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- **Resilient Performance**: Q3 EBITDA $250M, DCF $236M (incl. $71M tax recovery), reaffirming 2025 EBITDA guidance of $1.01B.
- **Tax Efficiency**: 2025-2026 tax rate 20-21%, with 2026 DCF revised to $655M; U.S. legislation extends interest deductions, benefiting 2025-2026.
- **Growth Momentum**: BlackRod on track for early 2026 in-service; 2026 EBITDA outlook +$25M from marketing recovery, +$10M from BlackRod ramp-up.
- **Safety & Compliance**: Milepost 171 remedial actions show no systemic issues; Keystone pressure restrictions expected to lift in 2026, aligning with market differentials.
- **Capital Discipline**: 2026 capital program $35M (maintenance $25M, growth $10M); 2-3% EBITDA growth target maintained via disciplined project execution.

**【CEO Opening Remarks】**
- South Bow delivered stable earnings in Q3 2025, prioritizing capital allocation through dividends, growth projects (e.g., BlackRod), and cost savings from early transition services exit.
- Emphasized strategic focus on safe operations, growth portfolio execution, competitiveness, and disciplined capital allocation.
- BlackRod project achieved mechanical completion in October, on schedule and within budget, with commissioning underway for early 2026 in-service.

**【COO Operational Update】**
- Remedial actions at Milepost 171: Inline inspections (6 runs) and 37 integrity digs show no systemic issues; advanced technologies being integrated for long-term safety.
- Keystone pressure restrictions expected to lift in phases in 2026, aligning with widening market differentials.
- Legal proceedings related to variable toll disputes resolved in October, with $22M indemnification cap from TC Energy.

**【CFO Financial Performance】**
- Q3 2025: Normalized EBITDA $250M, DCF $236M (incl. $71M tax recovery from U.S. legislation changes).
- 2025 Guidance: Normalized EBITDA $1.01B, DCF ~$700M; 2026 Outlook: EBITDA $1.03B (+$25M marketing, +$10M BlackRod, -$15M Keystone).
- Effective tax rate revised to 20-21% vs. prior 25-27%; 2026 capital program: $25M maintenance, $10M growth (BlackRod connection).

**【Q&A Highlights】**
- **Tax Optimization**: $71M recovery in 2025; benefits extend to 2026 via interest deduction cap extension, with 2027 reverting to prior tax cadence.
- **Growth Projects**: BlackRod template for future organics; 2026 focus on maturing projects leveraging pre-invested corridors (e.g., Alberta/Keystone XL legacy assets).
- **CapEx Assumptions**: ~$100M annual average for 2-3% EBITDA growth; no material projects sanctioned yet, but pipeline discussions active.
- **Variable Toll Impact**: $33M payments/$19M receipts over 6/2 years, excluded from EBITDA, neutral to cash flow.


South Bow Corp (SOBO) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

SOBO

SOBO fundamentals

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