC Energy, in partnership with the Saugeen Ojibway Nation, will begin pre-development work on the Ontario Pumped Storage Project. This comes after the Ontario Government’s announcement on January 24, 2025, to invest up to C$285 million for detailed cost estimates and environmental assessments to evaluate the project’s feasibility.
Key Financial Highlights
While TC Energy’s fourth-quarter results are noteworthy, let’s also examine three other major industry reports.
Oil and gas service provider Liberty Energy (LBRT) reported a fourth-quarter adjusted net income of 10 cents per share, slightly exceeding the Zacks Consensus Estimate of 9 cents, largely due to reduced costs. However, this figure was down from 54 cents from the previous year, affected by operational challenges and lower activity levels.
As of December 31, Liberty had around $20 million in cash and cash equivalents, while its long-term debt stood at $190.5 million, resulting in a debt-to-capitalization ratio of 8.8%.
Another provider, Halliburton Company (HAL), posted a fourth-quarter adjusted net income of 70 cents per share, matching the Zacks Consensus Estimate but falling short of 86 cents reported in the same quarter last year. This decline was influenced by reduced activity in North America, albeit partially compensated by improved operations in the Gulf of Mexico.
By December 31, 2024, Halliburton had approximately $2.6 billion in cash and $7.2 billion in long-term debt, resulting in a debt-to-capitalization ratio of 40.4%. The company generated $1.5 billion in cash flow from operations during the fourth quarter, leading to free cash flow of $1.1 billion.
Energy infrastructure provider Kinder Morgan (KMI) reported fourth-quarter adjusted earnings of 32 cents per share, slightly below the Zacks Consensus Estimate of 33 cents. The shortfall was mainly due to decreased volumes on certain systems mixed with asset sales and lower crude, CO2, and NGL volumes. Kinder Morgan’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year prior.
As of December 31, 2024, Kinder Morgan reported $88 million in cash, with long-term debt reaching $29.8 billion. For 2025, the company projects a net income of $2.8 billion, an 8% increase from last year, with an adjusted EPS of $1.27, up 10%. They expect to announce dividends of $1.17 per share, a 2% rise, and a budgeted adjusted EBITDA of $8.3 billion, up 4% from the prior year.
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