TC PipeLines, LP (NYSE: TCP) (the Partnership) today reported net
income attributable to controlling interests of $57 million and
distributable cash flow of $55 million for the three months ended
June 30, 2020.
“In the second quarter of 2020, our diversified portfolio of
assets generated the kind of dependable results that our
unitholders expect and rely upon,” said Nathan Brown, president of
TC PipeLines, GP, Inc. “Our critical infrastructure was highly
utilized, as demand for our transportation services was largely
unaffected by the COVID-19 pandemic and the prudent operatorship of
our assets through this time of crisis permitted us to continue to
provide uninterrupted energy to millions of Americans and
businesses. The take-or-pay nature of our shipper contracts largely
insulates us from short-term volatility associated with the ups and
downs of volume throughput and commodity prices, underpinning the
resilience and stability of our pure natural gas midstream
business.
“We remain focused on the health and safety of employees,
contractors and the communities in which we operate and on
maintaining the reliability of our systems,” added Brown. “We
continued to advance our suite of organic growth projects. PNGTS’
PXP project is on track to be fully in-service this November and
our Westbrook, GTN and Tuscarora XPress projects are all
progressing as planned. As well, we successfully refinanced GTN’s
senior notes back in June, upsizing the offering to provide the
necessary funding for the GTN XPress project, a notable achievement
given the uncertainty in today’s financial markets.
“Looking ahead, we will continue to conservatively manage our
financial position and self-fund our ongoing capital expenditures.
We believe we are well positioned to continue to expand and enhance
our existing infrastructure and to create value for our unitholders
well into the future,” concluded Brown.
Second quarter highlights
(unaudited)
- Generated net income attributable to controlling interests of
$57 million;
- Paid cash distributions of $47 million;
- Declared cash distribution of $0.65 per common unit for the
second quarter of 2020;
- Generated Adjusted EBITDA of $110 million and distributable
cash flow of $55 million;
- Maintained no outstanding balance on our Senior Credit
Facility;
- Continued permitting, engineering and construction activities
on our PNGTS, GTN XPress and Tuscarora XPress projects;
- Continued to progress North Baja XPress and Iroquois’ ExC
project;
- GTN issued $175 million of 10-year fixed rate Senior Notes and
established a 3-year Private Shelf Facility for an additional $75
million, thereby refinancing maturing debt and securing the funding
for its GTN XPress project;
- Extended the maturity date for Tuscarora’s $23 million term
loan to August 2021;
- Great Lakes’ credit rating was upgraded by two notches by
Standard and Poor’s to BBB+/Stable; and
- PNGTS credit rating was upgraded by one notch by Fitch to
BBB+/Stable.
The Partnership’s financial highlights for the
second quarter of 2020 compared to the same period in 2019
were:
|
Three months ended |
|
Six months ended |
(unaudited) |
June 30, |
|
June 30, |
(millions of dollars, except per common unit amounts) |
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Net income |
|
61 |
|
|
|
57 |
|
|
|
155 |
|
|
|
157 |
|
Net income attributable to
controlling interests |
|
57 |
|
|
|
55 |
|
|
|
145 |
|
|
|
148 |
|
Net income per common unit –
basic and diluted (a) |
$0.78 |
|
|
$0.75 |
|
|
$1.99 |
|
|
$2.03 |
|
|
|
|
|
|
|
|
|
Earnings before interest,
taxes, depreciation and amortization (EBITDA) (b) |
|
103 |
|
|
|
99 |
|
|
|
237 |
|
|
|
241 |
|
Adjusted EBITDA(b) |
|
110 |
|
|
|
113 |
|
|
|
248 |
|
|
|
265 |
|
|
|
|
|
|
|
|
|
Cash distributions paid |
|
(47 |
) |
|
|
(47 |
) |
|
|
(95 |
) |
|
|
(95 |
) |
Class B distributions paid
(c) |
|
- |
|
|
|
- |
|
|
|
(8 |
) |
|
|
(13 |
) |
Distributable cash flow
(b) |
|
55 |
|
|
|
70 |
|
|
|
143 |
|
|
|
186 |
|
|
|
|
|
|
|
|
|
Cash distribution declared per
common unit |
$0.65 |
|
|
$0.65 |
|
|
$1.30 |
|
|
$1.30 |
|
|
|
|
|
|
|
|
|
Weighted average
common units outstanding – basic and diluted
(millions) |
|
71.3 |
|
|
|
71.3 |
|
|
|
71.3 |
|
|
|
71.3 |
|
|
|
|
|
|
|
|
|
Common units
outstanding, end of period (millions) |
|
71.3 |
|
|
|
71.3 |
|
|
|
71.3 |
|
|
|
71.3 |
|
- Net income per common unit is computed by dividing net income
attributable to controlling interests, after deduction of net
income attributable to TC PipeLines GP, Inc. (the General Partner),
by the weighted average number of common units outstanding. Refer
to the “Financial Summary-Consolidated Statements of Operations”
section of this release.
- EBITDA, Adjusted EBITDA and Distributable Cashflow 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, including a reconciliation to the comparable GAAP
measures.
- Reflects distributions allocable to Class B units in the years
ended December 31, 2019 and 2018 and paid in the six months ended
June 30, 2020 and 2019, respectively.
Recent business
developments:
Current outlook:
On March 11, 2020, the World Health Organization declared
COVID-19 a global pandemic. As primary operator of our pipelines,
TC Energy Corporation’s (TC Energy) business continuity plans
remain in place across the organization and TC Energy continues to
effectively operate our assets, conduct commercial activities and
execute on projects with a focus on health, safety and reliability.
Our business is broadly considered essential in the United States
given the important role our infrastructure plays in providing
energy to North American markets. We believe that TC Energy’s
robust continuity and business resumption plans for critical teams,
including gas control and commercial and field operations, will
continue to ensure the safe and reliable delivery of energy that
our customers depend upon. We anticipate that changes to work
practices and other restrictions put in place by government and
health authorities in response to the COVID-19 pandemic will have
an impact on certain projects. While we generally believe this will
not be material to our operations, we also recognize that the
ultimate impact remains uncertain at this time.
Our pipeline assets are largely backed by long-term, take-or-pay
contracts resulting in revenues that are materially insulated from
short-term volatility associated with fluctuations in volume
throughput and commodity prices. More importantly, a significant
portion of our long-term contract revenue is with investment-grade
customers and we have not experienced any material collection
issues on our receivables to date. Aside from the impact of
maintenance activities and normal seasonal factors, to date we have
not seen any material changes in the utilization of our assets.
Additionally, to date, we have not experienced any significant
impacts on our supply chain. While it is too early to ascertain any
long-term impact that the COVID-19 pandemic may have on our capital
growth program, we note that we could experience some delay in
construction and other related activities. For more information on
our capital growth program, see “Status of Our Capital Growth
Program” below.
Capital market conditions in 2020 have been significantly
impacted by COVID-19 resulting in periods of extreme volatility and
reduced liquidity. Despite these challenges, our liquidity remains
strong underpinned by stable cashflow from operations, cash on hand
and full access to our $500 million senior credit facility. During
the second quarter of 2020, GTN's $100 million senior notes due in
June 2020 were refinanced through the issuance of $175 million of
10-year Senior Notes with the incremental $75 million of proceeds
to be used to fund the GTN XPress project through the balance of
2020. Additionally, GTN entered into a 3-year Private Shelf
Agreement for an additional $75 million which will be used to
finance a portion of the GTN XPress project into 2023. This
refinancing demonstrates our continued access to the debt capital
markets at attractive levels. Additionally, on July 23, 2020, we
extended Tuscarora's $23 million unsecured term loan due in August
2020 for one year to August 2021 under generally the same terms.
PNGTS is also working on increasing its borrowing capacity to
accommodate the financing required for the balance of both the PXP
and Westbrook XPress projects. We continue to conservatively
manage our financial position, self-fund our ongoing capital
expenditures and maintain our debt at prudent levels and we believe
we are well positioned to fund our obligations through a prolonged
period of disruption, should it occur. Based on current
expectations, we believe our business will continue to deliver
consistent financial performance going forward and support our
current quarterly distribution level of $0.65 per common unit.
Since the pandemic began, we, together with TC Energy, have
endeavored to understand and respond to the needs of the
communities in which we operate. Based on the paramount needs of
people in these areas, our support has focused on food security and
first responder organizations. As our capital projects continue to
progress, where possible, we will focus on supporting local
commerce, benefiting the people and small businesses in many
communities that have been significantly impacted by the COVID-19
crisis.
The full extent and lasting impact of the COVID-19 pandemic on
the global economy is uncertain but to date has included extreme
volatility in financial markets and commodity prices, a significant
reduction in overall economic activity and widespread extended
shutdowns of businesses along with supply chain disruptions. The
degree to which COVID-19 has a more significant impact on our
operations and growth projects will depend on future developments,
policies and actions which remain highly uncertain.
Status of our growth capital program:
- PNGTS’ Portland XPress (PXP) Phase III has begun construction
and is expected to be in service in late 2020;
- GTN XPress Phase I construction is progressing as planned. Work
at several points along the line requires further permitting under
the normal FERC process, as do the expansion facilities that will
be constructed in 2022 and 2023;
- On June 18, 2020, FERC issued a certificate of public
convenience and necessity for PNGTS’ Westbrook XPress Phases II and
III;
- On June 22, 2020, ANR Pipeline Company filed a FERC application
requesting authorization for its proposed Alberta XPress project
that will utilize existing capacity on Great Lakes;
- On June 24, 2020, Tuscarora filed a FERC application to
increase its certificated capacity in relation to the Tuscarora
XPress project;
- North Baja XPress is still subject to (i) a final investment
decision by Sempra and (ii) an environmental assessment by FERC
which is expected to be issued in September 2020; and
- Iroquois’ ExC project continues to progress through its
regulatory process and receipt of the FERC decision authorizing
construction of the project is anticipated in early 2021.
GTN financing:
On June 1, 2020, GTN’s $100 million 5.29 percent Senior Notes
matured and were refinanced through a Note Purchase and Private
Shelf Agreement whereby GTN issued $175 million of 10-year Series A
Senior Notes with a fixed rate coupon of 3.12 percent per annum and
entered into a 3-year Private Shelf Facility for an additional $75
million. The new Series A Senior Notes do not require any principal
payments until maturity on June 1, 2030. Proceeds from the Series A
Senior Note issuance were used to repay the outstanding balance of
the 5.29 percent Senior Notes and to fund the GTN XPress capital
expenditures through the balance of 2020. GTN expects to draw the
$75 million under the Private Shelf Facility by the end of 2023,
the estimated completion date of GTN XPress. The Private Shelf
Agreement contains a covenant that limits total debt to no greater
than 65 percent of GTN’s total capitalization.
Tuscarora financing:
On July 23, 2020, Tuscarora's $23 million unsecured term loan
due August 21, 2020, was amended to extend the maturity date to
August 20, 2021 under generally the same terms.
Great Lakes’ credit rating upgrade:
On June 21, 2020, Standard & Poor's upgraded
Great Lakes' credit rating by two notches from BBB-/Stable to
BBB+/Stable primarily due to an improvement in Great Lakes'
financial risk profile resulting from its increased long-term
contracting levels.
PNGTS credit rating upgrade:
On July 24, 2020, Fitch upgraded PNGTS' credit
rating by one notch from BBB/Stable to BBB+/Stable primarily due to
an improvement in PNGTS' financial risk profile resulting from
placing its PXP Phase II project in-service on November 1,
2019.
Cash distributions:
On July 23, 2020, the board of directors of our
General Partner declared the Partnership’s second quarter 2020 cash
distribution in the amount of $0.65 per common unit payable on
August 14, 2020 to unitholders of record as of August 3, 2020. The
declared distribution to our General Partner was $1 million for its
two percent general partner interest.
Results of operations
The Partnership’s net income attributable to controlling
interests increased by $2 million in the three months ended June
30, 2020 compared to the same period in 2019, mainly due to the
following:
Transmission revenues - The $2
million increase in transmission revenues was largely the result of
the following:
- higher revenue at PNGTS as a result of new revenues from PXP
Phase II and Westbrook XPress Phase I, both of which entered
service on November 1, 2019; partially offset by
- lower revenue at GTN due to (i) its scheduled 6.6 percent rate
decrease effective January 1, 2020, and (ii) lower opportunity for
the sale of discretionary services given increased natural gas
storage injection rates upstream of GTN; and
- lower revenue on Tuscarora due to its scheduled 10.8 percent
rate decrease effective August 1, 2019.
Financial charges and other - The $3
million decrease was primarily attributable to higher allowance for
funds used during construction (AFUDC) which served to offset
interest charges and thereby caused a decline. AFUDC increased
primarily due to continued spending on our expansion projects and
higher maintenance capital spending.
Non-GAAP Financial Measures
Our EBITDA was higher for the three months ended June 30, 2020
compared to the same period in 2019. The $4 million increase was
primarily due to higher revenue from our consolidated subsidiaries
as discussed above.
Our Adjusted EBITDA was lower for the three months ended June
30, 2020 compared to the same period in 2019. The $3 million
decrease was primarily due to the net effect of:
- higher earnings from consolidated subsidiaries as discussed
above;
- lower distributions from Northern Border primarily due to
higher spending on its major equipment overhauls; and
- lower distribution from Iroquois as it satisfied its final
surplus cash distribution obligation of approximately $2.6 million
in the fourth quarter of 2019 and the surplus cash payments are no
longer applicable.
Our distributable cash flow decreased by $15 million in the
three months ended June 30, 2020 compared to the same period in
2019 due to the net effect of:
- lower Adjusted EBITDA; and
- higher normal-course maintenance capital expenditures at GTN as
a result of increased spending on major equipment overhauls at
several compressor stations and certain system upgrades.
Cash flow analysis
Operating cash flows
The Partnership's operating cashflows for the six months ended
June 30, 2020 compared to the same period in 2019 were
comparable due to the net effect of:
- the timing of receipt of Iroquois' third quarter 2019
distributions from its operating activities, which we would
ordinarily have received during the fourth quarter of 2019 but were
instead received early in the first quarter of 2020; offset by
- lower distributions from operating activities of our equity
investments in Northern Border and Great Lakes largely due to
higher maintenance capital spending at both entities.
Investing cash flows
During the six months ended June 30, 2020, the cash used in
our investing activities was a net cash outflow of $88 million
compared to a net inflow of $22 million in the six months ended
June 30, 2019 due to the net effect of:
- higher maintenance capital expenditures at GTN for its overhaul
projects together with continued capital spending on our GTN
XPress, PXP and Westbrook XPress projects; and
- the $50 million distribution received from Northern Border
during the second quarter of 2019 that was considered a return of
investment.
Financing cash flows
The change in cash used for financing activities was primarily
due to a net debt issuance of $107 million in the six months ended
June 30, 2020 compared to a net debt repayment of $115 million for
the same period in the prior year primarily due to financing
executed for the capital expenditures on our GTN XPress, PXP and
Westbrook XPress expansion projects.
Overall current financial condition:
Cash and Debt Level - Our overall long-term debt balance
increased by approximately $107 million primarily as a result of
the financing put in place during the period for our expansion
projects. The increase included an incremental $75 million of
liquidity from GTN's issuance of Series A Senior Notes at a fixed
rate of 3.12 percent which effectively secured the funding required
for GTN XPress for the balance of 2020. The $75 million also
resulted in an increase in the balance of our cash and cash
equivalents, which totaled $215 million at June 30, 2020
compared to our position at December 31, 2019 of approximately
$83 million.
Working Capital - At June 30, 2020, our current assets totaled
$262 million and current liabilities amounted to $415 million,
leaving us with a working capital deficit of $153 million compared
to a deficit of $14 million at December 31, 2019. Our working
capital deficiency is considered to be normal course for our
business and is managed through:
- our ability to generate predictable and growing cash flows from
operations;
- cash on hand and full access to our $500 million Senior Credit
facility: and
- our access to debt capital markets, facilitated by our strong
investment grade ratings, allowing us the ability to renew and/or
refinance the current portion of our long-term debt.
We continue to be financially disciplined by using our available
cash to fund ongoing capital expenditures and maintaining debt at
prudent levels and we believe we are well positioned to fund our
obligations as required.
We believe our (1) cash on hand, (2) operating cash flow, (3)
$500 million available borrowing capacity under our Senior Credit
Facility at August 5, 2020, and (4) if needed, and subject to
customary lender approval upon request, an additional $500 million
capacity that is available under the Senior Credit Facility's
accordion feature, are sufficient to fund our short-term liquidity
requirements, including distributions to our unitholders, ongoing
capital expenditures, required debt repayments and other financing
needs such as capital contribution requests from our equity
investments without the need for additional common equity.
Non-GAAP financial
measures
The following non-GAAP financial measures are
presented as a supplement to our financial statements:
- EBITDA;
- Adjusted EBITDA;
- Total distributable cash flow; and
- 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, which includes net income
attributable to non-controlling interests and earnings from our
equity investments. It measures our earnings before deducting
interest, depreciation and amortization and taxes.
Adjusted EBITDA is our EBITDA, less (1) earnings from our equity
investments, plus (2) distributions from our equity investments,
and plus or minus (3) certain non-recurring items (if any) that are
significant but not reflective of our underlying operations.
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 Adjusted
EBITDA less:
- AFUDC;
- Interest expense;
- Current 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, 2020 less $20 million, the
residual of which is further multiplied by 43.75 percent 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. Distributions allocable
to the Class B units in 2019 equaled 30 percent of GTN’s
distributable cashflow less $20 million and the Class B
Reduction.
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
800.806.5484 and entering pass code 4289103# on August 5, 2020 at
10:00 a.m. CDT/11:00 a.m. EDT. Nathan Brown, President of the
General Partner, along with other members of management, will
discuss the Partnership’s 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. A live webcast of the conference call will also
be available through the Partnership’s website at
www.tcpipelineslp.com/events or via the following URL:
http://www.gowebcasting.com/10740. 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 /midnight
EDT on August 12, 2020, by calling 800.408.3053, then entering pass
code 7469507#.
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, the impact of a potential
slowdown in construction activities or delay in completion of our
capital projects including increase in costs and availability of
labor, equipment and materials, the impact of downward changes in
oil and natural gas prices, including any effects on the
creditworthiness of our shippers or the availability of natural gas
in a low oil price environment, the impact of litigation and other
opposition proceedings on our ability to begin work on projects and
the potential impact of an ultimate court or administrative ruling
to a project schedule or viability, uncertainty surrounding the
impact of global health crises that reduce commercial and economic
activity, including the recent outbreak of the COVID-19 virus, and
the potential impact on our business 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. Risk Factors” in
our Annual Report on Form 10-K for the year-ended December 31, 2019
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.
–30–
Media
Inquiries:
Hejdi Carlsen / Jaimie Harding 403.920.7859 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) |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Transmission revenues |
|
|
95 |
|
|
|
93 |
|
|
|
196 |
|
|
|
206 |
|
Equity earnings |
|
|
29 |
|
|
|
30 |
|
|
|
84 |
|
|
|
84 |
|
Operation and maintenance expenses |
|
|
(16 |
) |
|
|
(17 |
) |
|
|
(32 |
) |
|
|
(33 |
) |
Property taxes |
|
|
(7 |
) |
|
|
(6 |
) |
|
|
(13 |
) |
|
|
(13 |
) |
General and administrative |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
Depreciation and amortization |
|
|
(19 |
) |
|
|
(19 |
) |
|
|
(39 |
) |
|
|
(39 |
) |
Financial charges and other |
|
|
(18 |
) |
|
|
(21 |
) |
|
|
(37 |
) |
|
|
(43 |
) |
Net income before taxes |
|
|
62 |
|
|
|
58 |
|
|
|
156 |
|
|
|
158 |
|
Income taxes |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Net income |
|
|
61 |
|
|
|
57 |
|
|
|
155 |
|
|
|
157 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to non-controlling interests |
|
|
4 |
|
|
|
2 |
|
|
|
10 |
|
|
|
9 |
|
Net income attributable to controlling
interests |
|
|
57 |
|
|
|
55 |
|
|
|
145 |
|
|
|
148 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to controlling interest
allocation |
|
|
|
|
|
|
|
|
Common units |
|
|
56 |
|
|
|
54 |
|
|
|
142 |
|
|
|
145 |
|
General Partner |
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
57 |
|
|
|
55 |
|
|
|
145 |
|
|
|
148 |
|
|
|
|
|
|
|
|
|
|
Net income per common unit – basic and diluted
(a) |
|
$0.78 |
|
|
$0.75 |
|
|
$1.99 |
|
|
$2.03 |
|
|
|
|
|
|
|
|
|
|
Weighted average common units outstanding – basic
and diluted (millions) |
|
|
71.3 |
|
|
|
71.3 |
|
|
|
71.3 |
|
|
|
71.3 |
|
|
|
|
|
|
|
|
|
|
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 and Class
B units, 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. The amount allocable to the Class B units in 2020 will
equal 30 percent of GTN’s distributable cash flow during the year
ending December 31, 2020 less $20 million, the residual of which is
further multiplied by 43.75 percent. This amount is further reduced
by the estimated Class B Reduction for 2020 (December 31, 2019
- $20 million less Class B Reduction) as applicable. During the
three and six months ended June 30, 2020 and 2019, no amounts were
allocated to the Class B units as the thresholds had not been
exceeded.
TC PipeLines,
LPFinancial Summary
Consolidated Balance
Sheets
(unaudited) |
|
|
|
|
(millions of dollars) |
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
ASSETS |
|
|
|
|
Current Assets |
|
|
|
|
Cash and cash equivalents |
|
215 |
|
|
83 |
|
Accounts receivable and other |
|
34 |
|
|
43 |
|
Distribution receivable from Iroquois |
|
- |
|
|
14 |
|
Inventories |
|
10 |
|
|
10 |
|
Other |
|
3 |
|
|
6 |
|
|
|
262 |
|
|
156 |
|
Equity investments |
|
1,082 |
|
|
1,098 |
|
Property, plant and
equipment |
|
|
|
|
(Net of $1,218 accumulated depreciation; 2019 - $1,187) |
|
1,598 |
|
|
1,528 |
|
Goodwill |
|
71 |
|
|
71 |
|
TOTAL
ASSETS |
|
3,013 |
|
|
2,853 |
|
|
|
|
|
|
LIABILITIES AND
PARTNERS’ EQUITY |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
|
49 |
|
|
28 |
|
Accounts payable to affiliates |
|
6 |
|
|
8 |
|
Accrued interest |
|
10 |
|
|
11 |
|
Current portion of long-term debt |
|
350 |
|
|
123 |
|
|
|
415 |
|
|
170 |
|
Long-term debt, net |
|
1,762 |
|
|
1,880 |
|
Deferred state income
taxes |
|
6 |
|
|
7 |
|
Other liabilities |
|
43 |
|
|
36 |
|
|
|
2,226 |
|
|
2,093 |
|
Partners’ Equity |
|
|
|
|
Common units |
|
593 |
|
|
544 |
|
Class B units |
|
95 |
|
|
103 |
|
General partner |
|
15 |
|
|
14 |
|
Accumulated other comprehensive income (loss) (AOCI) |
|
(18 |
) |
|
(5 |
) |
Controlling interests |
|
685 |
|
|
656 |
|
Non-controlling interest |
|
102 |
|
|
104 |
|
|
|
787 |
|
|
760 |
|
TOTAL LIABILITIES AND
PARTNERS’ EQUITY |
|
3,013 |
|
|
2,853 |
|
TC PipeLines,
LPFinancial Summary
Consolidated Statement of Cash
Flows
|
|
Six months ended |
(unaudited) |
|
June 30, |
(millions of dollars) |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Cash Generated from
Operations |
|
|
|
|
Net income |
|
155 |
|
|
157 |
|
Depreciation and
amortization |
|
39 |
|
|
39 |
|
Amortization of debt issue
costs reported as interest expense |
|
1 |
|
|
1 |
|
Equity earnings from equity
investments |
|
(84 |
) |
|
(84 |
) |
Distributions received from
operating activities of equity investments |
|
115 |
|
|
112 |
|
Equity allowance for funds
used during construction |
|
(3 |
) |
|
(1 |
) |
Change in operating working
capital |
|
6 |
|
|
4 |
|
Other |
|
(1 |
) |
|
- |
|
|
|
228 |
|
|
228 |
|
Investing
Activities |
|
|
|
|
Investment in Great Lakes |
|
(5 |
) |
|
(5 |
) |
Distribution received from
Iroquois as return of investment |
|
5 |
|
|
5 |
|
Distribution received from
Northern Border as return of investment |
|
- |
|
|
50 |
|
Capital expenditures |
|
(87 |
) |
|
(29 |
) |
Customer advances for
construction |
|
(1 |
) |
|
1 |
|
|
|
(88 |
) |
|
22 |
|
Financing
Activities |
|
|
|
|
Distributions paid to common
units, including the General Partner |
|
(95 |
) |
|
(95 |
) |
Distributions paid to Class B
units |
|
(8 |
) |
|
(13 |
) |
Distributions paid to
non-controlling interests |
|
(12 |
) |
|
(15 |
) |
Long-term debt issued, net of
discount |
|
207 |
|
|
20 |
|
Long-term debt repaid |
|
(100 |
) |
|
(135 |
) |
|
|
(8 |
) |
|
(238 |
) |
Increase in cash and
cash equivalents |
|
132 |
|
|
12 |
|
Cash and cash equivalents,
beginning of period |
|
83 |
|
|
33 |
|
Cash and cash
equivalents, end of period |
|
215 |
|
|
45 |
|
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) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net
income |
|
61 |
|
|
57 |
|
|
155 |
|
|
157 |
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
Interest expense (a) |
|
22 |
|
|
22 |
|
|
42 |
|
|
44 |
|
Depreciation and
amortization |
|
19 |
|
|
19 |
|
|
39 |
|
|
39 |
|
Income taxes |
|
1 |
|
|
1 |
|
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
103 |
|
|
99 |
|
|
237 |
|
|
241 |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
Equity earnings |
|
|
|
|
|
|
|
|
Northern Border |
|
(13 |
) |
|
(14 |
) |
|
(35 |
) |
|
(35 |
) |
Great Lakes |
|
(9 |
) |
|
(9 |
) |
|
(29 |
) |
|
(29 |
) |
Iroquois |
|
(7 |
) |
|
(7 |
) |
|
(20 |
) |
|
(20 |
) |
|
|
(29 |
) |
|
(30 |
) |
|
(84 |
) |
|
(84 |
) |
Add: |
|
|
|
|
|
|
|
|
Distributions from equity
investments (b) |
|
|
|
|
|
|
|
|
Northern Border |
|
15 |
|
|
21 |
|
|
42 |
|
|
48 |
|
Great Lakes |
|
11 |
|
|
9 |
|
|
32 |
|
|
32 |
|
Iroquois (c) |
|
10 |
|
|
14 |
|
|
21 |
|
|
28 |
|
|
|
36 |
|
|
44 |
|
|
95 |
|
|
108 |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(d) |
|
110 |
|
|
113 |
|
|
248 |
|
|
265 |
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
AFUDC equity |
|
(2 |
) |
|
(1 |
) |
|
(3 |
) |
|
(1 |
) |
Interest expense (a) |
|
(22 |
) |
|
(22 |
) |
|
(42 |
) |
|
(44 |
) |
Income taxes |
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
Distributions to
non-controlling interest (e) |
|
(5 |
) |
|
(3 |
) |
|
(11 |
) |
|
(10 |
) |
Maintenance capital
expenditures (f) |
|
(24 |
) |
|
(15 |
) |
|
(46 |
) |
|
(21 |
) |
|
|
(54 |
) |
|
(42 |
) |
|
(103 |
) |
|
(77 |
) |
|
|
|
|
|
|
|
|
|
Total Distributable
Cash Flow |
|
56 |
|
|
71 |
|
|
145 |
|
|
188 |
|
General Partner distributions
declared (g) |
|
(1 |
) |
|
(1 |
) |
|
(2 |
) |
|
(2 |
) |
Distributions allocable to
Class B units (h) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Distributable Cash
Flow |
|
55 |
|
|
70 |
|
|
143 |
|
|
186 |
|
- Interest expense as presented includes net realized loss or
gain related to the interest rate swaps.
- 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.
- This amount represents our proportional 49.34 percent share of
the distribution declared by our equity investee, Iroquois, for the
current reporting period. For the three and six months ended June
30, 2019, the amounts include our 49.34 percent share of the
Iroquois unrestricted cash distributions amounting to approximately
$2.6 million and $5.2 million, respectively (three and six months
ended June 30, 2020 - none).
- Beginning in our first quarter results of 2020, we provided
Adjusted EBITDA as an additional performance measure of the current
operating profitability of our assets and we revised our
calculation of Adjusted EBITDA to include distributions from our
equity investments, net of equity earnings from our investments as
described above, which were previously excluded from such
measure. The presentation of Adjusted EBITDA for the three and
six months ended June 30, 2019 was recast to conform with
the current presentation. The Partnership believes the revised
presentation more closely aligns with similar non-GAAP measures
presented by our peers and with the Partnership’s definitions of
such measures.
- 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.
- 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.
- No incentive distributions were declared to the General Partner
for the three and six months ended June 30, 2020 and 2019.
- For the three and six months ended June 30, 2020 and 2019, no
distributions were allocated to the Class B units.
PDF
available: http://ml.globenewswire.com/Resource/Download/2ff8a46b-3a22-4e01-a72c-eb6c7b6f9fb3
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