SOBO has adjusted its expectations for the upcoming fiscal year 2025, improving the lower range of its normalized EBITDA forecast to -2% while slightly reducing the upper range to 1%. This revision stems from the company's robust performance in the first quarter. However, for the second quarter, SOBO anticipates that its normalized EBITDA will decline by 7% to 8% compared to the $266 million reported in Q1.
SOBO Key Business Developments
Release Date: March 06, 2025
- Normalized EBITDA (2024): $1.09 billion.
- Distributable Cash Flow (2024): $608 million.
- Normalized EBITDA (2025 Forecast): $1.01 billion, within a range of 3%.
- Net Debt to Normalized EBITDA Ratio (2025 Forecast): Approximately 4.8 times.
- Quarterly Dividend: $0.50 per share, payable on April 15th to shareholders of record on March 31st.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- South Bow Corp (SOBO, Financial) achieved record safety performance in 2024, marking a significant milestone in both occupational and process safety.
- The company successfully completed IPOs on both the Toronto and New York stock exchanges, enhancing its market presence.
- SOBO generated $1.09 billion in normalized EBITDA and $608 million in distributable cash flow in 2024, underscoring strong financial performance.
- 90% of the company's 2025 normalized EBITDA is secured through committed arrangements, providing stable and predictable cash flows.
- SOBO is focused on deleveraging and aims to reach a net debt to normalized EBITDA ratio of approximately 4.8 times by the end of 2025.
Negative Points
- There is ongoing uncertainty around tariffs, which may create headwinds for SOBO's uncommitted capacity.
- The company's 2025 financial outlook is lower than previous expectations due to reduced activity in the marketing segment and certain unwinds of positions.
- SOBO's leverage is expected to increase modestly through 2025 as it advances the Black Rod connection project.
- The company faces potential risks related to variable toll disputes, which are subject to ongoing legal and commercial processes.
- Market volatility and tighter arbs present challenges for SOBO's marketing strategy, impacting uncontracted volumes and revenue.
