TC Energy’s Q1 2025 Results: A Pipeline of Growth in North America’s Energy Transition

TC Energy Corporation’s Q1 2025 earnings underscore its position as a pillar of North America’s energy infrastructure, with disciplined execution and strategic investments driving consistent performance. Despite modest headwinds, the company reaffirmed its full-year outlook, highlighted robust operational milestones, and emphasized its pivot toward low-risk, contracted growth. Here’s why investors should take note.

Financial Fortitude Amid Transition

TC Energy delivered $2.7 billion in Comparable EBITDA, maintaining parity with Q1 2024, while segmented earnings rose 5% year-over-year to $2.0 billion, reflecting strong contributions from its Canadian, U.S., and Mexican natural gas pipelines. Though net income dipped slightly to $0.94 per share, the company’s focus on capital discipline remains intact: it reaffirmed its 2025 Comparable EBITDA guidance of $10.7–$10.9 billion, with capital expenditures capped at $6.6 billion.

The spinoff of its Liquids Pipelines business (South Bow) in late 2024 has repositioned TC Energy as a pure-play natural gas and power solutions company, a strategic shift that investors appear to reward.

Operational Momentum: Pipelines and Power

The company’s operational highlights reveal a clear theme: scale, reliability, and record-setting capacity.

• Natural Gas Pipelines:
• Canadian deliveries hit 27.6 Bcf/d, an 8% year-over-year jump, with the NGTL System setting a record 17.8 Bcf/d.
• U.S. flows averaged 31.0 Bcf/d, a 5% increase, driven by the GTN pipeline’s record 3.2 Bcf/d.

• Mexico’s pipelines saw a 6% rise in flows, with the Southeast Gateway Pipeline poised to add 1.3 Bcf/d once fully operational.

• Power Generation:

• Bruce Power maintained 87% availability despite planned maintenance, while its Cogeneration fleet achieved a stellar 98.6% availability, reflecting efficient spring outages.

Project Pipeline: Low-Risk, High-Impact Growth

TC Energy’s project execution is its crown jewel. In Q1, it advanced $8.5 billion in projects toward completion, 15% under budget. Key highlights include:

1. Southeast Gateway Pipeline:

2. Completed 13% under its $2.2 billion budget, this 715-km pipeline is now ready for service pending Mexico’s CNE rate approval. Once operational, it will supply 10 of Mexico’s 14 planned gas-fired power plants, solidifying TC Energy’s role in the country’s energy transition.

3. Northwoods Expansion:

4. A $0.9 billion project on the ANR system, this 0.4 Bcf/d expansion targets U.S. Midwest demand (including data centers) by late 2029. Backed by a 20-year take-or-pay contract, it promises a 5–7x build multiple, aligning with TC Energy’s capital allocation criteria.

5. Bruce Power Unit 5 MCR:

6. A $1.1 billion overhaul of a nuclear unit in Ontario, set to deliver 1,350 MW of baseload power by 2030. This project supports Ontario’s electricity needs amid 75% projected demand growth by 2050, underpinning Bruce Power’s long-term contract to 2064.

Risks and Reward

While TC Energy’s execution is impressive, risks linger:
- Regulatory hurdles, such as Mexico’s CNE rate approval for Southeast Gateway, could delay cash flows.
- Macroeconomic volatility and counterparty credit risks remain, though TC Energy’s focus on long-term, creditworthy contracts mitigates these concerns.

Conclusion: A Steady Hand in a Transitioning Energy Landscape

TC Energy’s Q1 results reaffirm its status as a defensive play in energy infrastructure. With $4 billion in sanctioned projects over six months, a dividend growth target of 3–5% annually, and a track record of delivering projects under budget, the company is well-positioned to capitalize on North America’s energy transition.

The Southeast Gateway Pipeline alone represents $1.3 billion in contracted capacity for Mexico’s power sector, while Bruce Power’s MCR ensures decades of reliable baseload generation. Even with a slight dip in comparable earnings (down 7% to $0.95 per share from $1.02 in Q1 2024), the company’s focus on low-risk, high-return projects—including those with 5–7x build multiples—suggests sustained earnings resilience.

Investors seeking stability in energy infrastructure would do well to consider TC Energy’s mix of regulated cash flows, contracted growth, and a dividend yield currently above 6%. While risks exist, TC Energy’s execution record and strategic focus make it a compelling bet for those betting on North America’s energy future.