Strong Quarterly Results and Continued Expansion Progress

Trans Mountain Corporation (TMC) today posted to its website the company’s financial statements and associated management report for the three and six month periods ending June 30, 2021. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.

Net income for the three-month period ended June 30, 2021 increased by $33.3 million to $63.1 million, as compared to $29.8 million in the same period of the prior year. The increase is mainly due to the $44.1 million increase in equity AFUDC (Allowance for Funds Used During Construction), due to spending on the Trans Mountain Expansion Project, and a $0.4 million increase in Adjusted EBITDA, partially offset by the $10.7 million increase in income tax expense, due to higher pre-tax income.

Net income for the six-month period ended June 30, 2021 increased by $59.4 million to $114.4 million, as compared to $55.0 million in the same period of the prior year. The increase is mainly due to the $81.3 million increase in equity AFUDC, due to spending on the Expansion Project, partially offset by the $19.3 million increase in income tax expense, due to higher pre-tax income, the $2.2 million increase in interest expense, and the $2.0 million decrease in Adjusted EBITDA.

The pipeline operated at full capacity with an average daily throughput for the quarter for the mainline of approximately 336,000 barrels per day, with 36,000 barrels per day to Westridge Marine Terminal and 215,000 barrels per day to Washington State on the Puget pipeline. The Trans Mountain pipeline operated at full capacity for all of 2020 and throughout the first six months of 2021.

“In the first half of 2021, the company’s financial and operational performance built on a strong 2020, with continued and steady demand for access to the markets the Trans Mountain Pipeline serves” said Ian Anderson, President and CEO of Trans Mountain Corporation. “As economic conditions in Canada and around the world begin to recover post- COVID-19, we are well-positioned to continue to operate safely at full capacity.”

“Expansion project construction reached approximately 30% completion as of the end of the quarter, and inclusive of pre-construction activities we exceeded 50% overall project progress. Significant progress has been reached at our facilities and terminal locations, which are between 35 and 45% complete. Many key activities, including the Burnaby Mountain Tunnel boring, are underway and progressing,” added Anderson. “The progress on the pipeline work faced some challenges with environmental conditions including extreme heat and wildfire hazards, however we were pleased to hit a key milestone of 200 kilometres of new pipe in the ground in July. We look forward to a busy summer and fall of pipelining along the entire route.”

As of June 30, 2021, 13,640 people have been hired for the Expansion Project, of which 1,470 or more than 10% were Indigenous, with approximately 9,400 people actively working on the Project in hundreds of communities across B.C and Alberta.

Since the Project’s inception, $8.4 billion in capital spending has been incurred to the end of the second quarter in 2021, including a total of $1.3 billion and $2.3 billion for the three and six months ended June 30, 2021, respectively. Spending to-date on the Expansion Project also includes pre-construction costs of permitting, regulatory processes, legal matters, materials such as pipe, valves, buildings, and motors, and financing costs.

Trans Mountain anticipates mechanical completion of the Project by the end of 2022, with commercial operations commencing soon thereafter. TMC’s projected Adjusted EBITDA is expected to be approximately $1.5 billion in the first full year of the Expansion Project’s operation and expected to grow annually thereafter. These projections are underpinned by long-term contractual commitments for 80% of the system’s 890,000 barrels a day of capacity.

In July, the Canada Energy Regulator approved Trans Mountain’s route variance application for the West Alternative Route through the Coldwater Valley in British Columbia. More than 98% of the route is approved leaving less than 2% of the entire pipeline route with outstanding regulatory approval.

In early July, Trans Mountain released its inaugural ESG report outlining the Corporation’s results and aspirations through environment, social, and governance principles. Trans Mountain will set targets to reduce/offset our emissions. Our targets will support the Government of Canada’s ambition to reach net zero by 2050.

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

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 by rate-regulated entities to reflect a return on the equity and debt components of capital invested in construction work in progress.