TC PipeLines, LP (NYSE: TCP) (the Partnership) today reported net
income attributable to controlling interests of $55 million and
distributable cash flow of $70 million for the three months ended
June 30, 2019.
“Our portfolio of high quality natural gas pipelines performed
well in the second quarter of 2019, continuing to benefit from
strong natural gas flows and contracting levels. The decrease in
earnings year-over-year was expected and is largely reflective of
the Bison contract payouts late last year together with the rate
decreases emanating from the 2018 FERC actions,” said Nathan Brown,
President of TC PipeLines, GP, Inc. “We have continued to pay down
debt with available cash during the quarter and believe that our
healthy balance sheet positions us well to self-fund our current
level of organic growth with capacity to fund additional expansions
down the road. Through the medium term, we are targeting a run-rate
for our bank leverage metric in the high three to low four times
area and a coverage ratio of 1.3 to 1.4 times. We right-sized our
distribution in 2018 to be able to meet these targets and we are
maintaining it at the current level of 65 cents per unit again this
quarter.”
“Our Portland XPress and Westbrook XPress
projects are progressing well and we expect they will both be fully
in-service by late 2022. We continue to source additional expansion
opportunities such as our potential North Baja expansion and a
project on our Iroquois pipeline together with other organic growth
options and will keep the market apprised of these projects as they
progress. The strong demand for natural gas transportation on our
current suite of assets is necessitating important maintenance and
other capital work on our systems which we are performing to ensure
ongoing safe and reliable operations for our customers,” added
Brown. “We continue to believe that our assets are well situated to
serve our customers and their need for natural gas transportation
and will create value well into the future.”
Second quarter highlights
(unaudited)
- generated net income attributable to controlling interests of
$55 million
- paid cash distributions of $47 million
- declared cash distribution of $0.65 per common unit for the
second quarter of 2019
- generated EBITDA of $99 million and distributable cash flow of
$70 million
- reduced overall debt balance by $83 million, including a $50
million payment on our 2013 Term Loan Facility
- received approval from the Federal Energy Regulatory Commission
(FERC) to increase the certificated capacity on Portland Natural
Gas Transmission System (PNGTS) for Phase I of its Westbrook XPress
project
- Standard & Poor’s (S&P) upgraded credit rating to
BBB/Stable from BBB-/Stable
The Partnership’s financial highlights for the
second quarter of 2019 compared to the same period in 2018
were:
|
Three months ended |
|
Six months ended |
(unaudited) |
June 30, |
|
June 30, |
(millions of dollars, except per common unit amounts) |
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Net income |
57 |
|
|
75 |
|
|
157 |
|
|
177 |
|
Net income attributable to
controlling interests |
55 |
|
|
73 |
|
|
148 |
|
|
169 |
|
Net income per common unit –
basic and diluted (a) |
$0.75 |
|
|
$1.00 |
|
|
$2.03 |
|
|
$2.33 |
|
|
|
|
|
|
|
|
|
Earnings before interest,
taxes, depreciation and amortization (EBITDA) (b) |
99 |
|
|
124 |
|
|
241 |
|
|
274 |
|
|
|
|
|
|
|
|
|
Cash distributions paid |
(47) |
|
|
(47) |
|
|
(95) |
|
|
(123) |
|
Class B distributions
paid |
- |
|
|
- |
|
|
(13) |
|
|
(15) |
|
Distributable cash flow
(b) |
70 |
|
|
101 |
|
|
186 |
|
|
213 |
|
|
|
|
|
|
|
|
|
Cash distribution declared per
common unit |
$0.65 |
|
|
$0.65 |
|
|
$1.30 |
|
|
$1.30 |
|
|
|
|
|
|
|
|
|
Weighted average
common units outstanding – basic and diluted (millions)
(c) |
71.3 |
|
|
71.3 |
|
|
71.3 |
|
|
71.2 |
|
|
|
|
|
|
|
|
|
Common units
outstanding, end of period (millions) (c) |
71.3 |
|
|
71.3 |
|
|
71.3 |
|
|
71.3 |
|
|
(a) Net income per common unit is computed by dividing net income
attributable to controlling interests, after deduction of net
income attributable to the General Partner, by the weighted average
number of common units outstanding. Refer to the “Financial
Summary-Consolidated Statements of Income” section of this
release.(b) Distributable cash flow and EBITDA are non-GAAP
financial measures. Refer to the description of these non-GAAP
financial measures in the section of this release entitled
“Non-GAAP Measures” and the Supplemental Schedule for further
detail.(c) Under the at-the-market (ATM) program, no common units
were issued during the three and six months ended June 30, 2019
(June 30, 2018 – nil and 732,973 units issued). |
Recent business
developments:
Cash distributions - On July 23, 2019, the board of
directors of our General Partner declared the Partnership’s second
quarter 2019 cash distribution in the amount of $0.65 per common
unit payable on August 14, 2019 to unitholders of record as of
August 2, 2019. The declared distribution to our General Partner
was $1 million for its two percent general partner interest.
Credit rating upgrade - On July 23, 2019,
S&P upgraded the Partnership’s credit rating to BBB/Stable from
BBB-/Stable primarily due to the improvement in our financial risk
profile resulting from our ongoing deleveraging efforts.
2018 FERC actions update:
On May 24, 2019, Northern Border’s amended settlement agreement
previously filed with FERC on April 4, 2019 was approved by the
FERC and its 501-G proceeding was terminated. Until superseded by a
subsequent rate case or settlement, effective January 1, 2020, the
amended settlement agreement extends the two percent rate reduction
implemented on February 1, 2019 to July 1, 2024.
FERC has now closed all 501-G dockets for our pipeline systems
with the exception of Great Lakes.
Growth projects update:
PNGTS’ Portland XPress (PXP) Project - Our PXP project was
initiated in 2017 in order to expand deliverability on the PNGTS
system to Dracut, Massachusetts through re-contracting and
construction of incremental compression within PNGTS’ existing
footprint in Maine. The project was designed to be phased in over a
three-year period which began November 1, 2018 (Phase I). Phases II
and III are expected to be in-service on November 1, 2019 and 2020,
respectively. Beginning 2021, the project is expected to generate
approximately $50 million in annual revenue for PNGTS. During
2018, PNGTS filed the required applications with FERC for all three
phases of PXP which included an amendment to its Presidential
Permit and an increase in its certificated capacity through the
addition of a compressor unit at its jointly owned facility with
Maritimes and Northeast Pipeline LLC to bring additional natural
gas supply to New England. The total final volume of the project is
approximately 183,000 Dth/ day; 40,000 Dth/day from Phase I,
118,400 Dth/day from Phase II, which includes re-contracting and
renewal of expiring contracts, and 24,600 Dth/day from Phase III.
We continue to advance this project and have received all
approvals for filings to date. We intend to file with FERC for
approval to proceed with construction of Phase III of the project
in early 2020.
PXP is secured by long-term agreements and when all phases of
the project are in service, PNGTS will be effectively fully
contracted until 2032.
PNGTS’ Westbrook XPress Project (Westbrook XPress)
- Westbrook XPress is an estimated $125 million multi-phase
expansion project that is expected to generate approximately $35
million in revenue for PNGTS on an annualized basis when fully in
service. It is part of a coordinated offering to transport
incremental Western Canadian Sedimentary Basin natural gas supplies
to the Northeast U.S. and Atlantic Canada markets through
additional compression capability at an existing PNGTS facility.
Westbrook XPress is designed to be phased in over a four-year
period with Phases I, II and III estimated in-service dates of
November 2019, 2021, and 2022, respectively. These three phases
will add incremental capacity of approximately 43,000 Dth/day,
69,000 Dth/day, and 18,000 Dth/day, respectively. Westbrook XPress,
together with PXP, will increase PNGTS’ capacity by 90 percent from
210,000 Dth/day to approximately 400,000 Dth/day.
FERC issued an Order Granting Certificate on July 2, 2019,
approving PNGTS’ request to increase its certificated capacity
under Westbrook XPress Phase I, effective November 1, 2019.
Iroquois Gas Transmission ExC Project (Iroquois ExC Project) -
In May 2019, one of Iroquois' customers, Consolidated Edison, Inc.,
announced that they had reached a precedent agreement to develop
and permit incremental pipeline delivery capacity into New York
City. Iroquois' "Expansion through Compression" or ExC Project
would optimize the Iroquois system to meet current and future gas
supply needs of utility customers while minimizing environmental
impact through enhancements at existing compressor stations along
the pipeline. If successful, the project's total capacity is
expected to be approximately 125,000 Dth/day with an estimated
in-service date in November 2023. The capital cost of this project
is still to be determined as the optimal facility set is finalized
during the regulatory process for this potential expansion. This
project would be 100 percent underpinned with 20-year
contracts.
Results of operations
The Partnership’s net income attributable to
controlling interests decreased by $18 million in the three months
ended June 30, 2019 compared to the same period in 2018, mainly due
to the following:
Transmission revenues – Revenues were lower due largely to the
decrease in revenue from Bison Pipeline LLC (Bison). During the
fourth quarter of 2018, two of Bison’s customers elected to pay out
the remainder of their contracted obligations on Bison and
terminate the associated transportation agreements. Revenues were
further reduced by the following:
- lower revenue on GTN due to its scheduled 10 percent rate
decrease effective January 1, 2019 as part of the settlement
reached with its customers in 2018; and
- lower revenue from PNGTS primarily due to the expiration of its
legacy recourse rate contracts, partially offset by revenues from
Phase I of PXP which went into service November 1, 2018.
Equity earnings - The $6 million decrease was
primarily due to the following:
- decrease in Great Lakes’ and Northern Border’s equity earnings
as a result of rate reductions in early 2019 related to the 2018
FERC actions, together with an increase in operating costs related
to compliance programs and allocated management and operational
expenses from TC Energy; and
- decrease in Iroquois’ equity earnings as a result of the
scheduled reduction of its existing rates as part of the 2019
Iroquois Settlement.
Depreciation – The decrease in depreciation expense during the
second quarter of 2019 was a direct result of the long-lived asset
impairment recognized during the fourth quarter of 2018 on Bison,
which effectively eliminated the depreciable base of the
pipeline.
Financial charges and other - The $2 million decrease was
primarily attributable to the repayment of our $170 million Term
Loan during the fourth quarter of 2018 and the net $40 million
repayment of borrowings under our Senior Credit Facility during the
first quarter of 2019.
EBITDA was lower for the second quarter of 2019 compared to the
same period in 2018. The $25 million decrease was primarily due to
lower revenue and equity earnings during the period, as discussed
above.
Our distributable cash flow decreased by $31 million in the
second quarter of 2019 compared to the same period in 2018 due to
the net effect of:
- lower EBITDA from our consolidated subsidiaries;
- higher maintenance capital expenditures related to major
compression equipment overhauls on GTN and pipe integrity costs on
Tuscarora, North Baja and GTN, all the result of higher
transportation volumes of natural gas;
- lower interest expense due to repayment of the $170 million
Term Loan during the fourth quarter of 2018 and the repayment of
the Senior Credit Facility in the first quarter of 2019;
- higher distributions from our equity investment in Northern
Border primarily due to lower capital spending related to decreased
compressor station maintenance costs, partially offset by reduced
earnings as discussed above; and
- lower distributions from our equity investment in Great Lakes
primarily due to an increase in its capital spending on its
compliance and integrity programs and decreased earnings as
discussed above.
Cash flow analysis
Operating cash flows
The Partnership’s net cash provided by operating activities
increased by $5 million in the six months ended June 30, 2019
compared to the same period in 2018 primarily due to the net effect
of: lower net cash flow from operations of our consolidated
subsidiaries primarily due to the decrease in Bison’s and GTN's
revenues, partially offset by an increase in PNGTS’ revenue, offset
by:
- amount and timing of earnings and cash distributions received
from equity investments due to:• lower capital spending
related to decreased compressor station maintenance costs on
Northern Border;• net higher earnings generated by Northern
Border and Great Lakes from the fourth quarter of 2018 to first
quarter of 2019 compared to the same period in the prior
year;• higher distributions from our equity investments;
and
- positive impact from amount and timing of operating working
capital changes.
Investing cash flows
During the six months ended June 30, 2019, the cash
provided by our investing activities was a net cash inflow of $22
million compared to a net outflow of $8 million in the same period
in 2018 primarily due to the net impact of the following:
- $50 million distribution received from Northern Border as a
return of investment; partially offset by
- higher capital maintenance expenditures on our consolidated
subsidiaries and continued capital spending on PXP.
Financing cash flows
The Partnership’s net cash used for financing activities was
approximately $41 million higher in the six months ended June 30,
2019 compared to the same period in 2018 primarily due to the net
effect of:
- $20 million increase in net debt repayments;
- $28 million decrease in distributions paid primarily due to the
$0.35 per common unit reduction in distribution payments during the
first quarter of 2019 related to performance during the fourth
quarter of 2018 as compared to the same period in 2018 in response
to the 2018 FERC Actions;
- $2 million decrease in distributions paid to Class B units in
2019 as compared to 2018;
- no ATM equity issuances in 2019 year-to-date; and
- $12 million increase in distributions paid to non-controlling
interests during the six months ended June 30, 2019 compared to the
six months ended June 30, 2018 resulting from PNGTS’ higher revenue
in the first quarter of 2019 compared to its revenue in the first
quarter of 2018.
At June 30, 2019, our cash and cash equivalents balance was
higher than our position at December 31, 2018 by approximately $12
million and our debt balance was lower by $115 million, $83 million
of which was reduced during the second quarter. As of August 1,
2019, the available borrowing capacity under our Senior Credit
Facility is $500 million. We believe our cash position, remaining
borrowing capacity on our Senior Credit Facility, and our operating
cash flows are sufficient to fund our short-term liquidity
requirements, including distributions to our unitholders, ongoing
capital expenditures and required debt repayments.
Non-GAAP financial
measures
The following non-GAAP financial measures are
presented as a supplement to our financial statements:
- EBITDA
- Total distributable cash flow
- Distributable cash flow
EBITDA is an approximate measure of our operating cash flow
during the current earnings period and reconciles directly to the
most comparable measure of net income. It measures our earnings
before deducting interest, depreciation and amortization, taxes,
net income attributable to non-controlling interests, and includes
earnings from our equity investments.
Total distributable cash flow and distributable
cash flow provide measures of distributable cash generated during
the current earnings period and reconcile directly to the net
income amounts presented.
Total distributable cash flow includes EBITDA
plus:
- distributions from our equity investmentsless:
- earnings from our equity investments,
- equity allowance for funds used during construction (if
any),
- interest expense,
- income taxes,
- distributions to non-controlling interests, and
- maintenance capital expenditures from consolidated
subsidiaries.
Distributable cash flow is computed net of
distributions declared to the General Partner and any distributions
allocable to Class B units. Distributions declared to the General
Partner are based on its two percent interest plus, if applicable,
an amount equal to incentive distributions. Distributions allocable
to the Class B units equal 30 percent of GTN’s distributable cash
flow for the year ending December 31, 2019 less $20 million (2018 -
less $20 million) and, if required, the percentage by which
distributions payable to common units were reduced (Class B
Reduction). The Class B Reduction was implemented during the first
quarter of 2018 following the Partnership’s common unit
distribution reduction of 35 percent. The Class B Reduction will
apply to any calendar year during which distributions payable in
respect of common units for such calendar year are less than $3.94
per common unit.
The non-GAAP financial measures described above are performance
measures presented to assist investors in evaluating our business
performance. We believe these measures provide additional
meaningful information in evaluating our financial performance
and cash generating capacity.
The non-GAAP financial measures presented as part of this
release are provided as a supplement to GAAP financial results and
are not meant to be considered in isolation or as substitutes for
financial results prepared in accordance with GAAP. Additionally,
these measures as presented may not be comparable to similarly
titled measures of other companies.
For a reconciliation of these non-GAAP financial measures to
GAAP measures, please see the table captioned "Reconciliation of
Net income to Distributable Cash Flow” included at the end of this
release.
Conference call
Members of the investment community and other interested parties
are invited to participate in a teleconference by calling
800.377.0758 on Thursday, August 1, 2019 at 4:30 p.m. CDT/5:30 p.m.
EDT. Nathan Brown, President of the General Partner, will discuss
the second quarter financial results and provide an update on the
Partnership’s business, followed by a question and answer session.
Please dial in 10 minutes prior to the start of the call. No pass
code is required. A live webcast of the conference call will also
be available through the Partnership’s website at
www.tcpipelineslp.com or via the following URL:
http://www.gowebcasting.com/10025. Slides for the presentation will
be posted on the Partnership’s website under “Events and
Presentations” prior to the webcast.
A replay of the teleconference will also be available two hours
after the conclusion of the call and until 11 p.m. CDT and midnight
EDT on August 8, 2019, by calling 800.408.3053, then entering pass
code 6000772#.
About TC PipeLines, LP
TC PipeLines, LP is a Delaware master limited partnership with
interests in eight federally regulated U.S. interstate natural gas
pipelines which serve markets in the Western, Midwestern and
Northeastern United States. The Partnership is managed by its
general partner, TC PipeLines GP, Inc., a subsidiary of TC Energy
Corporation (NYSE: TRP). For more information about TC PipeLines,
LP, visit the Partnership’s website at www.tcpipelineslp.com.
Forward-looking statements
Certain non-historical statements in this release relating to
future plans, projections, events or conditions are intended to be
“forward-looking statements”. These statements are based on current
expectations and, therefore, subject to a variety of risks and
uncertainties that could cause actual results to differ materially
from the projections, anticipated results or other expectations
expressed in this release, including, without limitation to the
ability of these assets to generate ongoing value to our
unitholders, impact of potential impairment charges, decreases in
demand on our pipeline systems, increases in operating and
compliance costs, the outcome of rate proceedings, the impact of
recently issued and future accounting updates and other changes in
accounting policies, potential changes in the taxation of MLP
investments by state or federal governments such as the elimination
of pass-through taxation or tax deferred distributions, our ability
to identify and complete expansion and growth opportunities,
operating hazards beyond our control, and our ability to access
debt and equity markets that negatively impacts the
Partnership’s ability to finance its capital spending. These and
other factors that could cause future results to differ materially
from those anticipated are discussed in Item 1A. in our Annual
Report on Form 10-K for the year-ended December 31, 2018 filed with
the Securities and Exchange Commission (the SEC), as updated and
supplemented by subsequent filings with the SEC. All
forward-looking statements are made only as of the date made and
except as required by applicable law, we undertake no obligation to
update any forward-looking statements to reflect new information,
subsequent events or other changes.
Media
inquiries:
Jaimie Harding / Warren Beddow403.920.7859 or 800.608.7859
Unitholder and Analyst inquiries:
Rhonda Amundson
877.290.2772
investor_relations@tcpipelineslp.com
TC PipeLines,
LPFinancial
Summary
Consolidated Statements of
Income |
|
Three months ended |
|
Six months ended |
(unaudited) |
|
June 30, |
|
June 30, |
(millions of dollars, except per common unit amounts) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Transmission revenues |
|
93 |
|
|
111 |
|
|
206 |
|
|
226 |
|
Equity earnings |
|
30 |
|
|
36 |
|
|
84 |
|
|
95 |
|
Operation and maintenance expenses |
|
(17) |
|
|
(17) |
|
|
(33) |
|
|
(33) |
|
Property taxes |
|
(6) |
|
|
(7) |
|
|
(13) |
|
|
(14) |
|
General and administrative |
|
(2) |
|
|
(1) |
|
|
(4) |
|
|
(2) |
|
Depreciation and amortization |
|
(19) |
|
|
(24) |
|
|
(39) |
|
|
(48) |
|
Financial charges and other |
|
(21) |
|
|
(23) |
|
|
(43) |
|
|
(46) |
|
Net income before taxes |
|
58 |
|
|
75 |
|
|
158 |
|
|
178 |
|
Income taxes |
|
(1) |
|
|
— |
|
|
(1) |
|
|
(1) |
|
Net income |
|
57 |
|
|
75 |
|
|
157 |
|
|
177 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to non-controlling interests |
|
2 |
|
|
2 |
|
|
9 |
|
|
8 |
|
Net income attributable to controlling
interests |
|
55 |
|
|
73 |
|
|
148 |
|
|
169 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to controlling interest
allocation |
|
|
|
|
|
|
|
|
Common units |
|
54 |
|
|
72 |
|
|
145 |
|
|
166 |
|
General Partner |
|
1 |
|
|
1 |
|
|
3 |
|
|
3 |
|
|
|
55 |
|
|
73 |
|
|
148 |
|
|
169 |
|
|
|
|
|
|
|
|
|
|
Net income per common unit – basic and diluted
(a) |
|
$0.75 |
|
|
$1.00 |
|
|
$2.03 |
|
|
$2.33 |
|
|
|
|
|
|
|
|
|
|
Weighted average common units outstanding – basic
and diluted (millions) |
|
71.3 |
|
|
71.3 |
|
|
71.3 |
|
|
71.2 |
|
|
|
|
|
|
|
|
|
|
Common units outstanding, end of period
(millions) |
|
71.3 |
|
|
71.3 |
|
|
71.3 |
|
|
71.3 |
|
|
(a) Net income per common unit is computed by dividing net
income attributable to controlling interests, after deduction of
amounts attributable to the General Partner, by the weighted
average number of common units outstanding. The amount allocable to
the General Partner equals an amount based upon the General
Partner’s two percent general partner interest. For the year ending
December 31, 2019, the amount allocable to the Class B units is
equal to 30 percent of GTN’s annual distributable cash flow, less
the threshold amount of $20 million and is further reduced by the
Class B Reduction for 2019 (2018 – less the threshold of $20
million and the Class B Reduction). During the six months
ended June 30, 2019 and 2018, no amounts were allocated to the
Class B units as the annual threshold of $20 million had not been
exceeded. |
TC PipeLines,
LPFinancial Summary
Consolidated Balance
Sheets |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
(millions of dollars) |
|
June 30, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and cash equivalents |
|
45 |
|
|
33 |
|
Accounts receivable and other |
|
33 |
|
|
48 |
|
Inventories |
|
9 |
|
|
8 |
|
Other |
|
3 |
|
|
8 |
|
|
|
90 |
|
|
97 |
|
Equity investments |
|
1,118 |
|
|
1,196 |
|
Property, plant and
equipment |
|
|
|
|
|
(Net of $1,145 accumulated depreciation; 2018 - $1,110) |
|
1,520 |
|
|
1,529 |
|
Goodwill |
|
71 |
|
|
71 |
|
Other assets |
|
— |
|
|
6 |
|
TOTAL
ASSETS |
|
2,799 |
|
|
2,899 |
|
|
|
|
|
|
|
LIABILITIES AND
PARTNERS’ EQUITY |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
26 |
|
|
36 |
|
Accounts payable to affiliates |
|
6 |
|
|
6 |
|
Accrued interest |
|
11 |
|
|
12 |
|
Current portion of long-term debt |
|
101 |
|
|
36 |
|
|
|
144 |
|
|
90 |
|
Long-term debt, net |
|
1,892 |
|
|
2,072 |
|
Deferred state income
taxes |
|
9 |
|
|
9 |
|
Other liabilities |
|
34 |
|
|
29 |
|
|
|
2,079 |
|
|
2,200 |
|
Partners’ Equity |
|
|
|
|
|
Common units |
|
514 |
|
|
462 |
|
Class B units |
|
95 |
|
|
108 |
|
General partner |
|
14 |
|
|
13 |
|
Accumulated other comprehensive income (loss) (AOCI) |
|
(5) |
|
|
8 |
|
Controlling interests |
|
618 |
|
|
591 |
|
Non-controlling interest |
|
102 |
|
|
108 |
|
|
|
720 |
|
|
699 |
|
TOTAL LIABILITIES AND
PARTNERS’ EQUITY |
|
2,799 |
|
|
2,899 |
|
TC PipeLines,
LPFinancial Summary
Consolidated Statement of
Cash Flows |
|
|
|
|
Six months ended |
(unaudited) |
|
June 30, |
(millions of dollars) |
|
2019 |
|
2018 |
|
|
|
|
|
Cash Generated from
Operations |
|
|
|
|
Net income |
|
157 |
|
|
177 |
|
Depreciation and
amortization |
|
39 |
|
|
48 |
|
Amortization of debt issue
costs reported as interest expense |
|
1 |
|
|
1 |
|
Amortization of realized
losses |
|
— |
|
|
2 |
|
Equity earnings from equity
investments |
|
(84) |
|
|
(95) |
|
Distributions received from
operating activities of equity investments |
|
112 |
|
|
96 |
|
Change in other long-term
liabilities |
|
— |
|
|
(1) |
|
Equity allowance for funds
used during construction (AFUDC equity) |
|
(1) |
|
|
— |
|
Change in operating working
capital |
|
4 |
|
|
(5) |
|
|
|
228 |
|
|
223 |
|
Investing
Activities |
|
|
|
|
Investment in Great Lakes |
|
(5) |
|
|
(4) |
|
Distribution received from
Iroquois as return of investment |
|
5 |
|
|
5 |
|
Distribution received from
Northern Border as return of investment |
|
50 |
|
|
— |
|
Capital expenditures |
|
(29) |
|
|
(9) |
|
Customer advances for
construction |
|
1 |
|
|
— |
|
|
|
22 |
|
|
(8) |
|
Financing
Activities |
|
|
|
|
Distributions paid to common
units, including the general partner |
|
(95) |
|
|
(123) |
|
Distributions paid to Class B
units |
|
(13) |
|
|
(15) |
|
Distributions paid to
non-controlling interests |
|
(15) |
|
|
(3) |
|
Common unit issuance, net |
|
— |
|
|
40 |
|
Long-term debt issued, net of
discount |
|
20 |
|
|
130 |
|
Long-term debt repaid |
|
(135) |
|
|
(225) |
|
Debt issuance costs |
|
— |
|
|
(1) |
|
|
|
(238) |
|
|
(197) |
|
Increase in cash and
cash equivalents |
|
12 |
|
|
18 |
|
Cash and cash equivalents,
beginning of period |
|
33 |
|
|
33 |
|
Cash and cash
equivalents, end of period |
|
45 |
|
|
51 |
|
TC PipeLines,
LPSupplemental Schedule
Non-GAAP
Measures |
|
|
|
|
Reconciliations of Net
income to Distributable Cash Flow |
|
|
|
|
|
|
Three months ended |
|
Six months ended |
(unaudited) |
|
June 30, |
|
June 30, |
(millions of dollars) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income |
|
57 |
|
|
75 |
|
|
157 |
|
|
177 |
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
Interest expense (a) |
|
22 |
|
|
25 |
|
|
44 |
|
|
48 |
|
Depreciation and
amortization |
|
19 |
|
|
24 |
|
|
39 |
|
|
48 |
|
Income taxes |
|
1 |
|
|
— |
|
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
99 |
|
|
124 |
|
|
241 |
|
|
274 |
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
Distributions from equity
investments (b) (f) |
|
|
|
|
|
|
|
|
Northern Border (c) |
|
21 |
|
|
18 |
|
|
48 |
|
|
37 |
|
Great Lakes |
|
9 |
|
|
14 |
|
|
32 |
|
|
39 |
|
Iroquois (d) |
|
14 |
|
|
14 |
|
|
28 |
|
|
28 |
|
|
|
44 |
|
|
46 |
|
|
108 |
|
|
104 |
|
Less: |
|
|
|
|
|
|
|
|
Equity earnings: |
|
|
|
|
|
|
|
|
Northern Border |
|
(14) |
|
|
(15) |
|
|
(35) |
|
|
(32) |
|
Great Lakes |
|
(9) |
|
|
(12) |
|
|
(29) |
|
|
(36) |
|
Iroquois |
|
(7) |
|
|
(9) |
|
|
(20) |
|
|
(27) |
|
|
|
(30) |
|
|
(36) |
|
|
(84) |
|
|
(95) |
|
Less: |
|
|
|
|
|
|
|
|
AFUDC equity |
|
(1) |
|
|
— |
|
|
(1) |
|
|
— |
|
Interest expense (a) |
|
(22) |
|
|
(25) |
|
|
(44) |
|
|
(48) |
|
Income taxes |
|
(1) |
|
|
— |
|
|
(1) |
|
|
(1) |
|
Distributions to
non-controlling interest (e) |
|
(3) |
|
|
(2) |
|
|
(10) |
|
|
(9) |
|
Maintenance capital
expenditures (f) |
|
(15) |
|
|
(5) |
|
|
(21) |
|
|
(10) |
|
|
|
(42) |
|
|
(32) |
|
|
(77) |
|
|
(68) |
|
|
|
|
|
|
|
|
|
|
Total Distributable
Cash Flow |
|
71 |
|
|
102 |
|
|
188 |
|
|
215 |
|
General Partner distributions
declared (g) |
|
(1) |
|
|
(1) |
|
|
(2) |
|
|
(2) |
|
Distributions allocable to
Class B units (h) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Distributable Cash
Flow |
|
70 |
|
|
101 |
|
|
186 |
|
|
213 |
|
|
(a) Interest expense as presented includes net realized loss
related to the interest rate swaps.(b) Amounts are calculated in
accordance with the cash distribution policies of each of our
equity investments. Distributions from our equity investments
represent our respective share of these entities’ quarterly
distributable cash for the current reporting period.(c) Excludes
the $50 million additional distribution received from Northern
Border. The entire proceeds were used by the Partnership to
partially repay our 2013 Term Loan Facility.(d) This amount
represents our proportional 49.34 percent share of the distribution
declared by our equity investee, Iroquois, for the current
reporting period and includes our 49.34 percent share of the
Iroquois unrestricted cash distribution amounting to approximately
$2 million and $5 million, respectively, for both the three and six
months ended June 30, 2019 and June 30, 2018.(e) Distributions to
non-controlling interests represent the respective share of our
consolidated entities’ distributable cash from earnings not owned
by us for the periods presented.(f) The Partnership’s maintenance
capital expenditures include cash expenditures made to maintain,
over the long term, the operating capacity, system integrity and
reliability of our pipeline assets. This amount represents the
Partnership’s and its consolidated subsidiaries’ maintenance
capital expenditures and does not include the Partnership’s share
of maintenance capital expenditures for our equity investments.
Such amounts are reflected in “Distributions from equity
investments” as those amounts are withheld by those entities from
their quarterly distributable cash.(g) No incentive distributions
were declared to the General Partner for the six months ended June
30, 2019 and 2018.(h) Distributions allocable to the Class B units
are based on 30 percent of GTN’s distributable cash flow during the
current reporting period, but declared and paid in the subsequent
reporting period. During the six months ended June 30, 2019 and
June 30, 2018, 30 percent of GTN’s total eligible distributions,
when combined with the Class B Reduction, did not exceed the
threshold level of $20 million; therefore, no distributions were
allocated to the Class B units. Currently, we expect the 2019
threshold will be exceeded in the fourth quarter of 2019. |
PDF
available: http://ml.globenewswire.com/Resource/Download/d85cc316-4c8c-4f83-8ed8-06d7bbc978f7
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