South Bow (SOBO) Q4 2024 earnings summary

Executive summary

• Achieved record safety and operational performance in 2024, with Keystone Pipeline SOF at 95% and throughput up 5% year-over-year.

• Completed spinoff from TC Energy on Oct. 1, 2024, launching as an independent company and repaid affiliate debt.

• Raised $5.8 billion through initial notes offering in August 2024 and completed successful debt raise, dual IPOs, and attracted a top-tier board.

• Advanced Blackrod Connection Project, targeting in-service in early 2026.

• Received PHMSA approval to lift pressure restrictions on the affected pipeline segment, improving operational efficiency and reducing costs.

Financial highlights

• 2024 revenue was $2,120 million, up from $2,005 million in 2023; Q4 revenue was $488 million.

• Normalized EBITDA for 2024 was $1,091 million, a 2% increase from 2023; distributable cash flow for 2024 was $608 million.

• Net income for 2024 was $316 million ($1.52/share), down from $442 million ($2.13/share) in 2023.

• 90% of 2025 normalized EBITDA is secured through committed arrangements, minimizing commodity and volumetric risk.

• Quarterly dividend of $0.50 per share approved, payable April 15th to shareholders of record on March 31st; annual dividend guidance for 2025 is $416 million ($2.00/share), subject to board approval.

Outlook and guidance

• 2025 normalized EBITDA projected at $1.01 billion (±3%), with distributable cash flow expected at $535 million (±3%).

• Growth capital expenditures for Blackrod Connection Project estimated at $110 million; maintenance capex at $65 million.

• Net debt-to-normalized EBITDA ratio expected to rise to ~4.8x by end of 2025, then decline as Blackrod generates cash flow; deleveraging expected to begin in 2026 with a long-term leverage target of 4.0x by 2028.

• Guidance incorporates potential headwinds from tariffs and market volatility, but risk is managed within a 3% range.

• One-time Spinoff costs of $40–$50 million expected in 2025.