South Bow Corporation released its third‑quarter 2025 financial results, reporting revenue of $461 million and GAAP earnings per share of $0.46, which surpassed the consensus estimate of $0.37 by $0.09—an approximately 27% beat. Adjusted EPS was $0.47, further underscoring the company’s profitability. Net income rose to $93 million from $61 million in the same quarter a year earlier, while distributable cash flow climbed to $236 million from $167 million, and normalized EBITDA increased modestly to $254 million from $250 million.
The company’s revenue fell 13% year‑over‑year to $461 million, missing the consensus estimate of $498 million by $37 million. The decline was driven by a weaker overall demand environment and a modest drop in the Keystone Pipeline System segment, which remains the primary revenue driver. While the company did not provide a detailed segment breakdown, the mix shift toward lower‑margin marketing and intra‑Alberta & other activities contributed to the revenue shortfall.
EPS beat expectations largely resulted from a $71 million tax recovery stemming from recent U.S. tax legislation changes, combined with disciplined cost management that kept operating expenses in line with revenue growth. The tax benefit, coupled with operational efficiencies in the Keystone Pipeline System, allowed the company to maintain a strong operating margin of 34.34% despite the revenue decline.
Looking ahead, South Bow reaffirmed its 2025 normalized EBITDA guidance at $1.01 billion and raised its 2025 distributable cash flow outlook to approximately $700 million, up from the prior $590 million estimate. For 2026, the company projects normalized EBITDA of $1.03 billion and distributable cash flow of $655 million, signaling confidence in continued operational efficiency and the expected cash‑flow contribution from the Blackrod Connection Project, which is slated for commercial service in early 2026.
CEO Bevin Wirzba emphasized the company’s resilience, noting that “South Bow’s third‑quarter financial results once again demonstrated the resilience of our business with our stable earnings profile, allowing us to meaningfully deliver on our capital allocation priorities in our first year as an independent company.” CFO Van Dafoe highlighted the tax recovery, stating that “Distributable cash flow of $236 million benefited from a current tax recovery of $71 million resulting from changes in U.S. tax legislation and successful optimization efforts from our tax team.” The company also reported that toll disputes have been resolved, the Keystone spill remedial actions are underway, and the Blackrod Connection Project remains on schedule.
Financially, South Bow faces headwinds such as a high debt‑to‑equity ratio, a low interest coverage ratio, and an Altman Z‑Score of 0.83, placing it in the distress zone. Nevertheless, the company’s strong cash‑flow generation, tax‑related gains, and reaffirmed guidance suggest that management believes it can navigate these challenges while pursuing growth initiatives. Investors responded positively to the earnings release, reflecting confidence in the company’s ability to maintain profitability and execute its strategic plans.
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