TC Energy Corporation Q2 FY26 Earnings Analysis

- Natural gas demand is growing strongly, particularly in the U.S. Midwest and Columbia Gas systems, with expected incremental demand of about 4 Bcf/day through 2035 and 5+ Bcf/day growth across the Midwest corridor over the next decade (Pages 2, 6). - Columbus, Ohio and Crossroads open seasons were heavily oversubscribed (3x and 2.5x respectively), indicating robust demand and growth opportunities (Pages 2, 15). - The company targets a 6% annualized EBITDA growth rate through 2028, supported by sanctioned projects moving toward in-service (Page 3). - Investment backlog totals approximately $23 billion secured, plus $6 billion pending approval, and $15 billion in origination, demonstrating a multi-year growth runway (Pages 10, 12). - Growth drivers include expansion of storage capacity, increasing power demand from data centers, electrification, and strong regulatory/commercial tailwinds in the U.S. (Pages 2, 6, 12). - Bruce Power MCR program will generate significant free cash flow post-2030, supporting further portfolio growth.

- 2026 comparable EBITDA outlook is reaffirmed at $11.6 billion to $11.8 billion, representing ~7% growth to midpoint versus 2025 and 8% versus 2024. - Target comparable EBITDA for 2028 is $12.6 billion to $13.1 billion, implying a 6% annualized growth rate over 3 years, driven by sanctioned projects advancing toward in-service. - Growth led by Mexico and U.S. natural gas businesses, with over $8 billion of new assets placed in service in 2025. - Strong execution momentum expected to continue, with projects on schedule and on or under budget in 2026. - Long-term EBITDA growth supported by a deep, diverse, and low-risk project backlog, including significant U.S. pipeline expansions and Bruce Power's continued cash flow growth post-2030. - Bruce Power's MCR program will start generating meaningful free cash flow by 2030 ($1B by 2032, $2B by 2035), adding optionality for growth. - Ongoing revenue enhancements and cost/capital optimization programs may provide incremental upside beyond core growth.

- The company is optimizing and bringing forward capital to support up to $6 billion of annual net capital deployment over the next couple of years, with potential to exceed this later in the decade. (Page 4) - A $15 billion backlog of projects in origination competing for capital through 2028 and beyond, mostly targeting in-service dates between 2028 and 2031. (Pages 4, 7, 10, 13) - Recent sanctioned projects include the Appalachia supply project (~$2.2 billion), with opportunities to expand capacity up to 2 Bcf with minor facility modifications. (Pages 4, 5, 6, 13) - Open seasons launched on NGTL indicating increased demand and discussion of a new investment framework for post-2029 growth beyond the existing settlement. (Pages 5, 12, 13) - The US Midwest corridor is a key growth area driven by power demand, supported by multiple pipeline assets and storage access. (Pages 6, 13) - Capital allocation decisions prioritize project execution excellence, balanced leverage (target 4.75x), and competitive returns (5-7x build multiple, ~12% IRR). (Pages 4, 7, 13)

- No explicit mention of new fundraising through debt or equity in the provided transcript. - Capital allocation is focused on maintaining balance sheet strength and a 4.75x leverage target. - The company aims to continue executing projects within disciplined capital allocation guardrails. - Post-2030, with Bruce Power’s cash flow profile improving, there is greater optionality to increase capital spending, subject to maintaining financial strength. - Francois Poirier indicates opportunities to grow net capital spend beyond $6 billion annually, balanced against project execution and leverage. - Sean O’Donnell mentions the planning window starting to include Bruce, facilitating future capital allocation flexibility. - Overall, capital plans prioritize disciplined execution and maintaining financial strength rather than signaling new debt or equity issuance.

- TC Energy's project backlog comprises: - $23 billion secured projects - $6 billion in pending approval projects (late-stage, high bar for inclusion) - $15 billion+ in origination projects (early stages, competitive bidding underway) - Recent open seasons in the U.S. (Crossroads, Columbia Gas) were highly oversubscribed, signaling strong demand but these are mostly in the $15 billion origination bucket, not yet pending. - The $6 billion pending approval bucket is fairly diversified across assets. - Canadian NGTL expansions are mostly not included in the $15 billion backlog due to early-stage discussions and new investment framework development. - Project sanctioning targets 2026, with capital largely spent in the construction year close to in-service dates (~2029-2031). - Continuous replenishment expected for the $15 billion origination backlog, reflecting strong multi-year growth visibility.