TC Energy Corporation

Thank you for standing by. This is the conference operator. Welcome to the TC Energy second quarter 2024 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I 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 2024 Second Quarter Conference Call. Joining me are Francois Poirier, President and Chief Executive Officer, Sean O'Donnell, Executive Vice President and Chief Financial Officer, along with other members, of our senior leadership team. Francois and Sean 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 Investors 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 may 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 gap and non-gap measures is contained in the appendix of the presentation. With that, I'll pass the call to Francois.

Thanks, Gavin, and good morning, everyone. Before I dive into our results, I just want to acknowledge the natural disasters that have impacted individuals and communities across our footprint. From Hurricane Beryl in Texas to the current devastation being caused by the Alberta and BC wildfires, our thoughts remain with those affected. During these events, our teams face the monumental task of keeping our operations running smoothly and their dedication to maintaining safe and reliable operations is nothing short of extraordinary. It's this dedication across our company that drove another strong quarter while making exceptional progress on our strategic priorities for 2024. Our continued focus on safety and operational excellence allowed us to set multiple records while growing comparable EBITDA by 9% as compared to the second quarter of 2023. We also advanced multiple strategic initiatives aimed at maximizing the long-term value of our assets, including a successful shareholder vote on Southbow and reaching unanimous support from customers for a five-year settlement agreement on our NGTL system. Our secured capital program continues to track both cost and schedule with our major projects, Southeast Gateway and our Bruce Power Unit 3 MCR. We've already placed $1.2 billion of projects into service and remain on track to place approximately $7 billion of assets into service in 2024, including Coastal Gas Link. And as we look to 2025, this represents an important inflection point for TC Energy with plans to place an additional $9 billion of assets into service at an average build multiple of just over seven times. In combination with our announced asset divestitures that now total $2.6 billion, strong year-to-date EBITDA performance, and capital expenditures that are trending to the low end of our $8 to $8.5 billion outlook, we are well on track to reach our 2024 year-end debt to EBITDA target of 4.75 times. We're proud to announce that we've entered into Canada's largest ever Indigenous Equity Ownership Agreement that will enable ownership of the NGTL and Foothill systems. This historic agreement is made possible by an equity loan guarantee provided by the Alberta Indigenous Opportunities Corporation in support of a newly formed Indigenous-owned investment partnership. The transaction creates a pathway for equity participation ownership that delivers long-term, low-risk and stable revenue for local Indigenous communities, creating a lasting and meaningful legacy. We thank all rights holders and stakeholders involved in making this agreement possible. It is an example of what's achievable when Indigenous communities, governments, and industry come together. Never have I seen such strong prospects for North American natural gas demand growth. We are seeing natural gas demand reach record highs, and this is expected to grow by nearly 40 BCF per day by 2035. The outlook for our business has never been stronger. Our assets are strategically positioned to meet growth and demand underpinned by five key pillars that give us visibility to attractive in corridor opportunities through the end of the decade. Based on capacity projects under various stages of development, we have line of sight to five plus BCF per day of next wave LNG growth. that will feed exports from Canada, the US, and Mexico, and we are the only company to have major assets in all three markets. In the US, we are delivering approximately 30% of LNG feed gas. In Mexico, we expect to see the first LNG cargo this month from Altamira's liquefaction facility. And in Canada, CGL remains ready to deliver gas when called for. Second, we're seeing continued demand and reliability requirements from our utility customers. We have one of the largest natural gas storage systems in North America and that further bolsters energy reliability across the continent. Third, power generation demand is expected to increase significantly, driven by wide-scale electrification, coal-fired retirements, as well as emerging power needs from AI and data centers. As an example, we see around 300 data centers at various stages of development, 60% of which have proposed locations within 15 miles of our systems, namely Columbia. Additionally, within 15 miles of our Columbia and ANR systems, we estimate approximately nine gigawatts of coal-fired generation is set to retire by 2031. From a capacity project standpoint, these drivers represent approximately an additional five BCF per day of high quality opportunity. Fourth, our assets strategically connect the lowest cost supply to the highest value markets. These basins continue to see significant growth potential, and our customers continue to look for additional connectivity. And finally, we have approximately $7.5 billion in our secured capital table for recoverable maintenance and our modernization projects that support the safe and reliable delivery of record volumes. Our role is to execute the opportunities that maximize risk-adjusted returns, while adhering to our net capital expenditure limit of $6 to $7 billion per year to create incremental value for our shareholders. In Mexico, we achieved critical milestones in the construction of Southeast Gateway and remain on track for commercial and service by mid-2025 at our expected cost of US $4.5 billion. Progress on the offshore pipe installation has reached over 98% completion. The deepwater offshore section is now installed, and there is approximately three kilometers of shallow water installation remaining. We anticipate the shallow water installation to be complete in the third quarter. Onshore, we have completed construction at all three landfall sites. and construction of the onshore facilities and final pipe, as well as the tie-in activities, continue to progress on schedule. To further illustrate the continued demand for natural gas, again we saw continued high utilization of our systems. You can see on this slide that our NGTL system in Canada, our US natural gas pipelines, And our Mexico pipelines all set new all-time records for receipt or delivery volumes with several daily records achieved in July. We reached unanimous support from customers for a five-year negotiated revenue requirement settlement on NGTL that extends from 2025 to 2029. This continues our 20-plus year track record of collaboratively working with our customers to address evolving needs while maximizing the value of our assets. The settlement is expected to result in approximately $150 to $200 million per year of incremental EBITDA through increased depreciation rates and incentive mechanisms. The settlement supports competitive tolls for our customers and it incentivizes emissions reductions. The settlement also enables an investment framework to allocate approximately $3.3 billion toward a new multi-year growth program that will serve continued growth from the Western Canadian Basin. The projects comprising the growth plan have targeted in-service dates between 2027 and 2030, aligning with our net annual capital expenditure limit. In our power segment, Bruce Power continues to reliably provide emissionless, low-cost electricity in Ontario. We achieved 78% availability in the second quarter, taking into account planned outages on four of our units, Units 8 through 5. The availability outlook for 2024 remains in the low 90% range now that all planned maintenance is complete for 2024. Unit 3 MCR continues to progress on plan for both cost and schedule, and the Unit 4 MCR is expected to begin in early 2025. In the liquids business, Keystone continued its strong operational performance, achieving 94% reliability in the second quarter. At our annual and special meeting in June, we received strong support from our shareholders to spin off the liquids pipelines business, with voted common shares at 97% in favor of the spin. We continue to believe that spinning off Southbow will allow both companies to execute their focused strategies while maximizing the value of their respective assets. And now, I'll turn the call over to Sean.