TC Energy Q1 Earnings Call Highlights

Key Points

• Record first-quarter comparable EBITDA: TC Energy generated over CAD 3 billion of comparable EBITDA (up 14% YoY and the first quarter above CAD 3 billion from continuing operations), driven by contributions across all business units and several operational delivery records.
• New U.S. growth project sanctioned: The company sanctioned the CAD 1.5 billion Appalachia Supply Project on Columbia Gas — a 20‑year take‑or‑pay deal adding 0.8 Bcf/d (expandable to 2 Bcf/d), targeting 2030 in‑service with a ~7.3x build multiple.
• Outlook and capital plan reaffirmed: Management reiterated 2026 guidance of CAD 11.6–11.8 billion and a 2028 target of CAD 12.6–13.1 billion, backed by a CAD 21 billion pipeline and plans to support up to CAD 6 billion annual net capital deployment while maintaining a 4.75x leverage target; customer settlements and oversubscribed open seasons point to robust Midwest and Ohio demand.

TC Energy NYSE: TRP opened 2026 with what management described as strong momentum, highlighting record first-quarter comparable EBITDA and a new U.S. growth investment anchored by long-term contracted demand.

Record first-quarter comparable EBITDA and operational highlights

President and CEO François Poirier said the company entered 2026 “delivering against a clear and consistent set of strategic priorities,” including what he called its best safety performance in six years. TC Energy generated “over CAD 3 billion of comparable EBITDA,” up 14% year-over-year, which Poirier framed as evidence of stable performance amid market and geopolitical volatility.

Executive Vice President and CFO Sean O’Donnell said the quarter marked “the first time that we generated more than CAD 3 billion of comparable EBITDA from continuing operations in a single quarter.” O’Donnell attributed the growth to contributions across all four business units, noting the company’s Mexico and U.S. natural gas businesses benefited from placing “over CAD 8 billion of new assets into service in 2025.” He also cited higher flow-through depreciation and NGTL incentive earnings in Canadian natural gas pipelines, along with higher contributions from Bruce Power in the Power and Energy Solutions segment.

On operations, O’Donnell said the company’s Canadian and U.S. natural gas pipeline businesses “set seven new all-time delivery records during the quarter.” In Power and Energy Solutions, he said Bruce Power achieved 88% availability in the quarter (including a planned outage on Unit 8), and management continues to expect full-year 2026 availability “in the low 90% range,” consistent with 2025. He added that the Alberta cogeneration fleet delivered 99.5% availability.

Settlements and outlook reaffirmed

Poirier said the company reached settlement agreements with customers on its Canadian Mainline, ANR, and Great Lakes assets, with outcomes “largely in line with expectations,” supporting TC Energy’s comparable EBITDA outlook.

In response to analyst questions, EVP and COO Tina Faraca said the ANR settlement in principle was “a positive result,” with “unanimous agreement with our customers on all major issues.” She said the settlement reflected “an increase over pre-filed rates” and that the outcome was “consistent with estimates.”

O’Donnell reaffirmed guidance for both 2026 and 2028. For 2026, he reiterated comparable EBITDA of CAD 11.6 billion to CAD 11.8 billion. For 2028, he repeated the target of CAD 12.6 billion to CAD 13.1 billion, which he said is “fully underpinned by sanctioned projects advancing towards in-service dates.”

O’Donnell also emphasized execution discipline, pointing to 2025 performance where the company placed more than CAD 8 billion of projects into service “on time and 15% below budget,” and said 2026 projects are “tracking on schedule and on or under budget.”

Appalachia Supply Project sanctioned on Columbia Gas

TC Energy used the call to announce a new strategic investment in the U.S. on its Columbia Gas system: the CAD 1.5 billion Appalachia Supply Project. Poirier said the project extends TC Energy’s reach into a high-demand corridor and provides a scalable platform for future growth.

According to Poirier, the project is supported by a “long-term 20-year take-or-pay contract backed by an investment-grade utility,” is expected to deliver “solid risk-adjusted returns,” and carries a “7.3x build multiple.” The project is designed to add 0.8 Bcf per day of capacity to support new power generation development, with an anticipated in-service date of 2030.

Management also described the project as expandable. Poirier said the system will be capable of up to 2 Bcf per day of total capacity through future expansions. Faraca told analysts that reaching 2 Bcf per day could be accomplished with “minor facility modifications,” describing it as “a very economic expansion.” She added that expansion beyond 2 Bcf per day would be possible with additional pipeline extensions, given what she described as a high-growth corridor.

When asked about how additional phases might impact economics, Faraca said the company could “move that down towards the end of that 5x-7x range” as it expands the new infrastructure more efficiently.

Demand signals: oversubscribed open seasons and Midwest growth

Management repeatedly pointed to rising power-related load growth—including data centers—and customer interest as key drivers across its footprint. Poirier reiterated that a Columbus, Ohio open season was “approximately 3x oversubscribed,” and said Ohio’s natural gas demand is projected to grow more than 30% over the next decade, citing power generation, industrial expansion, and grid reliability needs, including “more than 40 new data centers.”

Poirier also said the Crossroads open season drew bids exceeding “2.5x the capacity offering.” Faraca said the company is now working with participating customers to refine commitments and scope and is targeting sanctioning the Crossroads project in 2026 “within our 5x-7x build multiple range.” She noted there is “certainly the potential to upsize” based on discussions.

On the magnitude of opportunity, Faraca told analysts the company sees “about 5+ Bcf per day of incremental gas demand across the Midwest corridor over the next 10 years,” and later said updated forecasts show the power generation component “moving up into that 5 Bcf-8 Bcf range” in the Midwest corridor. She highlighted TC Energy’s incumbency across Columbia, ANR, Crossroads, Northern Border, and Great Lakes, as well as “over 200 connections to electric and gas utilities” on ANR and “over 532 Bcf of storage opportunities” for customers in the region.

Regarding supply, Faraca emphasized “supply optionality” and said TC Energy can access Appalachia, the Gulf Coast, Midcontinent, Bakken, and Western Canadian Sedimentary Basin supply. She also said the Appalachia Supply Project would allow for “additional egress out of the basin,” noting TC Energy is “the number one transporter of Appalachia Supply in the region.”

Capital allocation, backlog visibility, and Canada updates

O’Donnell said the company converted approximately CAD 2.2 billion of investment capital from pending approval into sanction with the Appalachia Supply Project, and said last quarter TC Energy added “over CAD 2 billion of new high-conviction, substantially de-risked projects” to its pending approval bucket. He also said the company has “about CAD 15 billion of additional projects in origination” competing for capital allocation this decade.

Poirier addressed the growth in the development pipeline, telling analysts that the company has “pretty good visibility” down to specific projects and that the CAD 21 billion pipeline in aggregate sits “solidly within that 5x-7x EBITDA build multiple” and in the “12% on levered IRR, after tax range.” He said the backlog is building as utility customers seek to “upsize” projects as power developments gain credibility and attract additional load.

On capital deployment, O’Donnell said TC Energy will look to “support up to CAD 6 billion of annual net capital deployment,” while maintaining a 4.75x leverage target. Poirier said that later in the decade, the company may let the opportunity set—within guardrails of execution excellence and balance sheet strength—drive the size of the capital program “rather than a self-imposed CAD 6 billion net capital limit.”

In Canada, Faraca said TC Energy launched an open season on NGTL in response to increased demand, including incremental load growth in the greater Edmonton area. She said the company is discussing a new investment framework with customers for expansions beyond the Multi-Year Growth Plan, and clarified that any new framework would be “outside of the existing settlement.” Poirier said discussions are early but could become “several billion dollars” of opportunity, subject to reaching a new investment framework.

The company also provided an update on Coastal GasLink Phase II. Faraca said TC Energy entered a new commercial agreement framework with LNG Canada and partners under which LNG Canada will lead execution as the execution manager while TC Energy provides technical advisory services. She said the model “puts limits on our capital commitments and overall liability for construction cost and schedule risk.” Poirier added that TC Energy holds 35% equity in Coastal GasLink and views it on a levered return basis, calling it “an extremely attractive returning project,” though “a small project in the grand scheme of things.”

Looking ahead, Poirier said TC Energy expects additional growth announcements through the year and reiterated priorities around safety and operational excellence, “low-risk, high-return growth,” and maintaining financial strength.

About TC Energy NYSE: TRP

TC Energy NYSE: TRP is a North American energy infrastructure company headquartered in Calgary, Alberta. Formerly known as TransCanada, the company rebranded as TC Energy to reflect its broad presence across Canada, the United States and Mexico. TC Energy develops, owns and operates a diversified portfolio of energy infrastructure assets that play a central role in the transportation and delivery of energy across the continent.

The company's principal businesses include long‑distance natural gas transmission, liquids (crude oil) pipelines, natural gas storage and power generation.

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