TC Energy (TRP) Q2 2026 Earnings Call Transcript

TC Energy reported Q2 comparable EBITDA of $2.9B (+12% YoY), with comparable EPS of $0.94 vs $0.82 in Q2 2025, driven by strong availability across its North American gas pipeline network and a powerful contribution from Bruce Power. The company raised/confirmed its 2026 comparable EBITDA target to the upper end of $11.6B–$11.8B and guided to $12.6B–$13.1B for 2028 (~6% annualized midpoint growth), while declaring a quarterly dividend of $0.8775/share. Growth visibility expanded: sanctioned projects of ~$3.0B YTD, pending approval backlog of ~$7.0B (up $1.0B), and origination backlog of $20B+ (mostly power generation). Management also reiterated a 4.75x debt-to-EBITDA leverage target while highlighting an AI-related $100M incremental EBITDA target for 2026 and ongoing nuclear refurbishment progress at Bruce (Unit 3 returned >7 months ahead, ~15% below Unit 6 refurbishment cost).

Analysis

The key market mechanism is not near-term EBITDA, but the conversion of a growing backlog into a lower-risk, self-funding growth runway. If TC Energy can keep sanctioning at 5-7x build multiples while preserving leverage, the equity starts to look like a compounder with a deferred re-rating catalyst in 2028-31, not just a yield proxy. The market is likely still discounting the optionality in power/data-center demand because that cash flow is mostly back-end loaded; that creates room for multiple expansion only when the next tranche of FIDs and funding clarity become visible.

Second-order, this is a relative loser for gas franchises that lack incumbency in the U.S. Heartland/Alberta/Mexico corridors; TC is signaling it can price capacity around load growth rather than commodity growth. That should pressure competing midstream names with weaker footprints or lower contract quality, while supporting upstream gas producers in Appalachia/WCSB that need takeaway. The flip side is that the more TC leans into unregulated laterals and load-serving structures, the more it competes with utilities and merchant power infrastructure rather than just pipelines.

The contrarian risk is that the stock may be over-earning credit for very long-dated demand that can slip on regulatory friction, data-center backlash, or a higher-for-longer rate regime. The real falsifier is not a quarter of good EBITDA; it is any sign that 2029-31 capex requires equity, that leverage drifts above the target, or that open seasons stop converting into sanctioned projects. Near-term catalysts are the Q4 Crossroads FID and the November update on AI/regulatory framework; those are the events that can either validate or puncture the growth narrative.

Key Decisions for Investors

• Long TRP common on pullbacks, 3-6 month horizon, as a quality yield-plus-growth name; thesis works if Crossroads sanctions in Q4 and leverage stays anchored. Falsify on any equity-funding language or guidance miss on 2026 EBITDA.
• Pair trade: long TRP / short ENB over 6-12 months to express relative backlog-quality and data-center optionality; TRP should outperform if power-linked demand converts faster than the market expects.
• Buy TRP Jan-2028 calls or call spreads only if you want convexity to the 2029-31 funding re-rating; this is a deferred catalyst trade with limited near-term theta if the stock stays range-bound.
• Add a watch alert for Canadian regulatory framework progress and any change in open-season take-up; if customer commitments weaken, trim exposure because the growth multiple thesis is the first thing to compress.