CALGARY,
AB, Nov. 4, 2022 /PRNewswire/ - Enbridge Inc.
(Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today reported
third quarter 2022 financial results, announced $3.8 billion of newly secured growth projects,
including an expansion of the T-South segment of the B.C. Pipeline,
and reaffirmed its 2022 financial outlook.
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.)
- Third quarter GAAP earnings of $1.3
billion or $0.63 per common
share, compared with GAAP earnings of $0.7
billion or $0.34 per common
share in 2021
- Adjusted earnings* of $1.4
billion or $0.67 per common
share*, compared with $1.2 billion or
$0.59 per common share in 2021
- Adjusted earnings before interest, income taxes and
depreciation and amortization (EBITDA)* of $3.8 billion, compared with $3.3 billion in 2021
- Cash provided by operating activities of $2.1 billion, compared with $2.3 billion in 2021
- Distributable cash flow (DCF)* of $2.5
billion or $1.24 per common
share*, compared with $2.3 billion or
$1.13 per common share in 2021
- 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
- Secured an expansion of B.C. Pipeline's T-South section adding
300 million cubic feet per day (MMcf/d) of capacity with an
estimated capital cost of up to $3.6
billion
- Launched a binding open season for a second expansion of B.C.
Pipeline's T-North section adding approximately 500MMcf/d of
capacity
- Formed strategic partnership with 23 First Nation and Métis
communities selling a 11.57% non-operating interest in seven
Regional Oil Sands pipelines for $1.12
billion
- Advanced U.S. Gulf Coast oil strategy through increased
interest in Gray Oak Pipeline while lowering commodity exposure
with reduced interest in DCP Midstream LP; received US$400 million cash
- Enhanced North American renewable development portfolio with
US$270 million acquisition of Tri
Global Energy (TGE)
- Acquired additional 10% ownership interest in Cactus II
Pipeline in the Permian bringing Enbridge's ownership to 30%
- Sanctioned investment for four additional oil storage tanks at
the Enbridge Ingleside Energy Center (EIEC)
- Secured two new RNG projects in Ontario where Enbridge will invest in gas
upgrading and pipeline connections
- Released Enbridge's Indigenous Reconciliation Action Plan
building on the Company's growing track record of engagement with
Indigenous communities and employees
CEO COMMENT
Al Monaco, President and CEO
commented on the following:
"While global economies and energy markets are experiencing
significant volatility, Enbridge's premium North America franchises, resilient commercial
underpinnings, and our increasing inventory of organic
opportunities put us in a great position to continue to grow into
the future. The fundamentals of our business continue to be
positive; it's clear that the world needs all forms of energy to
meet future demand, especially in the context of the energy
security, reliability, and affordability challenges that everyone
is faced with in today's environment.
"We are pleased with our strong third quarter results and
year-to-date performance, a testament to the Enbridge team across
our four core businesses. We're tracking to plan and expect to
achieve our 2022 EBITDA and DCF per share guidance. Looking
forward, our low-risk business model provides us with excellent
visibility to growing cash flows and our assets are underpinned by
long-term contracts or cost-of-service frameworks that provide
built-in inflation protections.
"The current environment and strong global energy fundamentals
validate our dual-pronged strategy of expanding and modernizing our
conventional business and increasing investment in low-carbon
growth. We've made excellent progress on the priorities that we
laid out at Enbridge Day last December, particularly related to our
natural gas strategy on both sides of the border.
"On the conventional infrastructure side, last quarter we
sanctioned a major expansion of our T-North gas transmission system
in British Columbia and agreed to
acquire a 30% interest in Woodfibre LNG near Squamish. The 535 MMcf/d T-North expansion is
progressing and we expect to close the Woodfibre transaction
shortly.
"Today we're announcing an expansion of our T-South system that
will provide much needed capacity for customers, supported by
binding long-term take-or-pay commitments. The expansion is
critical to meet natural gas demand and ensuring energy reliability
in the region. The project illustrates well the criticality of
existing pipe in the ground in minimizing the environmental
footprint of much needed energy infrastructure. The project will be
developed in consultation and close collaboration with
communities.
"We also announced today an open season for a further expansion
of our T-North system of approximately 500 MMcf/d. This expansion
is needed to support regional production growth, LNG exports, and
increased demand.
"South of the border, we're also excited about our growing
opportunity set in the U.S. Gulf Coast where we already feed five
LNG export facilities and we have line of sight to additional LNG
related and regional gas pipeline expansion projects.
"Continuing with natural gas, we're executing our $3.5 billion secured growth program at our
Ontario gas distribution utility
with $1.1 billion of projects on
track to enter service this year. Last week, we filed a regulatory
application that will establish the next incentive framework,
through 2028. This rate-making model has worked well for customers
and Enbridge, and we expect continued rate base and earnings growth
from this franchise.
"In our Liquids business, we've seen strong recovery of Western
Canadian supply and throughput across our systems, including the
Mainline. We've sanctioned construction of four new oil storage
tanks at our Ingleside export
facility and acquired an additional 10% interest in the Cactus
II Pipeline, both of which bolster our U.S. Gulf Coast oil export
strategies.
"We announced a landmark partnership with Athabasca Indigenous
Investments on seven pipelines in the Athabasca region. We're excited to work
together with our Indigenous partners on operating these assets, as
well as stewarding the surrounding environment. This transaction
demonstrates our commitment to recycling capital at attractive
valuations and provides a framework for potential future Indigenous
partnerships which we believe will be a critical component of
future energy infrastructure development and ownership.
"Discussions with shippers on a new Mainline commercial
agreement continue. We are pursuing two commercial paths - the
potential for another incentive-type tolling arrangement, or a
cost-of-service model. While we anticipated a decision to determine
the optimal path for Enbridge and our customers in the third
quarter, discussions are ongoing, and we expect to continue
negotiations through the end of the year.
"This quarter, we made great progress on our low-carbon
priorities. In renewables, our acquisition of Tri Global Energy
meaningfully accelerates our North American strategy and
opportunity set. The Tri Global team strongly complements our
existing capabilities and the deal immediately adds an attractive
backlog of 3 GW of development projects that could be in service
between 2024 and 2028, with more opportunities in the works. In
Europe, execution of our four
offshore wind projects off the coast of France is progressing, with Saint Nazaire wrapping up and expected to
generate first power later this month.
"We've also made good strides in our RNG business with two newly
secured projects in Ontario
totaling approximately $100 million,
which will supply zero emissions natural gas, delivered under long
term take-or-pay contracts.
"With today's announcements, we've secured $8 billion of new capital projects this year and
our secured capital backlog is now $17
billion, which will be fully funded within our equity
self-funding model. Our secured program is diversified and
underpinned by commercial models that align with our low-risk value
proposition. We will continue to be disciplined allocators of
capital by focusing on a strong balance sheet, investing wisely in
the business, and returning capital to shareholders.
"Finally, as I reflect on my 27 years at Enbridge, the last 11
as CEO, I'm proud of what the Enbridge team has accomplished. We've
consistently grown cash flows and the dividend, delivered on our
strategic priorities, and materially enhanced and diversified our
asset mix by substantially increasing our natural gas footprint and
low-carbon platform and capabilities. I'm particularly pleased with
how we have positioned our business and implemented strategies to
lead the energy transition. Looking forward, we'll continue to
deliver on our purpose to fuel people's quality of life, safely,
reliably, and sustainably.
"I've been honored to lead Enbridge and I'm confident that under
Greg Ebel's leadership, the
management team will continue to grow Enbridge - North America's leading energy infrastructure
company. I wish to sincerely thank our immensely skilled and
dedicated staff, shareholders and other stakeholders, and our Board
of Directors for their support of Enbridge. Since the announcement,
Greg and I have implemented a transition plan to ensure a smooth
changeover and maintain momentum and consistency - and that's well
underway."
FINANCIAL RESULTS SUMMARY
Financial results for the three months ended September 30, 2022 and 2021 are summarized in the
table below:
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts; number of shares in
millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
1,279
|
682
|
|
3,656
|
3,976
|
GAAP Earnings per
common share
|
0.63
|
0.34
|
|
1.80
|
1.97
|
Cash provided by
operating activities
|
2,144
|
2,313
|
|
7,617
|
7,366
|
Adjusted
EBITDA1
|
3,758
|
3,269
|
|
11,620
|
10,314
|
Adjusted
Earnings1
|
1,366
|
1,184
|
|
4,421
|
4,175
|
Adjusted Earnings per
common share1
|
0.67
|
0.59
|
|
2.18
|
2.06
|
Distributable Cash
Flow1
|
2,501
|
2,290
|
|
8,320
|
7,554
|
Weighted average common
shares outstanding
|
2,025
|
2,024
|
|
2,026
|
2,023
|
1 Non-GAAP
financial measures. Please refer to Non-GAAP Reconciliations
Appendices.
|
GAAP earnings attributable to common shareholders for the third
quarter of 2022 increased by $597
million or $0.29 per share
compared with the same period in 2021, primarily due to operating
performance factors discussed in detail below and a $1,076 million gain ($732
million after-tax) recorded on the closing of the joint
venture merger transaction with Phillips 66 (P66). This has been
partially offset by the impact of the mark-to-market value of
derivative financial instruments used to manage foreign exchange
risk. In the third quarter of 2022, GAAP earnings attributable to
common shareholders were negatively impacted by non-cash, net
unrealized derivative fair value losses of $1,334 million ($1,021
million after-tax) compared with unrealized losses of
$436 million ($332 million after-tax) in the third quarter of
2021.
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 Management's Discussion &
Analysis for the third quarter of 2022 filed in conjunction
with the third quarter financial statements for a detailed
discussion of GAAP financial results.
Adjusted EBITDA in the third quarter of 2022 increased by
$489 million compared with the same period in 2021. This was
primarily driven by contributions from new assets placed into
service including the U.S. portion of the Line 3 Replacement
Project and the acquisition of EIEC, as well as the recognition of
higher revenues from updated rates on Texas Eastern as a result of
its recent rate case.
Adjusted earnings in the third quarter of 2022 increased by
$182 million, or $0.08 per
share, primarily due to higher Adjusted EBITDA contributions,
offset by higher financing costs due to lower capitalized interest
with the completion of the U.S. portion of the Line 3 Replacement
Project along with the impacts of rising interest rates on
floating-rate debt, and increased depreciation expense on new
assets placed into service in the fourth quarter of 2021.
DCF for the third quarter of 2022 increased by
$211 million, or $0.11 per
share, primarily due to higher Adjusted EBITDA contributions
partially offset by the timing of maintenance capital spend, higher
cash taxes on higher taxable earnings, and higher financing costs
noted above.
Detailed financial information and analysis can be found below
under Third Quarter 2022 Financial Results.
FINANCIAL OUTLOOK
The Company reaffirms its 2022 financial guidance, which
includes adjusted EBITDA between $15.0 and $15.6
billion and DCF per share between $5.20 to $5.50.
Results for the nine months of 2022 are in line with expectations
and the Company anticipates that its businesses will continue to
experience strong capacity utilization and throughput, and good
operating performance through the balance of the year with normal
course seasonality. Forward financial guidance reflects a provision
in recognition of the uncertainty of future Mainline tolls
associated with the ongoing commercial framework discussions with
shippers.
Strong operational performance is expected to be offset by
challenging market conditions which continue to impact Energy
Services, along with higher financing costs, due to increased
interest rates on unhedged floating rate debt, relative to 2022
financial guidance.
FINANCING UPDATE
During the third quarter of 2022, Enbridge Gas Inc. a
wholly-owned subsidiary of Enbridge, issued $325 million of 10-year senior notes and
$325 million of 30-year senior notes.
Additionally, Enbridge issued US$1.1
billion of 60-year hybrid subordinated notes which will
receive partial equity treatment from rating agencies. These debt
offerings were completed at attractive rates with proceeds used to
pay down existing indebtedness, fund capital projects, and for
other general corporate purposes.
In August of 2022, the Company closed a transaction with P66
which provided Enbridge with approximately US$400 million of net proceeds. In October of
2022, Enbridge completed the sale of a minority non-operating
interest in certain Enbridge-operated pipelines in the Athabasca region of northern Alberta to Athabasca Indigenous Investments
(Aii) for $1.12 billion of cash
proceeds. Both transactions are discussed below. Proceeds from
these transactions create financial flexibility and provide
Enbridge with additional investable capacity to be deployed within
the Company's disciplined capital allocation framework.
The Company expects to continue to fund its secured capital
growth program within its equity self-funding model utilizing
internally generated cash flows, proceeds from recently completed
transactions and future debt financings.
SECURED GROWTH PROJECT EXECUTION UPDATE
During the third quarter, the Company added approximately
$3.8 billion of growth capital to its
secured capital program, including an expansion of the T-South
section of the B.C. Pipeline System (T-South Expansion) with an
estimated capital cost of up to $3.6
billion, a US$60 million
expansion of storage facilities at EIEC, and an approximately
$100 million investment in two RNG
projects in Ontario.
The Company's current secured growth program is now
approximately $17 billion with the
Company expecting to place $4.0
billion into service in 2022 with the East-West Tie-Line and
Gulfstream Phase VI projects already in service.
B.C. Pipeline Expansions
Enbridge continues to advance engineering and design work on the
previously announced 535 MMcf/d expansion of the T-North segment
(Aspen Point) of the B.C. Pipeline
System with an estimated capital cost of $1.2 billion. The Company expects to file its
application with the CER in 2024 with an anticipated in-service
date in 2026.
During the third quarter, Enbridge successfully completed an
oversubscribed binding open season and is proceeding with the 300
MMcf/d T-South Expansion project with a capital cost of up to
$3.6 billion.
The T-South Expansion will consist of compressor unit additions,
pipeline looping and other ancillary station modifications.
Enbridge has now begun the regulatory and permitting process and
plans to file its application with the Canada Energy Regulator
(CER) in 2024. The project is expected to be placed in service in
2028 and will be underpinned by a cost-of-service commercial
model.
Today, Enbridge announced that it is proceeding with a binding
open season for a further expansion of approximately 500 MMcf/d on
the T-North segment of the B.C. Pipeline with an estimated capital
cost of up $1.9 billion to meet
demand for further egress from growing Montney production, LNG exports, and to
accommodate downstream demand. The open season is expected to close
in early 2023.
BUSINESS UPDATES
Advancing U.S. Gulf Coast Oil Strategy
On August 17, 2022, Enbridge
completed a joint venture merger transaction with P66 resulting in
a single joint venture holding both Enbridge's and P66's indirect
ownership interests in Gray Oak Pipeline, LLC (Gray Oak) and DCP Midstream LP (DCP) and an
agreement to realign their respective economic and governance
interests in the underlying business operations.
Enbridge's indirect economic interest in Gray Oak has increased to 58.5% from 22.8% and
Enbridge will assume operatorship of Gray
Oak in the second quarter of 2023. The Company's indirect
economic interest in DCP has been reduced to 13.2% from 28.3%.
Additionally, Enbridge received approximately US$400 million of cash proceeds from the merged
entity.
Gray Oak is a long-haul,
contracted pipeline providing critical, low-cost connectivity from
the Permian basin to Corpus
Christi and Houston
regions.
On November 2, 2022, the
Company announced that it acquired an additional 10% ownership
interest in the 670 thousand barrel per day (kbpd) Cactus II
Pipeline (Cactus II) for US$177
million in cash from Western Midstream. Enbridge's
non-operating ownership in Cactus II is now 30%.
Cactus II is a highly contracted take-or-pay system that
benefits from flexible delivery options across key locations in
Corpus Christi and is integrated
with EIEC. The pipeline has the lowest operating cost of all major
Permian oil pipelines and can offer competitive tariffs to utilize
available capacity to transport intermittent volumes.
Also today, Enbridge has sanctioned a US$60 million oil storage expansion at EIEC which
will add four additional oil storage tanks for approximately two
million barrels of additional storage capacity in 2024.
In combination with EIEC and Enbridge's increased economic
interest in Gray Oak and Cactus II,
the Company is well-positioned to provide transportation solutions
for growing Permian Basin supply to local U.S. Gulf Coast and
global export markets.
Acquisition of Tri Global Energy
On September 29, 2022, Enbridge
announced the acquisition of TGE, a leading US renewable power
project developer, for US$270 million
in cash and assumed debt. TGE has a large development portfolio,
including 3.9 GW of renewable generation projects that TGE has
already sold to operators, which will generate development fees and
DCF per share accretion for Enbridge beginning in 2023. In
addition, 3 GW of wholly-owned, late-stage development projects are
expected to be placed into service between 2024 and 2028, providing
visible cash flow growth, along with a large slate of early-stage
development projects.
Rising targets for State renewable portfolio standards and
growing private sector demand for zero-carbon electricity are set
to drive investment in wind and solar power generation
significantly higher over the next decade. The acquisition of TGE
enhances Enbridge's renewable power platform and further builds on
the Company's inventory of North American growth opportunities.
Athabasca Indigenous Investments Partnership
On October 5th, 2022, Enbridge
closed the previously announced partnership with Aii, a newly
created entity representing 23 First Nation and Métis communities,
whereby Aii acquired an 11.57% non-operating interest in seven
Enbridge-operated Regional Oil Sands pipelines in northern
Alberta for $1.12 billion. The transaction included the
following pipelines: Athabasca;
Wood Buffalo/Athabasca Twin and associated tanks; Norlite Diluent;
Waupisoo; Wood Buffalo; Woodland; and the Woodland extension.
The partnership with Aii strengthens the Company's record of
engagement with Indigenous communities and developing financial
partnerships. It also provides Enbridge an opportunity to realize
value from its existing asset base and supplements the Company's
investable capacity into new value enhancing growth
opportunities.
Texas Eastern Transmission, LP (Texas Eastern) Rate
Case
On September 8, 2022, Texas
Eastern filed an uncontested Stipulation and Agreement with the
Federal Energy Regulatory Commission (FERC) to resolve all issues
from the rate proceeding. The comment and reply period ended
October 11, 2022 and it is now with
the FERC awaiting approval.
Mainline Commercial Framework
The Company is currently advancing two potential commercial
frameworks for the Canadian 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. Either framework is
anticipated to provide attractive risk-adjusted returns and the
range of financial outcomes is not expected to materially impact
Enbridge's financial outlook.
Enbridge has consulted with industry participants regarding the
Canadian Mainline and shared incentive rate making proposals,
supported by detailed cost information, with an industry
representative group comprised of a cross-section of participants,
including producers, integrated producers and refiners.
The Company had previously anticipated deciding whether to file
either a negotiated incentive tolling settlement or a Canadian
Mainline cost-of-service application with the CER in the third
quarter of 2022. However, we expect negotiations with stakeholders
to continue through the end of the year.
Enbridge has already filed and is currently negotiating with
shippers a cost-of-service application with the FERC in the U.S for
the Lakehead System (U.S. portion of the Mainline).
Enbridge is collecting interim tolls, which are subject to
refund, related to its July 1, 2021
Lakehead cost of service filing. On the Canadian Mainline, Enbridge
is also collecting, per the terms of the CTS, interim tolls
consistent with the tolls in effect on June
30, 2021 when the CTS agreement expired and which are also
subject to refund. The Company's financial results and forward 2022
financial guidance reflects a provision in recognition of the
uncertainty of future mainline tolls.
THIRD QUARTER 2022 FINANCIAL RESULTS
GAAP Segment EBITDA and Cash Flow from Operations
|
Three months
ended September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
1,946
|
1,673
|
|
6,093
|
5,756
|
Gas Transmission and
Midstream
|
2,251
|
884
|
|
4,384
|
2,725
|
Gas Distribution and
Storage
|
286
|
282
|
|
1,368
|
1,374
|
Renewable Power
Generation
|
105
|
91
|
|
389
|
362
|
Energy
Services
|
(70)
|
(204)
|
|
(348)
|
(379)
|
Eliminations and
Other
|
(935)
|
(121)
|
|
(1,284)
|
191
|
EBITDA1
|
3,583
|
2,605
|
|
10,602
|
10,029
|
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
1,279
|
682
|
|
3,656
|
3,976
|
|
|
|
|
|
|
Cash provided by
operating activities
|
2,144
|
2,313
|
|
7,617
|
7,366
|
1
Non-GAAP financial measure. Please refer to Non-GAAP
Reconciliations Appendices.
|
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.
Adjusted EBITDA By Segment
Adjusted EBITDA generated from U.S. dollar denominated
businesses was translated to Canadian dollars at a higher average
exchange rate (C$1.31/US$) in the
third quarter of 2022 when compared with the third quarter in 2021
(C$1.26/US$). 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 September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Mainline
System
|
1,271
|
1,083
|
|
3,778
|
3,264
|
Regional Oil Sands
System
|
236
|
225
|
|
694
|
693
|
Gulf Coast and
Mid-Continent System
|
375
|
252
|
|
1,006
|
702
|
Other
Systems1
|
387
|
338
|
|
1,103
|
964
|
Adjusted
EBITDA2
|
2,269
|
1,898
|
|
6,581
|
5,623
|
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
|
Mainline System -
ex-Gretna volume3
|
2,966
|
2,673
|
|
2,917
|
2,680
|
International Joint
Tariff (IJT)4
|
$4.27
|
$4.27
|
|
$4.27
|
$4.27
|
Competitive Tolling
Settlement (CTS) Surcharges4
|
$0.26
|
$0.26
|
|
$0.26
|
$0.26
|
Line 3 Replacement
Surcharge4,5,6
|
$0.85
|
$0.20
|
|
$0.91
|
$0.20
|
1
|
Other consists of Southern Lights Pipeline,
Express-Platte System, Bakken System, and Feeder Pipelines and
Other.
|
2
|
Non-GAAP financial measure. Please refer to Non-GAAP
Reconciliations Appendices.
|
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
|
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
realized for the Canadian portion of the Mainline during the third
quarter of 2022 was C$1.23/US$ (Q3 2021: C$1.26/US$). 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. The
Company is currently recording a provision against the IJT in
recognition of the uncertainty of the final Mainline tolls upon the
completion of the Mainline commercial framework
negotiations.
|
5
|
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.
|
6
|
Effective July 1, 2022, the Line 3 Replacement
Surcharge, exclusive of the receipt terminalling surcharge, will be
determined on a monthly basis by a volume ratchet based on the
9-month rolling average of ex-Gretna volumes. Each 50kbpd volume
ratchet above 2,835 kbpd (up to 3,085 kbpd) applies a US$0.035/bbl
discount whereas each 50kbpd volume ratchet below 2,350 kbpd (down
to 2,050 kbpd) adds a US$0.04/bbl charge. Refer to Enbridge's
Application for a Toll Order respecting the implementation of the
Line 3 Replacement Surcharges and CER Order TO-003-2021 for further
details.
|
Liquids Pipelines adjusted EBITDA increased $371 million
compared with the third quarter of 2021, primarily related to:
- higher Mainline System throughput enabled by incremental Line 3
capacity placed into service October 1,
2021, higher tolls due to the implementation of the full
Line 3 Replacement surcharge compared with the smaller surcharge on
the Canadian portion of the project in effect prior to October 2021, partially offset by the recognition
of a provision against the interim Mainline IJT for barrels shipped
in 2022 and higher power costs as a result of increased volumes and
increased power prices;
- higher contributions from the Gulf Coast and Mid-Continent
System due primarily to the acquisition of EIEC and related assets
in the fourth quarter of 2021, higher volumes on the Flanagan South
Pipeline, and an increased economic interest in the Gray Oak
Pipeline as a result of the joint venture merger transaction with
P66; partially offset by lower contributions from the Seaway Crude
Pipeline System and Cushing
storage assets as a result of lower demand; receipts of cash not
recognized in revenue related to unshipped contracted volumes at
EIEC that have a contractual right to ship at a later date are
recognized in DCF;
- higher contributions from the Bakken System due to higher
volumes; and
- the positive effect of translating U.S. dollar denominated
EBITDA at a higher Canadian to U.S. dollar average exchange rate,
which is partially offset 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
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
U.S. Gas
Transmission
|
853
|
732
|
|
2,372
|
2,235
|
Canadian Gas
Transmission
|
157
|
130
|
|
485
|
412
|
U.S.
Midstream
|
114
|
85
|
|
334
|
169
|
Other
|
34
|
39
|
|
109
|
112
|
Adjusted
EBITDA1
|
1,158
|
986
|
|
3,300
|
2,928
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
- Gas Transmission and Midstream adjusted EBITDA increased
$172 million compared with the third
quarter of 2021, primarily related to:
- higher U.S. Gas Transmission contributions from the Cameron
Extension, Middlesex Extension and the Appalachia to Market
projects placed into service in the fourth quarter of 2021 and the
recognition of revenues attributable to the Texas Eastern rate case
resulting from an uncontested Stipulation & Agreement;
- higher Canadian Gas Transmission contributions from the T-South
Expansion and Spruce Ridge projects placed fully into service in
the fourth quarter of 2021 and higher contributions from Enbridge's
investment in the Alliance Pipeline due to higher AECO-Chicago
basis differential;
- higher U.S. midstream contributions resulting from higher
commodity prices at Enbridge's DCP and Aux
Sable joint ventures, partially offset by reduced economic
interest in DCP as a result of the joint venture merger transaction
with P66; and
- the positive effect of translating U.S. dollar denominated
EBITDA at a higher Canadian to U.S. dollar average exchange rate
within U.S. Gas Transmission and U.S. Midstream, which is partially
offset in the Eliminations and Other segment as part of the
Company's enterprise-wide financial risk management program.
Gas Distribution And Storage
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Enbridge Gas Inc.
(EGI)
|
285
|
294
|
|
1,358
|
1,317
|
Other
|
8
|
2
|
|
31
|
86
|
Adjusted
EBITDA1
|
293
|
296
|
|
1,389
|
1,403
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
EGI
|
|
|
|
|
|
Volumes
(billions of cubic feet)
|
349
|
302
|
|
1,556
|
1,383
|
Number of active
customers2 (millions)
|
|
|
|
3.8
|
3.8
|
Heating degree
days3
|
|
|
|
|
|
Actual
|
79
|
61
|
|
2,602
|
2,350
|
Forecast based on
normal weather4
|
91
|
94
|
|
2,535
|
2,538
|
1
|
Non-GAAP financial measure. Please refer to Non-GAAP
Reconciliations Appendices.
|
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 & Storage adjusted EBITDA remained
consistent compared with the third quarter of 2021, resulting from
higher distribution charges at EGI from increases in rates and
customer base that were offset by higher maintenance and integrity
costs.
When compared with the normal weather forecast embedded in
rates, the weather in the third quarter of 2022 and 2021 had no
impact on EBITDA.
Renewable Power Generation
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA1
|
113
|
89
|
|
400
|
356
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
Renewable Power Generation adjusted EBITDA increased
$24 million compared with the third quarter of 2021 primarily
related to higher energy pricing at European offshore wind
facilities.
Energy Services
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA1
|
(132)
|
(116)
|
|
(302)
|
(277)
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
Energy Services adjusted EBITDA decreased $16 million
compared with the third quarter of 2021. The decrease is the result
of a more pronounced market structure backwardation than in the
same period of 2021 limiting storage opportunities and significant
compression of location and quality differentials in certain
markets.
Eliminations and Other
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Operating and
administrative recoveries
|
22
|
66
|
|
107
|
153
|
Realized foreign
exchange hedge settlement gains
|
35
|
50
|
|
145
|
128
|
Adjusted
EBITDA1
|
57
|
116
|
|
252
|
281
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
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 decreased
$59 million compared with the third quarter of 2021 due
to:
- the timing of recovery of operating and administrative costs
from the business segments; and
- lower realized foreign exchange gains on hedge
settlements.
Distributable Cash Flow
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars; number of shares in millions)
|
|
|
|
|
|
Liquids
Pipelines
|
2,269
|
1,898
|
|
6,581
|
5,623
|
Gas Transmission and
Midstream
|
1,158
|
986
|
|
3,300
|
2,928
|
Gas Distribution and
Storage
|
293
|
296
|
|
1,389
|
1,403
|
Renewable Power
Generation
|
113
|
89
|
|
400
|
356
|
Energy
Services
|
(132)
|
(116)
|
|
(302)
|
(277)
|
Eliminations and
Other
|
57
|
116
|
|
252
|
281
|
Adjusted
EBITDA1,3
|
3,758
|
3,269
|
|
11,620
|
10,314
|
Maintenance
capital
|
(215)
|
(142)
|
|
(466)
|
(412)
|
Interest
expense1
|
(837)
|
(665)
|
|
(2,357)
|
(1,977)
|
Current income
tax1
|
(129)
|
(89)
|
|
(391)
|
(210)
|
Distributions to
noncontrolling interests1
|
(60)
|
(66)
|
|
(184)
|
(207)
|
Cash distributions in
excess of equity earnings1
|
9
|
52
|
|
153
|
248
|
Preference share
dividends
|
(81)
|
(92)
|
|
(254)
|
(274)
|
Other receipts of cash
not recognized in revenue2
|
48
|
23
|
|
173
|
74
|
Other non-cash
adjustments
|
8
|
—
|
|
26
|
(2)
|
DCF3
|
2,501
|
2,290
|
|
8,320
|
7,554
|
Weighted average
common shares outstanding
|
2,025
|
2,024
|
|
2,026
|
2,023
|
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.
|
Third quarter 2022 DCF increased $211 million compared
with the same period of 2021 primarily due to operational factors
discussed above contributing to higher Adjusted EBITDA, as well
as:
- higher receipts of cash not recognized in revenue related to
unshipped contracted volumes at EIEC that have a contractual right
to ship at a later date; offset by
- the timing of maintenance capital spend;
- higher interest expense due to higher interest rates impacting
floating-rate debt, 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 higher debt balances associated
with advancing the Company's secured growth program in 2021;
- higher current income tax due to higher taxable earnings and an
increase in U.S. minimum taxes; and
- lower cash distributions in excess of equity earnings as a
result of the joint venture merger transaction with P66 which
lowered Enbridge's economic interest in DCP.
Adjusted Earnings
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts)
|
|
|
|
|
|
Adjusted
EBITDA1,2
|
3,758
|
3,269
|
|
11,620
|
10,314
|
Depreciation and
amortization
|
(1,104)
|
(944)
|
|
(3,272)
|
(2,805)
|
Interest
expense2
|
(826)
|
(654)
|
|
(2,324)
|
(1,941)
|
Income
taxes2
|
(360)
|
(355)
|
|
(1,274)
|
(1,023)
|
Noncontrolling
interests2
|
(20)
|
(34)
|
|
(58)
|
(90)
|
Preference share
dividends
|
(82)
|
(98)
|
|
(271)
|
(280)
|
Adjusted
earnings1
|
1,366
|
1,184
|
|
4,421
|
4,175
|
Adjusted earnings
per common share1
|
0.67
|
0.59
|
|
2.18
|
2.06
|
1
Non-GAAP financial measures. Please refer to Non-GAAP
Reconciliations Appendices.
|
2
Presented net of adjusting items.
|
Adjusted earnings increased $182 million and adjusted
earnings per share was consistent when compared with the third
quarter in 2021 primarily due to operational factors discussed
above contributing to higher Adjusted EBITDA, offset by:
- 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 EIEC acquired in October, 2021; and
- higher interest expense due to higher interest rates impacting
floating-rate debt, 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 higher debt balances associated
with advancing the Company's secured growth program in 2021.
CONFERENCE CALL
Enbridge will host a conference call and webcast on
November 4, 2022 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise wide business
update and review 2022 third quarter results. Analysts, members of
the media and other interested parties can access the call toll
free at 1-800-606-3040. The call will be audio webcast live at
https://events.q4inc.com/attendee/326327152. 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
available 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-free1-(800)-770-2030 (conference
ID: 9581867).
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 November 2, 2022, our Board of
Directors declared the following quarterly dividends. All dividends
are payable on December 1, 2022 to
shareholders of record on November 15,
2022.
|
Dividend per
share
|
Common
Shares1
|
$0.86000
|
Preference Shares,
Series A
|
$0.34375
|
Preference Shares,
Series B2
|
$0.32513
|
Preference Shares,
Series D
|
$0.27875
|
Preference Shares,
Series F
|
$0.29306
|
Preference Shares,
Series H
|
$0.27350
|
Preference Shares,
Series L3
|
US$0.36612
|
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 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 Preference Shares, Series B was increased to
$0.32513 from $0.21340 on June 1, 2022 due to reset of the annual
dividend on June 1, 2022. On June 1, 2022, all outstanding
Preference Shares, Series C were converted to Preference Shares,
Series B.
|
3
|
The quarterly dividend
per share paid on Preference Shares, Series L was increased to
US$0.36612 from US$0.30993 on September 1, 2022 due to reset of the
annual dividend on September 1, 2022.
|
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, and plans; 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 shareholder returns and asset returns; expected
performance of the Company's businesses, including customer growth
and organic growth opportunities; financial strength, capacity and
flexibility; financing costs1; 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;
impact of weather and seasonality; investment capacity; expected
future growth and expansion opportunities, including secured growth
program, development opportunities and low carbon and new energies
opportunities and strategy, including with respect to the Woodfibre
LNG investment, T-North and T-South expansions and open seasons and
EIEC; expected acquisitions, dispositions and other transactions,
and the timing and benefits thereof; expected future actions and
decisions of regulators and courts and the timing and impact
thereof, including with respect to Aii, Gray Oak Pipeline, Cactus
II Pipeline and TGE; 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 Texas Eastern, 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; 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; the COVID-19 pandemic and the duration and impact
thereof; availability and price of labour and construction
materials; the stability of our supply chain; 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.
1 As at
September 30, 2022, approximately 10% of Enbridge's debt is exposed
to floating interest rates as well as 2023 debt maturities that
require re-financing which, given rising interest rates, has had
and could continue to have an impact on our financing
costs.
|
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; the timing and closing of
acquisitions, dispositions and other transactions and the
realization of anticipated benefits therefrom; 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, inflation 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.
At Enbridge, we safely connect millions of people to the
energy they rely on every day, fueling quality of life through our
North American natural gas, oil or renewable power networks and our
growing European offshore wind portfolio. We're investing in modern
energy delivery infrastructure to sustain access to secure,
affordable energy and building on two decades of experience in
renewable energy to advance new technologies including wind and
solar power, hydrogen, renewable natural gas and carbon capture and
storage. We're committed to reducing the carbon footprint of the
energy we deliver, and to achieving net zero greenhouse gas
emissions by 2050. Headquartered in Calgary, Alberta, Enbridge's common shares
trade under the symbol ENB on the Toronto (TSX) and New York (NYSE) stock exchanges. To learn
more, visit us at 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
|
|
Rebecca
Morley
|
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.
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 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
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
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
1,946
|
1,673
|
|
6,093
|
5,756
|
Gas Transmission and
Midstream
|
2,251
|
884
|
|
4,384
|
2,725
|
Gas Distribution and
Storage
|
286
|
282
|
|
1,368
|
1,374
|
Renewable Power
Generation
|
105
|
91
|
|
389
|
362
|
Energy
Services
|
(70)
|
(204)
|
|
(348)
|
(379)
|
Eliminations and
Other
|
(935)
|
(121)
|
|
(1,284)
|
191
|
EBITDA
|
3,583
|
2,605
|
|
10,602
|
10,029
|
Depreciation and
amortization
|
(1,076)
|
(944)
|
|
(3,195)
|
(2,805)
|
Interest
expense
|
(806)
|
(648)
|
|
(2,316)
|
(1,923)
|
Income tax
expense
|
(318)
|
(199)
|
|
(1,044)
|
(952)
|
Earnings attributable
to noncontrolling interests
|
(21)
|
(34)
|
|
(61)
|
(93)
|
Preference share
dividends
|
(83)
|
(98)
|
|
(330)
|
(280)
|
Earnings
attributable to common shareholders
|
1,279
|
682
|
|
3,656
|
3,976
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts)
|
|
|
|
|
|
Liquids
Pipelines
|
2,269
|
1,898
|
|
6,581
|
5,623
|
Gas Transmission and
Midstream
|
1,158
|
986
|
|
3,300
|
2,928
|
Gas Distribution and
Storage
|
293
|
296
|
|
1,389
|
1,403
|
Renewable Power
Generation
|
113
|
89
|
|
400
|
356
|
Energy
Services
|
(132)
|
(116)
|
|
(302)
|
(277)
|
Eliminations and
Other
|
57
|
116
|
|
252
|
281
|
Adjusted
EBITDA
|
3,758
|
3,269
|
|
11,620
|
10,314
|
Depreciation and
amortization
|
(1,104)
|
(944)
|
|
(3,272)
|
(2,805)
|
Interest
expense
|
(826)
|
(654)
|
|
(2,324)
|
(1,941)
|
Income tax
expense
|
(360)
|
(355)
|
|
(1,274)
|
(1,023)
|
Earnings attributable
to noncontrolling interests
|
(20)
|
(34)
|
|
(58)
|
(90)
|
Preference share
dividends
|
(82)
|
(98)
|
|
(271)
|
(280)
|
Adjusted
earnings
|
1,366
|
1,184
|
|
4,421
|
4,175
|
Adjusted earnings
per common share
|
0.67
|
0.59
|
|
2.18
|
2.06
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts)
|
|
|
|
|
|
EBITDA
|
3,583
|
2,605
|
|
10,602
|
10,029
|
Adjusting
items:
|
|
|
|
|
|
Change in unrealized
derivative fair value (gain)/loss - Foreign exchange
|
1,334
|
436
|
|
1,751
|
(91)
|
Change in unrealized
derivative fair value (gain)/loss - Commodity prices
|
(58)
|
88
|
|
(22)
|
102
|
Gain on joint venture
merger transaction
|
(1,076)
|
—
|
|
(1,076)
|
—
|
Equity investment
impairment
|
—
|
111
|
|
—
|
111
|
Equity earnings
adjustment - DCP Midstream, LLC
|
—
|
38
|
|
26
|
104
|
Net inventory
adjustment
|
(4)
|
—
|
|
68
|
—
|
Enterprise insurance
strategy restructuring
|
(85)
|
—
|
|
15
|
—
|
Assets
impairment
|
15
|
—
|
|
106
|
—
|
Other
|
49
|
(9)
|
|
150
|
59
|
Total adjusting
items
|
175
|
664
|
|
1,018
|
285
|
Adjusted
EBITDA
|
3,758
|
3,269
|
|
11,620
|
10,314
|
Depreciation and
amortization
|
(1,076)
|
(944)
|
|
(3,195)
|
(2,805)
|
Interest
expense
|
(806)
|
(648)
|
|
(2,316)
|
(1,923)
|
Income tax
expense
|
(318)
|
(199)
|
|
(1,044)
|
(952)
|
Earnings attributable
to noncontrolling interests
|
(21)
|
(34)
|
|
(61)
|
(93)
|
Preference share
dividends
|
(83)
|
(98)
|
|
(330)
|
(280)
|
Adjusting items in
respect of:
|
|
|
|
|
|
Depreciation and
amortization
|
(28)
|
—
|
|
(77)
|
—
|
Interest
expense
|
(20)
|
(6)
|
|
(8)
|
(18)
|
Income tax
expense
|
(42)
|
(156)
|
|
(230)
|
(71)
|
Earnings attributable
to noncontrolling interests
|
1
|
—
|
|
3
|
3
|
Preference share
dividends
|
1
|
—
|
|
59
|
—
|
Adjusted
earnings
|
1,366
|
1,184
|
|
4,421
|
4,175
|
Adjusted earnings
per common share
|
0.67
|
0.59
|
|
2.18
|
2.06
|
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED EBITDA TO
SEGMENTED EBITDA
LIQUIDS PIPELINES
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
2,269
|
1,898
|
|
6,581
|
5,623
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
(290)
|
(222)
|
|
(364)
|
84
|
Assets
impairment
|
(8)
|
—
|
|
(55)
|
—
|
Property tax
settlement
|
—
|
—
|
|
—
|
57
|
Other
|
(25)
|
(3)
|
|
(69)
|
(8)
|
Total
adjustments
|
(323)
|
(225)
|
|
(488)
|
133
|
EBITDA
|
1,946
|
1,673
|
|
6,093
|
5,756
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
1,158
|
986
|
|
3,300
|
2,928
|
Equity investment
impairment
|
—
|
(111)
|
|
—
|
(111)
|
Gain from joint venture
merger transaction
|
1,076
|
—
|
|
1,076
|
—
|
Equity earnings
adjustment - DCP Midstream, LLC
|
—
|
(38)
|
|
(26)
|
(104)
|
Other
|
17
|
47
|
|
34
|
12
|
Total
adjustments
|
1,093
|
(102)
|
|
1,084
|
(203)
|
EBITDA
|
2,251
|
884
|
|
4,384
|
2,725
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
293
|
296
|
|
1,389
|
1,403
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
—
|
(2)
|
|
—
|
12
|
Other
|
(7)
|
(12)
|
|
(21)
|
(41)
|
Total
adjustments
|
(7)
|
(14)
|
|
(21)
|
(29)
|
EBITDA
|
286
|
282
|
|
1,368
|
1,374
|
RENEWABLE POWER GENERATION
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
113
|
89
|
|
400
|
356
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
2
|
2
|
|
6
|
12
|
Other
|
(10)
|
—
|
|
(17)
|
(6)
|
Total
adjustments
|
(8)
|
2
|
|
(11)
|
6
|
EBITDA
|
105
|
91
|
|
389
|
362
|
ENERGY SERVICES
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
(132)
|
(116)
|
|
(302)
|
(277)
|
Change in unrealized
derivative fair value gain/(loss) - Commodity prices
|
58
|
(88)
|
|
22
|
(102)
|
Net inventory
adjustment
|
4
|
—
|
|
(68)
|
—
|
Total
adjustments
|
62
|
(88)
|
|
(46)
|
(102)
|
EBITDA
|
(70)
|
(204)
|
|
(348)
|
(379)
|
ELIMINATIONS AND OTHER
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
57
|
116
|
|
252
|
281
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
(1,046)
|
(214)
|
|
(1,393)
|
(17)
|
Enterprise insurance
strategy restructuring
|
85
|
—
|
|
(15)
|
—
|
Impairment of lease
assets
|
(7)
|
—
|
|
(51)
|
—
|
Other
|
(24)
|
(23)
|
|
(77)
|
(73)
|
Total
adjustments
|
(992)
|
(237)
|
|
(1,536)
|
(90)
|
EBITDA
|
(935)
|
(121)
|
|
(1,284)
|
191
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED
BY OPERATING ACTIVITIES TO DCF
|
Three months
ended
September
30,
|
|
Nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Cash provided by
operating activities
|
2,144
|
2,313
|
|
7,617
|
7,366
|
Adjusted for changes in
operating assets and liabilities1
|
464
|
293
|
|
602
|
656
|
|
2,608
|
2,606
|
|
8,219
|
8,022
|
Distributions to
noncontrolling interests2
|
(60)
|
(66)
|
|
(184)
|
(207)
|
Preference share
dividends
|
(81)
|
(92)
|
|
(254)
|
(274)
|
Maintenance capital
expenditures3
|
(215)
|
(142)
|
|
(466)
|
(412)
|
Significant adjusting
items:
|
|
|
|
|
|
Other receipts of cash
not recognized in revenue4
|
48
|
23
|
|
173
|
74
|
Distributions from
equity investments in excess of cumulative
earnings2
|
148
|
52
|
|
474
|
297
|
Enterprise insurance
strategy restructuring expenses
|
—
|
—
|
|
100
|
—
|
Other items
|
53
|
(91)
|
|
258
|
54
|
DCF
|
2,501
|
2,290
|
|
8,320
|
7,554
|
1
|
Changes in operating
assets and liabilities, net of recoveries.
|
2
|
Presented net of
adjusting items.
|
3
|
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.
|
4
|
Consists of cash
received, net of revenue recognized, for contracts under make-up
rights and similar deferred revenue arrangements.
|
|
|
View original
content:https://www.prnewswire.com/news-releases/enbridge-reports-strong-third-quarter-2022-financial-results-and-secures-bc-pipeline-expansion-301668520.html
SOURCE Enbridge Inc.