South Bow Corporation's Q4 2024 Earnings Call: Unraveling Contradictions in Financial Projections and Market Strategies

These are the key contradictions discussed in South Bow Corporation's latest 2024 Q4 earnings call, specifically including: Financial Projections, and Market Expansion Strategy:



Financial Performance and Guidance:
- South Bow Corporation generated $1.09 billion of normalized EBITDA and distributable cash flow of $608 million in 2024.
- For 2025, the company expects normalized EBITDA of $1.01 billion within a range of 3%.
- The financial performance was underpinned by highly contracted assets and significant demand for capacity on the U.S. Gulf Coast segment.

Capital Allocation and Deleveraging:
- The company's capital allocation priorities include maintaining a strong balance sheet and leveraging existing infrastructure for growth.
- South Bow expects to exit 2025 with a net debt to normalized EBITDA ratio of approximately 4.8x.
- The deleveraging journey will begin in 2026 when the Blackrod Connection project starts generating cash flow.

Marketing Strategy and Risk Management:
- South Bow is shifting its marketing strategy to a more contracted basis, reducing risk exposure from volatile markets.
- The company guided a year-over-year reduction of $30 million in the marketing segment for 2025.
- This shift is in response to the uncertainty around tariffs and the need for a more risk-managed approach.

Open Season and Egress Growth:
- South Bow is considering leveraging its existing infrastructure to provide new Egress solutions for Western Canadian sedimentary basin.
- The company is encouraged by base fundamentals in the basin, with significant demand for heavy barrels on the Gulf Coast.
- The company does not see new Egress projects as a threat to its long-term recontracting efforts on Keystone.