Trans Mountain Corporation Releases 2020 Results
In a year marked by the global pandemic, the Trans Mountain Pipeline operated at full capacity and the Expansion Project progressed to 22% construction completed.
Trans Mountain Corporation (TMC) today posted to its website the company’s financial statements and associated management report for the year ending December 31, 2020. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.
Net income for the year increased by $9.9 million to $140.8 million, as compared to $130.9 million in the prior year. The increase is mainly due to the $93.1 million increase in equity AFUDC, as a result of capital spending on the TMEP, and a $2.6 million decrease in depreciation and amortization, due to the completion of a required deprecation study which lowered depreciation rates effective January 1, 2020. The pipeline operated at full capacity throughout the year, with an average daily throughput for the year for the mainline of approximately 311,700 barrels per day, 39,100 barrels per day to Westridge Marine Terminal and 196,300 barrels per day to Washington State on the Puget pipeline.
“In spite of the challenges presented by the global pandemic, it was a successful year operationally and financially for the corporation – a reflection of the critical service the Trans Mountain Pipeline provides and our ability as a company to adapt to changing conditions,” said Ian Anderson, President and CEO of Trans Mountain Corporation. “We have an important role to play in the economic recovery of communities where we operate. As an essential service provider and with a major, national interest pipeline expansion project underway, we know that in order to continue to work for the recovery of Canadians, we must remain safe.”
During the COVID-19 pandemic, Trans Mountain and its construction contractors have been working diligently together to ensure adherence to all advice and direction from government and health officials both provincially and federally, while ensuring the safe operation of the Trans Mountain Pipeline System and the continued safe construction of the TMEP. In 2020, direct costs related to Trans Mountain’s COVID-19 response totaled $18.9 million on the TMEP, to ensure safe project execution, and $1.6 million related to existing operations.
Work on the Expansion Project progressed to 22% construction completion by year-end. As of December 2020, prior to our safety standdown, there were 7,300 people working on the Expansion Project including more than 1,000 Indigenous workers who have worked on the Project – over half of whom live in communities directly along the pipeline corridor.
“We saw significant progress on the Expansion Project over the year – with pipeline construction starting and well-underway in British Columbia and the near-completion of work in the Greater Edmonton area,” added Anderson. “As we head into peak construction across most of the Project in mid-2021, we do so with a renewed focus on safety. After two significant contractor safety incidents, we voluntarily stood down project work from December 18, 2020 until mid – February 2021 while we completely reviewed safety culture, systems and training. Safety of workers is, and must be, our number 1 priority.”
Since the Project’s inception, $6.1 billion in capital spending has been incurred to the end of 2020. Spending to-date on the TMEP includes up-front costs of permitting, regulatory processes, legal, materials such as pipe, valves, buildings, motors, and financing costs in addition to direct construction related activities. 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 covering 80% of the system’s 890,000 barrels a day of capacity.
On February 4, 2020, the Federal Court of Appeal dismissed challenges to the Federal Government’s approval of the TMEP and on July 2, the Supreme Court of Canada dismissed all applications for leave to appeal the Federal Court of Appeal’s February 4, 2020 dismissal of challenges to the Federal Government’s approval of the TMEP.
On October 9, 2020, Trans Mountain submitted an application to the Canada Energy Regulator for the West Alternative Route variance through the Coldwater Valley in British Columbia.
In the second quarter of 2021, Trans Mountain will release its first ESG report outlining the Corporations results and aspirations through the lens of environment, social, and governance. Trans Mountain will be setting 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.
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.