CALGARY, May 7, 2020 /CNW/ - Enbridge Inc. (Enbridge or
the Company) (TSX:ENB) (NYSE:ENB) today reported first quarter 2020
financial results and provided a quarterly business update.
First Quarter 2020 Highlights
(all financial
figures are unaudited and in Canadian dollars unless otherwise
noted)
- First quarter GAAP loss of $1,429
million or $0.71 loss per
common share, compared to GAAP earnings of $1,891 million or $0.94 per common share in 2019, impacted by
certain unusual and infrequent factors, including a non-cash
impairment of the Company's investment in DCP Midstream of
$1,736 million and non-cash
unrealized derivative fair value losses of $1,956 million
- Adjusted earnings were $1,668
million or $0.83 per common
share for the first quarter of 2020, compared with $1,640 million or $0.81 per common share in 2019
- Adjusted earnings before interest, income tax and depreciation
and amortization (EBITDA) was $3,763
million, compared with $3,769
million in 2019
- Cash Provided by Operating Activities was $2,809 million, compared with $2,176 million in 2019
- Distributable Cash Flow (DCF) was $2,706
million, compared with $2,758
million in 2019
- Reaffirmed financial guidance range for 2020 Distributable Cash
Flow per Share of $4.50 to
$4.80/share
- Issued $4 billion of term debt at
attractive rates, and added $3
billion of new committed credit facilities, increasing
available liquidity to $14
billion
- Texas Eastern Transmission, LP (Texas Eastern) received
approval from the Federal Energy Regulatory Commission (FERC) of
its uncontested rate case settlement with customers
- Reducing operating costs by $300M, including reductions to senior management
and Board of Directors' compensation to further bolster our
business resiliency
- Deferral of approximately $1
billion of planned 2020 secured growth capital spending to
reflect refined execution schedules in light of COVID-19
- Minnesota Public Utilities Commission (PUC) issued its official
order confirming the re-certification of the Final Environmental
Impact Statement (FEIS), Route Permit and the Certificate of Need
for the Line 3 Replacement Project
- The Pollution Control Agency (PCA) and the U.S. Army Corp of
Engineers (USACE) completed their public consultation periods,
further advancing Line 3 permitting
- Filed a joint application for permits to the USACE and Michigan
Department of Environment, Great Lakes and Energy (EGLE) to
construct the Straits of Mackinac
tunnel
- Reached an agreement to sell 49% of our interest in three
offshore Wind projects under development in France to the Canada Pension Plan Investment
Board (CPP Investments) for initial proceeds expected to exceed
$100 million, and pro-rata
contributions for development and construction, going forward
- Announced $0.3 billion of
additional asset divestitures, including the Montana Alberta Tie
Line (MATL) power transmission business and the Ozark gas pipeline
assets
CEO COMMENT - Al Monaco,
President and Chief Executive Officer
"Our responsibility to deliver energy safely and reliably is
even more critical in these challenging times. Our pipeline
networks assure energy security for North
America and the vital fuel supplies that keep our economy
and supply chains moving and support the production of equipment
and delivery of services needed to fight COVID-19.
"Our teams responded to this unprecedented challenge, quickly
and effectively. In January we initiated comprehensive business
continuity measures to protect the health of our employees,
contractors and the communities we operate in. Our people have once
again shown their professionalism and dedication to their work in
keeping our critical functions operating safely and reliably in
this difficult time.
"While the full economic impact of COVID-19 and pace of global
recovery is still uncertain, we're confident that Enbridge will
persevere through the difficult conditions being faced by all of us
today. That's because resiliency has always been a hallmark of how
we manage our business; our strategically located assets,
diversified cash flows, strong commercial underpinnings, and a
strong balance sheet, allow us to withstand economic downturns and
stay well-positioned for the future.
"In the first quarter, all our businesses performed well.
Despite warmer than normal weather and lower contribution from
energy services, our operating and financial results came in better
than expected because of record volumes on the Liquids Mainline,
strong utilization on our Texas Eastern gas transmission system,
and great progress on synergy capture within our Gas Distribution
and Storage business.
"We also advanced our strategic priorities this quarter. We sold
$0.4 billion of assets, providing
more financial flexibility and demonstrating our commitment to
capital discipline. We put new rates into effect on Texas Eastern,
reflecting the settlement we reached with customers. Finally, in
Liquids Pipelines permitting continues to advance on the Line 3
Replacement project, a critical safety and integrity project.
"This solid performance underscores the strength and resiliency
of our diversified asset portfolio which will serve us well in the
face of the challenges emerging from the global response to the
COVID-19 pandemic. However, there's no doubt that the impacts of
the pandemic on society as a whole, and the energy industry, are
unprecedented. The global economy has severely contracted and we're
experiencing energy demand disruption on a scale that we haven't
seen before. While Enbridge's business is resilient and our
financial position is strong, we don't expect to be entirely immune
to COVID-19 impacts in the near term.
"Our Liquids Mainline system has historically operated at or
close to full capacity, generating highly predictable cashflows
through commodity cycles, industry downturns and financial market
disruptions; in fact, the Mainline has been apportioned for several
years. However, the large and rapid decline in gasoline and jet
fuel consumption, brought about by COVID-19, has resulted in sharp
cuts to refinery runs and crude oil production. We've started to
see some impacts on the Mainline: throughput was down approximately
400 thousand barrels per day in April, compared to average Q1
throughput of 2.84 million barrels per day. We expect similarly
lower utilization rates will likely continue through the end of the
second quarter.
"We currently believe that volumes will recover in the second
half of the year as COVID-19 related travel restrictions are slowly
lifted and mobility gradually returns to North America in the third and fourth quarter
of this year. This view is supported by our belief that that the
refineries operating in our core Mainline markets (i.e. the U.S.
Midwest, Eastern Canada and the
U.S. Gulf Coast) will be among the first to ramp back up given
their scale, complexity and cost competitiveness.
"With the near-term reduction in Mainline volumes (Mainline
accounts for 30% of EBITDA), it's important to remember that
Enbridge's cash flows are well diversified across many businesses,
geographies and have strong commercial structures. For instance, at
this time, the financial performance of our Gas Transmission, Gas
Distribution and Storage, and Renewable Power businesses is not
expected to experience a meaningful impact from COVID. Our Gas
Transmission business accounts for about 30% of 2020 expected
EBITDA and is anchored by utility customers with firm
reservation-based load which is expected to remain relatively
stable.
"Revenues from our Gas Distribution utility and Power businesses
account for approximately 17% of 2020 expected EBITDA and are
underpinned by strong regulatory and contractual frameworks and
predominately derived from a large and diversified residential
customer base whose utilization rates are not expected to be
impacted materially by the pandemic.
"While results from a few of our smaller businesses with direct
commodity exposure (accounting for approximately 3% of EBITDA),
such as Energy Services, DCP Midstream and our Aux Sable fractionation business, are likely to
be weaker than budgeted, we also expect upside to our full year
financial forecast from lower interest rates and a weaker Canadian
dollar that improves translated results of our significant U.S.
cash flows.
"We've initiated additional actions to further bolster our
resiliency, while assuring that the safety and reliability of our
operations remains our first priority. After a comprehensive review
of our operating expenditures, we plan to reduce 2020 costs by
approximately $300 million. These
actions include company-wide compensation reductions, including for
myself, the Board of Directors, and the rest of the management
team. In addition, we've already increased our excess liquidity to
$14 billion, which ensures we can
fund our capital program well into 2021, even in the absence of
further access to debt capital markets. Finally, we're deferring
about $1 billion of 2020 secured
growth capital spending to reflect refined execution schedules in
light of COVID-19.
"Our full year financial performance will be impacted by the
degree and pace of recovery of Mainline throughput. However, given
the strength and stability of our broader business portfolio, and
accounting for our current assessment of headwinds, tail winds and
cost reduction actions, we continue to expect to generate DCF
within our original guidance range of $4.50 to 4.80 per share.
"Finally, we remain focused on executing our $10 billion 3-year (2020 - 2022) secured
growth capital program, of which approximately $5.5 billion remains to be spent (net of project
level financing). Once in service, these low risk, highly capital
efficient organic projects will drive solid growth over the near to
medium term and advance our strategic priorities. Importantly, the
actions we've taken to bolster our balance sheet and liquidity
provides us with the continued financial flexibility to self-fund
this growth."
FINANCIAL RESULTS SUMMARY
Financial results for three months ended March 31, 2020, are summarized in the table
below:
|
|
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share amounts; number of
shares in millions)
|
|
|
GAAP Earnings/(loss)
attributable to common shareholders
|
(1,429)
|
1,891
|
GAAP Earnings/(loss)
per common share
|
(0.71)
|
0.94
|
Cash provided by
operating activities
|
2,809
|
2,176
|
Adjusted
EBITDA1
|
3,763
|
3,769
|
Adjusted
Earnings1
|
1,668
|
1,640
|
Adjusted Earnings per
common share1
|
0.83
|
0.81
|
Distributable Cash
Flow1
|
2,706
|
2,758
|
Weighted average
common shares outstanding
|
2,019
|
2,016
|
1
|
Non-GAAP financial
measures. Schedules reconciling adjusted EBITDA, adjusted earnings,
adjusted earnings per common share and distributable cash flow are
available as Appendices to this news release.
|
GAAP earnings attributable to common shareholders for the first
quarter of 2020 decreased by $3,320
million or $1.65 per share
compared with the same period in 2019. The period-over-period
comparability of earnings attributable to common shareholders was
impacted by certain unusual, infrequent factors or other
non-operating factors, including a non-cash impairment of the
Company's investment in DCP Midstream of $1,736 million and non-cash unrealized derivative
fair value losses of $1,956 million,
which are noted in the reconciliation schedule included in Appendix
A of this news release.
Adjusted earnings in the first quarter 2020 increased by
$28 million and on a per share basis
by $0.02. The increase was primarily
driven by a reduction in earnings attributable to non-controlling
interests (NCI) and lower current income taxes, offset by increased
depreciation expenses on new assets put into service throughout
2019 and increased interest expense as a result of debt issued to
fund capital expenditures as well as the reduction in capitalized
interest associated with the Canadian portion of Line 3 which was
put into service in the fourth quarter of 2019.
DCF for the first quarter was $2,706
million, a decrease of $52
million over the first quarter of 2019 driven largely by the
operating factors noted above. These factors are discussed in
detail under Distributable Cashflow.
Detailed segmented financial information and analysis for the
first quarter 2020 can be found below under Adjusted EBITDA by
Segments.
PROJECT EXECUTION UPDATE
Enbridge currently has under development $10 billion of secured growth capital
projects, net of the sale of 49% of our interest in the
Saint Nazaire offshore wind
project announced today. Once in service, these projects will
provide approximately $2.5 billion of incremental cash
flows and drive highly transparent growth over the near to medium
term horizon. Approximately $5.5
billion of the secured growth capital program remains to be
spent through 2022, net of anticipated project level financing
provided by third parties.
The individual projects that make up the secured program are all
supported by long-term take-or-pay contracts, cost-of-service
frameworks or similar low-risk commercial arrangements and are
diversified across a wide range of business platforms and
regulatory jurisdictions.
The Company is experiencing a natural slowing of 2020 secured
growth capital spending in light of the COVID-19 pandemic and the
health and safety measures put place by federal and regional
governments. After a review of capital execution schedules, it's
expected that 2020 expenditures will be approximately $1 billion lower than budgeted. The deferred
capital will be shifted into 2021, and it's anticipated that the
impact to in-service dates will be immaterial as scheduling
efficiencies and contingencies are largely expected to offset
delayed spending.
On April 22, the Sabal Trail
Pipeline Phase 2 expansion project received FERC approval for the
additional capacity and on May 1 was
placed into service. The project is underpinned by long-term
take-or-pay contracts. Enbridge holds a 50% interest in the Sabal
Trail Pipeline, and its investment in the expansion project is
$0.1 billion.
The Company also announced a transaction with CPP Investments to
sell 49% of its 50% interest in the Saint
Nazaire offshore wind project off the coast of France, which reached a positive final
investment decision in 2019. This transaction reduces the Company's
equity investment in the Saint
Nazaire project to $0.2
billion from $0.3 billion and
reduces the Company's secured capital program (inclusive of the
Company's proportionate share of project level financing) to
$0.9 billion from $1.8 billion. It's expected the transaction will
improve the Company's equity returns from the project, reflecting a
continued emphasis on disciplined capital allocation. The
transaction is discussed more fully in the Update on Financing
Activities and Asset Sales section below.
Line 3 Replacement
The $9 billion Line 3 Replacement
Project is a critical integrity replacement project that will
enhance the continued safe and reliable operations of our Mainline
System well into the future and reflects the importance of
protecting the environment.
The $5 billion Canadian segment of
the pipeline replacement was placed into service on December 1, 2019, with an interim surcharge of
$US$0.20 per barrel.
On the U.S. segment of the project, in Minnesota, the MPUC approved the adequacy of
the FEIS and reinstated the Certificate of Need and Route Permit,
allowing for construction of the pipeline to commence following the
issuance of required permits. State and Federal environmental
agencies are advancing the permitting process, including the
issuance of the draft 401 Water Quality Certification by the
Minnesota Pollution Control Agency, as well as the completion of
the relevant public consultation processes. According to the PCA
permitting schedule, the next critical phase is focused on the PCA
reviewing and considering public comments before making a
certification decision.
At this time, Enbridge cannot determine when all necessary
permits to commence construction will be issued. Depending on the
final in-service date, there is a risk that the project may exceed
the Company's total cost estimate of $9
billion for the combined Line 3 Replacement Project.
However, a significant portion of the capital spend relates to the
Canadian segment of the Line 3 replacement project, which is
currently in service and came in slightly below budget at around
$5 billion. At this time, the Company
does not anticipate any capital cost impacts that would be material
to Enbridge's financial position and outlook.
OTHER BUSINESS UPDATES
Company Cost Reduction Actions
The Company has initiated actions to reduce costs by approximately
$300 million in 2020. The actions
will not impact the safety and reliability of our operations, which
remains our number one priority. The cost management program will
include reductions to outside services and supply chain costs,
company-wide salary rollbacks and a voluntary workforce reductions
program. Salary rollbacks include a 10% reduction for the Executive
Leadership Team and a 15% reduction for the President & Chief
Executive Officer and the Board of Directors. These actions bolster
Enbridge's resilience and align with the interests of our
stakeholders.
Mainline Contracting
On December 19, 2019, the Company
submitted an application to the Canada Energy Regulator (CER) to
implement contracts on the Liquids Canadian Mainline System. The
application for contracted and uncommitted service included the
associated terms, conditions and tolls for each service, which
would be offered in an open season following approval by the CER.
The tolls and services will replace the current Competitive Toll
Settlement (CTS) that is in place until it expires on June 30, 2021. If a replacement agreement is not
in place by that time, the CTS tolls will continue on an interim
basis.
The application that the Company filed is the result of two
years of extensive negotiations with a diverse group of shippers
and has been designed to align the interests of its shippers and
Enbridge. Shippers representing approximately 75% of the current
Mainline system throughput have filed letters supporting the
application with the CER demonstrating the strong shipper backing
for the offering.
The application highlights the benefits of the Mainline contract
offering for both shippers and the public, including the
following:
- Secures long-term demand for Western Canadian Sedimentary Basin
(WCSB) heavy and light barrels in premium markets;
- Supports the best netbacks for WCSB producers;
- Competitive and stable tolls for customers; and
- Flexibility for shippers of all types and sizes to participate
by offering both a traditional take-or-pay and producer and refiner
requirements contracts.
On February 24, 2020, the CER
issued a Notice of Public Hearing which outlined the process for
participation in the hearing and identified a list of issues for
discussion in the proceeding.
In March, letters were filed with the CER by a group of
potential intervenors that requested the CER delay setting hearing
dates associated with the Mainline contract filing. Subsequently,
the CER issued a letter requesting comments on the potential delay
of proceedings. Enbridge filed its response with the CER on
May 1, 2020, submitting that the CER
should proceed with issuing a hearing order and not delay the
proceedings as the written portion does not require physical
gatherings and the oral portion is not likely to occur until the
fall.
Line 5 Tunnel
As part of Enbridge's agreement with the State of Michigan, the Company plans to
replace its existing Line 5 dual pipelines at the Straits of
Mackinac with a pipeline secured
in an underground tunnel, under the Straits, making a safe pipeline
even safer. In 2019, the Company completed geotechnical work which
supports the suitability of this state-of-the-art tunnel, with
enhanced safety features, and further demonstrates Enbridge's
commitment to protecting Michigan
and the Great Lakes' natural resources. Enbridge has filed for all
major environmental permits, including the Joint Permit Application
with the EGLE and the USACE, as well as an independent application
to the Michigan Public Service Commission.
The joint application covers permit requirements from both state
and federal agencies and allowing for the simultaneous review of
permitting activities by both agencies.
Upon receipt of all required permits, Enbridge expects to begin
construction of the Line 5 tunnel, with the expected completion of
construction, testing and commissioning to be completed sometime in
2024.
Gas Transmission and Midstream Rate Cases
In February, the Company received approval from the FERC of its
uncontested rate case settlement between Texas Eastern and its
customers, further optimizing the base business. Upon approval,
Texas Eastern recognized revenues in the first quarter of 2020
reflecting settlement terms and put into effect its settled rates
on April 1, 2020.
FINANCING UPDATE & ASSET SALES
In the first quarter of 2020, prior to the debt capital market
disruption, the Company secured over $3
billion of debt financing at attractive rates, including a
US$750 million floating rate note and
US$1.5 billion of bank term loans.
Proceeds were used to re-finance maturing debt and fund new growth
projects. Subsequent to the first quarter, Enbridge Gas Inc. was
one of the first corporate issuers back in the Canadian debt
capital markets given its low risk business model and strong credit
rating. It issued 10-year and 30-year notes for total proceeds of
$1.2 billion at a weighted average
coupon of 3.3%, representing the largest Enbridge Gas Inc. offering
to date.
In addition, Enbridge secured $3
billion of new committed credit facilities which further
increased the Company's available liquidity to over $14 billion. This liquidity position provides
significant financial flexibility and would be more than sufficient
to meet the Company's financing needs, net of internally generated
cash flows, through 2021 in the absence of further capital markets
access.
The Company continues to maintain strong leverage ratios, and
expects that its Debt to EBITDA metric will remain well within its
target range of 4.5x to 5.0x through 2020.
On April 1, 2020, the Company
closed the sale of our Ozark Gas Transmission and Ozark Gas
Gathering assets for proceeds of approximately $0.1 billion. In addition, on May 1, 2020, Enbridge closed the previously
announced sale of our Montana-Alberta Tie Line transmission assets
for proceeds of approximately $0.2
billion.
On May 1, 2020, the Company and
CPP Investments executed agreements whereby 49% of the Company's
50% interest in Éolien Maritime France SAS (EMF) will be sold to
CPP Investments in return for a payment which will include a
project promote as well as 49% of all development capital spent by
Enbridge since inception to the date of close. The total payment at
close is anticipated to exceed $100
million. Post closing, CPP Investments will contribute its
pro-rata 49% share of all ongoing future development capital.
Completion of the transaction is subject to customary regulatory
approvals and is anticipated to close in the fourth quarter of
2020. After the transaction closes, through the Company's
investment in EMF, Enbridge will own equity interests in three
French offshore wind projects, including, Saint Nazaire (25.5%), Fecamp (17.9%), and
Courseulles (21.7%).
In 2019, the Saint Nazaire
offshore wind project reached a positive final investment decision
while the remaining projects are expected to reach a final
investment decision by next year.
These divestiture transactions, which total $0.4 billion, further strengthen the Company's
financial position and highlight its disciplined approach to
capital allocation.
FIRST QUARTER 2020 FINANCIAL RESULTS
The following table summarizes the Company's GAAP reported
results for segment EBITDA, earnings attributable to common
shareholders, and cash provided by operating activities for the
first quarter of 2020.
GAAP SEGMENT EBITDA AND CASH FLOW FROM OPERATIONS
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Liquids
Pipelines
|
850
|
2,072
|
Gas Transmission and
Midstream
|
(1,054)
|
1,020
|
Gas Distribution and
Storage
|
604
|
662
|
Renewable Power
Generation
|
120
|
124
|
Energy
Services
|
121
|
6
|
Eliminations and
Other
|
(966)
|
248
|
EBITDA
|
(325)
|
4,132
|
|
|
|
Earnings (loss)
attributable to common shareholders
|
(1,429)
|
1,891
|
|
|
|
Cash provided by
operating activities
|
2,809
|
2,176
|
For purposes of evaluating performance, the Company makes
adjustments for unusual, infrequent or other non-operating factors
to GAAP reported earnings, segment EBITDA, and cash flow provided
by operating activities, which allow Management and investors to
more accurately compare the Company's performance across periods,
normalizing for factors that are not indicative of underlying
business performance. Tables incorporating these adjustments follow
below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted
EBITDA by segment, adjusted earnings, adjusted earnings per share
and DCF to their closest GAAP equivalent are provided in the
Appendices to this news release.
DISTRIBUTABLE CASH FLOW
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
Liquids
Pipelines
|
1,919
|
1,729
|
Gas Transmission and
Midstream
|
1,097
|
1,040
|
Gas Distribution and
Storage
|
609
|
693
|
Renewable Power
Generation
|
118
|
123
|
Energy
Services
|
(13)
|
176
|
Eliminations and
Other
|
33
|
8
|
Adjusted
EBITDA1,3
|
3,763
|
3,769
|
Maintenance
capital
|
(204)
|
(179)
|
Interest
expense1
|
(711)
|
(684)
|
Current income
tax1
|
(108)
|
(158)
|
Distributions to
noncontrolling interests1
|
(76)
|
(46)
|
Cash distributions in
excess of equity earnings1
|
72
|
94
|
Preference share
dividends
|
(96)
|
(95)
|
Other receipts of
cash not recognized in revenue2
|
51
|
53
|
Other non-cash
adjustments
|
15
|
4
|
DCF3
|
2,706
|
2,758
|
Weighted average
common shares outstanding
|
2,019
|
2,016
|
1
|
Presented net of
adjusting items.
|
2
|
Consists of cash
received net of revenue recognized for contracts under make-up
rights and similar deferred revenue arrangements.
|
3
|
Schedules
reconciling adjusted EBITDA and DCF are available as Appendices to
this news release.
|
First quarter 2020 DCF decreased $52
million compared with the same period of 2019. Key
performance drivers of quarter-over-quarter decline included:
- Lower Adjusted EBITDA reflecting strong operating performance
from Liquids Pipelines and Gas Transmission and Midstream assets
and contributions from new assets placed into service in 2019,
offset by the absence of contributions from the federally regulated
Canadian natural gas gathering and processing business sold on
December 31, 2019, lower EBITDA from
Energy Services due to narrowing of certain crude oil location and
quality differentials, and lower adjusted EBITDA from Gas
Distribution and Storage due to warmer weather in the first quarter
of 2020 when compared with the first quarter of 2019.
- Higher maintenance capital due the timing of maintenance
spending at the end of 2019 that carried over into the first
quarter of 2020.
- Higher interest expense due to a combination of additional of
new debt incurred to fund capital expenditures as well as a
reduction in capitalized interest associated with the Canadian
portion of Line 3 which was placed into service in December 2019, partially offset by lower rates on
short term debt and newly issued long term notes.
Partially offsetting the factors noted above was lower current
income tax due newly enacted Canadian tax legislation coming into
effect in the second half of 2019.
In the first quarter of 2020, DCP Midstream, LP (DCP) announced
it would reduce its quarterly distribution by 50%, beginning with
the first quarter distribution which will be paid in May.
Enbridge's DCF in the first quarter of 2020 includes DCP's
distribution from the fourth quarter of 2019 which was declared and
paid prior to the DCP's announced distribution reduction.
ADJUSTED
EARNINGS
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
Adjusted
EBITDA2
|
3,763
|
3,769
|
Depreciation and
amortization
|
(882)
|
(840)
|
Interest
expense1
|
(696)
|
(668)
|
Income
taxes1
|
(451)
|
(488)
|
Noncontrolling
interests1
|
30
|
(38)
|
Preference share
dividends
|
(96)
|
(95)
|
Adjusted
earnings2
|
1,668
|
1,640
|
Adjusted earnings
per common share
|
0.83
|
0.81
|
1
|
Presented net of
adjusting items.
|
2
|
Schedules
reconciling adjusted EBITDA and adjusted earnings are available as
Appendices to this news release.
|
Adjusted earnings increased $28
million and adjusted earnings per share increased
$0.02 compared with the first quarter
in 2019. Growth in adjusted earnings was driven by the same factors
impacting business performance and adjusted EBITDA as discussed
under Distributable Cash Flow above, partially offset by the
following factors:
- Higher depreciation and amortization expense as a result of new
assets placed into service throughout 2019.
- Higher interest expense due to debt issued to fund new growth
capital as well as a reduction in capitalized interest associated
with the Canadian portion of Line 3 which was placed into service
in December 2019, partially offset by
lower rates on short term debt and newly issued long term
notes.
- Lower income taxes primarily due to lower adjusted earnings
before income taxes.
- A positive impact to NCI as a result of tax equity adjustments
on certain onshore wind farms.
The increase in the weighted average outstanding common shares
did not have a significant impact on adjusted earnings per common
share.
ADJUSTED EBITDA BY SEGMENTS
Adjusted EBITDA by segment is reported on a Canadian dollar
basis. Adjusted EBITDA generated from U.S. dollar
denominated businesses was translated at a higher average Canadian
dollar exchange rate in the first quarter of 2020 (C$1.35/US$) when compared with the corresponding
2019 period (C$1.33/US$).
A portion of the U.S. dollar earnings is hedged under
the Company's enterprise-wide financial risk management program.
The offsetting hedge settlements are reported within Eliminations
and Other.
LIQUIDS PIPELINES
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Mainline
System1
|
1,107
|
964
|
Regional Oil Sands
System
|
211
|
227
|
Gulf Coast and
Mid-Continent System
|
244
|
216
|
Other2
|
357
|
322
|
Adjusted
EBITDA3
|
1,919
|
1,729
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
Mainline System -
ex-Gretna volume4
|
2,842
|
2,717
|
Regional Oil Sands
System5
|
1,865
|
1,751
|
International Joint
Tariff (IJT)6
|
$4.21
|
$4.15
|
1
|
Mainline System
includes the Canadian Mainline and the Lakehead System, which were
previously reported separately.
|
2
|
Included within
Other are Southern Lights Pipeline, Express-Platte System, Bakken
System and Feeder Pipelines & Other.
|
3
|
Schedules
reconciling adjusted EBITDA are provided in the Appendices to this
news release.
|
4
|
Mainline System
throughput volume represents mainline system deliveries ex-Gretna,
Manitoba which is made up of United States and eastern Canada
deliveries originating from Western Canada.
|
5
|
Volumes are for
the Athabasca mainline, Athabasca Twin, Waupisoo Pipeline and
Woodland Pipeline and exclude laterals on the Regional Oil Sands
System.
|
6
|
The IJT benchmark
toll and its components are set in U.S. dollars and the majority of
the Company's foreign exchange risk on the Canadian portion of the
Mainline is hedged. The Canadian portion of the Mainline represents
approximately 45% of total Mainline System revenue and the average
effective FX rate for the Canadian portion of the Mainline during
the first quarter of 2019, was C$1.20/US$ (Q1 2019:
C$1.19/US$).
The U.S. portion of the Mainline System is subject to FX
translation similar to the Company's other U.S. based businesses,
which are translated at the average spot rate for a given period. A
portion of this U.S. dollar translation exposure is hedged under
the Company's enterprise-wide financial risk management program.
The offsetting hedge settlements are reported within Eliminations
and Other.
|
Liquids Pipelines adjusted EBITDA increased $190 million compared to the first quarter of
2019 primarily as a result of the following factors:
- Mainline System adjusted EBITDA increased driven by higher
throughput as a result of continued optimizations of the system, as
well as a higher period-over-period IJT. In addition, the Mainline
System benefited from incremental contributions from the Canadian
portion of the Line 3 Replacement project that was placed into
service on December 1, 2019, with an
interim surcharge on Mainline volumes of US$0.20 per barrel.
- Gulf Coast and Mid-Continent System growth was driven by strong
demand for spot volumes on the Flanagan South Pipeline due to
refinery outages in the Midwest U.S. The Gray Oak Pipeline project
commenced service late in the fourth quarter of 2019 and provided
modest contributions in the first quarter of 2020 with volume
expected to ramp up in the second quarter of 2020.
- Other adjusted EBITDA increased due primarily to higher volumes
on the Dakota Access Pipeline.
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
US Gas
Transmission1
|
864
|
745
|
Canadian Gas
Transmission1
|
138
|
188
|
US
Midstream
|
45
|
52
|
Other
|
50
|
55
|
Adjusted
EBITDA2
|
1,097
|
1,040
|
1
|
US Gas
Transmission includes the Canadian portion of the Maritimes &
Northeast Pipeline which was previously included in Canadian Gas
Transmission. The comparable 2019 adjusted EBITDA has been restated
to reflect this change.
|
2
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Gas Transmission and Midstream adjusted EBITDA increased
$57 million compared to the first
quarter of 2019 primarily due to the following factors:
- US Gas Transmission adjusted EBITDA increased primarily due to
higher revenues from updated rates on Texas Eastern resulting from
the recent rate case settlement and following the FERC approval,
the Company recognized in revenue interim rates collected from
shippers since June 1, 2019. In
addition, various US Transmission assets were placed into service
after the first quarter of 2019 including Atlantic Bridge Phase 2
and Stratton Ridge. These increases
were partially offset by higher planned integrity
expenditures.
- Canadian Gas Transmission adjusted EBITDA decreased primarily
due to the absence of adjusted EBITDA contributions from federally
regulated Canadian gas gathering and processing assets that were
sold on December 31, 2019. Further,
contributions from the Alliance Pipeline are also lower driven by
narrowing of the AECO-Chicago basis.
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Enbridge Gas Inc.
(EGI)
|
574
|
642
|
Other
|
35
|
51
|
Adjusted
EBITDA1
|
609
|
693
|
|
|
|
Operating
Data
|
|
|
EGI
|
|
|
Volumes (billions of
cubic feet)
|
638
|
719
|
Number of active
customers (thousands)2
|
3,748
|
3,722
|
Heating degree
days3
|
|
|
Actual
|
1,727
|
2,046
|
Forecast based on
normal weather4
|
1,923
|
1,922
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
2
|
Number of active
customers is the number of natural gas consuming customers at the
end of the reported period.
|
3
|
Heating degree
days is a measure of coldness that is indicative of volumetric
requirements for natural gas utilized for heating purposes in EGI's
distribution franchise areas.
|
4
|
Normal weather is
the weather forecast by EGI in its legacy rate zones, using the
forecasting methodologies approved by the Ontario Energy
Board.
|
Gas Distribution and Storage adjusted EBITDA will typically
follow a seasonal profile. It is generally highest in the first and
fourth quarters of the year reflecting greater volumetric demand
during the heating season and lowest in the third quarter as there
is generally less volumetric demand during the summer. The
magnitude of the seasonal EBITDA fluctuations will vary from
year-to-year reflecting the impact of colder or warmer than normal
weather on distribution volumes.
Gas Distribution and Storage adjusted EBITDA decreased
$84 million compared to the first
quarter of 2019 primarily due to warmer weather in EGI's franchise
areas which led to lower utilization. The warmer weather in the
first quarter of 2020 when compared with the normal weather
forecast embedded in rates negatively impacted adjusted EBITDA by
approximately $41 million while first
quarter 2019 EBITDA was positively impacted by colder than normal
weather by approximately $33 million.
This decrease in adjusted EBITDA was partially offset by higher
distribution charges resulting from increases in customer base, as
well as synergy captures realized from the amalgamation of Enbridge
Gas Distribution Inc. and Union Gas Limited. Other Gas Distribution
and Storage adjusted EBITDA decreased due to closing of the sale of
Enbridge Gas New Brunswick on October 1,
2019, and St. Lawrence Gas Company, Inc. on November 1, 2019.
RENEWABLE POWER GENERATION
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
EBITDA1
|
118
|
123
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Renewable Power Generation adjusted EBITDA decreased
$5 million compared to first quarter
of 2019 primarily due to lower contributions from Canadian wind
facilities due to weaker wind resources, partially offset by
adjusted EBITDA contributions from the Hohe See Offshore Wind
Project and the adjacent expansion project, Albatros. Hohe See
reached full operating capacity in October
2019 and Albatros came into service in January 2020.
ENERGY SERVICES
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
earnings/(loss) before interest, income taxes, and
depreciation
|
|
|
and
amortization1
|
(13)
|
176
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Energy Services adjusted EBITDA decreased $189 million compared to the first quarter of
2019 as a result of significant compression of location and quality
differentials in certain markets resulting in fewer opportunities
to achieve profitable margins on capacity obligations. The first
quarter of 2019 was an exceptionally strong due to favourable
location and quality differentials in the second half of 2018 that
resulted in profitable margins realized in the first quarter of
2019.
ELIMINATIONS AND OTHER
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Operating and
administrative recoveries
|
79
|
63
|
Realized foreign
exchange hedge settlements
|
(46)
|
(55)
|
Adjusted
EBITDA1
|
33
|
8
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Operating and administrative costs captured in this segment
reflect the cost of centrally delivered services (including
depreciation of corporate assets) inclusive of amounts recovered
from business units for the provision of those services. Also, as
previously noted, U.S. dollar denominated earnings within the
segment results are translated at average foreign exchange rates
during the quarter. The offsetting impact of settlements made under
the Company's enterprise foreign exchange hedging program are
captured in this segment.
Eliminations and Other adjusted EBITDA increased $25 million compared with the first quarter of
2019. Key quarter-over-quarter performance drivers included:
- Lower operating and administrative costs and the timing of the
recovery of certain operating and administrative costs allocated to
the business segments.
- Lower realized foreign exchange settlement losses primarily due
to a narrower spread between the average exchange rate of
$1.35 for the first quarter of 2020
(Q1 2019:$1.33) and the first quarter
2020 hedge rate of $1.29 (Q1
2019:$1.24).
CONFERENCE CALL
Enbridge will host a conference call and webcast on May 7,
2020 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time)
to provide an enterprise wide business update and review 2020 first
quarter financial results. Analysts, members of the media and other
interested parties can access the call toll free at (877) 930-8043
or within and outside North
America at (253) 336-7522 using the access code of 5545476#.
The call will be audio webcast live at
https://edge.media-server.com/mmc/p/kzjwa9bx. It is recommended
that participants dial in or join the audio webcast fifteen minutes
prior to the scheduled start time. A webcast replay and podcast
will be available approximately two hours after the conclusion of
the event and a transcript will be posted to the website within 24
hours. The replay will be available for seven days after the call
toll-free (855) 859-2056 or within and outside North America at (404) 537-3406 (access code
5545476#).
The conference call format will include prepared remarks from
the executive team followed by a question and answer session for
the analyst and investor community only. Enbridge's media and
investor relations teams will be available after the call for any
additional questions.
DIVIDEND DECLARATION
On May 5, 2020, our Board of
Directors declared the following quarterly dividends. All dividends
are payable on June 1, 2020, to
shareholders of record on May 15,
2020.
|
Dividend per
share
|
Common
Shares1
|
$0.81000
|
Preference Shares,
Series A
|
$0.34375
|
Preference Shares,
Series B
|
$0.21340
|
Preference Shares,
Series C2
|
$0.25458
|
Preference Shares,
Series D
|
$0.27875
|
Preference Shares,
Series F
|
$0.29306
|
Preference Shares,
Series H
|
$0.27350
|
Preference Shares,
Series J
|
US$0.30540
|
Preference Shares,
Series L
|
US$0.30993
|
Preference Shares,
Series N
|
$0.31788
|
Preference Shares,
Series P
|
$0.27369
|
Preference Shares,
Series R
|
$0.25456
|
Preference Shares,
Series 1
|
US$0.37182
|
Preference Shares,
Series 3
|
$0.23356
|
Preference Shares,
Series 5
|
US$0.33596
|
Preference Shares,
Series 7
|
$0.27806
|
Preference Shares,
Series 9
|
$0.25606
|
Preference Shares,
Series 113
|
$0.24613
|
Preference Shares,
Series 13
|
$0.27500
|
Preference Shares,
Series 15
|
$0.27500
|
Preference Shares,
Series 17
|
$0.32188
|
Preference Shares,
Series 19
|
$0.30625
|
1
|
The quarterly
dividend per common share was increased 9.8% to $0.81 from $0.738,
effective March 1, 2020.
|
2
|
The quarterly
dividend per share paid on Series C was increased to $0.25458 from
$0.25305 on March 1, 2020 due to reset on a quarterly basis
following the date of issuance of the Series C Preference
Shares.
|
3
|
The quarterly
dividend per share paid on Series 11 was decreased to $0.24613 from
$0.275 on March 1, 2020, due to the reset of the annual dividend on
March 1, 2020, and every five years thereafter.
|
FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements,
have been included in this news release to provide information
about Enbridge and its subsidiaries and affiliates, including
management's assessment of Enbridge and its subsidiaries' future
plans and operations. This information may not be appropriate for
other purposes. Forward-looking statements are typically identified
by words such as ''anticipate'', ''expect'', ''project'',
''estimate'', ''forecast'', ''plan'', ''intend'', ''target'',
''believe'', "likely" and similar words suggesting future outcomes
or statements regarding an outlook. Forward-looking information or
statements included or incorporated by reference in this document
include, but are not limited to, statements with respect to the
following: Enbridge's corporate vision and strategy, including
strategic priorities and enablers; 2020 financial guidance; the
COVID-19 pandemic and the duration and impact thereof; anticipated
reductions in operating costs and deferrals of secured growth
capital spend; the expected supply of, demand for and prices of
crude oil, natural gas, natural gas liquids, liquified natural gas
and renewable energy; anticipated utilization of our existing
assets, including throughput on the Mainline; expected EBITDA or
expected adjusted EBITDA; expected earnings/(loss) or adjusted
earnings/(loss); expected earnings/(loss) or adjusted
earnings/(loss) per share; expected DCF or DCF per share; expected
future cash flows; expected performance of the Company's
businesses; expected debt-to-EBITDA ratio; financial strength and
flexibility; expectations on sources of liquidity and sufficiency
of financial resources; expected costs related to announced
projects and projects under construction; expected in-service dates
for announced projects and projects under construction; expected
capital expenditures; expected future growth and expansion
opportunities; expectations about the Company's joint ventures and
our partners' ability to complete and finance announced projects
and projects under construction; expected closing of acquisitions
and dispositions and the timing thereof; expected benefits of
transactions, including the realization of efficiencies and
synergies; expected future actions of regulators and courts; toll
and rate case discussions and filings, including Mainline
Contracting and the anticipated benefits thereof; anticipated
competition; United States Line 3 Replacement Program; Line 5
tunnel and related matters; interest rates; and exchange
rates.
Although Enbridge believes these forward-looking statements
are reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Material assumptions
include assumptions about the following: the COVID-19 pandemic and
the duration and impact thereof; anticipated reductions in
operating costs and deferrals of secured growth capital spend; the
expected supply of and demand for crude oil, natural gas, natural
gas liquids (NGL) and renewable energy; prices of crude oil,
natural gas, NGL and renewable energy, including the current
weakness and volatility of such prices; anticipated utilization of
our existing assets; exchange rates; inflation; interest rates;
availability and price of labour and construction materials;
operational reliability; customer and regulatory approvals;
maintenance of support and regulatory approvals for the Company's
projects; anticipated in-service dates; weather; the timing and
closing of acquisitions and dispositions; the realization of
anticipated benefits and synergies of transactions; governmental
legislation; litigation; impact of the Company's dividend policy on
its future cash flows; credit ratings; capital project funding;
expected EBITDA or expected adjusted EBITDA; expected
earnings/(loss) or adjusted earnings/(loss); expected
earnings/(loss) or adjusted earnings/(loss) per share; expected
future cash flows and expected future DCF and DCF per share; and
estimated future dividends. Assumptions regarding the expected
supply of and demand for crude oil, natural gas, NGL and renewable
energy, and the prices of these commodities, are material to and
underlie all forward-looking statements, as they may impact current
and future levels of demand for the Company's services. Similarly,
exchange rates, inflation, interest rates and the COVID-19 pandemic
impact the economies and business environments in which the Company
operates and may impact levels of demand for the Company's services
and cost of inputs, and are therefore inherent in all
forward-looking statements. Due to the interdependencies and
correlation of these macroeconomic factors, the impact of any one
assumption on a forward-looking statement cannot be determined with
certainty, particularly with respect to expected EBITDA, expected
adjusted EBITDA, earnings/(loss), expected adjusted
earnings/(loss), expected DCF and associated per share amounts, or
estimated future dividends. The most relevant assumptions
associated with forward-looking statements regarding announced
projects and projects under construction, including estimated
completion dates and expected capital expenditures, include the
following: the availability and price of labour and construction
materials; the effects of inflation and foreign exchange rates on
labour and material costs; the effects of interest rates on
borrowing costs; the impact of weather and customer, government and
regulatory approvals on construction and in-service schedules and
cost recovery regimes; and the COVID-19 pandemic and the duration
and impact thereof.
Enbridge's forward-looking statements are subject to risks
and uncertainties pertaining to the realization of anticipated
benefits and synergies of projects and transactions; successful
execution of our strategic priorities, operating performance, the
Company's dividend policy, regulatory parameters, changes in
regulations applicable to the Company's business, acquisitions and
dispositions and other transactions, project approval and
support, renewals of rights-of-way, weather, economic and
competitive conditions, public opinion, changes in tax laws and tax
rates, changes in trade agreements, political decisions, exchange
rates, interest rates, commodity prices, supply of and demand for
commodities and the COVID-19 pandemic, including but not limited to
those risks and uncertainties discussed in this and in the
Company's other filings with Canadian and United States securities regulators. The
impact of any one risk, uncertainty or factor on a particular
forward-looking statement is not determinable with certainty as
these are interdependent and Enbridge's future course of action
depends on management's assessment of all information available at
the relevant time. Except to the extent required by applicable law,
Enbridge assumes no obligation to publicly update or revise any
forward-looking statements made in this news release or otherwise,
whether as a result of new information, future events or otherwise.
All forward-looking statements, whether written or oral,
attributable to Enbridge or persons acting on the Company's behalf,
are expressly qualified in their entirety by these cautionary
statements.
ABOUT ENBRIDGE INC.
Enbridge Inc. is a leading
North American energy infrastructure company. We safely and
reliably deliver the energy people need and want to fuel quality of
life. Our core businesses include Liquids Pipelines, which
transports approximately 25 percent of the crude oil produced in
North America; Gas Transmission
and Midstream, which transports approximately 20 percent of the
natural gas consumed in the U.S.; Gas Distribution and Storage,
which serves approximately 3.8 million retail customers in
Ontario and Quebec; and Renewable Power Generation, which
generates approximately 1,750 MW of net renewable power in
North America and Europe. The Company's common shares trade on
the Toronto and New York stock exchanges under the symbol ENB.
For more information, visit www.enbridge.com.
None of the information contained in, or connected to,
Enbridge's website is incorporated in or otherwise part of this
news release.
FOR FURTHER
INFORMATION PLEASE CONTACT:
|
|
Enbridge Inc. –
Media
|
Enbridge Inc. –
Investment Community
|
Jesse
Semko
|
Jonathan
Morgan
|
Toll Free: (888)
992-0997
|
Toll Free: (800)
481-2804
|
Email:
media@enbridge.com
|
Email:
investor.relations@enbridge.com
|
NON-GAAP RECONCILIATIONS APPENDICES
This news release contains references to adjusted EBITDA,
adjusted earnings, adjusted earnings per common share, and DCF.
Management believes the presentation of these metrics gives useful
information to investors and shareholders as they provide increased
transparency and insight into the performance of the Company.
Adjusted EBITDA represents EBITDA adjusted for unusual,
infrequent or other non-operating factors on both a consolidated
and segmented basis. Management uses adjusted EBITDA to set targets
and to assess the performance of the Company and its Business
Units.
Adjusted earnings represent earnings attributable to common
shareholders adjusted for unusual, infrequent or other
non-operating factors included in adjusted EBITDA, as well as
adjustments for unusual, infrequent or other non-operating factors
in respect of depreciation and amortization expense, interest
expense, income taxes, and noncontrolling interests on a
consolidated basis. Management uses adjusted earnings as another
measure of the Company's ability to generate earnings.
DCF is defined as cash flow provided by operating
activities before the impact of changes in operating assets and
liabilities (including changes in environmental liabilities) less
distributions to noncontrolling interests, preference share
dividends and maintenance capital expenditures, and further
adjusted for unusual, infrequent or other non-operating factors.
Management also uses DCF to assess the performance of the Company
and to set its dividend payout target.
Reconciliations of forward-looking non-GAAP financial measures
to comparable GAAP measures are not available due to the challenges
and impracticability with estimating some of the items,
particularly certain contingent liabilities, and non-cash
unrealized derivative fair value losses and gains which are subject
to market variability. Because of those challenges, a
reconciliation of forward-looking non-GAAP financial measures is
not available without unreasonable effort.
Our non-GAAP measures described above are not measures that have
standardized meaning prescribed by generally accepted accounting
principles in the United States of
America (U.S. GAAP) and are not U.S. GAAP measures.
Therefore, these measures may not be comparable with similar
measures presented by other issuers.
The tables below provide a reconciliation of the non-GAAP
measures to comparable GAAP measures.
APPENDIX A
NON-GAAP RECONCILIATIONS – ADJUSTED
EBITDA AND ADJUSTED EARNINGS
CONSOLIDATED EARNINGS
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Liquids
Pipelines
|
850
|
2,072
|
Gas Transmission and
Midstream
|
(1,054)
|
1,020
|
Gas Distribution and
Storage
|
604
|
662
|
Renewable Power
Generation
|
120
|
124
|
Energy
Services
|
121
|
6
|
Eliminations and
Other
|
(966)
|
248
|
EBITDA
|
(325)
|
4,132
|
Depreciation and
amortization
|
(882)
|
(840)
|
Interest
expense
|
(706)
|
(685)
|
Income tax
recovery/(expense)
|
549
|
(584)
|
(Earnings)/loss
attributable to noncontrolling interests
|
31
|
(37)
|
Preference share
dividends
|
(96)
|
(95)
|
Earnings/(loss)
attributable to common shareholders
|
(1,429)
|
1,891
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
Liquids
Pipelines
|
1,919
|
1,729
|
Gas Transmission and
Midstream
|
1,097
|
1,040
|
Gas Distribution and
Storage
|
609
|
693
|
Renewable Power
Generation
|
118
|
123
|
Energy
Services
|
(13)
|
176
|
Eliminations and
Other
|
33
|
8
|
Adjusted
EBITDA
|
3,763
|
3,769
|
Depreciation and
amortization
|
(882)
|
(840)
|
Interest
expense
|
(696)
|
(668)
|
Income tax
expense
|
(451)
|
(488)
|
(Earnings)/loss
attributable to noncontrolling interests
|
30
|
(38)
|
Preference share
dividends
|
(96)
|
(95)
|
Adjusted
earnings
|
1,668
|
1,640
|
Adjusted earnings
per common share
|
0.83
|
0.81
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
EBITDA
|
(325)
|
4,132
|
Adjusting
items:
|
|
|
Change in unrealized
derivative fair value (gain)/loss - Foreign exchange
|
1,956
|
(600)
|
Change in unrealized
derivative fair value (gain)/loss - Commodity prices
|
(551)
|
160
|
Equity investment
impairment - DCP Midstream
|
1,736
|
—
|
Equity investment
asset and goodwill impairment - DCP Midstream
|
324
|
—
|
Write-down of
inventory to the lower of cost or market
|
417
|
10
|
Texas Eastern
re-establishment of EDIT regulated liability
|
159
|
—
|
Employee severance,
transition and transformation costs
|
11
|
44
|
Other
|
36
|
23
|
Total adjusting
items
|
4,088
|
(363)
|
Adjusted
EBITDA
|
3,763
|
3,769
|
Depreciation and
amortization
|
(882)
|
(840)
|
Interest
expense
|
(706)
|
(685)
|
Income tax
recovery/(expense)
|
549
|
(584)
|
(Earnings)/loss
attributable to noncontrolling interests
|
31
|
(37)
|
Preference share
dividends
|
(96)
|
(95)
|
Adjusting items in
respect of:
|
|
|
Interest
expense
|
10
|
17
|
Income tax
recovery/(expense)
|
(1,000)
|
96
|
(Earnings)/loss
attributable to noncontrolling interests
|
(1)
|
(1)
|
Adjusted
earnings
|
1,668
|
1,640
|
Adjusted earnings
per common share
|
0.83
|
0.81
|
APPENDIX B
NON-GAAP RECONCILIATION – SEGMENTED EBITDA TO ADJUSTED
EBITDA
LIQUIDS PIPELINES
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
EBITDA
|
1,919
|
1,729
|
Change in unrealized
derivative fair value gain/(loss)
|
(1,066)
|
343
|
Other
|
(3)
|
—
|
Total
adjustments
|
(1,069)
|
343
|
EBITDA
|
850
|
2,072
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
EBITDA
|
1,097
|
1,040
|
Equity investment
impairment - DCP Midstream
|
(1,736)
|
—
|
Equity investment
asset and goodwill impairment - DCP Midstream
|
(324)
|
—
|
Texas Eastern
re-establishment of EDIT regulated liability
|
(159)
|
—
|
Equity earnings
adjustment - DCP Midstream
|
53
|
(14)
|
Other
|
15
|
(6)
|
Total
adjustments
|
(2,151)
|
(20)
|
EBITDA
|
(1,054)
|
1,020
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited;
millions of Canadian dollars)
|
|
|
Adjusted
EBITDA
|
609
|
693
|
Change in unrealized
derivative fair value gain
|
6
|
4
|
Employee severance,
transition and transformation costs
|
(7)
|
(35)
|
Other
|
(4)
|
—
|
Total
adjustments
|
(5)
|
(31)
|
EBITDA
|
604
|
662
|
RENEWABLE POWER GENERATION
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
EBITDA
|
118
|
123
|
Change in unrealized
derivative fair value gain
|
2
|
1
|
EBITDA
|
120
|
124
|
ENERGY SERVICES
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
earnings/(loss) before interest, income taxes and depreciation
and
|
|
|
amortization
|
(13)
|
176
|
Change in unrealized
derivative fair value gain/(loss)
|
551
|
(160)
|
Write-down of
inventory to the lower of cost or market
|
(417)
|
(10)
|
Total
adjustments
|
134
|
(170)
|
EBITDA
|
121
|
6
|
ELIMINATIONS AND OTHER
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Adjusted
EBITDA
|
33
|
8
|
Change in unrealized
derivative fair value gain/(loss)
|
(898)
|
252
|
Change in corporate
guarantee obligation
|
(74)
|
—
|
Investment write-down
loss
|
(43)
|
—
|
Employee severance,
transition and transformation costs
|
(4)
|
(9)
|
Other
|
20
|
(3)
|
Total
adjustments
|
(999)
|
240
|
EBITDA
|
(966)
|
248
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED BY OPERATING ACTIVITIES TO
DCF
|
Three months
ended
March 31,
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
Cash provided by
operating activities
|
2,809
|
2,176
|
Adjusted for changes
in operating assets and liabilities1
|
(194)
|
667
|
|
2,615
|
2,843
|
Distributions to
noncontrolling interests4
|
(76)
|
(46)
|
Preference share
dividends
|
(96)
|
(95)
|
Maintenance capital
expenditures2
|
(204)
|
(179)
|
Significant adjusting
items:
|
|
|
Other receipts of
cash not recognized in revenue3
|
51
|
53
|
Employee severance,
transition and transformation costs
|
11
|
44
|
Distributions from
equity investments in excess of cumulative
earnings4
|
77
|
61
|
Write-down of
inventory to the lower of cost or market
|
417
|
(10)
|
Other
items
|
(89)
|
87
|
DCF
|
2,706
|
2,758
|
1
|
Changes in
operating assets and liabilities, net of recoveries.
|
2
|
Maintenance
capital expenditures are expenditures that are required for the
ongoing support and maintenance of the existing pipeline system or
that are necessary to maintain the service capability of the
existing assets (including the replacement of components that are
worn, obsolete or completing their useful lives). For the purpose
of DCF, maintenance capital excludes expenditures that extend asset
useful lives, increase capacities from existing levels or reduce
costs to enhance revenues or provide enhancements to the service
capability of the existing assets.
|
3
|
Consists of cash
received net of revenue recognized for contracts under make-up
rights and similar deferred revenue arrangements.
|
4
|
Presented net of
adjusting items.
|
View original
content:http://www.prnewswire.com/news-releases/enbridge-reports-strong-first-quarter-2020-results-re-affirms-outlook-301054573.html
SOURCE Enbridge Inc.