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, 2023. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.

For the three month period ended June 30, 2023, net income increased by $43.3 million to $172.1 million, as compared to $128.8 million in the same period of the prior year. Net income for the six month period ended June 30, 2023, increased by $120.3 million to $356.3 million, as compared to $236.0 million in the same period of the prior year.

Adjusted EBITDA for the three month period ended June 30, 2023 increased by $1.9 million to $48.2 million, as compared to $46.3 million in the same period of the prior year. On a year-to-date basis, Adjusted EBITDA for the six month period ended June 30, 2023, increased by $10.0 million to $98.4 million, as compared to $88.4 million in the same period of the prior year.

Adjusted EBITDA reflects the results from TMC’s base business, while net income incorporates the significant financing impact of the Project, specifically equity allowance for funds used during construction (AFUDC), interest expense and capitalized debt financing costs.

Equity AFUDC for the three month period ended June 30, 2023, increased by $118.0 million to $279.0 million, as compared to $161.0 million in the same period of the prior year. For the six month period ended June 30, 2023, equity AFUDC increased by $227.0 million to $526.3 million, as compared to $299.3 million in the same period of the prior year. The significant increase for both the three and six month periods ended June 30, 2023, as compared to the same periods in the prior year, is due to the cumulative impact of capital spending on the Trans Mountain Expansion Project (the Project).

The company’s financial and operational performance remained strong throughout the first half of the year. With steady demand for Trans Mountain’s unique access to tidewater, the pipeline operated at full capacity for the quarter with an average daily throughput on the mainline of approximately 349,000 barrels per day, with 39,000 barrels per day to Westridge Marine Terminal and 233,000 barrels per day to Washington state on the Puget Pipeline.

As of June 30, 2023, construction of the Project is approximately 90 per cent complete, with $24.0 billion in construction capital spending incurred plus $3.3 billion in financial carrying costs capitalized since the inception of the Project. TMC continues to target the end of 2023 for mechanical completion with commercial service of the Project anticipated to occur in the first quarter of 2024.

As of August 19, 2023, construction of the Project is 94 per cent mechanically complete with approximately 42 kilometres of pipe left to install. Berth 1 at the Westridge Marine Terminal has been operating since mid-July. We made significant progress on watercourse and highway crossings and construction in the Lower Mainland is 93 per cent complete and 97 per cent of our facilities in Alberta and B.C. (including Edmonton Terminal and Alberta/B.C. pump stations) are also complete. We have mitigation and contingency plans in place due to construction challenges in areas including Burnaby Mountain Tunnel, Jacko Lake and Mountain 3 in Spread 5B. We are currently planning and targeting the commencement of service on the expanded pipeline system near the end of the first quarter of 2024.

During the quarter, Trans Mountain released its third environmental, social and governance report (ESG) report outlining the Corporation’s results and aspirations through ESG principles. Although the greenhouse gas (GHG) emissions associated with operating a pipeline are relatively small, Trans Mountain continues to set targets to reduce and/or offset scope 1 and scope 2 emissions, which 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.

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