South Bow (SOBO) Q4 2025 earnings summary

Executive summary

• Delivered 2025 financial results slightly ahead of expectations, demonstrating resilience and disciplined decision-making.

• Achieved zero recordable case rate in 2025, maintaining a strong safety record over 2.5 million work hours.

• Advanced the Blackrod Connection Project to commercial service on time and on budget, expected to boost cash flows in late 2026 and 2027.

• Progressed remedial actions on Milepost 171, prioritizing system integrity and regulatory compliance.

• Pursuing both organic and inorganic growth opportunities, leveraging existing infrastructure and maintaining financial discipline.

Financial highlights

• 2025 revenue was $1,986 million, down from $2,120 million in 2024; Q4 revenue was $503 million.

• Net income for 2025 was $433 million ($2.07/share), up from $316 million ($1.52/share) in 2024.

• Normalized EBITDA for 2025 was $1.022 billion, slightly above guidance, but down from $1.091 billion in 2024.

• Distributable Cash Flow reached $709 million, over 30% above original guidance and up from $621 million in 2024.

• Returned $416 million ($2 per share) to shareholders via sustainable dividends in 2025.

Outlook and guidance

• Reaffirmed 2026 financial outlook, expecting normalized EBITDA near $1.03 billion, with 90% secured through committed arrangements.

• Free cash flow will be directed toward deleveraging, targeting a 4x leverage ratio by midterm (2028).

• Growth capital plans to be shared upon sanctioning the next initiative.

• Anticipates phased lifting of Keystone pressure restrictions, with full capacity and increased spot movements targeted for 2027.

• Keystone Pipeline System segment EBITDA expected to decrease by $15 million in 2026 due to maintenance and tight pricing differentials.