TC Energy reports strong 2022 results

Increases common share dividend for the twenty-third consecutive year

CALGARY, Alberta, Feb. 14, 2023 (GLOBE NEWSWIRE) -- TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) released its fourth quarter results today. François Poirier, TC Energy's President and Chief Executive Officer, commented "2022 has been a record setting year with continued demand and strong utilization across our systems, which is highlighted by TC Energy's comparable earnings per common share1 of $4.30 and comparable EBITDA1 of $9.9 billion." Poirier continued, "Our business remains resilient and is expected to deliver strong comparable EBITDA growth in 2023. We have a defined funding plan in place that will allow us to continue to progress our industry leading capital program and accelerate our deleveraging target. Reflecting the confidence in our outlook, TC Energy's Board of Directors has declared a quarterly dividend increase to $0.93 per common share for the quarter ending March 31, 2023, equivalent to $3.72 per common share on an annualized basis, an increase of 3.3 per cent. This is the twenty-third consecutive year the Board has raised the dividend."

Highlights

(All financial figures are unaudited and in Canadian dollars unless otherwise noted)

¹ Includes Capital expenditures, Capital projects in development and Contributions to equity investments.

CEO Message

Throughout 2022 we saw how geopolitical events heightened energy security and the importance of sustainability when planning for the future. TC Energy has a significant role in contributing to local and global energy transition solutions, and we continue to leverage our vast infrastructure to deliver safe, affordable and reliable energy. Our team and, by extension, our assets continue to achieve high utilization across our systems and our focus on operational excellence allowed us to provide peak availability of our assets during periods of peak demand. This record operational performance is demonstrated by TC Energy reporting comparable earnings per common share of $4.30 and comparable EBITDA of $9.9 billion – approximately six per cent above 2021 comparable EBITDA.

During the year we set new records, including peak deliveries on our Canadian and U.S. natural gas systems. Additionally, we executed a first-of-its kind strategic alliance with the Comisión Federal de Electricidad (CFE) in Mexico to build the Southeast Gateway Pipeline, while investing in reducing our emission intensities with our VNBR and Gillis Access projects. In the U.S., we increased our share of LNG feedgas deliveries from approximately 25 to 30 per cent and remain on-track to increase our market share to 35 per cent by 2025. TC Energy remains well positioned to expand the connection between North America's premier basins and LNG export facilities to support energy security, reliability and affordability.

We expect this positive momentum to continue into 2023 despite macroeconomic challenges, with 2023 comparable EBITDA expected to be five to seven per cent higher than 2022. This further showcases the resiliency and sustainability of our earnings and cash flows that provides the foundation for TC Energy's Board of Directors to declare a quarterly dividend increase to $0.93 per common share for the quarter ending March 31, 2023, equivalent to $3.72 per common share on an annualized basis, an increase of 3.3 per cent. This is the twenty-third consecutive year the Board has raised the dividend.

We continue to expand, extend and modernize our diversified energy portfolio. In 2022, we sanctioned $8.8 billion of projects that are consistent with our risk preferences and expected to deliver a combined return that is above our targeted range of seven to nine per cent. We placed $5.8 billion of projects in service during 2022, with an additional $6 billion expected in 2023. We are advancing our unparalleled $34 billion fully sanctioned secured capital program that is expected to generate comparable EBITDA growth and grow our common share dividend at an annual rate of three to five per cent. To enhance and extend our growth outlook, we anticipate sanctioning additional high-quality projects that are consistent with our risk and return preferences, underpinned by long-term take-or-pay contracts or rate regulation and capturing a spread above our cost of capital to maximize shareholder value. However, we are actively managing our capital spending to minimize incremental funding requirements as we realize our deleveraging target. Capital rotation will feature more prominently in our go-forward funding plan in the event that capital spending exceeds an annual run-rate of $5 to $7 billion.

We are advancing our 2023 $5+ billion asset divestiture program to accelerate our deleveraging, execute on our vast opportunity set and provide a self-funding source for high-value growth opportunities. Our sanctioned capital program is expected to be funded through a combination of growing cash flows, incremental long-term debt and hybrid security capacity, commercial paper and our discounted DRP that is expected to be in place through the dividend declarations for the quarter ending June 30, 2023.

While 2022 was a record setting year in many ways, we were faced with challenges. On December 7, 2022, we activated our emergency response protocols after detecting an oil release on the Keystone Pipeline System in Washington County, Kansas. We replaced the impacted section of pipe and have engaged a third-party to analyze the incident to determine the root cause. On December 31, 2022, we accrued an environmental remediation liability of $650 million (US$480 million), before expected insurance recoveries. This amount represents our estimate of costs relating to emergency response, environmental remediation and cleanup activities required to fully remediate the site and has been recorded on an undiscounted basis. While no incident is ever acceptable to us, the effectiveness of our emergency response protocols resulted in a quick response by our team to begin the remediation process. Within seven minutes of detecting a volume imbalance, the Keystone Pipeline System was shut down and isolation valves were closed while field resources located the incident and installed containment booms. We continue to progress our recovery and remediation efforts and are working closely with the Environmental Protection Agency, Kansas Department of Health and Environment, impacted landowners, communities, Tribal Nations, agencies and local, state and federal officials. To date, our oil recovery efforts continue to progress successfully with 90 per cent of the release volume recovered. We expect to continue to be able to fulfill our Keystone Pipeline System contract commitments and will continue to provide updates on the Milepost 14 incident as information becomes available.

On February 1, 2023 we announced updated cost estimates for the Coastal GasLink pipeline project after conducting a comprehensive cost and schedule risk analysis (CSRA) to assess current market conditions and potential risks and uncertainties facing the remaining project scope. As a result of the CSRA, TC Energy's estimate of the costs to complete the pipeline has increased to approximately $14.5 billion. The CSRA review also considered the potential impact of an extension of construction well into 2024, which would further increase costs by up to $1.2 billion. We continue to make significant progress and, to date, the project is approximately 84 per cent complete and we are targeting mechanical completion by year-end 2023. In addition, the entire route has been cleared, grading is more than 96 per cent complete and more than 510 km of pipeline has been welded, lowered and backfilled with restoration activities underway in many areas.

Safety, project execution and operational excellence will continue to be key focus areas, and we will look for new ways to maximize the value of our existing assets by optimizing system availability and throughput. Finally, we remain committed to the sustainable development of our business. By leveraging our highly integrated North American energy footprint, we will further advance opportunities to originate low-carbon solutions, expand our capabilities and establish partnerships to support decarbonization initiatives for both us and our customers.

OUTLOOK

Comparable EBITDA and comparable earnings

We expect our 2023 comparable EBITDA to be higher than 2022 and our 2023 comparable earnings per common share are expected to be modestly higher than 2022 due to the net impact of the following:

We continue to monitor developments in energy markets, our construction projects, regulatory proceedings and our asset divestiture program for any potential impacts on the above outlook.

Consolidated capital spending and equity investments

We expect to spend approximately $11.5 to $12.0 billion in 2023 on growth projects, maintenance capital expenditures and contributions to equity investments. The majority of the 2023 capital program is focused on NGTL System expansions, advancement of the Southeast Gateway Pipeline and the Coastal GasLink pipeline project, U.S. Natural Gas Pipelines projects, the Bruce Power life extension program and normal course maintenance capital expenditures.

Canadian Natural Gas Pipelines

Comparable EBITDA and earnings in 2023 are expected to be higher than 2022 mainly due to continued growth of the NGTL System as we advance expansion programs which extend and expand supply facilities, enhance delivery facilities in Alberta and provide incremental service at our major border delivery locations in response to requests for firm service on the system. Due to the flow-through treatment of certain costs on our Canadian rate-regulated pipelines, changes in these costs can impact our comparable EBITDA despite having no significant effect on comparable earnings.

U.S. Natural Gas Pipelines

Comparable EBITDA in 2023 is expected to be consistent with 2022. This is due to, among other factors, completion of expansion projects in 2022 and 2023 on the ANR and Columbia Gulf systems as well as higher revenues on ANR due to the full-year implementation of higher transportation rates as part of the uncontested Section 4 rate case settlement filed with the Federal Energy Regulatory Commission (FERC). Our pipeline systems continue to see historically strong demand for service and we anticipate our assets will maintain the high utilization levels experienced in 2022. These positive results are expected to be partially offset by higher operational costs, reflective of increased system utilization across our footprint, and an anticipated increase in property taxes from capital projects placed in service.

Mexico Natural Gas Pipelines

Comparable EBITDA for 2023 is expected to be higher than 2022 due to full-year revenues from the north section of the Villa de Reyes pipeline (VdR North) and east section of the Tula pipeline (Tula East) which were placed in service in third quarter 2022 under the new TGNH TSA with the CFE.

Liquids Pipelines

Comparable EBITDA in 2023 is expected to be modestly lower than 2022 for the Keystone Pipeline System including liquids marketing as a result of the de-rate associated with the Milepost 14 incident and continuing lower margins on the U.S. Gulf Coast section of the Keystone Pipeline System; however, we expect to continue to be able to fulfill our Keystone Pipeline System contract commitments.

Power and Energy Solutions

Comparable EBITDA in 2023 is expected to be consistent with 2022 provided Alberta power prices experienced in 2022 continue into 2023. We expect that Bruce Power's equity income will be higher in 2023 than 2022 due to the full year impact of the Unit 3 Major Component Replacement (MCR) program contract price increase and fewer non-MCR planned outage days, partially offset by greater MCR outage days. The planned maintenance for 2023 is currently scheduled to begin on Unit 4 in the second quarter and on Unit 8 in the second half of 2023. The average 2023 plant availability percentage, excluding the Unit 3 and Unit 6 MCR programs, is expected to be in the low-90 per cent range.

NOTABLE RECENT DEVELOPMENTS INCLUDE:

Canadian Natural Gas Pipelines

U.S. Natural Gas Pipelines

Mexico Natural Gas Pipelines

Liquids Pipelines

Power and Energy Solutions

Other Energy Solutions

Corporate

Teleconference and Webcast

We will hold a teleconference and webcast on Tuesday, February 14, 2023 at 6:30 a.m. (MST) / 8:30 a.m. (EST) to discuss our fourth quarter 2022 financial results and company developments. Presenters will include François Poirier, President and Chief Executive Officer; Joel Hunter, Executive Vice-President and Chief Financial Officer; and other members of the executive leadership team.

Members of the investment community and other interested parties are invited to participate by calling 1.800.319.4610. No pass code is required. Please dial in 15 minutes prior to the start of the call. A live webcast of the teleconference will be available on TC Energy's website at www.TCEnergy.com/events or via the following URL: https://www.gowebcasting.com/12438.

A replay of the teleconference will be available two hours after the conclusion of the call until midnight EST on Tuesday, February 21, 2023. Please call 1.855.669.9658 and enter pass code 9820.

The audited annual consolidated financial statements and Management's Discussion and Analysis (MD&A) are available on our website at www.TCEnergy.com and will be filed today under TC Energy's profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov .

About TC Energy

We’re a team of 7,000+ energy problem solvers working to move, generate and store the energy North America relies on. Today, we’re taking action to make that energy more sustainable and more secure. We’re innovating and modernizing to reduce emissions from our business. And, we’re delivering new energy solutions – from natural gas and renewables to carbon capture and hydrogen – to help other businesses and industries decarbonize too. Along the way, we invest in communities and partner with our neighbours, customers and governments to build the energy system of the future.

TC Energy's common shares trade on the Toronto (TSX) and New York (NYSE) stock exchanges under the symbol TRP. To learn more, visit us at www.TCEnergy.com.

Forward-Looking Information

This release contains certain information that is forward-looking, including the sustainability commitments and targets contained in our 2022 Report on Sustainability and our GHG Emissions Reduction Plan, and is subject to important risks and uncertainties (such statements are usually accompanied by words such as "anticipate", "expect", "believe", "may", "will", "should", "estimate", "intend" or other similar words). Forward-looking statements in this document are intended to provide TC Energy security holders and potential investors with information regarding TC Energy and its subsidiaries, including management's assessment of TC Energy's and its subsidiaries' future plans and financial outlook. All forward-looking statements reflect TC Energy's beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. As actual results could vary significantly from the forward-looking information, you should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking information due to new information or future events, unless we are required to by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to the most recent Quarterly Report to Shareholders and the 2022 Annual Report filed under TC Energy's profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov and the "Forward-looking information" section of our 2022 Report on Sustainability and our GHG Emissions Reduction Plan which are available on our website at www.TCEnergy.com.

Non-GAAP Measures

This release contains references to the following non-GAAP measures: comparable earnings, comparable earnings per common share, comparable EBITDA and comparable funds generated from operations. These non-GAAP measures do not have any standardized meaning as prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities. These non-GAAP measures are calculated by adjusting certain GAAP measures for specific items we believe are significant but not reflective of our underlying operations in the period. These comparable measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable except as otherwise described in the Condensed consolidated financial statements and MD&A. Refer to: (i) each business segment for a reconciliation of comparable EBITDA to segmented earnings; (ii) Consolidated results section for reconciliations of comparable earnings and comparable earnings per common share to Net income attributable to common shares and Net income per common share, respectively; and (iii) Financial condition section for a reconciliation of comparable funds generated from operations to Net cash provided by operations. Refer to the Non-GAAP measures section of the MD&A in our most recent quarterly report for more information about the non-GAAP measures we use, which section of the MD&A is incorporated by reference herein. The MD&A can be found on SEDAR (www.sedar.com) under TC Energy's profile.

Additional Information

This release should also be read in conjunction with our December 31, 2022 audited Consolidated financial statements and notes and the MD&A in our 2022 Annual Report. Capitalized abbreviated terms that are used but not otherwise defined herein are defined in our 2022 Annual Report. Certain comparative figures have been adjusted to reflect the current period's presentation.

Media Inquiries:

Stone Grissom / Suzanne Wilton

[email protected]

403.920.7859 or 800.608.7859

Investor & Analyst Inquiries:

Gavin Wylie / Hunter Mau

[email protected]

403.920.7911 or 800.361.6522

Download full report here: https://www.tcenergy.com/siteassets/pdfs/investors/reports-and-filings/annual-and-quarterly-reports/2022/tc-2022-q4-quarterly-report.pdf

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¹ Comparable earnings, comparable earnings per common share, comparable funds generated from operations and comparable EBITDA are non-GAAP measures used throughout this news release. These measures do not have any standardized meaning under GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. The most directly comparable GAAP measures are Net income attributable to common shares, Net income per common share, Net cash provided by operations and Segmented earnings. For more information on non-GAAP measures, refer to the Non-GAAP section of this news release.