TransCanada Reports Strong Fourth Quarter and Year-End Financial Results
Common Share Dividend Increased Eight Per Cent to $2.08 Per Share Annually
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 02/13/15 -- TransCanada Corporation (TSX: TRP)(NYSE: TRP) (TransCanada) today announced net income attributable to common shares for fourth quarter 2014 of $458 million or $0.65 per share compared to $420 million or $0.59 per share for the same period in 2013. For the year ended December 31, 2014, net income attributable to common shares was $1.7 billion or $2.46 per share compared to $1.7 billion or $2.42 per share in 2013. Comparable earnings for fourth quarter 2014 were $511 million or $0.72 per share compared to $410 million or $0.58 per share for the same period last year. For the year ended December 31, 2014, comparable earnings were $1.7 billion or $2.42 per share compared to $1.6 billion or $2.24 per share in 2013. TransCanada's Board of Directors also declared a quarterly dividend of $0.52 per common share for the quarter ending March 31, 2015, equivalent to $2.08 per common share on an annualized basis, an increase of eight per cent. This is the fifteenth consecutive year the Board of Directors has raised the dividend.
"Comparable earnings and funds generated from operations in 2014 increased eight per cent and seven per cent, respectively compared to last year," said Russ Girling, TransCanada's president and chief executive officer. "Our strong performance reflects the diversity and stability of our complementary businesses and $3.8 billion of new assets that were placed into service in 2014. Looking forward, the resiliency of our business model and a strong balance sheet leaves us well positioned to continue to create shareholder value under various market conditions.
"With an additional $12 billion of small-to-medium sized projects expected to be completed and placed into service by the end of 2017, and the steps we have taken to solidify the long-term returns from existing assets such as the Canadian Mainline and ANR, we are also pleased to announce an eight per cent increase in the common share dividend", added Girling. "Our financial strength and flexibility provides us with the capacity to raise the dividend and to continue to prudently fund our industry-leading capital program."
Over the course of 2014, we captured approximately $7 billion of new projects primarily related to our Canadian regulated natural gas pipeline business. With these additions, our capital program now includes $46 billion of commercially secured projects which are backed by long-term contracts or cost of service business models. We continue to advance this unprecedented slate of growth initiatives, with many currently under construction or proceeding through their respective regulatory processes. Over the remainder of the decade, subject to required approvals, this blue-chip portfolio of contracted energy infrastructure is expected to generate significant sustainable growth in earnings, cash flow and dividends.
Fourth Quarter and Year-End Highlights
(All financial figures are unaudited and in Canadian dollars unless noted otherwise)
Net income attributable to common shares increased by $38 million to $458 million or $0.65 per share for the three months ended December 31, 2014 compared to the same period in 2013. Both years included unrealized gains and losses from changes in certain risk management activities. Fourth quarter 2014 results also included an $8 million after-tax gain from the sale of Gas Pacifico/INNERGY.
Net income attributable to common shares for the year ended December 31, 2014 was $1.7 billion or $2.46 per share compared to $1.7 billion or $2.42 per share in 2013. Results in 2014 included a net after-tax gain of $99 million from the sale of Cancarb and its related power generation facility, an after-tax $32 million expense for terminating a natural gas storage contract and an $8 million after-tax gain from the sale of Gas Pacifico/INNERGY. Results in 2013 included $84 million of net income related to the 2012 impact of the 2013 NEB decision on the Canadian Mainline as well as a $25 million favourable income tax adjustment due to the enactment of Canadian Federal tax legislation relating to Part VI.I tax. These amounts, along with unrealized gains and losses on risk management activities, were excluded from comparable earnings.
Comparable earnings for fourth quarter 2014 were $511 million or $0.72 per share compared to $410 million or $0.58 per share for the same period in 2013. Higher earnings from the Keystone Pipeline System, the Canadian Mainline, Mexican Pipelines and U.S. Power were partially offset by higher interest expense.
Comparable earnings for the year ended December 31, 2014 were $1.7 billion or $2.42 per share compared to $1.6 billion or $2.24 per share in 2013. Higher earnings from the Keystone Pipeline System, the Canadian Mainline, Mexican Pipelines, U.S. and International Pipelines, Eastern Power and U.S. Power were partially offset by higher interest expense and lower contributions from Western Power.
Notable recent developments in Liquids Pipelines, Natural Gas Pipelines, Energy and Corporate include:
Liquids Pipelines:
Natural Gas Pipelines:
Energy:
Corporate:
Teleconference - Audio and Slide Presentation:
We will hold a teleconference and webcast on Friday, February 13, 2015 to discuss our fourth quarter 2014 financial results. Russ Girling, TransCanada president and chief executive officer, and Don Marchand, executive vice-president and chief financial officer, along with other members of the TransCanada executive leadership team, will discuss the financial results and Company developments at 1:00 p.m. (MT) / 3:00 p.m. (ET).
Analysts, members of the media and other interested parties are invited to participate by calling 800.396.7098 or 416.340.2218 (Toronto area). Please dial in 10 minutes prior to the start of the call. No pass code is required. A live webcast of the teleconference will be available at .
A replay of the teleconference will be available two hours after the conclusion of the call until midnight (ET) on February 20, 2015. Please call 800.408.3053 or 905.694.9451 and enter pass code 2631193.
With more than 60 years' experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and oil pipelines, power generation and gas storage facilities. TransCanada operates a network of natural gas pipelines that extends more than 68,500 kilometres (42,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with more than 400 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns or has interests in over 11,800 megawatts of power generation in Canada and the United States. TransCanada is developing one of North America's largest oil delivery systems. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP. For more information visit: or check us out on Twitter (at)TransCanada or .
Fourth quarter 2014 and financial highlights
FORWARD-LOOKING INFORMATION
We disclose forward-looking information to help current and potential investors understand management's assessment of our future plans and financial outlook, and our future prospects overall.
Statements that are forward-looking are based on certain assumptions and on what we know and expect today and generally include words like anticipate, expect, believe, may, will, should, estimate or other similar words.
Forward-looking statements in this news release may include information about the following, among other things:
Forward-looking statements do not guarantee future performance. Actual events and results could be significantly different because of assumptions, risks or uncertainties related to our business or events that happen after the date of this news release.
Our forward-looking information is based on the following key assumptions, and subject to the following risks and uncertainties:
Assumptions
Risks and uncertainties
You can read more about these factors and others in reports we have filed with Canadian securities regulators and the SEC, including the MD&A in our 2013 Annual Report.
You should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking statements due to new information or future events, unless we are required to by law.
FOR MORE INFORMATION
You can find more information about TransCanada in our annual information form and other disclosure documents, which are available on SEDAR ().
NON-GAAP MEASURES
We use the following non-GAAP measures:
These measures do not have any standardized meaning as prescribed by U.S. GAAP and therefore may not be comparable to similar measures presented by other entities.
EBITDA and EBIT
We use EBITDA as an approximate measure of our pre-tax operating cash flow. It measures our earnings before deducting financial charges, income tax, depreciation and amortization, net income attributable to non-controlling interests and preferred share dividends, and includes income from equity investments. EBIT measures our earnings from ongoing operations and is a useful measure of our performance and an effective tool for evaluating trends in each segment as it is equivalent to our segmented earnings.
Funds generated from operations
Funds generated from operations includes net cash provided by operations before changes in operating working capital. We believe it is a useful measure of our consolidated operating cash flow because it does not include fluctuations from working capital balances, which do not necessarily reflect underlying operations in the same period and is used to provide a consistent measure of the cash generating performance of our assets.
Comparable measures
We calculate the comparable measures by adjusting certain GAAP and non-GAAP measures for specific items we believe are significant but not reflective of our underlying operations in the period. These comparable measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable.
Our decision not to include a specific item is subjective and made after careful consideration. Specific items may include:
We calculate comparable earnings by excluding the unrealized gains and losses from changes in the fair value of certain derivatives used to reduce our exposure to certain financial and commodity price risks. These derivatives provide effective economic hedges, but do not meet the criteria for hedge accounting. As a result, the changes in fair value are recorded in net income. As these amounts do not accurately reflect the gains and losses that will be realized at settlement, we do not consider them part of our underlying operations.
Net income attributable to common shares increased by $38 million for the three months ended December 31, 2014 compared to the same period in 2013 and included an after tax gain on the sale of Gas Pacifico/INNERGY of $8 million as well as unrealized gains and losses from changes in certain risk management activities. Excluding the impact of these items, comparable earnings in the three months ended December 31, 2014 increased over the same period in 2013, as discussed below in Reconciliation of Net Income to Comparable Earnings.
Net income attributable to common shares increased by $31 million for the year ended December 31, 2014 compared to 2013. The following specific items were recognized in net income:
2014
2013
The items discussed above were excluded from comparable earnings for the relevant periods. Certain unrealized fair value adjustments relating to risk management activities are also excluded from comparable earnings. The remainder of net income is equivalent to comparable earnings. A reconciliation of net income attributable to common shares to comparable earnings is shown in the following table.
Comparable earnings increased by $101 million for the three months ended December 31, 2014 compared to the same period in 2013. This was primarily the net effect of:
The stronger U.S. dollar this quarter compared to the same period in 2013 positively impacted the translated results of our U.S. businesses, however this impact was mostly offset by a corresponding increase in interest expense on U.S. dollar-denominated debt as well as realized losses on foreign exchange hedges used to manage our net exposure through our hedging program.
CAPITAL PROGRAM
We are developing quality projects under our long-term capital program. These long-life infrastructure assets are supported by long-term commercial arrangements with creditworthy counterparties or regulated business models and are expected to generate significant growth in earnings and cash flow.
Our capital program is comprised of $12 billion of small to medium-sized projects and $34 billion of large scale projects. Amounts presented exclude the impact of foreign exchange and capitalized interest.
All projects are subject to cost adjustments due to market conditions, route refinement, permitting conditions, scheduling and timing of regulatory permits.
Natural Gas Pipelines
The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented earnings (the equivalent GAAP measure).
Natural Gas Pipelines segmented earnings increased by $123 million for the three months ended December 31, 2014 compared to the same period in 2013 and included a $9 million pre-tax gain related to the sale of Gas Pacifico/INNERGY in November 2014. This amount has been excluded in our calculation of comparable EBIT. The remainder of the Natural Gas Pipelines segmented earnings are equivalent to comparable EBIT which, along with comparable EBITDA, are discussed below.
CANADIAN PIPELINES
Net income and comparable EBITDA for our rate-regulated Canadian pipelines are affected by the approved ROE, investment base, level of deemed common equity, carrying charges owed to shippers on the Canadian Mainline Tolls Stabilization Account (TSA), and incentive earnings. Changes in depreciation, financial charges and taxes also impact comparable EBITDA and comparable EBIT but do not impact net income as they are recovered in revenue on a flow-through basis.
NET INCOME - WHOLLY OWNED CANADIAN PIPELINES
Net income and comparable earnings for the Canadian Mainline increased by $39 million for the three months ended December 31, 2014 compared to the same period in 2013 because of higher incentive earnings recorded in the fourth quarter partially offset by higher carrying charges owed to shippers on the positive TSA balance. Results for both periods reflect an ROE of 11.50 per cent on deemed common equity of 40 per cent.
Net income for the NGTL System decreased by $13 million for the three months ended December 31, 2014 compared to the same period in 2013. This decrease was due to increased OM&A costs at risk under the terms of the 2013-2014 NGTL Settlement approved by the NEB in November 2013, partially offset by a higher average investment base in 2014. Additionally, results for the three months ended December 31, 2013 reflect the annual impact of the 2013-2014 NGTL Settlement, which included an ROE of 10.10 per cent on deemed common equity of 40 per cent and annual fixed amounts for certain OM&A costs.
U.S. AND INTERNATIONAL PIPELINES
Earnings for our U.S. natural gas pipelines operations are generally affected by contracted volume levels, volumes delivered and the rates charged, as well as by the cost of providing services, including OM&A and property taxes. ANR is also affected by the contracting and pricing of its storage capacity and incidental commodity sales.
Comparable EBITDA for the U.S. and international pipelines increased by US$35 million for the three months ended December 31, 2014 compared to the same period in 2013. This was due to:
A stronger U.S. dollar had a positive impact on the Canadian dollar equivalent comparable earnings from our U.S. and International operations.
COMPARABLE DEPRECIATION AND AMORTIZATION
Comparable depreciation and amortization decreased by $8 million for the three months ended December 31, 2014 compared to the same period in 2013 as fourth quarter 2013 included the annual impact of the 2013-2014 NGTL Settlement approved by the NEB in November 2013. This settlement increased depreciation for 2013 and 2014. This year-over-year decrease compared to 2013 was partially offset by depreciation on the Tamazunchale Extension for the period in 2014.
OPERATING STATISTICS - WHOLLY OWNED PIPELINES
Liquids Pipelines
The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented earnings (the equivalent GAAP measure).
Liquids Pipelines segmented earnings increased by $70 million for the three months ended December 31, 2014 compared to the same period in 2013, and are equivalent to comparable EBIT which, along with comparable EBITDA, are discussed below.
Segmented earnings and comparable EBITDA for the Keystone Pipeline System is generated primarily by providing pipeline capacity to shippers for fixed monthly payments that are not linked to actual throughput volumes. Uncontracted capacity is offered to the market on a spot basis and provides opportunities to generate incremental earnings.
Comparable EBITDA for the Keystone Pipeline System increased by $94 million for the three months ended December 31, 2014 compared to the same period in 2013. This increase was primarily due to:
COMPARABLE DEPRECIATION AND AMORTIZATION
Comparable depreciation and amortization increased by $20 million for the three months ended December 31, 2014 compared to the same period in 2013 due to the Keystone Gulf Coast extension being placed in service.
Energy
The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented earnings (the equivalent GAAP measure).
Energy segmented earnings decreased by $82 million for the three months ended December 31, 2014 compared to the same period in 2013.
Energy segmented earnings for the three months ended December 31, 2014 and 2013 included unrealized gains and losses from changes in the fair value of certain derivatives used to reduce our exposure to certain commodity price risks as follows:
The quarterly variances in these unrealized gains and losses reflect the impact of changes in the forward natural gas and power prices and the volume of our position for these particular derivatives over a certain period of time; however, they do not accurately reflect the gains and losses that will be realized on settlement, or the offsetting impact of other derivative and non-derivative transactions that make up our business as a whole. As a result, we do not consider them part of our underlying operations and exclude them in our calculation of comparable EBIT.
The remainder of the Energy segmented earnings are equivalent to comparable EBIT which, along with comparable EBITDA, are discussed below.
Comparable EBITDA for Energy increased by $39 million for the three months ended December 31, 2014 compared to the same period in 2013 due to the net effect of:
A stronger U.S. dollar had a positive impact on the Canadian dollar equivalent comparable earnings from our U.S. operations.
CANADIAN POWER
Western and Eastern Power
Sales volumes and plant availability
Includes our share of volumes from our equity investments.
Western Power
Comparable EBITDA for Western Power increased by $8 million for the three months ended December 31, 2014 compared to the same period in 2013 due to the net effect of:
Average spot market power prices in Alberta decreased by 35 per cent from $48/MWh to $31/MWh for the three months ended December 31, 2014 compared to the same period in 2013. Relatively soft price levels persisted as the Alberta power market was well supplied despite strong power demand growth. Realized prices on power sales can be higher or lower than spot market power prices in any given period as a result of contracting activities.
76 per cent of Western Power sales volumes were sold under contract in fourth quarter 2014 and 68 per cent in fourth quarter 2013.
Eastern Power
Comparable EBITDA for Eastern Power increased by $20 million for the three months ended December 31, 2014 compared to the same period in 2013 because of higher Becancour contractual earnings and incremental earnings from solar facilities acquired in December 2013 and in the second half of 2014.
BRUCE POWER
Our proportionate share
Equity income from Bruce A increased by $30 million for the three months ended December 31, 2014 compared to the same period in 2013 mainly due to higher generation levels and lower operating expenses. Fourth quarter 2014 results also include the impact of a deemed generation adjustment related to a prior quarter.
Equity income from Bruce B decreased $30 million for the three months ended December 31, 2014 compared to the same period in 2013 mainly due to lower volumes and higher operating costs resulting from higher planned outage days.
Amounts received under the Bruce B floor price mechanism within a calendar year are subject to repayment if the average spot price in a month exceeds the floor price.
The OPA contract provides for payment if the Independent Electricity System Operator (IESO) reduces Bruce Power's generation to balance the supply of and demand for electricity and manage other operating conditions of the Ontario power grid. The amount of the generation reduction is considered "deemed generation", for which Bruce Power is paid the fixed price for Bruce A or the floor price or spot price for Bruce B as applicable.
U.S. POWER
Sales volumes and plant availability
Comparable EBITDA for U.S. Power increased US$20 million for the three months ended December 31, 2014 compared to the same period in 2013. The increase was the net effect of:
Wholesale electricity prices in New York and New England were lower for the three months ended December 31, 2014 compared to the same period in 2013 primarily due to warmer temperatures, decreased natural gas demand and lower natural gas price volatility. Average spot power prices for the three months ended December 31, 2014 in New England decreased approximately 29 per cent and in New York City spot power prices decreased approximately 21 per cent compared to the same period in 2013.
Average New York Zone J spot capacity prices for the three months ended December 31, 2014 were consistent with the same period in 2013, however, the impact of hedging activities resulted in higher realized capacity prices in 2014.
Physical sales volumes for the three months ended December 31, 2014 were higher than the same period in 2013. Generation volumes at our hydro and Ravenswood facilities increased due to higher precipitation and lower natural gas prices. Purchased volumes were also higher in the three months ended December 31, 2014 compared to 2013 due to increased sales to wholesale, commercial and industrial customers in both the New England and PJM markets.
As at December 31, 2014, approximately 3,700 GWh or 30 per cent of U.S. Power's planned generation was contracted for 2015, and 1,600 GWh or 14 per cent for 2016. Planned generation fluctuates depending on hydrology, wind conditions, commodity prices and the resulting dispatch of the assets. Power sales fluctuate based on customer usage.
NATURAL GAS STORAGE AND OTHER
Comparable EBITDA for Natural Gas Storage and Other decreased $15 million for the three months ended December 31, 2014 compared to the same period in 2013 mainly due to lower realized natural gas storage spreads and lower volumes of third party sales.
Other income statement items
The following are reconciliations and related analyses of our non-GAAP measures to the equivalent GAAP measures.
Comparable interest expense for the three months ended December 31, 2014 was $83 million higher compared to the same period in 2013 due to the net effect of the following:
Comparable interest income and other for the three months ended December 31, 2014 was $30 million higher compared to the same period in 2013 primarily as a result of increased AFUDC related to our rate-regulated projects, including Energy East Pipeline and our Mexico pipelines. This was partially offset by higher realized losses on derivatives used to manage our net exposure to foreign exchange rate fluctuations on U.S. dollar-denominated income and the impact of a fluctuating U.S. dollar on the translation of foreign currency denominated working capital.
Comparable income tax expense increased $45 million for the three months ended December 31, 2014 compared to the same period in 2013 mainly due to higher pre-tax earnings in 2014 and changes in the proportion of income earned between Canadian and foreign jurisdictions.
Net income attributable to non-controlling interests increased by $5 million for the three months ended December 31, 2014 compared to the same period in 2013 primarily due to the sale of the remaining 30 per cent interest in Bison to TC PipeLines, LP in October 2014, partially offset by the redemption of TCPL Series Y preferred shares in March 2014.
Preferred share dividends increased by $6 million for the three months ended December 31, 2014 compared to the same period in 2013 due to the issuance of Series 9 preferred shares in January 2014.
Contacts:
TransCanada Media Enquiries:
Shawn Howard/Davis Sheremata
403.920.7859 or 800.608.7859
TransCanada Investor & Analyst Enquiries:
David Moneta/Lee Evans
403.920.7911 or 800.361.6522
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Datum: 13.02.2015 - 13:00 Uhr
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News-ID 371532
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