Mr. Francois Poirier reports

TC ENERGY REPORTS RECORD 2023 OPERATING AND FINANCIAL RESULTS DRIVEN BY SOLID EXECUTION

TC Energy Corp. has released its fourth quarter results. Francois Poirier, TC Energy's president and chief executive officer, commented: "By remaining focused on a clearly defined set of priorities emphasizing project execution, safety and operational excellence, we delivered record operational performance and financial results. Two thousand twenty-three marks one of the most transformational years for TC Energy -- we reached mechanical completion on the Coastal GasLink pipeline project, announced our intention to spin off the liquids pipelines business and enhanced our financial strength through our asset divestiture program. Underpinned by our strong performance, TC Energy's board of directors approved a dividend increase of 3.2 per cent for the quarter ending March 31, 2024, equivalent to $3.84 per common share on an annualized basis. This represents our 24th consecutive year of dividend growth." Mr. Poirier continued, "As we look to 2024, our strategic priorities remain in pursuit of maximizing the value of our assets, safely executing our major projects on time and budget, and further enhancing our balance sheet strength and flexibility."

Highlights:

• Fourth quarter 2023 financial results:
  • Delivered approximately 16-per-cent growth in comparable EBITDA (earnings before interest, taxes, depreciation and amortization) of $3.1-billion compared with $2.7-billion in fourth quarter 2022 and segmented earnings of $2.3-billion compared with segmented losses of $1-billion in fourth quarter 2022;
  • Comparable earnings per common share of $1.35 in fourth quarter 2023 increased 22 per cent compared with $1.11 in fourth quarter 2022 and net income per common share of $1.41 in fourth quarter 2023 compared with net loss per common share of $1.42 in fourth quarter 2022.
• Year ended Dec. 31, 2023, financial results:
  • Delivered approximately 11-per-cent growth in 2023 comparable EBITDA of $11-billion compared with $9.9-billion in 2022 and segmented earnings of $6.1-billion compared with $3.6-billion in 2022;
  • 5-per-cent increase in comparable earnings per common share of $4.52 in 2023 compared with $4.30 in 2022 and net income per common share of $2.75 in 2023 compared with 64 cents in 2022.
• Strong fourth quarter 2023 results were underpinned by the continued reliability, availability and exceptional operational performance of TC's assets. While its natural gas pipelines business is not exposed to material volumetric or commodity price risks, strong utilization rates demonstrate the demand for the company's services and the longer-term criticality of its assets:
  • Total NGTL system deliveries averaged 14.5 Bcf/d (billion cubic feet/day), largely consistent relative to fourth quarter 2022;
  • U.S. natural gas pipelines deliveries to power generators continued to grow, setting a record of 2.8 Bcf/d during fourth quarter 2023, up 16 per cent relative to fourth quarter 2022;
  • U.S. natural gas pipelines daily average flows were 27.7 Bcf/d, in line with fourth quarter 2022;
  • Gas Transmission Northwest (GTN) system achieved an all-time delivery record of 3.1 Bcf on Nov. 11, 2023;
  • The Keystone pipeline system achieved approximately 92-per-cent operational reliability during fourth quarter 2023;
  • Continued strong demand across the Keystone pipeline system;
  • Bruce Power achieved approximately 85-per-cent availability in fourth quarter 2023, reflecting a planned outage on Unit 8, and approximately 92-per-cent overall availability in 2023, with Unit 6 returning to service in September, 2023, ahead of schedule and within budget;
  • Alberta cogeneration power plant fleet achieved 98.7-per-cent availability.
• Following mechanical completion, required pipeline commissioning activities were completed on the Coastal GasLink project and the pipeline was ready to deliver natural gas to the LNG Canada facility in fourth quarter 2023. These milestones entitle Coastal GasLink LP to receive a $200-million incentive payment from LNG Canada. In accordance with the contractual terms between the Coastal GasLink LP partners, this amount accrues in full to TC Energy as the project developer, was recorded in fourth quarter 2023 and was settled through a cash distribution on Feb. 12, 2024:
  • Excluding earnings from Coastal GasLink related to the recognition of the $200-million incentive payment, TC Energy delivered approximately 9-per-cent growth in comparable EBITDA in 2023 compared with 2022.
• Reaffirming 2024 outlook:
  • Comparable EBITDA outlook for 2024 is expected to be $11.2-billion to $11.5-billion and remains consistent with TC's November, 2023, investor day, with growth related to increased comparable EBITDA from the NGTL system due to the advancement of expansion programs, the full-year impact of projects placed into service in 2023, including Bruce Power Unit 6, which returned to service in September, along with new projects anticipated to be placed in service in 2024;
  • Comparable earnings per common share is expected to be lower than 2023 due to the net impact of higher net income attributable to non-controlling interests as a result of the sale of a 40-per-cent non-controlling equity interest in Columbia Gas Transmission LLC and Columbia Gulf Transmission LLC in 2023, partially offset by increased comparable EBITDA and higher AFUDC (allowance for funds used during construction) related to increased capital expenditures on the Southeast Gateway pipeline project;
  • TC's 2024 comparable EBITDA and comparable earnings per common share outlooks reflect a full-year impact of contributions from the liquids pipelines business and does not take into consideration the potential impact of the $3-billion capital rotation program or proposed spinoff of the liquids pipelines business that is subject to TC Energy shareholder and court approvals, favourable tax rulings, other regulatory approvals, and satisfaction of other customary closing conditions;
  • Two thousand twenty-four capital expenditures are anticipated to be approximately $8.5-billion to $9-billion on a gross basis, including capitalized interest, or approximately $8.-billion to $8.5-billion on a net basis after considering non-controlling interests. The majority of TC's 2024 program is focused on the advancement of the Southeast Gateway pipeline project, U.S. natural gas pipelines projects, postconstruction and reclamation activities on the Coastal GasLink pipeline project, the Bruce Power major component replacement (MCR) programs, and normal course maintenance capital expenditures.
• TC Energy's board of directors approved a 3.2-per-cent increase in the quarterly common share dividend to 96 cents per common share for the quarter ending March 31, 2024, equivalent to $3.84 per common share on an annualized basis.
• Placed approximately $5.3-billion of projects in service in 2023 on budget, and expect to place approximately $7-billion of new projects in service in 2024.
• Advanced TC's capital rotation program in 2023, with $3-billion of incremental asset sales expected to be completed by year-end 2024.
• Closed the sale of a 40-per-cent non-controlling equity interest in Columbia Gas and Columbia Gulf to Global Infrastructure Partners (GIP) for total cash proceeds of $5.3-billion ($3.9-billion (U.S.)). Preceding the close of the equity sale, on Aug. 8, 2023, Columbia Pipelines Operating Company LLC and Columbia Pipelines Holding Company LLC issued $4.6-billion (U.S.) and $1-billion (U.S.) of long-term, senior unsecured debt, respectively. Net proceeds from the offerings were used to repay existing intercompany indebtedness with TC Energy entities and directed toward reducing leverage.
• Named Van Dafoe as incoming senior vice-president and chief financial officer (CFO) and Lori Muratta as incoming senior vice-president and general counsel (GC) at South Bow Corp. to continue to progress the spinoff transaction. The company has received a favourable tax ruling from the Internal Revenue Service on the spinoff transaction and is continuing to work collaboratively with the Canada Revenue Agency on obtaining a favourable tax ruling in Canada.
• Federal Energy Regulatory Commission approved the VR and WR projects in November and December, 2023, respectively.
• Placed the $100-million (U.S.) Virginia electrification project in service in February, 2024, on time and on budget.
• Approved the $900-million (U.S.) Heartland project in February, 2024, which is an expansion project on TC's ANR system that is expected to increase capacity and improve system reliability with an anticipated in-service date in late 2027.
• The final cost and schedule estimate for the Bruce Power Unit 4 MCR program was submitted to the Independent Electricity System Operator (IESO) on Dec. 13, 2023, and received IESO approval on Feb. 8, 2024. The Unit 4 MCR is expected to commence in first quarter 2025 and is expected to be completed in 2028.
• The noted approved projects fit within the capital plan disclosed at TC's 2023 investor day. It remains committed to limiting annual net capital expenditures to $6-billion to $7-billion, with a bias to the lower end beyond 2024.

CEO message

"Driven by solid execution throughout 2023, our unparalleled asset base continued to generate strong operational and financial results, delivering record comparable EBITDA and comparable earnings per common share. Our collective efforts in 2023 continued to set the stage for a transformative period for TC Energy. Guided by a clear set of strategic priorities for 2023, including project execution, enhancing balance sheet strength and maximizing the value of our asset base, TC Energy was successful in delivering on our commitments.

"Project execution

"In 2023, we placed approximately $5.3-billion of projects in service on budget, including various expansion projects on our NGTL system, the lateral section of our Villa de Reyes pipeline and the Unit 6 MCR at Bruce Power, which was completed ahead of schedule and within budget.

"In November, 2023, the Coastal GasLink pipeline project achieved mechanical completion ahead of our year-end 2023 target, completed required pipeline commissioning activities and was ready to deliver natural gas to the LNG Canada facility in fourth quarter 2023. The achievement of these monumental milestones entitle Coastal GasLink LP to receive a $200-million incentive payment from LNG Canada. In accordance with the contractual terms between the Coastal GasLink LP partners, this amount accrues in full to TC Energy as the project developer and was settled through a cash distribution on Feb. 12, 2024. With construction and required commissioning activities now complete, postconstruction and reclamation activities will continue throughout 2024. The project remains on track with its cost estimate of approximately $14.5-billion and Coastal GasLink LP will continue to pursue contractor cost recoveries.

"We also achieved significant progress on the Southeast Gateway pipeline project in 2023. In addition to closing land rights, right of ways negotiation and obtaining critical permits for construction, offshore installation began in December, 2023, and is progressing on schedule, along with all onshore facilities. The project continues to progress on time and on budget, with commercial in-service expected by mid-2025.

"We will continue to develop quality projects within our secured capital program, with approximately $7-billion of assets expected to be placed in service in 2024. Our commitment to limiting annual net capital expenditures to $6[-billion] to $7-billion, with a bias to the lower end beyond 2024, will not waver. We believe that adhering to our net capital expenditure limit beyond 2024 will allow TC Energy to continue delivering an attractive and sustainable dividend growth rate of three to 5 per cent.

"Firmly on a path to enhancing balance sheet strength

"We have a clearly defined path to reach our 4.75 times debt-to-EBITDA target by year-end 2024, which represents the upper limit we will manage to. Throughout 2023, we made significant progress towards reducing leverage, including successfully completing the sale of a 40-per-cent non-controlling equity interest in Columbia Gas and Columbia Gulf for total cash proceeds of $5.3-billion ($3.9-billion (U.S.)). In addition, we are continuing to evaluate an incremental $3-billion of capital rotation opportunities, which we expect to complete by the end of 2024. Project execution and continued growth in comparable EBITDA will support further deleveraging, in addition to liability management opportunities related to the spinoff transaction, subject to TC Energy shareholder and court approvals, favourable tax rulings, other regulatory approvals, and satisfaction of other customary closing conditions.

"Maximizing the value of our assets through safety and operational excellence

"Throughout fourth quarter 2023, we continued to see strong, sustained demand for our assets and services that further supported the delivery of record results. Within our integrated natural gas pipelines business, total NGTL system deliveries in Canada averaged 14.5 Bcf/d and various pipelines in the U.S. achieved record throughput volumes. The GTN system achieved a delivery record of 3.1 Bcf on Nov. 11, 2023, Tuscarora gas transmission system achieved a delivery record of 0.2 Bcf on Nov. 30, 2023, and the Portland natural gas transmission system achieved a delivery record of 0.5 Bcf on Dec. 12, 2023. Within the liquids pipelines business, the Keystone pipeline system achieved approximately 92-per-cent operational reliability during the quarter, consistent with the Keystone pipeline system's full-year 2023 operational reliability. Bruce Power achieved approximately 85-per-cent availability during the quarter, reflecting a planned outage on Unit 8, and approximately 92-per-cent overall availability in 2023, while our Alberta cogeneration power plant fleet experienced 98.7-per-cent availability during the quarter.

"Advancing proposed liquids pipelines business spinoff

"The separation management office continues to make important progress on the spinoff transaction. Van Dafoe has been named incoming senior vice-president and CFO at South Bow. With over 30 years of experience in the energy industry, including serving as CFO of a public company for eight years, Van will be instrumental in managing South Bow's finance, accounting, risk, investor relations activities and information services. On Feb. 1, 2024, Lori Muratta was named as incoming senior vice-president and general counsel at South Bow. With over 20 years of experience in the energy industry and 30 years practising law, Lori will be instrumental in overseeing South Bow's legal, compliance and regulatory activities. The company has received a favourable tax ruling from the IRS on the spinoff transaction and is continuing to work collaboratively with the CRA on obtaining a favourable tax ruling in Canada.

"We continue to identify experienced board candidates for South Bow and anticipate the full slate of directors and other information to be described in the management information circular to be filed prior to the shareholder meeting and related vote, which remains on track to take place in mid-2024.

"Dividend declaration, 2024 outlook and strategic priorities

"Based on the confidence of our business plans, TC Energy's board of directors declared a quarterly dividend of 96 cents per common share for the quarter ending March 31, 2024, equivalent to $3.84 per common share on an annualized basis, an increase of 3.2 per cent. This is the 24th consecutive year the board has raised the dividend. Looking to our 2024 outlook, 2024 comparable EBITDA is expected to be $11.2[-billion] to $11.5-billion and remains consistent with our November, 2023, investor day, with growth related to increased comparable EBITDA from the NGTL system due to the advancement of expansion programs, the full-year impact of projects placed in service in 2023 and anticipated projects to be placed in service in 2024. We expect 2024 comparable earnings per common share to be lower than 2023 due to the net impact of higher net income attributable to non-controlling interests as a result of the sale of a 40 per cent non-controlling equity interest in Columbia Gas and Columbia Gulf in 2023, partially offset by the increase in comparable EBITDA and higher AFUDC related to the Southeast Gateway pipeline project. We anticipate our net capital expenditures in 2024 to be approximately $8[-billion] to $8.5-billion after consideration of non-controlling interests in the capital expenditures of the entities we control.

"We will remain focused on our clearly defined set of strategic priorities as we look to 2024. TC Energy is steadfast in our commitment to executing projects on time and on budget, enhancing our balance sheet strength and flexibility as we continue to achieve our debt-to-EBITDA leverage target, and maximizing the value of our assets while continuing to safely, reliably and affordably deliver the energy the world needs, every day."

Teleconference and webcast

TC will hold a teleconference and webcast on Friday, Feb. 16, 2024, at 6:30 a.m. (MST)/8:30 a.m. (EST) to discuss its fourth quarter 2023 financial results and company developments. Presenters will include Mr. 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 passcode is required. Please dial in 15 minutes prior to the start of the call. Alternatively, participants may preregister for the call. Upon registering, you will receive a calendar booking by e-mail with dial-in details and a unique PIN. This process will bypass the operator and avoid the queue. Registration will remain open until the end of the conference call.

A live webcast of the teleconference will be available on TC Energy's website. The webcast will be available for replay following the meeting.

A replay of the teleconference will be available two hours after the conclusion of the call until midnight EST on Feb. 23, 2024. Please call 1-855-669-9658 and enter passcode 0635.

The audited annual consolidated financial statements and management's discussion and analysis (MD&A) are available on TC's website and will be filed today under TC Energy's profile on SEDAR+ and with the U.S. Securities and Exchange Commission on EDGAR.

About TC Energy Corp.

TC Energy is a team of over 7,000 energy problem solvers working to move, generate and store the energy North America relies on. Today, it is taking action to make that energy more sustainable and more secure -- while innovating and modernizing to reduce emissions from its business. Along the way, the company invests in communities and partners with its neighbours, customers and governments to build the energy system of the future.

We seek Safe Harbor.