South Bow Reports Third-quarter 2025 Results, Provides 2026 Outlook, and Declares Dividend
Executive Summary
- South Bow reported Q3 2025 revenue of $461 M, net income of $93 M ($0.45/share) and normalized EBITDA of $254 M, a modest 2% increase versus Q2.
- The company declared a quarterly dividend of $0.50 per share (total $104 M) payable Jan. 15 2026 and extended its C$2 B revolving credit facility to Oct. 3 2029.
- Updated 2025‑2026 guidance: normalized EBITDA ~US$1.03 B for 2026 (+/- 2%), distributable cash flow $655 M (2026) and $700 M (2025), with net debt-to-EBITDA ratio expected to modestly improve in 2026.
Key Details
- Operational Highlights
- Average Keystone Pipeline throughput Q3 2025: ~584,000 bbl/d; U.S. Gulf Coast segment: ~703,000 bbl/d.
- Blackrod Connection Project mechanically completed; 25‑km gas lateral in service, cash flows to increase in H2 2026 and 2027.
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Ongoing remedial work on Milepost 171 incident – six inline inspections and 37 integrity digs completed; total incident cost ≈$55 M (≈$16 M reimbursed to date).
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Financial Performance (Q3 2025)
- Revenue: $461 M (down from $524 M Q2)
- Net income: $93 M ($0.45/share) vs. $96 M Q2
- Normalized EBITDA: $254 M (↑2% QoQ)
- Distributable cash flow: $236 M (↑$69 M QoQ)
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Total long‑term debt: $5.8 B; net debt: $4.8 B; net‑debt/EBITDA = 4.6× (unchanged).
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Capital Structure
- Extended C$2 B revolving credit facility to Oct. 3 2029.
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Senior unsecured notes and junior subordinated notes issued Aug. 28 2024; $1.25 B used to repay TC Energy affiliate debt, remainder held in escrow for Spinoff completion.
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Dividends
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Quarterly dividend declared: $0.50/share ($104 M total). Payable Jan. 15 2026 to shareholders of record Dec. 31 2025.
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Guidance – 2025 (Revised)
- Normalized EBITDA: US$1,010 M ±1%/‑2% (unchanged)
- Distributable cash flow: $700 M ±2% (up from prior $590 M)
- Effective tax rate: 20%–21% (down from 23%–24%)
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Capital expenditures – Growth: $110 M ±3%; Maintenance: $55 M ±3%
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Guidance – 2026
- Normalized EBITDA: US$1,030 M ±2%, ~90% secured via contracts.
- Distributable cash flow: $655 M ±2%.
- Financial charges: $315 M ±2%; Effective tax rate: 22%–23%.
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Capital expenditures – Growth: $10 M; Maintenance: $25 M ±$10 M.
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Outlook & Strategic Items
- SCADA system transition expected Q4 2025, completing TSA exit with TC Energy.
- Variable toll disputes withdrawn; indemnity liability capped at $22 M (maximum reached).
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Anticipated modest increase in net‑debt/EBITDA ratio to ~4.7× by year‑end 2025 due to Blackrod project spend and one‑time separation costs ($30‑$40 M).
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Conference Call / Investor Day
- Q3 results call: Nov. 14 2025, 8 a.m. MT (10 a.m. ET).
- Inaugural investor day: Nov. 19 2025, 7 a.m. MT (9 a.m. ET) – webcast on company website.
Notable Quotes
- “Our Q3 results reflect the resilience of our core pipeline business and the successful execution of key projects such as Blackrod,” said Martha Wilmot, President & CEO.
- “We remain focused on delivering strong, sustainable returns to shareholders while maintaining a disciplined capital allocation framework,” added Solomiya Lyaskovska, CFO.