CALGARY, AB, July 30, 2021 /CNW/ - Enbridge Inc. (Enbridge or
the Company) (TSX: ENB) (NYSE: ENB) today reported second quarter
2021 financial results, reaffirmed its 2021 financial outlook, and
provided a mid-year business update.
Highlights
(all financial figures are unaudited
and in Canadian dollars unless otherwise noted)
- Second quarter GAAP earnings of $1.4
billion or $0.69 per common
share, compared with GAAP earnings of $1.6
billion or $0.82 per common
share in 2020
- Adjusted earnings of $1.4 billion
or $0.67 per common share, compared
with $1.1 billion or $0.56 per common share in 2020
- Adjusted earnings before interest, income taxes and
depreciation and amortization (EBITDA) of $3.3 billion, compared with $3.3 billion in 2020
- Cash Provided by Operating Activities of $2.2 billion, compared with $2.4 billion in 2020
- Distributable Cash Flow (DCF) of $2.5
billion or $1.24 per common
share, compared with $2.4 billion or
$1.21 per common share in 2020
- Reaffirmed 2021 full year guidance range of EBITDA of
$13.9 billion to $14.3 billion and DCF per share of $4.70 to $5.00
- Construction of the final leg of the U.S. Line 3 Replacement
Project is progressing on schedule with an expected fourth quarter
in-service date
- Placed initial phases of the $1.0
billion T-South Expansion and $0.5
billion Spruce Ridge projects into service; both projects
expected to be fully in-service in the fourth quarter
- Announced collaboration with the Government of Ontario to expand natural gas access to rural,
northern and Indigenous communities
- Announced development of Ridgeline Expansion Project in
Tennessee to provide affordable
and reliable natural gas power generation to displace higher carbon
coal generation
- Advancing the US$2.1 billion
multi-year Gas Transmission modernization program
- Announced plans to file a rate case on Texas Eastern with rates
effective in early 2022, ensuring the system continues to earn an
appropriate rate of return on invested capital
- Construction on three French offshore wind projects progressing
well, which will collectively generate 1.4 GW (0.3 GW net) of
renewable power once placed into service
- Continued development of solar self-power program in both
Liquids Pipelines and Gas Transmission; 3 facilities in operation
and 4 more under construction
- Announced the $1.14 billion sale
of Enbridge's interest in Noverco Inc. (Noverco), which is expected
to close by early 2022, providing increased financial
flexibility
- Received Moody's upgrade to Baa1 for Enbridge Inc.; All four
agencies' ratings are BBB+, or equivalent, reflecting Enbridge's
sector leading financial strength and cash flow resiliency
- Published Enbridge's 20th annual Sustainability Report and
announced the first midstream sector sustainability-linked bond
issuance of US$1.0 billion
CEO COMMENT
Commenting on Enbridge's second quarter operational performance
and financial results, Al Monaco,
President and CEO of Enbridge noted the following:
"Following a strong start to the year, our four franchises
delivered solid financial performance in the second quarter, with
good operating performance and high utilization across our systems.
The global economic recovery is now well underway, and our assets
have been essential in assuring access to reliable and affordable
conventional and renewable energy throughout this critical
period.
"Our performance in the first half of 2021 has set us up well
for the full year. We're on track to bring $10 billion of projects into service this year
and we're reaffirming our full year 2021 financial guidance. Our
secured growth execution and embedded asset growth gives us
confidence that we'll generate 5-7% distributable cash flow growth
through 2023, and we're continuing to advance strategic priorities
across each of our franchises.
"In Liquids Pipelines, nominations for July were robust, which
highlights the strength of the markets we serve and the demand for
our system capacity. As expected, lower mainline volumes in the
second quarter reflected the planned maintenance of oil sands
upgraders and downstream refineries, and are factored into our full
year outlook of 2.8 mmbpd on average for 2021.
"Construction of the final leg of the Line 3 Replacement Project
is progressing well and the project is on schedule. We are proud of
the fact that Line 3 has provided significant business and
employment to Indigenous companies and workers in both Canada and the U.S., and contributed over
$750 million of spending with
Indigenous and Tribal communities with over US$250 million of spending in Minnesota alone so far.
"With the Canadian, North
Dakota and Wisconsin
segments complete, and Minnesota
construction progressing well, we expect Line 3 to be fully in
service during the fourth quarter. Line 3 is, first and foremost, a
critical integrity project that will improve safety and further
reduce environmental risks, while driving significant incremental
EBITDA growth once fully in service.
"During the quarter, we placed the 160 kbpd Woodland Pipeline
Expansion Project into service to meet the needs of the Kearl
oilsands project. This expansion is a great example of the ongoing
executable, low-risk, solid return opportunities for growth in the
Liquids business.
"In Gas Transmission, we are proud to be working with the
Tennessee Valley Authority (TVA) on an opportunity that has the
potential to provide affordable and cleaner energy for the
utility's customers. The potential expansion of the East Tennessee
Natural Gas system, if selected, would supply natural gas to serve
one of the power generation options that TVA is currently scoping
to replace a coal-fired power plant in Northeast Tennessee. This is an exciting
opportunity reflecting the vital role that natural gas is expected
to play in displacing higher-carbon sources of power generation,
while providing reliable and affordable energy to the people of
Tennessee.
"We are also advancing the $0.5
billion Spruce Ridge and $1.0
billion T-South BC Pipeline expansion projects. We've
completed and placed into service initial segments of each project,
which remain on schedule to be fully in-service by the end of the
year. More broadly, the execution of our 3-year, US$2.1 billion modernization program is also
progressing well. And, we plan to file a rate case shortly so that
we earn an appropriate return on our invested capital, including
the modernization program.
"Our natural gas distribution utility also continues to see
strong growth. We recently announced plans to expand access to
natural gas to remote and Indigenous communities across
Ontario. This joint effort with
the Government of Ontario will
provide reliable, low-cost access to lower carbon energy for
consumers. And, we continue to advance construction of three
renewable natural gas projects in Ontario to go along with the three currently
in operation. Similarly, construction on our hydrogen blending
facility in Markham, Ontario is on
schedule.
"Construction of three offshore wind facilities off the coast of
France is progressing well.
Combined, these three projects will generate enough renewable
energy to power over 1 million homes. And, through our offshore
wind joint venture development company Maple Power, we continue to develop further
opportunities in Europe that
capitalize on our growing development, construction and operating
capability. Finally, we're continuing to progress our solar
self-power strategy with three projects now in service and four
more underway - another great example of how we're lowering
emissions and costs to generate shareholder value.
"Through strong cash flow growth and disciplined capital
allocation, we continue to build financial flexibility to position
Enbridge for the future. Our balance sheet is strong and we're
further enhancing it through the recently announced $1.14 billion divestment of our non-operating
minority interest in Noverco. This was an excellent opportunity to
monetize a non-strategic investment at a premium
valuation.
"We're pleased with our progress through the first half of 2021,
having advanced our strategic priorities, including adding
opportunities to the backlog. Our solid execution positions us well
to achieve our three-year plan and helps to solidify our growth
trajectory beyond 2023.
"Last month we published our 20th annual
Sustainability Report, which highlights our long-standing focus on
sustainable practices and our industry-leading performance across
environmental, social and governance issues, including a 32%
reduction in Scope 1 and 14% reduction in Scope 2 emissions between
2018 and 2020. We reinforced our commitments with the issuance of
our first Sustainability-Linked Bond which ties our financial
performance to the achievement of the ESG goals we set out in
2020.
"We believe that in all practical scenarios, our assets will
remain critical to supporting long term energy demand. Existing
infrastructure is going to play a key role in the transportation
and storage of future energy supplies, ensuring affordable and
reliable access to conventional and low-carbon energy.
"We're leveraging our existing assets and working, along with
our customers, to identify early stage investments in embedded
low-carbon infrastructure opportunities across our businesses,
while modernizing our assets to ensure we're serving society's
energy needs for decades to come. Over the last two decades we've
built a strong renewables platform and made early stage investments
in renewable natural gas, hydrogen and compressed natural gas that
will help us grow well into the future as a differentiated energy
service provider."
FINANCIAL RESULTS SUMMARY
Financial results for the three and six months ended
June 30, 2021 and 2020 are summarized
in the table below:
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars, except per share amounts; number of
shares in millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
1,394
|
|
1,647
|
|
|
3,294
|
|
218
|
|
GAAP Earnings per
common share
|
0.69
|
|
0.82
|
|
|
1.63
|
|
0.11
|
|
Cash provided by
operating activities
|
2,227
|
|
2,416
|
|
|
4,791
|
|
5,225
|
|
Adjusted
EBITDA1
|
3,302
|
|
3,312
|
|
|
7,045
|
|
7,075
|
|
Adjusted
Earnings1
|
1,357
|
|
1,133
|
|
|
2,991
|
|
2,801
|
|
Adjusted Earnings per
common share1
|
0.67
|
|
0.56
|
|
|
1.48
|
|
1.39
|
|
Distributable Cash
Flow1
|
2,503
|
|
2,437
|
|
|
5,264
|
|
5,143
|
|
Weighted average
common shares outstanding
|
2,024
|
|
2,019
|
|
|
2,023
|
|
2,019
|
|
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 second
quarter of 2021 decreased by $253
million or $0.13 per share
compared with the same period in 2020.
The period-over-period comparability of GAAP earnings
attributable to common shareholders was impacted by certain
unusual, infrequent factors or other non-operating factors, which
are noted in the reconciliation schedule included in Appendix A of
this news release.
Adjusted earnings in the second quarter of 2021 increased by
$224 million, or $0.11 per share and was driven largely by the net
impact of the operating factors discussed below along with lower
interest rates on short-term borrowings, the positive impact of a
weaker USD on the translation of USD denominated interest expense,
and the recognition of lower taxes in 2021.
Adjusted EBITDA in the second quarter of 2021 decreased
by $10 million compared with the same period in 2020. This is
primarily driven by rebounding demand for energy as economies
continue to recover from the impacts of the COVID-19 pandemic
offset by weaker contributions from Energy Services and the impacts
of a weaker USD, which negatively impacts the translation of the
Company's USD denominated EBITDA. The average CAD to USD exchange
rate in the second quarter fell approximately 12% in 2021 to
$1.23, compared with $1.39 in the second quarter of 2020. Enbridge's
enterprise-wide financial risk management program has partially
mitigated the impact of this foreign exchange weakening through its
USD earnings hedges.
DCF for the second quarter was $2.5
billion, an increase of $66
million over the second quarter of 2020, driven primarily by
the impact of the operating factors discussed above, along with
lower interest rates on short-term borrowings, the positive impact
of a weaker USD on the translation of USD denominated interest
expense, and the recognition of lower cash taxes in 2021.
These factors are discussed in detail under Distributable
Cash Flow. Detailed segmented financial information and
analysis can be found below under Adjusted EBITDA by
Segments.
FINANCIAL POSITION
As the Company executes on its secured capital program in 2021,
it expects to maintain its strong financial position, which is
anticipated to strengthen further in 2022, as projects placed into
service in 2021 contribute incremental annualized EBITDA.
On June 1, 2021, Moody's Investor
Service upgraded the credit ratings of Enbridge Inc., including our
senior unsecured and issuer ratings to Baa1 from Baa2 with a stable
outlook, citing Enbridge's lower leverage and continued improvement
in the Company's financial metrics going forward. The Company is
now rated BBB+, or equivalent, by all four of its credit rating
agencies.
During the quarter, the Company announced a definitive agreement
to sell its 38.9% non-operating minority ownership interest in
Noverco to Trencap L.P. for $1.14
billion in cash, net of Noverco non-recourse debt assumed by
Trencap L.P. This represents a valuation of approximately 29x
reported 2020 GAAP earnings of $39
million.
This transaction is expected to close by early 2022, subject to
the receipt of regulatory approvals and customary closing
conditions. Sale proceeds are expected to be used initially to
repay short-term debt, and longer term, are expected to provide
additional financial flexibility.
Since 2018, Enbridge has announced and closed over $8 billion of asset sales, and this transaction
will bring that total to well over $9
billion. This reflects Enbridge's commitment to capital
discipline and its ability to realize value from its existing asset
base for deployment to higher return opportunities.
During the second quarter, Enbridge Pipelines Inc., a wholly
owned subsidiary of the Company, issued $400
million of 10-year Senior Notes with a coupon of 2.82% and
$400 million of 30-year Senior Notes
with a coupon of 4.20% as a dual-tranche offering in the Canadian
public debt market.
In addition, in June, Enbridge issued its first
Sustainability-Linked Bond (SLB) in the U.S. debt capital markets
with US$1.0 billion of 12-Year senior
notes holding a coupon of 2.5%. The issuance is consistent with the
SLB Framework announced earlier in the month, which incorporates
emissions and inclusion goals in the financing terms. This issuance
further demonstrates Enbridge's commitment to the ESG goals the
Company set out in November 2020 and
to industry leading performance. In combination with this offering,
the Company also issued US$500
million of 30-Year senior notes with a coupon of 3.4%.
Proceeds from both dual-tranche offerings were primarily used to
repay existing indebtedness, partially fund capital projects and
for other general corporate purposes.
FINANCIAL OUTLOOK
The Company expects full year 2021 EBITDA and DCF to remain
within its previously provided guidance range of $13.9 to $14.3
billion and $4.70 to
$5.00 per share, respectively.
Each of the Company's four franchises are expected to achieve
solid utilization in the second half of the year in line with
guidance. However, this strong operating performance is expected to
be impacted by a weaker USD currency, net of foreign exchange
hedges, and lower contributions from Energy Services, which remains
challenged by narrow location and quality differentials, as well
market price backwardation.
DCF will benefit from lower overall financing costs resulting
from favorable short-term interest rates and USD denominated
interest expense and lower cash taxes primarily due to increased
utilization of existing tax pools to offset U.S. taxable
income.
The Company's guidance issued at its investor day in December
assumed an exchange rate of C$1.30/USD and Enbridge has disclosed that a
one cent movement in the foreign
exchange rate results in an approximately $2
million per month impact to DCF, or approximately a
one cent impact to DCF per share
annually.
The impact of a weaker USD currency on EBITDA, net of the
Company's hedging program, is approximately a decrease of
$70 million for the six months ended
June, 2021, compared with assumptions included within 2021
guidance.
SECURED GROWTH PROJECT EXECUTION UPDATE
The Company's approximately $17
billion secured growth capital program is well-diversified
across its four growth platforms and all projects are contractually
underpinned by business models that are consistent with Enbridge's
low-risk pipeline-utility model. Spending to date is approximately
$8 billion, with approximately
$9 billion to be spent over the
remaining secured capital program.
Enbridge continues to advance the approximately $10 billion of capital expected to be placed into
service in 2021, which is expected to generate significant EBITDA
and free cash flow growth in 2022. These projects include:
- Liquids Pipelines U.S. Line 3 Replacement Project and Southern
Access Expansion;
- Gas Transmission T-South and Spruce Ridge expansions of the
B.C. Pipeline, and its 2021 Modernization Program;
- Customer connections, expansions and reinforcement projects in
Gas Distribution; and
- Several other smaller projects within Liquids Pipelines and Gas
Transmission and Midstream.
Line 3 Replacement Project
The Line 3 Replacement Project is a critical integrity project
that will enhance the continued safe and reliable operations of
Enbridge's Mainline System well into the future.
Construction of the U.S. portion of the Line 3 Replacement
Project in Minnesota continues to
advance on schedule utilizing industry-leading environmental
protection measures and construction techniques. Construction
resumed in early June after a planned temporary pause starting on
April 1 due to seasonal
restrictions.
In June, the Minnesota Court of
Appeals acknowledged the thorough review completed over six years
by the Minnesota Public Utilities Commission and confirmed that the
Commission appropriately approved the project's environmental
impact statement, certificate of need and route permit.
The project is on track to be in service in the fourth quarter
and is expected to contribute approximately $200 million of incremental EBITDA in 2021, and
support significant free cash flow growth in 2022 and beyond.
B.C. Pipeline System Expansions
The $1.0 billion T-South
Reliability and Expansion Program and $0.5
billion Spruce Ridge Project continue to advance on
schedule. Combined, these two projects will increase the capacity
of the B.C. Pipeline System by approximately 590 MMcf/d to meet
growing regional demand in B.C. and the U.S. Pacific Northwest
through a combination of compressor station upgrades and the
addition of two new pipeline segments.
During the second quarter two of the planned five compressor
stations replacements on the T-South project were completed and
placed into service. Similarly, on the Spruce Ridge project, one of
two new sections of pipeline was completed and placed into service.
The remaining sections of both projects are expected to be placed
into service by the fourth quarter of 2021.
The capital cost of these expansion and reliability projects
will be included in rate base, earning a rate of return consistent
with the system's regulated cost of service commercial
framework.
Gas Transmission Modernization Program
The Company continues to advance its current US$2.1 billion modernization program through 2023
with $0.4 billion spent to date. This
program is designed primarily to replace aging compressor stations
and upgrade other components of the system which will improve both
the system's reliability and safety, as well as reduce greenhouse
gas emissions associated with the transportation of natural
gas.
European Offshore Wind Projects
Construction of the three previously announced French offshore
wind projects, Saint-Nazaire,
Fécamp, and Calvados, is advancing on schedule for the targeted
in-service dates ranging between late 2022 and 2024. These projects
are underpinned by long-term fixed price power purchase agreements
granted by the French government.
Once in service, the Company will own interests in six operating
offshore wind projects located in Europe with a total gross generation capacity
of more than 2.4 GW (0.6 GW net), enough to power over 2 million
homes with renewable energy.
OTHER BUSINESS UPDATES
Gas Transmission and Midstream
Ridgeline Expansion Project Opportunity
The Company
is working on a proposed expansion of Enbridge's East Tennessee
Natural Gas (ETNG) system. The potential expansion would provide
additional natural gas for TVA to support the replacement of an
existing coal-fired power plant as it continues to transition its
generation mix towards lower-carbon fuels, while providing
affordable energy to consumers. The TVA environmental review
scoping process has begun for this proposed plant; TVA published a
Notice of Intent on the Federal Register on June 15, 2021 to initiate their review process.
Several options to replace the retiring coal-fired generation would
be assessed in TVA's Environmental Impact Statement. Should the
onsite natural gas option of building a combined cycle plant be
selected through TVA's review, Enbridge would deliver on the
required expansion of the East
Tennessee system.
ETNG's proposed project would consist of the installation of
additional pipeline, with the majority of the route located along
existing rights-of-way, the installation of one electric-powered
compressor station and solar facilities behind the meter, as well
as other design features all contributing to minimizing greenhouse
gas emissions.
Should TVA's environmental assessment determine that the natural
gas solution of building an onsite combined cycle plant is the
optimal supply source, and pending the approval and receipt of all
necessary permits, construction of the pipeline would begin in 2025
with a target in-service date of fall 2026.
Regulatory Update
The Company continues to advance
its regulatory strategy to ensure just and reasonable returns, and
timely recovery of the capital invested into its critical energy
delivery systems.
On April 30, 2021, the FERC
approved a Stipulation and Agreement filed with regards to the
Maritimes & Northeast U.S. rate case and on July 15, 2021, FERC approved a Stipulation and
Agreement filed with regards to the Alliance U.S. rate case.
Additionally, an agreement in principle has been reached on the
East Tennessee rate case and a
Stipulation and Agreement has been filed with the FERC and is
pending approval.
Subsequent to the quarter, Enbridge announced plans to file a
Section 4 rate case on the Texas Eastern system to reflect growth
in the system's rate base and an increase in cost of service,
primarily as a result of system modernization, and safety and
reliability investments. Settlement discussions with shippers will
begin in the second half of 2021 and carry into 2022, with filed
rates expected to be effective February 1,
2022.
Gas Distribution and Storage
Community Expansion
During the second quarter
Enbridge announced a collaboration with the Government of
Ontario to expand access to
natural gas to rural, northern and Indigenous communities through
27 projects supported by Phase 2 of Ontario's Natural Gas Expansion Program. These
projects will help grow Enbridge's North American leading utility
franchise and ensure that more families and businesses will have
access to low-cost and reliable natural gas.
Liquids Pipelines
Mainline Contracting
The Company has concluded the
Mainline Contracting hearing before the Canada Energy Regulator
(CER). The contract offering, which reflects two years of
negotiations with shippers, will support the best shipper netbacks
and secure long-term demand for Western Canadian crude oil.
The CER will now review the record developed throughout the
regulatory process prior to issuing its decision. The Company
expects to receive a decision later this year. The current
Competitive Toll Settlement (CTS) expired on June 30, 2021 and, consistent with the terms of
the CTS agreement, the tolls in effect at that time remained in
effect on July 1, 2021 on an interim
basis, subject to finalization and refund, if any. These tolls will
be updated later this year to reflect the in-service of the U.S.
portion of the Line 3 Replacement project, and thereafter will
remain in effect until the Mainline contracts are in place.
Line 5 - Great Lakes Tunnel Project
The Great Lakes
Tunnel Project (Tunnel Project) will relocate the Line 5 pipeline
into a state-of-the-art tunnel beneath the Straits of Mackinac (the Straits) and is the best way to
replace and modernize the existing crossing at the Straits while
maintaining an essential supply of energy on which Michigan and the surrounding region
depend.
Enbridge continues to advance the necessary permits for the
Tunnel Project. In the first quarter of 2021, the Company received
its required permits from the Michigan Department of Environment
Great Lakes and Energy. The U.S. Army Corp of Engineers is
proceeding with an environmental impact statement to support its
permitting process, which is expected to strengthen the regulatory
record, and the Michigan Public Service Commission continues to
progress its permitting process.
Sustainability and ESG Performance Update
2020 Sustainability Report
In June, Enbridge issued
its 20th annual Sustainability Report highlighting industry leading
performance and how the Company is advancing a long-standing
approach to sustainability.
The 2020 Sustainability Report has introduced new metrics to
track the Scope 3 emissions intensity of the energy transported by
Enbridge and how investments in renewable natural gas, hydrogen and
renewable electricity are advancing the energy transition. In
addition, Enbridge has engaged a third-party verifier to conduct
limited assurance on key environmental performance indicators
demonstrating the Company's commitment to transparent disclosure of
its performance against its targets.
Solar Self-Power Program
During the second quarter,
the Company placed into service a 2.5 MW solar facility located at
the Heidlersburg, Pennsylvania
compressor station on the Texas Eastern system. Enbridge now has
three operating facilities across its systems, with another four
projects totaling 40 MW of renewable generation planned for late
2022 on the Liquids Mainline and Flanagan
South pipelines.
Self-powering is part of the Company's approach to achieving its
net zero emissions targets, by reducing its Scope 1 and Scope 2
emissions associated with the transportation of crude oil and
natural gas while also generating a return on our investment
comparable to our traditional organic growth projects. Enbridge
continues to assess additional opportunities along its network to
construct solar self-power facilities.
SECOND QUARTER 2021 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
second quarter of 2021.
GAAP SEGMENT EBITDA AND CASH FLOW FROM OPERATIONS
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Liquids
Pipelines
|
2,044
|
|
2,340
|
|
|
4,083
|
|
3,190
|
|
Gas Transmission and
Midstream
|
868
|
|
950
|
|
|
1,841
|
|
(104)
|
|
Gas Distribution and
Storage
|
458
|
|
383
|
|
|
1,092
|
|
987
|
|
Renewable Power
Generation
|
115
|
|
163
|
|
|
271
|
|
283
|
|
Energy
Services
|
(239)
|
|
(99)
|
|
|
(175)
|
|
22
|
|
Eliminations and
Other
|
92
|
|
261
|
|
|
312
|
|
(705)
|
|
EBITDA
|
3,338
|
|
3,998
|
|
|
7,424
|
|
3,673
|
|
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
1,394
|
|
1,647
|
|
|
3,294
|
|
218
|
|
|
|
|
|
|
|
Cash provided by
operating activities
|
2,227
|
|
2,416
|
|
|
4,791
|
|
5,225
|
|
For purposes of evaluating performance, the Company makes
adjustments to GAAP reported earnings, segment EBITDA and cash flow
provided by operating activities for unusual, infrequent or other
non-operating factors, 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
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
Liquids
Pipelines
|
1,844
|
|
1,744
|
|
|
3,725
|
|
3,663
|
|
Gas Transmission and
Midstream
|
935
|
|
975
|
|
|
1,942
|
|
2,072
|
|
Gas Distribution and
Storage
|
461
|
|
406
|
|
|
1,107
|
|
1,015
|
|
Renewable Power
Generation
|
113
|
|
150
|
|
|
267
|
|
268
|
|
Energy
Services
|
(86)
|
|
86
|
|
|
(161)
|
|
73
|
|
Eliminations and
Other
|
35
|
|
(49)
|
|
|
165
|
|
(16)
|
|
Adjusted
EBITDA 1,3
|
3,302
|
|
3,312
|
|
|
7,045
|
|
7,075
|
|
Maintenance
capital
|
(161)
|
|
(135)
|
|
|
(270)
|
|
(339)
|
|
Interest
expense1
|
(635)
|
|
(709)
|
|
|
(1,312)
|
|
(1,420)
|
|
Current income
tax1
|
(20)
|
|
(134)
|
|
|
(121)
|
|
(242)
|
|
Distributions to
noncontrolling interests1
|
(73)
|
|
(88)
|
|
|
(141)
|
|
(164)
|
|
Cash distributions in
excess of equity earnings1
|
153
|
|
210
|
|
|
196
|
|
282
|
|
Preference share
dividends
|
(90)
|
|
(94)
|
|
|
(182)
|
|
(190)
|
|
Other receipts of
cash not recognized in revenue2
|
32
|
|
81
|
|
|
51
|
|
132
|
|
Other non-cash
adjustments
|
(5)
|
|
(6)
|
|
|
(2)
|
|
9
|
|
DCF3
|
2,503
|
|
2,437
|
|
|
5,264
|
|
5,143
|
|
Weighted average
common shares outstanding
|
2,024
|
|
2,019
|
|
|
2,023
|
|
2,019
|
|
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.
|
Second quarter 2021 DCF increased $66
million compared with the same period of 2020 primarily due
to operational factors discussed below in Adjusted EBITDA by
Segments as well as:
- lower interest expense due to favorable interest rates on
short-term borrowings as well as the impact of a weaker USD
currency that positively impacts the translation of interest
payments on USD denominated debt;
- lower current income tax primarily due to a reduction in US
minimum tax; and increased utilization of existing tax pools to
offset U.S. taxable income; and
- lower cash distributions in excess of equity earnings primarily
due to timing of dividends received in 2020.
ADJUSTED EARNINGS
|
Three months
ended June 30,
|
|
Six months
ended June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
3,302
|
|
3,312
|
|
|
7,045
|
|
7,075
|
|
Depreciation and
amortization
|
(929)
|
|
(949)
|
|
|
(1,861)
|
|
(1,831)
|
|
Interest
expense2
|
(622)
|
|
(695)
|
|
|
(1,287)
|
|
(1,391)
|
|
Income
taxes2
|
(269)
|
|
(404)
|
|
|
(668)
|
|
(855)
|
|
Noncontrolling
interests2
|
(35)
|
|
(37)
|
|
|
(56)
|
|
(7)
|
|
Preference share
dividends
|
(90)
|
|
(94)
|
|
|
(182)
|
|
(190)
|
|
Adjusted
earnings 1
|
1,357
|
|
1,133
|
|
|
2,991
|
|
2,801
|
|
Adjusted earnings
per common share
|
0.67
|
|
0.56
|
|
|
1.48
|
|
1.39
|
|
1
|
Schedules
reconciling adjusted EBITDA and adjusted earnings are available as
Appendices to this news release.
|
2
|
Presented net of
adjusting items.
|
Adjusted earnings increased $224
million and adjusted earnings per share increased
$0.11 compared with the second
quarter in 2020. The increase in adjusted earnings was driven by
the same factors impacting business performance and adjusted EBITDA
as discussed under Adjusted EBITDA by Segments below, as
well as the following factors:
- lower interest expense due to favorable interest rates on
short-term borrowings as well as the impact of a weaker USD
currency that positively impacts the translation of interest
payments on USD denominated debt; and
- lower income tax expense primarily due to decreased earnings
and a reduction in US minimum tax.
ADJUSTED EBITDA BY SEGMENTS
Adjusted EBITDA by segment is reported on a Canadian dollar
basis. Adjusted EBITDA generated from U.S. dollar
denominated businesses, primarily within Liquids Pipelines and Gas
Transmission and Midstream, were translated at a lower average
Canadian dollar exchange rate in the second quarter of 2021
(C$1.23/US$) when compared with the
corresponding 2020 period (C$1.39/US$).
A portion of 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
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Mainline
System
|
1,050
|
|
969
|
|
|
2,181
|
|
2,076
|
|
Regional Oil Sands
System
|
231
|
|
199
|
|
|
468
|
|
410
|
|
Gulf Coast and
Mid-Continent System
|
261
|
|
257
|
|
|
450
|
|
501
|
|
Other1
|
302
|
|
319
|
|
|
626
|
|
676
|
|
Adjusted
EBITDA 2
|
1,844
|
|
1,744
|
|
|
3,725
|
|
3,663
|
|
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
|
Mainline System -
ex-Gretna volume3
|
2,623
|
|
2,439
|
|
|
2,684
|
|
2,641
|
|
Regional Oil Sands
System4
|
1,884
|
|
1,399
|
|
|
1,916
|
|
1,632
|
|
International Joint
Tariff (IJT)5
|
$4.27
|
|
$4.21
|
|
|
$4.27
|
|
$4.21
|
|
1
|
Other consists of
Southern Lights Pipeline, Express-Platte System, Bakken System,
Gray Oak and Feeder Pipelines & Other.
|
2
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
3
|
Mainline System
throughput volume represents mainline system deliveries ex-Gretna,
Manitoba which is made up of U.S. and Eastern Canada deliveries
originating from Western Canada.
|
4
|
Volumes are for the
Athabasca Pipeline, Waupisoo Pipeline, Woodland Pipeline and Wood
Buffalo system and exclude laterals on the Regional Oil Sands
System.
|
5
|
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 55% of total Mainline System revenue and the average
effective FX rate for the Canadian portion of the Mainline during
the second quarter of 2021 was C$1.24/US$ (Q2 2020:
C$1.17/US$).
|
|
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 $100 million compared with the second quarter of
2020, primarily related to:
- higher Mainline System contributions due to higher throughput
compared with the second quarter of 2020 driven by the rebounding
demand for crude oil and related products as economies continue to
recover from the impacts of the COVID-19 pandemic, a higher IJT
Benchmark Toll and CTS surcharge, and a higher effective foreign
exchange hedge rate (C$1.24 in 2021
vs. C$1.17 in 2020) on hedges used to
manage foreign exchange risk of the U.S. dollar denominated
Canadian Mainline revenue;
- higher throughput on the Athabasca and Waupisoo pipelines within the
Regional Oil Sands System as production in the basin recovers from
its lowest point in the second quarter of 2020; and
- higher contributions from the Gulf Coast and Mid-Continent
System due primarily to higher throughput and stronger
contributions from the Seaway Crude Pipeline System; partially
offset by
- the negative effect of translating U.S. dollar denominated
EBITDA at a lower Canadian to U.S. dollar average exchange rate,
which is partially offset by realized gains in the Eliminations and
Other segment as part of the Company's enterprise-wide financial
risk management program.
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
U.S. Gas
Transmission
|
721
|
|
791
|
|
|
1,503
|
|
1,655
|
|
Canadian Gas
Transmission
|
140
|
|
105
|
|
|
282
|
|
243
|
|
U.S.
Midstream
|
41
|
|
35
|
|
|
84
|
|
80
|
|
Other
|
33
|
|
44
|
|
|
73
|
|
94
|
|
Adjusted
EBITDA 1
|
935
|
|
975
|
|
|
1,942
|
|
2,072
|
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Gas Transmission and Midstream adjusted EBITDA decreased
$40 million compared with the second
quarter of 2020 primarily related to:
- the negative effect of translating U.S. dollar denominated
EBITDA at a weaker U.S dollar average exchange rate, which is
partially offset by realized gains in the Eliminations and Other
segment as part of the Company's enterprise-wide financial risk
management program; and
- lower contributions in U.S. Gas Transmission due to the absence
in 2021 of the recognition of revenues in 2020 that related to the
settlement of interim rates collected from shippers on Texas
Eastern retroactive to June 1, 2019;
partially offset by
- increased revenue on the U.S. Gas Transmission assets due to
the absence of pressure restrictions that existed on the Texas
Eastern system in 2020; and
- contributions from the Atlantic Bridge Phase III project, with
in-service notifications to FERC in January of 2021.
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Enbridge Gas Inc.
(EGI)
|
419
|
|
385
|
|
|
1,023
|
|
959
|
|
Other
|
42
|
|
21
|
|
|
84
|
|
56
|
|
Adjusted
EBITDA 1
|
461
|
|
406
|
|
|
1,107
|
|
1,015
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
EGI
|
|
|
|
|
|
Volumes (billions
of cubic feet)
|
352
|
|
351
|
|
|
1,023
|
|
989
|
|
Number of active
customers (millions)2
|
|
|
|
3.8
|
|
3.8
|
|
Heating degree
days3
|
|
|
|
|
|
Actual
|
482
|
|
606
|
|
|
2,289
|
|
2,333
|
|
Forecast based on
normal weather4
|
520
|
|
516
|
|
|
2,444
|
|
2,439
|
|
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. 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 increased
$55 million compared with the second
quarter of 2020 primarily related to:
- lower operating and administrative costs resulting largely from
achieved efficiencies; and
- higher distribution charges resulting from annual increases in
rates and customer base growth.
When compared with the normal weather forecast embedded in
rates, the second quarter of 2021 experienced a slight favorable
impact of $1 million. The second
quarter of 2020 experienced colder weather than forecasted which
favorably impacted results by $22
million.
RENEWABLE POWER GENERATION
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA 1
|
113
|
|
150
|
|
|
267
|
|
268
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Renewable Power Generation adjusted EBITDA decreased
$37 million compared with the second
quarter of 2020 primarily related to:
- the absence in 2021 of reimbursements received in 2020 at
certain Canadian wind facilities resulting from a change in
operator; and
- weaker wind resources at Canadian onshore wind power generation
facilities.
ENERGY SERVICES
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA 1
|
(86)
|
|
86
|
|
|
(161)
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Energy Services adjusted EBITDA decreased $172 million compared with the second quarter of
2020 primarily related to:
- the significant compression of location and quality
differentials in certain markets;
- limited storage opportunities in 2021 due to market price
backwardation compared to favorable storage opportunities in 2020;
and
- fewer opportunities to achieve profitable transportation
margins on facilities in which Energy Services holds capacity
obligations.
ELIMINATIONS AND OTHER
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Operating and
administrative recoveries/(expenses)
|
(19)
|
|
29
|
|
|
87
|
|
108
|
|
Realized foreign
exchange hedge settlement gains/(losses)
|
54
|
|
(78)
|
|
|
78
|
|
(124)
|
|
Adjusted
EBITDA 1
|
35
|
|
(49)
|
|
|
165
|
|
(16)
|
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Operating and administrative recoveries 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 $84 million compared with the second quarter of
2020 due to realized foreign exchange gains in 2021 compared with
realized foreign exchange losses in 2020 as a result of a weakening
U.S. dollar average exchange rate of $1.23 for the second quarter of 2021 (Q2
2020:$1.39) compared with a hedge
rate of $1.30 for the second quarter
of 2021 (Q2 2020:$1.29).
CONFERENCE CALL
Enbridge will host a conference call and webcast on
July 30, 2021 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise wide business
update and review 2021 second quarter results. Analysts, members of
the media and other interested parties can access the call toll
free at (833) 233-4460 or within and outside North America at (647) 689-4543 using the
access code of 5559468. The call will be audio webcast live at
https://www.enbridge.com/media-center/news/details?id=123683&lang=en.
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 soon after the
conclusion of the event and a transcript will be posted to the
website approximately 24 hours after the event. The replay will be
available for seven days after the call toll-free (800) 585-8367 or
within and outside North America
at (416) 621-4642 (access code 5559468).
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 July 27, 2021, the Company's
Board of Directors declared the following quarterly dividends. All
dividends are payable on September 1,
2021 to shareholders of record on August 13, 2021.
|
Dividend
per
share
|
|
Common
Shares1
|
$0.83500
|
|
Preference Shares,
Series A
|
$0.34375
|
|
Preference Shares,
Series B
|
$0.21340
|
|
Preference Shares,
Series C2
|
$0.15753
|
|
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 11
|
$0.24613
|
|
Preference Shares,
Series 13
|
$0.19019
|
|
Preference Shares,
Series 15
|
$0.18644
|
|
Preference Shares,
Series 17
|
$0.32188
|
|
Preference Shares,
Series 19
|
$0.30625
|
|
1
|
The quarterly
dividend per common share was increased 3% to $0.835 from $0.81,
effective March 1, 2021.
|
2
|
The quarterly
dividend per share paid on Series C was increased to $0.15501 from
$0.15349 on March 1, 2021, and increased to $0.15753 from $0.15501
on June 1, 2021, due to reset on a quarterly basis following the
date of issuance of the Series C Preference
Shares.
|
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; 2021 financial
guidance; the COVID-19 pandemic and the duration and impact
thereof; energy intensity and emissions reduction targets;
diversity and inclusion goals; 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 and expected adjusted EBITDA; expected
earnings/(loss) and adjusted earnings/(loss); expected DCF and DCF
per share; expected future cash flows; expected dividend growth and
payout ratio; expected performance of the Company's businesses;
expected debt-to-EBITDA ratio; financial strength and flexibility
and investment capacity; capital allocation priorities;
expectations on sources of liquidity and sufficiency of financial
resources; expected in-service dates and costs related to announced
projects and projects under construction and for maintenance,
including B.C. Pipeline Systems expansions; expected future growth
and expansion opportunities; expected benefits of transactions,
including the use of proceeds and realization of efficiencies and
synergies; expected future actions and decisions of regulators and
courts and the timing and impact thereof; toll and rate case
discussions and filings, including Mainline Contracting, and the
anticipated benefits thereof; Line 3 Replacement Project, including
anticipated in-service date, capital costs, EBITDA and cash flow
contribution and economics; and Line 5 dual pipelines, the Great
Lakes Tunnel Project and related matters.
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; 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;
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; anticipated reductions in operating costs; 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;
hedging program; expected EBITDA and expected adjusted EBITDA;
expected earnings/(loss) and 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, expected earnings/(loss), expected adjusted
earnings/(loss), expected DCF and associated per share amounts, and
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; 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, litigation,
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 U.S. 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 1,766 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 forms 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
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
2,044
|
|
2,340
|
|
|
4,083
|
|
3,190
|
|
Gas Transmission and
Midstream
|
868
|
|
950
|
|
|
1,841
|
|
(104)
|
|
Gas Distribution and
Storage
|
458
|
|
383
|
|
|
1,092
|
|
987
|
|
Renewable Power
Generation
|
115
|
|
163
|
|
|
271
|
|
283
|
|
Energy
Services
|
(239)
|
|
(99)
|
|
|
(175)
|
|
22
|
|
Eliminations and
Other
|
92
|
|
261
|
|
|
312
|
|
(705)
|
|
EBITDA
|
3,338
|
|
3,998
|
|
|
7,424
|
|
3,673
|
|
Depreciation and
amortization
|
(929)
|
|
(949)
|
|
|
(1,861)
|
|
(1,831)
|
|
Interest
expense
|
(618)
|
|
(681)
|
|
|
(1,275)
|
|
(1,387)
|
|
Income tax
expense
|
(270)
|
|
(591)
|
|
|
(753)
|
|
(42)
|
|
Earnings attributable
to noncontrolling interests
|
(37)
|
|
(36)
|
|
|
(59)
|
|
(5)
|
|
Preference share
dividends
|
(90)
|
|
(94)
|
|
|
(182)
|
|
(190)
|
|
Earnings
attributable to common shareholders
|
1,394
|
|
1,647
|
|
|
3,294
|
|
218
|
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
Liquids
Pipelines
|
1,844
|
|
1,744
|
|
|
3,725
|
|
3,663
|
|
Gas Transmission and
Midstream
|
935
|
|
975
|
|
|
1,942
|
|
2,072
|
|
Gas Distribution and
Storage
|
461
|
|
406
|
|
|
1,107
|
|
1,015
|
|
Renewable Power
Generation
|
113
|
|
150
|
|
|
267
|
|
268
|
|
Energy
Services
|
(86)
|
|
86
|
|
|
(161)
|
|
73
|
|
Eliminations and
Other
|
35
|
|
(49)
|
|
|
165
|
|
(16)
|
|
Adjusted
EBITDA
|
3,302
|
|
3,312
|
|
|
7,045
|
|
7,075
|
|
Depreciation and
amortization
|
(929)
|
|
(949)
|
|
|
(1,861)
|
|
(1,831)
|
|
Interest
expense
|
(622)
|
|
(695)
|
|
|
(1,287)
|
|
(1,391)
|
|
Income tax
expense
|
(269)
|
|
(404)
|
|
|
(668)
|
|
(855)
|
|
Earnings attributable
to noncontrolling interests
|
(35)
|
|
(37)
|
|
|
(56)
|
|
(7)
|
|
Preference share
dividends
|
(90)
|
|
(94)
|
|
|
(182)
|
|
(190)
|
|
Adjusted
earnings
|
1,357
|
|
1,133
|
|
|
2,991
|
|
2,801
|
|
Adjusted earnings
per common share
|
0.67
|
|
0.56
|
|
|
1.48
|
|
1.39
|
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
EBITDA
|
3,338
|
|
3,998
|
|
|
7,424
|
|
3,673
|
|
Adjusting
items:
|
|
|
|
|
|
Change in unrealized
derivative fair value (gain)/loss - Foreign exchange
|
(242)
|
|
(1,186)
|
|
|
(521)
|
|
770
|
|
Change in unrealized
derivative fair value loss - Commodity prices
|
153
|
|
525
|
|
|
14
|
|
49
|
|
Equity investment
impairment
|
—
|
|
—
|
|
|
—
|
|
1,736
|
|
Equity investment
asset and goodwill impairment
|
—
|
|
—
|
|
|
—
|
|
324
|
|
Net inventory
adjustment - Energy Services
|
—
|
|
(340)
|
|
|
—
|
|
2
|
|
Employee severance,
transition and transformation costs
|
36
|
|
268
|
|
|
72
|
|
279
|
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
|
—
|
|
|
—
|
|
159
|
|
Other
|
17
|
|
47
|
|
|
56
|
|
83
|
|
Total adjusting
items
|
(36)
|
|
(686)
|
|
|
(379)
|
|
3,402
|
|
Adjusted
EBITDA
|
3,302
|
|
3,312
|
|
|
7,045
|
|
7,075
|
|
Depreciation and
amortization
|
(929)
|
|
(949)
|
|
|
(1,861)
|
|
(1,831)
|
|
Interest
expense
|
(618)
|
|
(681)
|
|
|
(1,275)
|
|
(1,387)
|
|
Income tax
expense
|
(270)
|
|
(591)
|
|
|
(753)
|
|
(42)
|
|
Earnings attributable
to noncontrolling interests
|
(37)
|
|
(36)
|
|
|
(59)
|
|
(5)
|
|
Preference share
dividends
|
(90)
|
|
(94)
|
|
|
(182)
|
|
(190)
|
|
Adjusting items in
respect of:
|
|
|
|
|
|
Interest
expense
|
(4)
|
|
(14)
|
|
|
(12)
|
|
(4)
|
|
Income tax
expense
|
1
|
|
187
|
|
|
85
|
|
(813)
|
|
Earnings attributable
to noncontrolling interests
|
2
|
|
(1)
|
|
|
3
|
|
(2)
|
|
Adjusted
earnings
|
1,357
|
|
1,133
|
|
|
2,991
|
|
2,801
|
|
Adjusted earnings
per common share
|
0.67
|
|
0.56
|
|
|
1.48
|
|
1.39
|
|
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED
EBITDA TO SEGMENTED EBITDA
LIQUIDS PIPELINES
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
1,844
|
|
1,744
|
|
|
3,725
|
|
3,663
|
|
Change in unrealized
derivative fair value gain/(loss)
|
145
|
|
616
|
|
|
306
|
|
(450)
|
|
Property tax
settlement
|
57
|
|
—
|
|
|
57
|
|
—
|
|
Asset write-down
loss
|
—
|
|
(13)
|
|
|
—
|
|
(13)
|
|
Employee severance,
transition and transformation costs
|
(2)
|
|
(7)
|
|
|
(5)
|
|
(7)
|
|
Other
|
—
|
|
—
|
|
|
—
|
|
(3)
|
|
Total
adjustments
|
200
|
|
596
|
|
|
358
|
|
(473)
|
|
EBITDA
|
2,044
|
|
2,340
|
|
|
4,083
|
|
3,190
|
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
935
|
|
975
|
|
|
1,942
|
|
2,072
|
|
Equity investment
impairment
|
—
|
|
—
|
|
|
—
|
|
(1,736)
|
|
Equity investment
asset and goodwill impairment
|
—
|
|
—
|
|
|
—
|
|
(324)
|
|
Equity earnings
adjustment - DCP Midstream, LLC
|
(47)
|
|
(22)
|
|
|
(66)
|
|
31
|
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
|
—
|
|
|
—
|
|
(159)
|
|
Other
|
(20)
|
|
(3)
|
|
|
(35)
|
|
12
|
|
Total
adjustments
|
(67)
|
|
(25)
|
|
|
(101)
|
|
(2,176)
|
|
EBITDA
|
868
|
|
950
|
|
|
1,841
|
|
(104)
|
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
461
|
|
406
|
|
|
1,107
|
|
1,015
|
|
Change in unrealized
derivative fair value gain/(loss)
|
12
|
|
(15)
|
|
|
14
|
|
(9)
|
|
Employee transition
and transformation costs
|
(14)
|
|
(8)
|
|
|
(28)
|
|
(15)
|
|
Other
|
(1)
|
|
—
|
|
|
(1)
|
|
(4)
|
|
Total
adjustments
|
(3)
|
|
(23)
|
|
|
(15)
|
|
(28)
|
|
EBITDA
|
458
|
|
383
|
|
|
1,092
|
|
987
|
|
RENEWABLE POWER GENERATION
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
113
|
|
150
|
|
|
267
|
|
268
|
|
Change in unrealized
derivative fair value gain
|
2
|
|
—
|
|
|
4
|
|
2
|
|
Disposition - MATL
transmission assets
|
—
|
|
13
|
|
|
—
|
|
13
|
|
Total
adjustments
|
2
|
|
13
|
|
|
4
|
|
15
|
|
EBITDA
|
115
|
|
163
|
|
|
271
|
|
283
|
|
ENERGY SERVICES
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
(86)
|
|
86
|
|
|
(161)
|
|
73
|
|
Change in unrealized
derivative fair value loss
|
(153)
|
|
(525)
|
|
|
(14)
|
|
(49)
|
|
Net inventory
adjustment
|
—
|
|
340
|
|
|
—
|
|
(2)
|
|
Total
adjustments
|
(153)
|
|
(185)
|
|
|
(14)
|
|
(51)
|
|
EBITDA
|
(239)
|
|
(99)
|
|
|
(175)
|
|
22
|
|
ELIMINATIONS AND OTHER
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
35
|
|
(49)
|
|
|
165
|
|
(16)
|
|
Change in unrealized
derivative fair value gain/(loss)
|
83
|
|
585
|
|
|
197
|
|
(313)
|
|
Change in corporate
guarantee obligation
|
—
|
|
—
|
|
|
—
|
|
(74)
|
|
Investment write-down
loss
|
—
|
|
—
|
|
|
—
|
|
(43)
|
|
Employee severance,
transition and transformation costs
|
(20)
|
|
(253)
|
|
|
(39)
|
|
(257)
|
|
Other
|
(6)
|
|
(22)
|
|
|
(11)
|
|
(2)
|
|
Total
adjustments
|
57
|
|
310
|
|
|
147
|
|
(689)
|
|
EBITDA
|
92
|
|
261
|
|
|
312
|
|
(705)
|
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED
BY OPERATING ACTIVITIES TO DCF
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities
|
2,227
|
|
2,416
|
|
|
4,791
|
|
5,225
|
|
Adjusted for changes
in operating assets and liabilities1
|
207
|
|
91
|
|
|
625
|
|
(103)
|
|
|
2,434
|
|
2,507
|
|
|
5,416
|
|
5,122
|
|
Distributions to
noncontrolling interests4
|
(73)
|
|
(88)
|
|
|
(141)
|
|
(164)
|
|
Preference share
dividends
|
(90)
|
|
(94)
|
|
|
(182)
|
|
(190)
|
|
Maintenance capital
expenditures2
|
(161)
|
|
(135)
|
|
|
(270)
|
|
(339)
|
|
Significant adjusting
items:
|
|
|
|
|
|
Other receipts of cash
not recognized in revenue3
|
32
|
|
81
|
|
|
51
|
|
132
|
|
Employee severance,
transition and transformation costs
|
37
|
|
268
|
|
|
72
|
|
279
|
|
Distributions from
equity investments in excess of cumulative
earnings4
|
184
|
|
176
|
|
|
245
|
|
253
|
|
Other
items
|
140
|
|
(278)
|
|
|
73
|
|
50
|
|
DCF
|
2,503
|
|
2,437
|
|
|
5,264
|
|
5,143
|
|
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.
|
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SOURCE Enbridge Inc.