CALGARY, AB, Feb. 11, 2022 /CNW/ - Enbridge Inc. (Enbridge or
the Company) (TSX: ENB) (NYSE: ENB) today reported strong full year
2021 financial results, reaffirmed its 2022 financial outlook, and
provided a quarterly business update.
Highlights
(All financial figures are unaudited and in Canadian dollars
unless otherwise noted. * identifies non-GAAP financial measures.
Please refer to "Non-GAAP Reconciliations Appendices" section of
this news release.)
- Full year GAAP earnings of $5.8
billion or $2.87 per common
share, compared with GAAP earnings of $3.0
billion or $1.48 per common
share in 2020
- Adjusted earnings* of $5.6
billion or $2.74 per common
share*, compared with $4.9
billion or $2.42 per common
share* in 2020
- Adjusted earnings before interest, income taxes and
depreciation and amortization (EBITDA)* of $14.0 billion, compared with $13.3 billion in 2020
- Cash provided by operating activities of $9.3 billion, compared with $9.8 billion in 2020
- Distributable cash flow (DCF)* of $10.0 billion or $4.96 per common share*, compared with
$9.4 billion or $4.67 per common share* in 2020
- Reaffirmed 2022 full year guidance range for EBITDA of
$15.0 billion to $15.6 billion and DCF per share of $5.20 to $5.50
- Increased the 2022 quarterly dividend by 3% to $0.86 ($3.44
annually) per share reflecting the 27th consecutive annual
increase
- Placed approximately $10 billion
of capital projects into service in 2021, which is expected to
generate significant EBITDA growth in 2022
- Advanced the current $10 billion
secured growth program, which supports the Company's 5 to 7% DCF
per share growth through 2024
- Successfully closed the previously announced US$3.0 billion acquisition of Moda Midstream
Operating LLC including the Ingleside Energy Center
- Announced US$0.4 billion Texas
Eastern Phase II Modernization program to upgrade and electrify
aging compressors increasing safety and reliability and lowering
emissions
- Announced US$0.1 billion
Appalachia to Market Phase II system expansion, expanding natural
gas supply into the U.S. Northeast to meet growing local
demand
- Executed pipeline transportation precedent agreement with Texas
LNG Brownsville LLC for a US$0.4
billion expansion of the Valley Crossing Pipeline to supply
its LNG export terminal
- Entered into a Memorandum of Understanding with Lehigh Cement
and announced Letters of Intent with local Indigenous Nations to
develop the Open Access Wabamun Carbon Hub
- Advanced ESG priorities by executing on emissions reduction
pathways and increasing the diversity of Enbridge's leadership and
Board of Directors
- Announced additional measures to further align the business
with our net-zero emissions goals
- Completed the previously announced $1.1
billion sale of Enbridge's interest in Noverco Inc.
(Noverco), providing for additional financial flexibility
- Announced the approval by the Toronto Stock Exchange (TSX) of
Enbridge's normal course issuer bid (NCIB) of up to $1.5 billion
- Issued $750 million of 60-year
hybrid debt in the Canadian debt markets with proceeds to be used
to redeem the $750 million Enbridge
Inc. Preferred Shares - Series 17
CEO COMMENT
Al Monaco, President and CEO
commented on the following:
"The last year has once again demonstrated the importance of
reliable and affordable energy to the world's social and economic
well-being. While it's clear we need to reduce global emissions to
achieve our climate objectives, it's also important that we
transition our energy systems prudently by ensuring adequate supply
of conventional energy, while increasing lower-carbon forms of
energy. That approach is driving our strategies at Enbridge,
including investment in renewables and new low-carbon energy
infrastructure, and setting near-term emissions reduction targets
and net zero by 2050.
"2021 was a pivotal year for Enbridge; we delivered strong
safety, operating and financial performance, advanced our strategic
priorities, and strengthened the competitive positioning of our
conventional and low-carbon businesses.
"Operationally, each of our businesses performed well, driven by
a rebound in the global economy, customer demand, and the critical
role our assets play in delivering essential energy supply. We
placed $10 billion of growth capital
into service, including the Line 3 Replacement Project, which will
generate significant cash flow growth in 2022 and provide a
foundation for future growth.
"Financially, we achieved solid results, near the top of our DCF
per share guidance range for the year. And, we sold $1.2 billion of non-core assets at attractive
valuations, including Noverco, which will provide additional
financial flexibility. Along with the cash flows from new
projects placed into service, we expect our leverage to be at
the low end of our target range in
2022.
"We also advanced our strategic priorities and added
$2 billion of new conventional and
low-carbon growth capital to our commercially secured backlog and
executed on our natural gas and crude oil export strategies.
"In Liquids Pipelines, we closed the acquisition of the
Ingleside Energy Center, North
America's premier light crude oil export platform, with over
$1 billion in embedded conventional
and low-carbon organic growth potential. As we enter 2022, we're
progressing plans to expand Ingleside's export capacity while adding up to
60 MWs of solar power to the site, which will enable net negative
facility emissions.
"We're also executing on our carbon capture strategy. For
example, our recently announced partnerships and collaboration with
Capital Power, Lehigh Cement and local indigenous communities on a
carbon capture and storage hub in central Alberta has the potential to sequester nearly
4 million tonnes of CO2 emissions annually. Carbon capture and storage will be critical to
meeting society's emissions reductions goals and we're excited to
be leveraging our expertise and footprint with great partners.
"In Gas Transmission, we placed our Cameron Extension project
into service supplying the Calcasieu Pass LNG facility, and our
agreement to serve Texas LNG further extends our U.S. Gulf Coast
export opportunity set. In Western
Canada, our B.C. Pipeline is advancing a $2.5 billion expansion to serve west coast LNG
and local market demand growth. And, we're expanding our
multi-billion Texas Eastern modernization program to upgrade and
electrify additional compressors, which will improve system safety
and performance and drive emissions lower.
"At our Utility, we added more than 40 thousand natural gas
customers last year, and continued to develop new low-carbon
projects that fit well within our low-risk commercial model and
lower emissions for our customers. We now have seven renewable
natural gas projects operating or under construction with a healthy
backlog of new projects in development. Our new hydrogen blending
facility in Markham, the first of
its kind in North America, just
began operations.
"In Renewables, construction of four offshore wind projects off
the coast of France, including our
first floating facility, are progressing on schedule with the first
expected to enter service by the end of this year. In North America, we have ten solar self-power
projects under construction across our liquids and gas transmission
systems, which will generate about 100 MW of renewable power, and
further lower our emissions.
"Throughout 2021, we accelerated our leadership in all aspects
of environmental, social and governance performance. We've embedded
our goals into our business and capital allocation framework, and
aligned those plans with enterprise-wide compensation. On our
diversity and inclusion goals, we've added diversity at all levels
of the organization, including the Board of Directors. We're also
making good progress towards our medium and long-term emissions
goals across our operations. And, we've added new Scope 3 metrics
to track the emissions intensity of the energy we deliver and our
contribution to reducing global emissions through demand-side
management programs and our growing renewable and low-carbon
investments. Our demand-side management programs at the utility,
for example, have helped our customers avoid 55 million tonnes of
greenhouse gas emissions over the last 26 years.
"As our shareholders and other stakeholders know, we are
committed to leadership in sustainably delivering affordable,
reliable and secure energy to millions of people in North America and globally. We recognize that
leading our industry also comes with the responsibility of
continuous improvement, which is why we are committing to new
measures that further align our business with the emissions
reductions targets we established in late 2020.
"These measures include ensuring that investment decision making
reflects our interim and long-term targets, working with our supply
chain to lower Scope 3 emissions, and developing lower carbon
partnerships to drive innovation across our businesses. We will
also continue to work proactively with the organizations
developing science-based guidelines for emissions targets in the
midstream sector, and in May, our 21st annual
sustainability report will include scenario analysis based on a
net-zero emissions pathway.
"In 2022, we're positioned to grow EBITDA and DCF per share by
over 8%. Execution of our secured growth program and embedded
growth supports our 5-7% distributable cash flow per share compound
annual growth from 2021 to 2024. This visible cash flow growth
outlook and a healthy balance sheet supports our 27th consecutive
annual dividend increase, reinforcing the importance we place on
returning capital as part of our shareholder value
proposition.
"Looking forward to our 3-year planning horizon, we expect to
have $5-6 billion of annual
investment capacity, of which $3-4
billion is prioritized to core utility-like investments. The
remaining $2 billion will be deployed
to the next best alternatives including share repurchases. Our
recent implementation of a normal course issuer bid provides
flexibility to repurchase up to $1.5
billion of our common shares and creates an additional
avenue to supplement the return of capital to shareholders, while
increasing per share earnings and distributable cash flow.
"The strong demand for our system capacity and execution on our
secured capital continues to drive stable and growing cash flows.
As we look to the future, embedded conventional and low-carbon
organic growth opportunities across our assets, along with our
disciplined approach to investment, provides a compelling growth
outlook and value proposition for our shareholders."
FINANCIAL RESULTS SUMMARY
Financial results for the three months and year ended
December 31, 2021 and 2020 are
summarized in the table below:
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share amounts;
number of shares in millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
1,840
|
1,775
|
|
5,816
|
2,983
|
GAAP Earnings per
common share
|
0.91
|
0.88
|
|
2.87
|
1.48
|
Cash provided by
operating activities
|
2,302
|
2,254
|
|
9,256
|
9,781
|
Adjusted
EBITDA1
|
3,687
|
3,201
|
|
14,001
|
13,273
|
Adjusted
Earnings1
|
1,376
|
1,132
|
|
5,551
|
4,894
|
Adjusted Earnings per
common share1
|
0.68
|
0.56
|
|
2.74
|
2.42
|
Distributable Cash
Flow1
|
2,487
|
2,209
|
|
10,041
|
9,440
|
Weighted average
common shares outstanding
|
2,024
|
2,022
|
|
2,023
|
2,020
|
1 Non-GAAP
financial measures. Please refer to "Non-GAAP Reconciliations
Appendices" section of this news release.
|
GAAP earnings attributable to common shareholders for the fourth
quarter of 2021 increased by $65
million or $0.03 per share
compared with the same period in 2020.
On a full year basis, GAAP earnings attributable to common
shareholders for 2021 increased by $2.8
billion or $1.39 per share
compared with the same period in 2020.
The period-over-period comparability of GAAP earnings
attributable to common shareholders is 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. Refer to the annual Management Discussion &
Analysis for 2021 filed in conjunction with the year-end
financial statements for a detailed discussion of GAAP financial
results.
Adjusted earnings in the fourth quarter of 2021 increased by
$244 million, or $0.12 per share and was driven largely by the net
impact of the operating factors discussed below, offset by
increased depreciation expense on new assets placed into service
throughout 2021, including the U.S. portion of the Line 3
Replacement Project, which was placed into service early in the
fourth quarter, and the Enbridge Ingleside Energy Center, which was
acquired in mid-October.
Full year adjusted earnings for 2021 increased by $657 million, or $0.32 per share, primarily due to the net impact
of the operating factors discussed below, along with lower interest
rates on short-term borrowings and the positive impact of a weaker
USD on the translation of USD denominated interest expense. This
was partially offset by increased depreciation expense on new
assets placed into service throughout 2021.
Adjusted EBITDA in the fourth quarter of 2021 increased
by $486 million compared with the same period in 2020. This is
primarily driven by contributions from the U.S. portion of the Line
3 Replacement Project and the acquisition of the Enbridge Ingleside
Energy Center. Additionally, results were negatively impacted by a
weaker USD which negatively impacts the translation of the
Company's USD denominated EBITDA. The average CAD to USD exchange
rate in the fourth quarter fell approximately 3% in 2021 to
$1.26, compared with $1.30 in the fourth quarter of 2020. Enbridge's
enterprise-wide financial risk management program has partially
mitigated the impact of a weaker USD currency through its foreign
exchange hedging program.
Full year adjusted EBITDA for 2021 increased by $728
million compared with the same period in 2020. This is primarily
driven by the same factors discussed above and partially offset by
weaker contributions from Energy Services. The average CAD to USD
exchange rate in 2021 fell approximately 7% to $1.25, compared with $1.34 in 2020.
DCF for the fourth quarter was $2.5
billion, an increase of $278
million over the fourth quarter of 2020, driven primarily by
the impact of the operating factors discussed above and partially
offset by higher cash taxes in the quarter and lower cash
distributions in excess of equity earnings.
DCF for the year ended December 31,
2021 was $10.0 billion, an
increase of $601 million over 2020,
primarily due to the same operating factors discussed above as well
as lower maintenance capital expenditures, primarily at the
Utility, lower interest expense and lower cash distributions in
excess of equity earnings.
In addition to the items discussed above, adjusted EBITDA,
adjusted earnings and DCF were each impacted by the recognition of
a provision in the fourth quarter against the interim Mainline
International Joint Toll (IJT) for barrels shipped between July 1 and December 31, 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
The Company is currently rated BBB+, or equivalent, by all four
of its credit rating agencies, reflecting Enbridge's sector leading
financial strength and cash flow resiliency. Enbridge's financial
position is expected to strengthen in 2022 towards the low end of
the targeted Debt to EBITDA range of 4.5x to 5.0x as annualized
EBITDA contributions from the approximately $14 billion of capital projects and asset
acquisitions executed in 2021 are realized.
In January 2022, Enbridge issued
$750 million of hybrid securities in
the Canadian debt market. Net proceeds from the offering will be
used to redeem the outstanding Cumulative Redeemable Minimum Rate
Reset Preference Shares, Series 17 (TSX: ENB.PF.I) on March 1, 2022. These hybrid securities will
receive partial equity treatment from rating agencies, while
lowering the Company's overall financing costs due to a lower
realized coupon rate.
FINANCIAL OUTLOOK
The Company reaffirms its 2022 financial guidance, announced in
December, which included adjusted EBITDA between $15.0 and $15.6
billion and DCF per share between $5.20 to $5.50.
Growth in 2022 is anticipated to be driven by an increase in
Mainline volumes, which are expected to average 2.95 million
barrels per day (mmbpd), full year contributions from projects
placed into service during 2021, including the Line 3 Replacement
Project and the acquisition of the Ingleside Energy Center and
execution of our 2022 growth program, offset by ongoing weakness in
Energy Services due to continued market backwardation and narrow
basis.
Enbridge increased its 2022 quarterly dividend by 3% to
$0.86 ($3.44 annually) per share, commencing with the
dividend payable on March 1, 2022 to
shareholders of record on February 15,
2022.
SECURED GROWTH PROJECT EXECUTION UPDATE
In 2021, Enbridge placed approximately $10 billion of growth projects into service
across each of its four businesses, which are expected to provide
significant EBITDA and DCF contributions in 2022
including:
- the US$4.0 billion U.S. segment
of the Line 3 Replacement Project and associated US$0.5 billion Southern Access Expansion to 1.2
mmbpd;
- the US$0.1 billion 90 thousand
barrel per day (kbpd) expansion of Flanagan
South;
- the $1.0 billion T-South
Reliability and Expansion Program and the $0.4 billion Spruce Ridge Project, which
increased capacity on the B.C. Pipeline;
- Gas Transmission's US$1.0 billion
2021 Modernization Program;
- the US$0.1 billion Cameron
Extension along the U.S. Gulf Coast providing natural gas to
service Calcasieu Pass LNG;
- the combined US$0.1 billion
Appalachia to Market and Middlesex Extension projects, which
support reliable natural gas supply into the U.S. Northeast;
and
- Gas Distribution's $0.9 billion
2021 Utility Growth capital.
In the fourth quarter, Enbridge closed the previously announced
acquisition of Moda Midstream Operating LLC for US$3.0 billion, which included the Ingleside
Energy Center and related pipeline and logistics assets. The
Company is developing approximately two million barrels of
additional permitted storage and a solar facility of up to 60 MW to
be located on site.
Today, Enbridge announced it is proceeding with Texas Eastern
Modernization Phase II with a total capital cost of approximately
US$0.4 billion to modernize aging
compressor equipment across Texas Eastern resulting in increased
safety and reliability of the system and a reduction in associated
greenhouse gas emissions. This phase of work will be staged with
in-service dates beginning in 2024. The Company expects to earn an
appropriate return on these investments in the system through
periodic rate filings on Texas Eastern.
The Company also announced the US$0.1
billion Appalachia to Market Phase II expansion of the Texas
Eastern system providing additional capacity to meet U.S. northeast
demand for natural gas which is expected to be in service in
2025.
Inclusive of newly sanctioned capital, the Company's current
secured growth program is approximately $10
billion and is supported by commercial models entirely
consistent with Enbridge's low-risk model. The program includes
ratable capital requirements for both Gas Transmission's
modernization and Gas Distribution's utility growth programs, as
well as 4 offshore wind projects in France providing a combined 1.5 GW (0.3 GW
net) of generation capacity, and a number of other smaller projects
across each of Enbridge's businesses.
OTHER BUSINESS UPDATES
Mainline Contracting
On November 26, 2021, the Canada
Energy Regulator (CER) denied Enbridge's application to implement
firm service contracting on the Canadian Mainline system.
Subsequent to the CER decision, Enbridge has initiated a process to
negotiate a go-forward Canadian Mainline tolling framework with
customers and other stakeholders.
The Company is currently advancing two potential commercial
frameworks for the Mainline in parallel: i) a new incentive
rate-making agreement that may be similar to the Competitive Toll
Settlement (CTS) agreement that expired on June 30, 2021, and ii) a Canadian Mainline
cost-of-service application. The Company anticipates that its
consultation and negotiation with industry will progress through
the first half of 2022, with the potential to file a proposed
incentive tolling settlement or cost-of-service application with
the CER for review later this year.
Either framework is anticipated to provide attractive
risk-adjusted returns for operating the Canadian Mainline and the
range of financial outcomes is not expected to materially impact
Enbridge's financial outlook.
As per the terms of the CTS, Enbridge is collecting interim
tolls which are consistent with the tolls in effect on June 30, 2021 when the CTS agreement expired and
which are subject to refund. The Company has included provisions in
its 2021 Mainline results from July 31 to
December 31, along with its 2022 and 3-year guidance, in
recognition of the uncertainty of future tolls.
Carbon Capture and Storage (CCS)
Enbridge has announced multiple collaborative efforts to develop
the proposed Open Access Wabamun Carbon Hub in central Alberta (Wabamun Carbon Hub) including a
Memorandum of Understanding (MoU) on January
26, 2022, to collaborate with Lehigh Cement, part of
HeidelbergCement Group (Lehigh), on a carbon storage solution for
Lehigh's cement manufacturing facility in Edmonton, Alberta. Lehigh is developing
North America's first full-scale
CCS solution for the cement industry at its Edmonton facility with the goal of capturing
approximately 780,000 tonnes of CO2 annually. Captured emissions
would be transported via pipeline and permanently sequestered by
Enbridge and, subject to the award of carbon sequestration rights
and regulatory approvals, could be in service as early as 2025.
The MoU with Lehigh combined with the previously announced MoU
with Capital Power Corporation (Capital Power) announced on
November 29, 2021, represents an
opportunity to capture approximately 4 million tonnes of
CO2 emissions annually from their facilities at the
proposed Wabamun Carbon Hub.
Additionally, on February 3, 2022,
Enbridge and the First Nation Capital Investment Partnership
consisting of four central Alberta Indigenous Nations announced the
signing of a Letter of Intent (LoI) to work collaboratively to
advance the Wabamun Carbon Hub. The four Treaty 6 First Nations
represent collectively more than 10,000 on- and off-reserve members
and include the Alexander First Nation, the Alexis Nakota Sioux
Nation, the Enoch Cree Nation, and the Paul First Nation. A
separate LoI with the Lac Ste. Anne Métis Community Association has
also been signed. This collaboration and partnership reflects
Enbridge's commitment to Indigenous Reconciliation and,
specifically, meaningful involvement of Indigenous Nations,
communities and groups in the development of energy projects.
Enbridge is participating in the Government of Alberta's Request for Full Project Proposals
process for carbon storage hubs.
Normal Course Issuer Bid
On December 31, 2021, the TSX
approved Enbridge's NCIB to purchase, for cancellation, up to
31,062,331 of its outstanding common shares to an aggregate amount
of up to $1.5 billion. The NCIB
commenced on January 5, 2022 and
expires on the earlier date of January 4,
2023, or when the Company reaches its share repurchase
limit.
Share repurchases made pursuant to the Company's NCIB will be
predicated upon maintaining a strong balance sheet, strong business
performance, and the availability and attractiveness of alternative
capital investment opportunities.
The NCIB implementation provides flexibility to repurchase our
common shares and creates an additional avenue to supplement the
return of capital to shareholders, while increasing per share
earnings and distributable cash flow.
ESG LEADERSHIP UPDATE
Enbridge is committed to leading ESG practices and performance
which has long been core to how it does business. To this end, the
Company set ambitious ESG goals in 2020, which include net zero on
Scope 1 and 2 emissions by 2050 with an interim target to reduce
the intensity of its greenhouse gas (GHG) emissions 35% by 2030.
These goals were developed to align with the objectives of the
Paris Agreement, and the Company is committed to continuing to take
action to achieve these climate goals.
The Company has integrated its ESG goals into enterprise-wide
incentive compensation and $3 billion
of sustainability-linked financings. Each of the Company's business
units also developed multi-year emissions reduction plans which are
being implemented and will be closely monitored.
Through 2021, the Company estimates that GHG emissions intensity
is approximately 21% lower than its 2018 baseline and progressing
towards its 2030 goal. Additionally, in 2021 the Company expanded
emissions reporting to include new metrics designed to measure the
emissions intensity of the energy delivered and the emissions
avoided through over two decades of investment in renewables,
low-carbon fuels and demand side management programs.
Enbridge aims to continuously strengthen its approach to
emissions reporting and reduction. In 2021, Enbridge set a solid
foundation, and the Company is now expanding its approach to
include the following additional actions:
- ensure that investment decisions align with Enbridge's interim
and long-term emissions reduction goals;
- continue to work proactively with the organizations developing
science-based guidelines for emissions targets in the midstream
sector;
- work with key suppliers to support the further reduction of
Scope 3 emissions;
- update TCFD disclosures in the Company's 21st annual
sustainability report to include scenario analysis based on a
net-zero emissions pathway; and
- further develop low-carbon energy partnerships to drive
innovation across our business, with a focus on renewable power,
renewable natural gas, hydrogen and carbon capture.
FOURTH QUARTER AND YEAR-END 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
fourth quarter and full year of 2021.
GAAP SEGMENT EBITDA AND CASH FLOW FROM OPERATIONS
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
2,141
|
2,403
|
|
7,897
|
7,683
|
Gas Transmission and
Midstream
|
946
|
857
|
|
3,671
|
1,087
|
Gas Distribution and
Storage
|
743
|
463
|
|
2,117
|
1,748
|
Renewable Power
Generation
|
146
|
147
|
|
508
|
523
|
Energy
Services
|
66
|
(224)
|
|
(313)
|
(236)
|
Eliminations and
Other
|
165
|
385
|
|
356
|
(113)
|
EBITDA1
|
4,207
|
4,031
|
|
14,236
|
10,692
|
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
1,840
|
1,775
|
|
5,816
|
2,983
|
|
|
|
|
|
|
Cash provided by
operating activities
|
2,302
|
2,254
|
|
9,256
|
9,781
|
1
Non-GAAP financial measure. Please refer to "Non-GAAP
Reconciliations Appendices" section of this news
release.
|
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
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
Liquids
Pipelines
|
2,108
|
1,787
|
|
7,731
|
7,182
|
Gas Transmission and
Midstream
|
922
|
878
|
|
3,850
|
3,895
|
Gas Distribution and
Storage
|
450
|
492
|
|
1,853
|
1,822
|
Renewable Power
Generation
|
140
|
146
|
|
496
|
507
|
Energy
Services
|
(83)
|
(82)
|
|
(360)
|
(119)
|
Eliminations and
Other
|
150
|
(20)
|
|
431
|
(14)
|
Adjusted
EBITDA1,3
|
3,687
|
3,201
|
|
14,001
|
13,273
|
Maintenance
capital
|
(274)
|
(320)
|
|
(686)
|
(915)
|
Interest
expense1
|
(747)
|
(705)
|
|
(2,724)
|
(2,846)
|
Current income
tax1
|
(142)
|
(17)
|
|
(352)
|
(342)
|
Distributions to
noncontrolling interests
|
(64)
|
(68)
|
|
(271)
|
(300)
|
Cash distributions in
excess of equity earnings1
|
65
|
170
|
|
313
|
649
|
Preference share
dividends
|
(93)
|
(96)
|
|
(367)
|
(380)
|
Other receipts of
cash not recognized in revenue2
|
53
|
42
|
|
127
|
292
|
Other non-cash
adjustments
|
2
|
2
|
|
—
|
9
|
DCF3
|
2,487
|
2,209
|
|
10,041
|
9,440
|
Weighted average
common shares outstanding
|
2,024
|
2,022
|
|
2,023
|
2,020
|
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
|
Non-GAAP financial
measures. Please refer to "Non-GAAP Reconciliations Appendices"
section of this news release.
|
Fourth quarter 2021 DCF increased $278
million compared with the same period of 2020 primarily due
to operational factors discussed below in Adjusted EBITDA by
Segments as well as:
- lower Gas Distribution and Storage maintenance capital related
to timing of spend; partially offset by,
- higher current income tax due to higher earnings and the timing
of recognition of U.S. minimum taxes;
- higher interest expense due to lower capitalized interest
associated with the U.S. portion of the Line 3 Replacement Project
placed into service in the fourth quarter of 2021; and,
- lower cash distributions in excess of equity earnings primarily
as a result of higher equity earnings (reflected in Adjusted
EBITDA) at certain equity investments that have not experienced
higher corresponding cash distributions in the quarter.
Full year 2021 DCF increased $601
million compared with 2020 primarily related to the factors
discussed above as well as lower interest expense for the first
nine months of 2021 due to favourable interest rates on short-term
borrowings, and the impact of a weaker USD currency that positively
impacted the translation of interest payments on USD denominated
debt. In addition, full year DCF was impacted by the operational
factors discussed below in Adjusted EBITDA by Segments.
ADJUSTED EARNINGS
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
Adjusted
EBITDA1
|
3,687
|
3,201
|
|
14,001
|
13,273
|
Depreciation and
amortization
|
(1,047)
|
(946)
|
|
(3,852)
|
(3,712)
|
Interest
expense2
|
(734)
|
(694)
|
|
(2,675)
|
(2,793)
|
Income
taxes2
|
(406)
|
(304)
|
|
(1,429)
|
(1,437)
|
Noncontrolling
interests2
|
(31)
|
(29)
|
|
(121)
|
(57)
|
Preference share
dividends
|
(93)
|
(96)
|
|
(373)
|
(380)
|
Adjusted
earnings1
|
1,376
|
1,132
|
|
5,551
|
4,894
|
Adjusted earnings
per common share
|
0.68
|
0.56
|
|
2.74
|
2.42
|
1
|
Non-GAAP financial
measures. Please refer to "Non-GAAP Reconciliations Appendices"
section of this news release.
|
2
|
Presented net of
adjusting items.
|
Adjusted earnings increased $244
million and adjusted earnings per share increased
$0.12 compared with the fourth
quarter in 2020 primarily due to the operational factors discussed
below in Adjusted EBITDA by Segments, as well as:
- higher depreciation expense on new assets placed into service
throughout 2021, including the U.S. portion of the Line 3
Replacement Project, which was placed into service in the fourth
quarter, and the Ingleside Energy Center, acquired in October;
and
- higher interest expense due to lower capitalized interest
associated with the U.S. portion of the Line 3 Replacement
Project.
Full year adjusted earnings increased $657 million and adjusted earnings per share
increased $0.32 compared with 2020
due to the same operational factors discussed below in
Adjusted EBITDA by Segments and the higher
depreciation discussed above. The impacts of higher interest
expense in the fourth quarter related to reduced capitalized
interest was offset on a full year basis by the impact of lower
rates on short-term borrowings, as well as the positive impact of a
weaker USD currency on the translation of interest payments on USD
denominated debt.
ADJUSTED EBITDA BY SEGMENTS
Fourth quarter adjusted EBITDA generated
from U.S. dollar denominated businesses was translated to
Canadian dollars at a lower average exchange rate of C$1.26/US$ when compared with C$1.30/US$ in the corresponding 2020 period. On a
full year basis, adjusted EBITDA generated from U.S dollar
denominated businesses was translated at C$1.25/US$ in 2021, compared with C$1.34/US$ in 2020. 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
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Mainline
System
|
1,202
|
1,032
|
|
4,466
|
4,102
|
Regional Oil Sands
System
|
234
|
234
|
|
927
|
839
|
Gulf Coast and
Mid-Continent System
|
317
|
206
|
|
1,019
|
920
|
Other
Systems1
|
355
|
315
|
|
1,319
|
1,321
|
Adjusted
EBITDA2
|
2,108
|
1,787
|
|
7,731
|
7,182
|
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
|
Mainline System -
ex-Gretna volume3
|
3,014
|
2,651
|
|
2,765
|
2,622
|
Regional Oil Sands
System4
|
1,983
|
1,919
|
|
1,929
|
1,641
|
International Joint
Tariff (IJT)5
|
$4.27
|
$4.27
|
|
$4.27
|
$4.24
|
Competitive Tolling
Settlement (CTS) Surcharges5
|
$0.26
|
$0.26
|
|
$0.26
|
$0.19
|
Line 3 Replacement
Surcharge5,6
|
$0.94
|
$0.20
|
|
$0.94
|
$0.20
|
1
|
Other consists of
Southern Lights Pipeline, Express-Platte System, Bakken System, and
Feeder Pipelines & Other.
|
2
|
Non-GAAP measure.
Please refer to "Non-GAAP Reconciliations Appendices" section of
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 fourth quarter of 2021 was C$1.27/US$ (Q4 2020: C$1.21/US$) and
for the full year 2021 C$1.25/US$ (2020: 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 with offsetting
hedge settlements reported within Eliminations and
Other.
|
6
|
The interim
surcharge of US$0.20 for the Canadian portion of the Line 3
Replacement Project, which was placed into service on December 1,
2019, was collected until October 1, 2021. With the completion of
the U.S. portion of the Line 3 Replacement Project on October 1,
2021, the interim surcharge was replaced by the full Line 3
Replacement surcharge.
|
Liquids Pipelines adjusted EBITDA increased $321 million compared with the fourth quarter of
2020, primarily related to:
- higher Mainline System throughput enabled by incremental Line 3
capacity placed into service October
1, higher tolls due to the implementation of the full Line 3
Replacement surcharge of US$0.935 per
barrel beginning October 2021
compared with the surcharge on the Canadian portion of the project
of US$0.20 per barrel and a higher
effective foreign exchange hedge rate (C$1.27 in 2021 vs. C$1.21 in 2020) on hedges used to manage foreign
exchange risk of the U.S. dollar denominated Canadian Mainline
revenue, partially offset by the recognition of a provision against
the interim Mainline IJT for barrels shipped between July 1 and December 31, 2021; and
- higher contributions from the Gulf Coast and Mid-Continent
System due primarily to the acquisition of the Ingleside Energy
Center in the fourth quarter of 2021 and higher 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 hedge gains in the
Eliminations and Other segment as part of the Company's
enterprise-wide financial risk management program.
Full year 2021 Liquids Pipeline adjusted EBITDA increased
$549 million compared with 2020 and
was primarily impacted by the same factors discussed above as well
as higher throughput within on the Mainline System and the Regional
Oil Sands System due to recovery from the impacts of the COVID-19
pandemic on crude oil demand and completion of the Woodland
Pipeline expansion in June 2021.
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
U.S. Gas
Transmission
|
670
|
673
|
|
2,905
|
3,090
|
Canadian Gas
Transmission
|
125
|
140
|
|
537
|
494
|
U.S.
Midstream
|
91
|
40
|
|
260
|
156
|
Other
|
36
|
25
|
|
148
|
155
|
Adjusted
EBITDA1
|
922
|
878
|
|
3,850
|
3,895
|
1 Non-GAAP
financial measure. Please refer to "Non-GAAP Reconciliations
Appendices" section of this news release.
|
Gas Transmission and Midstream adjusted EBITDA increased
$44 million compared with the fourth
quarter of 2020, primarily related to:
- higher U.S. Gas Transmission contributions from the Atlantic
Bridge Phase III project, placed into service in January 2021, and increased revenue due to the
absence of pressure restrictions that existed on the Texas Eastern
system in 2020;
- higher U.S. midstream contributions resulting from higher
commodity prices at Enbridge's Aux
Sable and DCP joint ventures; partially offset by
- lower Canadian Gas Transmission contributions due to the timing
of operating and administrative expenses, realized in the fourth
quarter of 2021, partially offset by higher contributions from the
final phases of the T-South Expansion and Spruce Ridge projects
placed into service in the quarter; and
- the negative effect of translating U.S. dollar denominated
EBITDA at a weaker U.S dollar average exchange rate, primarily
impacting U.S. Gas Transmission and U.S. Midstream results,
partially offset by realized gains in the Eliminations and Other
segment related to the Company's enterprise-wide financial risk
management program.
Full year 2021 Gas Transmission and Midstream adjusted EBITDA
decreased $45 million compared with
2020, due to the factors discussed above as well, as the absence of
the recognition of retroactive revenues in 2020 related to the
settlement of interim rates collected from shippers on Texas
Eastern in U.S. Gas Transmission.
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Enbridge Gas Inc.
(EGI)
|
427
|
455
|
|
1,744
|
1,741
|
Other
|
23
|
37
|
|
109
|
81
|
Adjusted
EBITDA1
|
450
|
492
|
|
1,853
|
1,822
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
EGI
|
|
|
|
|
|
Volumes (billions
of cubic feet)
|
560
|
507
|
|
1,943
|
1,793
|
Number of active
customers2 (millions)
|
|
|
|
3.8
|
3.8
|
Heating degree
days3
|
|
|
|
|
|
Actual
|
1,144
|
1,234
|
|
3,494
|
3,657
|
Forecast based on
normal weather4
|
1,317
|
1,310
|
|
3,855
|
3,843
|
1
|
Non-GAAP financial
measure. Please refer to "Non-GAAP Reconciliations Appendices"
section of 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.
Results include contributions from Noverco within Other. The
divestiture of Noverco closed on December
30, 2021.
Gas Distribution and Storage adjusted EBITDA decreased
$42 million compared with the fourth
quarter of 2020 primarily related to:
- the negative impact of warmer weather in 2021 of approximately
$16 million; and
- higher operating and administrative costs largely related to
timing of operational, pipeline integrity and safety costs between
quarters; partially offset by
- higher distribution charges resulting from increases in rates
and customer base.
When compared with the normal weather forecast embedded in
rates, the warmer weather in the fourth quarter of 2021 negatively
impacted EBITDA by approximately $31
million, compared to a negative impact of approximately
$15 million in the fourth quarter of
2020.
Full year 2021 Gas Distribution and Storage adjusted EBITDA
increased $31 million compared with
2020 due to the same factors discussed above. On a full year basis,
when compared with the normal weather forecast embedded in rates,
warmer weather negatively impacted EBITDA by approximately
$55 million and negatively impacted
2020 by approximately $33
million.
RENEWABLE POWER GENERATION
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA1
|
140
|
146
|
|
496
|
507
|
1
|
Non-GAAP financial
measure. Please refer to "Non-GAAP Reconciliations Appendices"
section of this news release.
|
Renewable Power Generation adjusted EBITDA decreased
$6 million compared with the fourth
quarter of 2020 primarily related to lower wind resources at the
Canadian wind facilities.
Full year 2021 Renewable Power Generation adjusted EBITDA
decreased $11 million compared with
2020 due to the factors discussed above, as well as:
- weaker wind resources at U.S. wind facilities, including
effects from the winter storm in Texas during February
2021; and
- the absence of reimbursements received in 2020 at certain
Canadian wind facilities from a change in operator; partially
offset by
- the promote fee received associated with the closing of the
sale of 49% of Enbridge's interest in three French offshore wind
projects in construction to CPP Investments, which closed in the
first quarter of 2021.
ENERGY SERVICES
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA1
|
(83)
|
(82)
|
|
(360)
|
(119)
|
1
|
Non-GAAP financial
measure. Please refer to "Non-GAAP Reconciliations Appendices"
section of this news release.
|
Energy Services adjusted EBITDA decreased $1 million compared with the fourth quarter of
2020 and $241 million with compared
with full year 2020. The decrease is the result of:
- significant compression of location and quality differentials
in certain markets along with limited storage opportunities due to
market price backwardation; and
- adverse impacts from the major winter storm experienced across
the U.S. Midwest during February
2021.
These conditions lead to fewer opportunities to achieve
profitable transportation margins on facilities in which Energy
Services holds capacity obligations.
ELIMINATIONS AND OTHER
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Operating and
administrative recoveries
|
103
|
(8)
|
|
256
|
158
|
Realized foreign
exchange hedge settlement gains/(losses)
|
47
|
(12)
|
|
175
|
(172)
|
Adjusted
EBITDA1
|
150
|
(20)
|
|
431
|
(14)
|
1
|
Non-GAAP financial
measure. Please refer to "Non-GAAP Reconciliations Appendices"
section of 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. U.S.
dollar denominated earnings within operating segment results are
translated at average foreign exchange rates during the quarter,
and the offsetting impact of settlements made under the Company's
enterprise foreign exchange hedging program are captured in this
corporate segment.
Eliminations and Other adjusted EBITDA increased $170 million compared with the fourth quarter of
2020 due to:
- higher realized foreign exchange gains compared with realized
foreign exchange losses in 2020 as a result of a weakening U.S.
dollar average exchange rate of $1.26
for the fourth quarter of 2021 (Q4 2020:$1.30) compared with a hedge rate of $1.30 for the fourth quarter of 2021 (Q4
2020:$1.29); and
- the annualized benefit of cost containment initiatives executed
in 2020.
Full year 2021 Eliminations and Other adjusted EBITDA increased
$445 million compared with 2020 due
to the same factors discussed above. On a full year basis, the
average exchange rate for 2021 was $1.25 (2020:$1.34)
compared with the full-year 2021 hedge rate of $1.30 (2020: $1.29).
CONFERENCE CALL
Enbridge will host a conference call and webcast on
February 11, 2022 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise wide business
update and review 2021 fourth 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
conference ID of 6486063. The call will be audio webcast live at
https://event.on24.com/wcc/r/3574327/A306812D7E85261DFF8D8810CF6EC1E4.
It is recommended that participants dial in or join the audio
webcast fifteen minutes prior to the scheduled start time. A
webcast replay will be soon after the conclusion of the event and a
transcript will be posted to the website. 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 (conference ID: 6486063).
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 December 6, 2021, the Company's
Board of Directors declared the following quarterly dividends. All
dividends are payable on March 1, 2022 to shareholders of
record on February 15, 2022.
|
Dividend per
share
|
Common
Shares1
|
$0.86000
|
Preference Shares,
Series A
|
$0.34375
|
Preference Shares,
Series B
|
$0.21340
|
Preference Shares,
Series C2
|
$0.15719
|
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
|
$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 $0.86 from $0.835,
effective March 1, 2022.
|
2
|
The quarterly
dividend per share paid on Series C was increased to $0.15501 from
$0.15349 on March 1, 2021, was increased to $0.15753 from $0.15501
on June 1, 2021, was increased to $0.16081 from $0.15753 on
September 1, 2021 and was decreased to $0.15719 from $0.16081 on
December 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 strategic plan, priorities and
outlook; 2022 financial guidance, including projected DCF per share
and adjusted EBITDA and expected growth thereof; expected
dividends, dividend growth and dividend policy; expected supply of,
demand for, exports of and prices of crude oil, natural gas,
natural gas liquids (NGL), liquified natural gas (LNG) and
renewable energy; energy transition and low carbon energy and our
approach thereto; environmental, social and governance (ESG) goals,
targets and plans, including greenhouse gas (GHG) emissions
intensity and reduction targets, ESG engagement and disclosure, and
diversity and inclusion goals; anticipated utilization of our
assets; expected EBITDA and expected adjusted EBITDA; expected
earnings/(loss) and adjusted earnings/(loss); expected DCF and DCF
per share; expected future cash flows; expected debt-to EBITDA
range; expected shareholder returns, asset returns and returns on
equity; expected performance of the Company's businesses, including
customer growth and organic growth opportunities; financial
strength, capacity and flexibility; financial priorities;
expectations on leverage, sources of liquidity and sufficiency of
financial resources; expected in-service dates and costs related to
announced projects and projects under construction and system
expansion, optimization and modernization; capital allocation
framework and priorities including ESG factors; share repurchases
under normal course issuer bid; investment capacity; expected
future growth and expansion opportunities, including secured growth
program, development opportunities and low carbon and new energies
opportunities and strategy; expected future actions and decisions
of regulators and courts and the timing and impact thereof; and
toll and rate case discussions and filings, including with respect
to the Mainline, and anticipated timing and impact
therefrom.
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: energy transition,
including the drivers and pace thereof; the COVID-19 pandemic and
the duration and impact thereof; global economic growth and trade;
the expected supply of and demand for crude oil, natural gas, NGL,
LNG and renewable energy; prices of crude oil, natural gas, NGL,
LNG and renewable energy; anticipated utilization of our
assets; anticipated cost savings; exchange rates; inflation;
interest rates; availability and price of labour and
construction materials; operational reliability and performance;
customer, regulatory and stakeholder support and approvals;
anticipated construction and in-service dates; weather; announced
and potential acquisition, disposition and other corporate
transactions and projects and the timing and impact thereof;
governmental legislation; litigation; credit ratings; 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;
estimated future dividends; financial strength and flexibility;
debt and equity market conditions; and general economic and
competitive conditions. Assumptions regarding the expected supply
of and demand for crude oil, natural gas, NGL, LNG 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 30 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 3.9 million retail customers in
Ontario and Quebec; and Renewable Power Generation, which
owns approximately 1,766 MW (net) in renewable power generation
capacity 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 EBITDA, 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.
EBITDA represents earnings before interest, tax,
depreciation and amortization.
Adjusted EBITDA represents EBITDA adjusted for unusual,
infrequent or other non-operating factors on both a consolidated
and segmented basis. Management uses EBITDA and 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.
This news release also contains references to Debt to EBITDA, a
non-GAAP ratio, which utilizes adjusted EBITDA as one of its
components. Debt to EBITDA is used as a liquidity measure to
indicate the amount of adjusted earnings to pay debt (as calculated
on a GAAP basis) before covering interest, tax, depreciation and
amortization.
Reconciliations of forward-looking non-GAAP financial measures and
non-GAAP ratios to comparable GAAP measures are not available due
to the challenges and impracticability of estimating certain 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 and non-GAAP ratios is
not available without unreasonable effort.
Our non-GAAP financial measures and non-GAAP
ratios 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
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
2,141
|
2,403
|
|
7,897
|
7,683
|
Gas Transmission and
Midstream
|
946
|
857
|
|
3,671
|
1,087
|
Gas Distribution and
Storage
|
743
|
463
|
|
2,117
|
1,748
|
Renewable Power
Generation
|
146
|
147
|
|
508
|
523
|
Energy
Services
|
66
|
(224)
|
|
(313)
|
(236)
|
Eliminations and
Other
|
165
|
385
|
|
356
|
(113)
|
EBITDA
|
4,207
|
4,031
|
|
14,236
|
10,692
|
Depreciation and
amortization
|
(1,047)
|
(946)
|
|
(3,852)
|
(3,712)
|
Interest
expense
|
(732)
|
(685)
|
|
(2,655)
|
(2,790)
|
Income tax
expense
|
(463)
|
(501)
|
|
(1,415)
|
(774)
|
Earnings attributable
to noncontrolling interests
|
(32)
|
(28)
|
|
(125)
|
(53)
|
Preference share
dividends
|
(93)
|
(96)
|
|
(373)
|
(380)
|
Earnings
attributable to common shareholders
|
1,840
|
1,775
|
|
5,816
|
2,983
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
Liquids
Pipelines
|
2,108
|
1,787
|
|
7,731
|
7,182
|
Gas Transmission and
Midstream
|
922
|
878
|
|
3,850
|
3,895
|
Gas Distribution and
Storage
|
450
|
492
|
|
1,853
|
1,822
|
Renewable Power
Generation
|
140
|
146
|
|
496
|
507
|
Energy
Services
|
(83)
|
(82)
|
|
(360)
|
(119)
|
Eliminations and
Other
|
150
|
(20)
|
|
431
|
(14)
|
Adjusted
EBITDA
|
3,687
|
3,201
|
|
14,001
|
13,273
|
Depreciation and
amortization
|
(1,047)
|
(946)
|
|
(3,852)
|
(3,712)
|
Interest
expense
|
(734)
|
(694)
|
|
(2,675)
|
(2,793)
|
Income tax
expense
|
(406)
|
(304)
|
|
(1,429)
|
(1,437)
|
Earnings attributable
to noncontrolling interests
|
(31)
|
(29)
|
|
(121)
|
(57)
|
Preference share
dividends
|
(93)
|
(96)
|
|
(373)
|
(380)
|
Adjusted
earnings
|
1,376
|
1,132
|
|
5,551
|
4,894
|
Adjusted earnings
per common share
|
0.68
|
0.56
|
|
2.74
|
2.42
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
EBITDA
|
4,207
|
4,031
|
|
14,236
|
10,692
|
Adjusting
items:
|
|
|
|
|
|
Change in unrealized
derivative fair value gain - Foreign exchange
|
(112)
|
(1,057)
|
|
(197)
|
(856)
|
Change in unrealized
derivative fair value (gain)/loss - Commodity prices
|
(155)
|
146
|
|
(53)
|
122
|
Equity investment
impairment
|
—
|
—
|
|
111
|
2,351
|
Equity investment
asset and goodwill impairment
|
—
|
—
|
|
—
|
324
|
Gain on sale of
Noverco
|
(303)
|
—
|
|
(303)
|
—
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
—
|
|
—
|
159
|
Employee severance,
transition and transformation costs
|
41
|
34
|
|
147
|
339
|
Other
|
9
|
47
|
|
60
|
142
|
Total adjusting
items
|
(520)
|
(830)
|
|
(235)
|
2,581
|
Adjusted
EBITDA
|
3,687
|
3,201
|
|
14,001
|
13,273
|
Depreciation and
amortization
|
(1,047)
|
(946)
|
|
(3,852)
|
(3,712)
|
Interest
expense
|
(732)
|
(685)
|
|
(2,655)
|
(2,790)
|
Income tax
expense
|
(463)
|
(501)
|
|
(1,415)
|
(774)
|
Earnings attributable
to noncontrolling interests
|
(32)
|
(28)
|
|
(125)
|
(53)
|
Preference share
dividends
|
(93)
|
(96)
|
|
(373)
|
(380)
|
Adjusting items in
respect of:
|
|
|
|
|
|
Interest
expense
|
(2)
|
(9)
|
|
(20)
|
(3)
|
Income tax
expense
|
57
|
197
|
|
(14)
|
(663)
|
Earnings attributable
to noncontrolling interests
|
1
|
(1)
|
|
4
|
(4)
|
Adjusted
earnings
|
1,376
|
1,132
|
|
5,551
|
4,894
|
Adjusted earnings
per common share
|
0.68
|
0.56
|
|
2.74
|
2.42
|
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED
EBITDA TO SEGMENTED EBITDA
LIQUIDS PIPELINES
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
2,108
|
1,787
|
|
7,731
|
7,182
|
Change in unrealized
derivative fair value gain
|
36
|
635
|
|
120
|
545
|
Property tax
settlement
|
—
|
—
|
|
57
|
—
|
Asset write-down
loss
|
—
|
(17)
|
|
—
|
(30)
|
Other
|
(3)
|
(2)
|
|
(11)
|
(14)
|
Total
adjustments
|
33
|
616
|
|
166
|
501
|
EBITDA
|
2,141
|
2,403
|
|
7,897
|
7,683
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
922
|
878
|
|
3,850
|
3,895
|
Equity investment
impairment
|
—
|
—
|
|
(111)
|
(2,351)
|
Equity investment
asset and goodwill impairment
|
—
|
—
|
|
—
|
(324)
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
—
|
|
—
|
(159)
|
Equity earnings
adjustment - DCP Midstream, LLC
|
60
|
(4)
|
|
(44)
|
22
|
Other
|
(36)
|
(17)
|
|
(24)
|
4
|
Total
adjustments
|
24
|
(21)
|
|
(179)
|
(2,808)
|
EBITDA
|
946
|
857
|
|
3,671
|
1,087
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
450
|
492
|
|
1,853
|
1,822
|
Change in unrealized
derivative fair value gain/(loss)
|
2
|
(12)
|
|
14
|
(10)
|
Gain on sale of
Noverco
|
303
|
—
|
|
303
|
—
|
Employee severance,
transition and transformation costs
|
(11)
|
(16)
|
|
(49)
|
(51)
|
Other
|
(1)
|
(1)
|
|
(4)
|
(13)
|
Total
adjustments
|
293
|
(29)
|
|
264
|
(74)
|
EBITDA
|
743
|
463
|
|
2,117
|
1,748
|
RENEWABLE POWER GENERATION
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
140
|
146
|
|
496
|
507
|
Change in unrealized
derivative fair value gain
|
2
|
1
|
|
8
|
3
|
Realized
hedges
|
13
|
—
|
|
13
|
—
|
Equity earnings
adjustment
|
(8)
|
—
|
|
(8)
|
—
|
Disposition - MATL
transmission assets
|
—
|
—
|
|
—
|
13
|
Other
|
(1)
|
—
|
|
(1)
|
—
|
Total
adjustments
|
6
|
1
|
|
12
|
16
|
EBITDA
|
146
|
147
|
|
508
|
523
|
ENERGY SERVICES
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
(83)
|
(82)
|
|
(360)
|
(119)
|
Change in unrealized
derivative fair value gain/(loss)
|
155
|
(146)
|
|
53
|
(122)
|
Net inventory
adjustment
|
(6)
|
4
|
|
(6)
|
5
|
Total
adjustments
|
149
|
(142)
|
|
47
|
(117)
|
EBITDA
|
66
|
(224)
|
|
(313)
|
(236)
|
ELIMINATIONS AND OTHER
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
150
|
(20)
|
|
431
|
(14)
|
Change in unrealized
derivative fair value gain
|
72
|
433
|
|
55
|
318
|
Change in corporate
guarantee obligation
|
—
|
—
|
|
—
|
(74)
|
Investment write-down
loss
|
—
|
—
|
|
—
|
(43)
|
Employee severance,
transition and transformation costs
|
(27)
|
(17)
|
|
(87)
|
(279)
|
Other
|
(30)
|
(11)
|
|
(43)
|
(21)
|
Total
adjustments
|
15
|
405
|
|
(75)
|
(99)
|
EBITDA
|
165
|
385
|
|
356
|
(113)
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED
BY OPERATING ACTIVITIES TO DCF
|
Three months
ended
December
31,
|
|
Year ended
December
31,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
|
Cash provided by
operating activities
|
2,302
|
2,254
|
|
9,256
|
9,781
|
Adjusted for changes
in operating assets and liabilities1
|
548
|
120
|
|
1,616
|
(93)
|
|
2,850
|
2,374
|
|
10,872
|
9,688
|
Distributions to
noncontrolling interests
|
(64)
|
(68)
|
|
(271)
|
(300)
|
Preference share
dividends
|
(93)
|
(96)
|
|
(367)
|
(380)
|
Maintenance capital
expenditures2
|
(274)
|
(320)
|
|
(686)
|
(915)
|
Significant adjusting
items:
|
|
|
|
|
|
Other receipts of cash
not recognized in revenue3
|
53
|
42
|
|
127
|
292
|
Employee severance,
transition and transformation costs
|
39
|
31
|
|
147
|
335
|
Distributions from
equity investments in excess of cumulative
earnings4
|
121
|
263
|
|
418
|
675
|
Other
items
|
(145)
|
(17)
|
|
(199)
|
45
|
DCF
|
2,487
|
2,209
|
|
10,041
|
9,440
|
DCF per common
share
|
1.23
|
1.09
|
|
4.96
|
4.67
|
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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content:https://www.prnewswire.com/news-releases/enbridge-reports-strong-2021-financial-results-and-advances-strategic-priorities-301480386.html
SOURCE Enbridge Inc.