Trans Mountain Corporation Releases First Quarter 2024 Results

Press Release

May 30, 2024

Trans Mountain Corporation (“TMC”) today released the company’s financial statements and associated management report for the three-month period ending March 31, 2024. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.

The existing pipeline operated at full capacity in the quarter with an average daily throughput on the mainline of approximately 332,000 barrels per day, with 47,000 barrels per day to Westridge Marine Terminal and 236,000 barrels per day to Washington state on the Puget pipeline. TMC began line fill activities for the expansion pipeline during the first quarter of 2024.

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) reflect the results from TMC’s base business. For the three-month period ended March 31, 2024, Adjusted EBITDA decreased by $14.2 million to $35.9 million, as compared to $50.1 million in the same period of the prior year. As flow through costs equally impact revenues and expenses, the decrease is mainly due to increased salary and benefits and higher administration expenses, due to costs associated with increases in the workforce for the commencement of the expanded pipeline system, partially offset by increased revenues on Puget, due to higher throughput.

Net income in the first quarter of 2024 decreased by $26.1 million to $158.1 million, as compared to $184.2 million in the same period of the prior year. The decrease was mainly due to lower Adjusted EBITDA and higher interest expense, partially offset by an increase in equity allowance for funds used during construction (“AFUDC”). The increase in both interest expense and equity AFUDC is mainly due to the cumulative impact of capital spending on the Trans Mountain Expansion Project (the “Expansion Project”) and higher interest rates on TMC’s credit facility.

Capital expenditures were $1.1 billion in the first quarter of 2024, as compared to $3.0 billion in the same period of the prior year, and mainly relate to construction of the Expansion Project. As of March 31, 2024, construction of the Expansion Project was nearly complete, with $27.7 billion in construction capital spending incurred plus $4.9 billion in financial carrying costs capitalized since the inception of the Expansion Project.

Subsequent to March 31, 2024, the Expansion Project was mechanically complete, with the final “golden” weld occurring on April 11, 2024. The commercial commencement date for the expanded system was May 1, 2024. All deliveries have since been subject to the expanded system tariff and tolls and both pipelines are transporting crude. TMC can load cargoes from its state-of-the-art loading facility, Westridge Marine Terminal, with three berths providing tidewater access to global markets. Final line fill on the expanded line was complete in early May followed by loading of the first ship from the expanded line during the second half of May, in accordance with the typical monthly nomination cycle.

The second quarter of 2024 will be a transitional quarter for TMC as operations shift from the current incentivized model to the new expanded system’s commercial model, resulting in significant increases to revenues and operating expenses.

See the full financial statements and management report documents here. See Canada Development Investment Corporation’s Quarterly Report here.

GAAP and Non-GAAP measures

We make use of certain financial measures that do not have a standardized meaning under U.S. GAAP because we believe they improve management’s ability to evaluate our operating performance and compare results between periods. These are known as non-GAAP measures and may not be similar to measures provided by other entities. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and equity AFUDC) is a non-GAAP measure we use to evaluate our operating performance absent the impact of financing decisions, non-cash depreciation and amortization, and non-cash equity AFUDC.

AFUDC (Allowance for Funds Used During Construction) is an amount recognized under U.S. GAAP by rate-regulated entities to reflect a return on the equity and debt components of capital invested in construction work in progress.

IBF4