TC Energy Corporation

Thank you for standing by. This is the conference operator. Welcome to the TCEnergy fourth quarter 2023 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0.

would now like to turn the conference over to gavin wiley vice president investor relations please go ahead thanks very much and good morning i'd like to welcome you to tc energy's 2023 fourth quarter conference call joining me are francois poirier president and chief executive officer joel hunter executive vice president chief financial officer along with other members of our senior leadership team francois and joel will begin today with some comments on our financial results and operational highlights. A copy of the slide presentation that will accompany their remarks is available on our website under the investor section. Following their remarks, we'll take questions from the investment community. We ask that you limit yourself to two questions, and if you're a member of the media, please contact our media team. Before Francois begins, I'd like to remind you that today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information, please see the reports filed by TC Energy with Canadian securities regulators and with the U.S. Securities Exchange Commission. Finally, during the presentation, we'll refer to certain non-GAAP measures that may not be comparable to similar measures presented by other entities. These measures are used to provide additional information on TC Energy's operating performance, liquidity, and its ability to generate funds to finance its operations. A reconciliation of various GAAP and non-GAAP measures is contained in the appendix of the presentation. With that, I'll turn the call over to Francois.

Thanks Gavin and good morning everyone. At the beginning of 2023, we set out to deliver on three clearly defined priorities that focused on maximizing the value of our assets, project execution, and enhancing balance sheet strength. And I'm pleased to report that we delivered on all three of those commitments. Our focus on safety and operational excellence resulted in high availability and several utilization records across our systems that contributed to 2023 comparable EBITDA being 11% higher compared to 2022, another record year for operational and financial results. We also announced our intention to spin off our liquids pipelines business to create two standalone investment grade companies, with greater flexibility to implement distinct strategies to unlock their full potential and deliver incremental long-term shareholder value. Our focus on project execution resulted in placing approximately $5.3 billion of projects into service on budget. And our major projects, including CGL and Southeast Gateway, remained on track or ahead of our 2023 targets. We committed to enhance our balance sheet strength through capital rotation and successfully closed the sale of a non-controlling interest in our Columbia pipelines with cash proceeds totaling $5.3 billion, and that reduced our 2023 debt to EBITDA leverage metric by over 0.4 times, a major step towards reaching our 2024 year-end objective of 4.75 times debt to EBITDA. And with this positive momentum, building into 2024, we have increased our dividend for the 24th consecutive year and reaffirm 2024 comparable EBITDA outlook to be between $11.2 and $11.5 billion. Now, after five years of construction and 55 million hours worked, we achieved the monumental milestone of mechanical completion on Coastal GasLink. This was one of the most technically challenging pipelines ever built in Canada, and our team applied project execution and safety excellence to deliver this project ahead of our year-end target. Following mechanical completion, we completed the required commissioning process safely in 2023 and we are now ready to deliver natural gas to LNG Canada's facility as soon as they are ready to receive it. Reflecting the team's monumental efforts to achieve these milestones, as the project developer, TC Energy earned a $200 million incentive payment that was settled through a cash distribution earlier this week. Post-construction and reclamation activities will continue throughout 2024 with the project remaining on track with its cost estimate of approximately $14.5 billion. The success of this project is not only important for TC Energy and for our customer LNG Canada. It's a nation-building project that will provide Canada's first direct path for sustainably produced Canadian natural gas to reach global LNG markets. In Mexico, we are making meaningful progress on our Southeast Gateway marine pipeline. We reached a milestone in the fourth quarter when we began offshore pipe installation for the project. We've now completed 100% of the concrete weight coating on all of the offshore pipe, and the remainder of the offshore pipe installation will continue throughout this year. And with all critical permits for construction obtained, the onshore construction at all landfall sites continues to progress on plan. Importantly, the project continues to track schedule and expected cost of US $4.5 billion as we continue to see benefits from sanctioning this project under our enhanced capital allocation governance process that included a Class III estimate prior to our final investment decision. Now, while our utility-like assets do not carry any material volumetric or commodity price risk, continued high utilizations throughout the fourth quarter continue to reflect volume growth and the incremental demand for our services that underpins our future investments. Within our integrated natural gas business, total NGTL system deliveries in Canada averaged 14.5 BCF a day, while our investment base grew by 9% year over year. In the U.S., various pipelines achieved record throughput volumes, including our GTN system, which achieved an all-time delivery record of 3.1 BCF in November. And our Mexico pipeline's daily throughput was also higher, averaging 2.7 BCF per day, which is up 30%. compared with the fourth quarter of 2022 levels. In our power and energy solutions business, our focus on operational excellence centers around our assets being available to deliver power when it was needed most. And our Alberta Cogen power fleet achieved 99% availability in the fourth quarter. And Bruce Power also had strong performance and averaged a 92% availability throughout 2023, which is well above our historical averages. Bruce Powers Unit 6 returned to commercial operations in 2023 following its major component replacement outage ahead of schedule and within budget. Bruce also submitted its final basis of estimate for the Unit 4 MCR with the ISO in the fourth quarter and we have now received the ISO's approval last week. Unit 4 will be the third of six units in the Bruce MCR program where we are extending its asset life for the next 40 years. This exceptional, emission-less asset produces 30% of the electricity in Ontario. On South Bow, Bevan and team continue to make progress on the proposed spinoff of our liquids pipelines business into a standalone investment-grade entity. Van Defoe has been named as incoming Senior VP and CFO. With over 30 years of experience in the energy industry, including being the CFO of a public company for eight years, Van will be instrumental in leading Southpoe's financial and strategic affairs. Additionally, Lori Murata was named as incoming Senior VP and General Counsel. Lori will oversee South Bow's legal, compliance, and regulatory activities, bringing over 20 years of experience in the energy industry and 30 years overall practicing law. For next steps, we expect our proxy circular will be filed in the first half of this year and we remain on track to advance a shareholder vote by mid-year. It is expected that we will hold our AGM concurrently with a shareholder vote on the spin-off transaction. And now I'll turn the call over to Joel.