South Bow (SOBO) Q3 2025 earnings summary

Executive summary

• Achieved stable financial and operational performance in Q3 2025, with strong throughput on the Keystone Pipeline and U.S. Gulf Coast segment.

• Mechanical completion of the BlackRod Connection Project, with commercial service started and full in-service expected in early 2026.

• Advanced remedial actions and regulatory compliance following the Milepost 171 incident, with most costs expected to be recovered via insurance.

• Transition services with TC Energy are concluding ahead of schedule, with the new SCADA system in place.

• Focused on future growth, competitiveness, safe operations, and disciplined capital allocation.

Financial highlights

• Q3 2025 revenue was $461 million, net income $93 million ($0.45/share), and normalized EBITDA $254 million, up 2% sequentially.

• Distributable cash flow rose to $236 million, up $69 million from Q2 2025, mainly due to U.S. tax changes and optimization.

• Dividends declared totaled $104 million ($0.50/share) for Q3 2025, payable January 15th.

• Net debt stood at $4.8 billion, with a net debt-to-normalized EBITDA ratio of 4.6x as of September 30, 2025.

• Normalized net income for Q3 2025 was $99 million ($0.47/share).

Outlook and guidance

• 2025 normalized EBITDA guidance reaffirmed at $1.01 billion (+1%/-2%), with distributable cash flow outlook raised to $700 million (+/-2%) due to lower expected taxes.

• 2026 normalized EBITDA projected at $1.03 billion (+/-2%), with 90% secured through committed arrangements; distributable cash flow expected at $655 million (+/-2%).

• 2026 effective tax rate expected at 22%-23%; net debt-to-normalized EBITDA ratio anticipated to decrease modestly.

• Key EBITDA drivers: marketing recovery (+$25M), BlackRod ramp-up (+$10M), Keystone maintenance (-$15M).

• Capital program for 2026 includes ~$25M maintenance and ~$10M growth capital for BlackRod.