Trans Mountain Corporation Releases Third Quarter 2022 Results
Nov. 29, 2022
Trans Mountain Corporation (TMC) released the company’s financial statements and associated management report for the three and nine-month periods ending September 30, 2022. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.
For the three-month period ended September 30, 2022, net income increased by $65.3 million to $139.7 million, as compared to $74.4 million in the same period of the prior year. The increase is due to a $87.6 million increase in equity AFUDC, partially offset by a $21.2 million increase in income tax expense, a $1.6 million increase in interest expense, net of capitalized interest, a $0.9 million decrease in Adjusted EBITDA, and a $0.3 million increase in depreciation and amortization expense. The remaining movement in net income relates to changes in foreign exchange gains and losses, and other items.
Net income for the nine-month period ended September 30, 2022, increased by $186.9 million to $375.7 million, as compared to $188.8 million in the same period of the prior year. The increase is due to a $231.3 million increase in equity AFUDC, and a $17.6 million decrease in interest expense, net of capitalized interest, partially offset by a $61.3 million increase in income tax expense, a $2.4 million decrease in Adjusted EBITDA and a $1.2 million increase in depreciation and amortization expense. The remaining movement in net income relates to changes in foreign exchange gains and losses, and other items.
The pipeline operated at full capacity for the quarter with an average daily throughput on the mainline of approximately 339,000 barrels per day, with 28,000 barrels per day to Westridge Marine Terminal and 225,000 barrels per day to Washington state on the Puget Pipeline.
“Trans Mountain’s third quarter results demonstrate the company’s consistent financial and operational performance,” said Dawn Farrell, President and CEO, Trans Mountain Corporation. “We remain focused on safe construction of the Expansion Project while steering the next phase of the Company’s future with successful completion of the Project.”
To date, Trans Mountain and our contractors have hired approximately 27,000 people, of which more than 10 per cent were Indigenous. As of September 30, 2022, 15,560 people are currently working on the Project in hundreds of communities across British Columbia and Alberta.
During the quarter, Trans Mountain finished drilling on the 2.6-kilometre underground tunnel connecting Burnaby Terminal and Westridge Marine Terminal. Drilling took 225 mining days with 20 hours of mining per day, and approximately 225,000 hours were worked during drilling. Now that drill completion is done, Trans Mountain will begin pipe installation through the tunnel for the three 30-inch delivery pipelines to load vessels at Westridge Marine Terminal.
“The Expansion Project is now more than 70 per cent construction complete. We have more than 650 kilometres of pipe in the ground, and our facilities and pump stations are over 90 per cent complete,” added Farrell. “Across Alberta and BC, we are in the process of transitioning our completed facilities and pump stations over from Project to operations. This is a great step forward towards successful integration of the new pipeline later in 2023.”
As of September 30, 2022, the overall project including upfront permitting, regulatory approval, and advance purchase of materials is approximately 73% complete. Since the Project’s inception, $16.6 billion in construction capital spending has been incurred to the end of the third quarter in 2022, including a total of $2.4 billion and $6.1 billion for the three and nine months ended September 30, 2022, respectively.
Trans Mountain anticipates mechanical completion of the Project to occur at the end of the third quarter of 2023 with commercial service of the Project expected to occur late in the fourth quarter of 2023. Trans Mountain’s projected Adjusted EBITDA is expected to be approximately $2 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 per cent of the system’s 890,000 barrels a day of capacity and expected utilization of uncontracted capacity of the system once in service.
See the full financial statements and management report documents here.
See Canada Development Investment Corporation’s Quarterly Report here.
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.