TC Energy Corporation

Thank you for standing by. This is the conference operator. Welcome to the TC Energy Second Quarter 2025 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 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 of Investor Relations. Please go ahead.

Thanks very much and good morning. I'd like to welcome you to TC Energy's 2025 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 this live presentation is available on our website under the Investor section. Following opening remarks, we'll take questions from the investment community. Please limit yourself to two questions and if you're a member of the media, contact our media team. 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, we'll refer to certain non-GAAP measures that may not be comparable to similar measures presented by other entities. A reconciliation is contained in the appendix of this presentation. With that, I'll turn the call over to Francois.

Thanks, Gavin, and good morning, everyone. Through the first half of 2025, TC Energy's performance remains strong, delivering across all key priorities we set at the beginning of the year. First and foremost, our safety record remains exceptional, with incident rates holding at five-year lows. This is a direct reflection of our team's unwavering commitment to safety in every step. Safety drives operational excellence, which allows us to maximize the value of our assets and supports our strong financial results. During the second quarter, we delivered a 12% -over-year increase in comparable EBITDA and are increasing our 2025 comparable EBITDA outlook to $10.8 to $11 billion, which represents an approximately 9% increase over 2024. Contributing to this increase, we have reached a settlement in principle with customers on our Columbia Gas system that is expected to result in an increase relative to pre-filed rates as evidenced by the interim settlement rates that Columbia Gas put in effect, which reflects a 26% increase in pre-filed FTS rates. This outcome underscores both the demand we see across our assets and our ability to collaborate effectively with stakeholders. To date, we've completed or placed into service approximately $5.8 billion of capacity projects, including Southeast Gateway and our East Lateral Express project. Our results continue to emphasize TC Energy's resilient, low-risk business model that continues to deliver solid growth and repeatable performance. The fundamentals underpinning our business have never been stronger, and our assets are strategically located to benefit from incumbent positions in the markets we serve. This strengthens our ability to compete for and capture the next wave of growth. North American natural gas demand is now forecast to grow by 45 BCF per day by 2035, as opposed to our prior forecast of 40 BCF per day. And this, driven by LNG exports, power generation, and industrial demand growth. This growth is structural and long-term in nature. And we're seeing this play out across our entire footprint. Electrification, -to-gas conversions, and the rise of AI and data centers are accelerating the need for reliable, low-emission baseload power. In response, strong customer demand is emerging for incremental service on new and existing projects, such as our Pulaski and Maysville projects, which were sanctioned last year and have now been upsized. To meet growing needs. Our origination pipeline also remains robust. We are currently engaged in commercial conversations with more than 30 counterparties across the data center value chain, several of which have indicated the potential to require greater capacity than originally planned. These developments reinforce our confidence in a rising cadence of project announcements through the second half of the year and into 2026. So 2025 is stacking up to be an excellent year for TC Energy as we continue to expect to place approximately $8.5 billion of assets into service, roughly 15% below budget. July of this year, the newly constituted CNE approved our regulated rates required to provide service to potential future interruptible service users on the Southeast Gateway pipeline other than the CFE. In addition, we placed approximately $300 million of projects in service in our U.S. natural gas business, including the East Lateral Express project, an expansion on our Columbia Gulf system that enhances connectivity to the U.S. Gulf Coast LNG export markets. Looking ahead to the second half of the year, we have multiple projects under construction. This includes the Virginia and Wisconsin reliability projects, A&R Oak Grove, and the VNBR project in Canada, all of which are tracking below budget or ahead of schedule and on budget. Across our North American footprint, we're consistently executing on a diverse set of projects totaling approximately 3 BCF per day of incremental capacity expected to be operational this year. These results reflect the strength of our disciplined approach to excellence in project execution. Since 2020, we've seen a steady upward trend in the returns of our sanctioned capital program. In 2024, our projects achieved an average unleavered after-tax IRR of approximately 11%, up meaningfully from .5% just a few years ago. And looking ahead, we expect this upward trend to continue as we high grade a growing set of competing opportunities to optimize returns and maximize long-term value. Back year to date, our sanctioned projects have an expected average unleavered after-tax IRR of approximately 12%. And for new projects going forward, we continue to expect to deliver EBITDA build multiples in the 5 to 7 times range that translates to low to mid teens IRRs. Importantly, and similar to the Northwoods project we announced earlier this year, these opportunities are predominantly brownfield in corridor expansions that leverage our existing footprint and long-standing customer relationships. Contracts are underpinned by long-term take-pay agreements with investment grade counterparties and in many cases have upside potential. For instance, the strategic upsizing of the Pulaski and Maysville projects that we sanctioned last year has enabled us to further improve the low six times build multiples expected on both projects. Turning to Bruce Power, an asset that continues to deliver long-term value and plays a central role in Ontario's energy future. Our investments through the major component replacement program are enhancing the reliability and availability of our nuclear fleet. These are long duration investments that support the province's clean energy goals while delivering strong returns for our shareholders. As shown on the left hand side of this slide, Bruce Power's availability has steadily improved from the mid 80s percent range in prior years to an expected average in the low 90s for 2025. And at the same time, the realized power price we receive continues to trend higher as the contract prices adjusted annually to reflect capital investments, inflation and other factors. Combined with project 2030, these investments are expected to nearly double our equity income from Bruce Power by 2035. Ontario published its latest electricity demand forecast in April that indicates a 75 percent increase needed by 2050 with Bruce Power playing a key role in meeting that need. The Bruce C project is progressing, supported by up to 50 million dollars in federal funding for development and assessment. We are proud to be part of this essential infrastructure and to continue delivering value through disciplined strategic investment. With that, I'll turn the call over to Sean.