South Bow (SOBO) Q2 2025 earnings summary

Executive summary

• Generated CND 250 million ($250 million) of normalized EBITDA in Q2 2025, maintaining strong cash flows and operational reliability despite market volatility and downtime.

• Achieved Q2 2025 revenue of $524 million and net income of $96 million ($0.46/share), supported by strong commercial contracts and average throughput of 544,000 bbl/d on Keystone and 760,000 bbl/d on the U.S. Gulf Coast segment.

• Advanced the Blackrod Connection Project, with major storage tank completed and full facilities on track for early 2026 in-service.

• Completed cleanup and reclamation of the Milepost 171 (MP-171) incident site, with most costs expected to be covered by insurance.

• Implemented a new ERP system and neared completion of transition service agreements, progressing toward full operational independence post-spinoff.

Financial highlights

• Q2 2025 revenue was $524 million, net income $96 million ($0.46/share), and normalized EBITDA $250 million, down 6% sequentially due to lower Marketing segment contributions.

• Distributable cash flow reached $167 million in Q2 2025, up from $157 million in Q1 2025; dividends declared totaled $104 million ($0.50/share).

• Net debt stood at $4.9 billion, with a net debt-to-normalized EBITDA ratio of 4.6x as of June 30, 2025.

• Reaffirmed 2025 normalized EBITDA outlook at ~$1.01 billion (+1%/-2%), with 90% secured through committed arrangements.

• Maintenance capital expenditures guidance revised to $55 million (±3%) for 2025, reflecting MP-171 remedial actions.

Outlook and guidance

• Expect to fulfill committed throughput contracts for the remainder of 2025, with limited spot capacity on the Keystone system.

• Net debt-to-normalized EBITDA ratio expected to peak at ~4.8x by year-end 2025, then decline as Blackrod generates cash flow in 2026.

• 2%-3% EBITDA CAGR growth outlook maintained; exit from transition service agreements to enhance operational focus.

• One-time separation costs for the spinoff now expected at $30–$40 million, down from $40–$50 million.

• Distributable cash flow outlook for 2025 revised to $590 million (±3%), reflecting tax savings and a modified definition.