Strong Operating Results and Continued Progress on Expansion Project

Trans Mountain Corporation (TMC) today posted to its website the company’s financial statements and associated management report for the three and nine month periods ending September 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 September 30, 2021 increased by $35.0 million to $74.4 million, as compared to $39.4 million in the same period of the prior year. The increase is mainly due to the $51.0 million increase in equity AFUDC (Allowance for Funds Used During Construction), due to spending on the Trans Mountain Expansion Project, partially offset by the $12.0 million increase in income tax expense, due to higher pre-tax income, the $2.2 million decrease in Adjusted EBITDA and a $1.0 million increase in interest expense.

“Trans Mountain’s third quarter results not only demonstrate the company’s strong financial and operational performance but also further show our commitment to ESG,” said Ian Anderson, President and CEO of Trans Mountain Corporation. “We released our first ESG report this quarter on the heels of a year marked by the many social changes and challenges presented by the pandemic. Trans Mountain respects and values the communities where we operate, and we continue to work hard to build and enhance the relationships we have developed. We embrace Canada’s commitment to advance reconciliation with Indigenous peoples and operate in a manner that supports that commitment. Whether it is through the course of our daily operations or during Project construction, we are committed to operating responsibly and safely to protect our employees, contractors, and the public.”

The Trans Mountain Pipeline operated at full capacity with an average daily throughput for the quarter for the mainline of approximately 315,000 barrels per day, with 42,000 barrels per day to the Westridge Marine Terminal and 189,000 barrels per day to Washington State on the Puget pipeline. Despite the pandemic’s impact on crude oil demand and price, the pipeline operated at full capacity throughout 2020 and the first nine months of 2021, as the market access Trans Mountain provides continues to be valuable to shippers.

“We continue to make construction progress across the Project. We have 100 per cent of the route approved, 25 per cent of the new pipe in the ground and with the start of construction in the Fraser Valley, we now have active construction in every region across the pipeline corridor,” added Anderson. “Like many British Columbians, we faced challenges in the summer due to extreme heat and wildfire hazards, but we continue to make progress and are ready for a busy fall and winter of pipeline construction across Alberta and B.C.”

Since the Expansion Project’s inception, $9.9 billion in capital spending has been incurred to the end of the third quarter in 2021, including a total of $1.5 billion and $3.8 billion incurred for the three and nine months ended September 30, 2021, respectively. Spending to-date on the Expansion Project includes up-front costs of permitting, regulatory and legal processes, materials such as pipe, valves, buildings, motors, and financing costs in addition to direct construction related activities.

Construction on the Expansion Project is more than 37 per cent complete as of the end of the quarter, and inclusive of pre-construction activities the Expansion Project exceeded 55% overall progress. As of September 30, 2021, approximately 11,300 people, including 11% Indigenous people, are actively working on the Project in hundreds of communities across B.C. and Alberta.

TMC’s projected Adjusted EBITDA is expected to be approximately $1.7 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.

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.