CALGARY, AB, Nov. 5, 2021 /PRNewswire/ - Enbridge Inc.
(Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today reported
third quarter 2021 financial results, reaffirmed its 2021 financial
outlook, and provided a quarterly business update.
Highlights
(all financial figures are unaudited and
in Canadian dollars unless otherwise noted)
- Third quarter GAAP earnings of $682
million or $0.34 per common
share, compared with GAAP earnings of $990
million or $0.49 per common
share in 2020
- Adjusted earnings of $1.2 billion
or $0.59 per common share, compared
with $1.0 billion or $0.48 per common share in 2020
- Adjusted earnings before interest, income taxes and
depreciation and amortization (EBITDA) of $3.3 billion, compared with $3.0 billion in 2020
- Cash Provided by Operating Activities of $2.2 billion, compared with $2.3 billion in 2020
- Distributable Cash Flow (DCF) of $2.3
billion or $1.13 per common
share, compared with $2.1 billion or
$1.03 per common share in 2020
- Reaffirmed 2021 full year guidance range for EBITDA of
$13.9 billion to $14.3 billion and DCF per share of $4.70 to $5.00
- Completed and placed into service the U.S. Line 3 Replacement
Project ensuring safe, reliable supply of Western Canadian
crude
- Placed into service the expansion of Southern Access (Line 61)
increasing capacity to 1.2 million barrels per day
- Acquired North America's
premier crude export facility located near Corpus Christi, Texas, significantly advancing
Enbridge's U.S. Gulf Coast export strategy
- Placed the final phases of the T-South Expansion and Spruce
Ridge projects into operation, facilitating the essential supply of
natural gas to meet West Coast demand
- Completed the Appalachia to Market and Middlesex Extension
projects, which expand the U.S. Northeast's access to reliable
natural gas supply
- Established a dedicated New Energies Team to advance low-carbon
energy infrastructure opportunities across Enbridge's four energy
delivery platforms
- Commissioned industrial scale green hydrogen blending facility
to inject hydrogen into the natural gas stream for Enbridge Gas
utility customers
- Construction of three French offshore wind projects,
representing approximately 1.4 GW of gross renewable power
generation, progressing on schedule
- Announced a partnership with Vanguard Renewables to build up to
eight renewable natural gas (RNG) facilities in the U.S. along
Enbridge's gas transmission systems
- Entered into a memorandum of understanding (MoU) with Shell to
develop North American low-carbon energy solutions, focused on
hydrogen, renewables, and carbon capture
- Completed 2021 financing requirements through issuances of
$4.8 billion in the U.S. and Canadian
debt markets, including $1.1 billion
Canadian sustainability-linked bonds
CEO COMMENT
Al Monaco, President and CEO
commented on the following:
"The return of energy demand growth to its pre-pandemic trend,
coupled with underinvestment in conventional energy and the recent
rise in global energy prices, underscores the criticality of
affordable, reliable and secure energy supply for consumers and our
social well-being. We believe sustainable development of
North America's significant energy
resources is essential to meeting both global energy needs and
societal emissions reduction objectives. The energy we deliver is
critical to fueling quality of life in North America and globally and this will
continue for decades to come.
"At Enbridge, we're strengthening our connections to global
markets and transitioning our energy mix towards lower-carbon
solutions. Over the last two decades, we've significantly expanded
our natural gas business and connections to LNG markets, extended
our crude oil platform to the U.S. Gulf Coast and waterborne
exports, and built a world-class renewables business. Today, we're
leveraging these platforms to make disciplined investments in
hydrogen, RNG and carbon capture opportunities, and to extend
long-term growth and further strengthen our resilience.
"Our objective is to be a differentiated energy infrastructure
service provider for our customers by leading our industry on
environmental, social and governance performance. In September, we
held our inaugural ESG Forum, outlining how we're committed to
safely delivering energy, lowering our emissions, and diversifying
our workforce. Since 2018, we've reduced our Scope 1 emissions by
32% and Scope 2 by 14%, along with continued improvements in
diversity at all levels of our organization. And, to ensure
we continue to deliver on our commitments, we've tied our goals to
enterprise-wide compensation and over $3
billion in sustainability-linked financings so far.
"In the third quarter, the business delivered strong operational
performance and financial results across our four franchises. Our
low-risk business model continues to generate predictable results
and execution on our strategic priorities is driving solid cash
flow growth and per share results.
"In Liquids Pipelines, we completed the Minnesota leg of the Line 3 Replacement
Project, allowing us to commence operations of this
state-of-the-art pipeline providing a safe and reliable supply of
energy. We're very proud of the relationship of trust we've built
through this project with communities and Indigenous nations and
groups along the right-of-way in both Canada and the
United States.
"During the quarter, we acquired the Ingleside Energy Center,
North America's premier crude oil
export terminal. With the lowest basin-to-water cost structure and
proximity to world-class Permian reserves, this terminal will be
critical to North America
capitalizing on its energy advantage. The transaction is expected
to be immediately accretive to cash flow per share while
maintaining our strong balance sheet and financial
flexibility.
"This investment is a prime example of how we're focused on
being a differentiated service provider to our customers. By
committing to invest in co-located solar power, we will achieve
net-zero scope 1 and 2 emissions at the facility and contribute to
scope 3 emission reductions.
"In Gas Transmission, we've continued to advance the execution
of our North American-wide secured capital program. Our multi-year
modernization program is on track, and we've placed the Appalachia
to Market and Middlesex Extension projects into service, which will
provide much needed access to natural gas supplies in New England
for the upcoming heating season. In B.C., our expansions are
progressing well, with the $1 billion
T-South project and the $0.5 billion
Spruce Ridge project commencing operations.
"The Utility is on track to add another 45 thousand customers in
2021 and advancing community expansion programs across the system.
This business also continues to provide us with a unique
opportunity to develop low-carbon solutions within our low-risk
commercial model. We've now commissioned our first hydrogen
blending pilot facility serving the Utility's customers and
commenced construction of our seventh RNG project. These projects
demonstrate the importance of our conventional assets to the
transition to a lower-carbon economy.
"Our renewables business is making good progress on the
construction of the three offshore wind projects off the coast of
France, which will generate enough
renewable energy to power over 1 million homes. And, in
North America, four more solar
self-power projects are in construction along our liquids
pipelines, further lowering our emissions.
"In September, we announced that we're building on our track
record of success in renewables and low-carbon investments with the
formation of our New Energies Team. This team will be dedicated to
advancing our low-carbon strategies and differentiated energy
delivery capabilities across each of our businesses. And, we're
partnering with leading low-carbon energy companies to
combine their technologies with our existing energy infrastructure
capabilities.
"We're on track to deliver more than $10
billion of capital into service in 2021. This capital, along
with embedded growth in each of our businesses, will drive
significant free cash flow growth and approximately $5-6 billion of annual investable capacity to
redeploy into our business. Each of our blue chip platforms has a
strong opportunity set of conventional and low-carbon organic
growth, and we will continue to prioritize disciplined capital
allocation where new growth projects will compete against capital
allocation opportunities.
"At our upcoming annual investor day on December 7th, we'll outline our 3-year
plan priorities, including 2022 financial guidance. And, our
business leaders will walk through how each of our businesses are
positioned to benefit from conventional and low-carbon organic
growth, along with how our disciplined approach to investment will
continue to maximize shareholder value.
"2021 continues to be a strong catalyst year for Enbridge. We've
reaffirmed our full year 2021 EBITDA and DCF per share guidance and
executed on our strategic priorities. We're excited about how we're
positioned for energy transition and the opportunities that lay
ahead in 2022 and beyond."
FINANCIAL RESULTS SUMMARY
Financial results for the three and nine months ended
September 30, 2021 and 2020 are
summarized in the table below:
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share amounts;
number of shares in millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
682
|
990
|
|
3,976
|
1,208
|
GAAP Earnings per
common share
|
0.34
|
0.49
|
|
1.97
|
0.60
|
Cash provided by
operating activities
|
2,163
|
2,302
|
|
6,954
|
7,527
|
Adjusted
EBITDA1
|
3,269
|
2,997
|
|
10,314
|
10,072
|
Adjusted
Earnings1
|
1,184
|
961
|
|
4,175
|
3,762
|
Adjusted Earnings per
common share1
|
0.59
|
0.48
|
|
2.06
|
1.86
|
Distributable Cash
Flow1
|
2,290
|
2,088
|
|
7,554
|
7,231
|
Weighted average
common shares outstanding
|
2,024
|
2,021
|
|
2,023
|
2,020
|
1
|
Non-GAAP financial
measures. Schedules reconciling adjusted EBITDA, adjusted earnings,
adjusted earnings per common share and distributable cash flow are
available as Appendices to this news release.
|
GAAP earnings attributable to common shareholders for the third
quarter of 2021 decreased by $308
million or $0.15 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 third quarter Management Discussion &
Analysis filed as part of the third quarter financial
statements for a detailed discussion of GAAP financial results.
Adjusted earnings in the third quarter of 2021 increased by
$223 million, or $0.11 per share and was driven largely by the net
impact of the operating factors discussed below, along with lower
interest rates on short-term borrowings and the positive impact of
a weaker USD on the translation of USD denominated interest
expense.
Adjusted EBITDA in the third quarter of 2021 increased
by $272 million compared with the same period in 2020. This is
primarily driven by rebounding demand for energy as economies
continue to recover from the impacts of the COVID-19 pandemic
offset by the impacts of a weaker USD which negatively impacts the
translation of the Company's USD denominated EBITDA. The average
CAD to USD exchange rate in the third quarter fell approximately 5%
in 2021 to $1.26, compared with
$1.33 in the third 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.
DCF for the third quarter was $2.3
billion, an increase of $202
million over the third quarter of 2020, driven primarily by
the impact of the operating factors discussed above, along with
lower utility maintenance capital expenditures in 2021 and lower
interest expense as discussed above.
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 expects to maintain a strong financial position for
the remainder of 2021, consistent with its target Debt/EBITDA range
of 4.5x to 5.0x. Further strengthening is anticipated in 2022 as
annualized EBITDA contributions from the approximately $14 billion of capital projects and asset
acquisitions executed in 2021 are realized, along with the closing
of the $1.1 billion sale of Noverco
expected in late 2021 or early 2022.
As of today, Enbridge has completed its financing plan issuing
approximately $4.8 billion at
attractive rates in the U.S. and Canadian debt markets since
July 1, 2021. These issuances
complete the Company's 2021 financing plan requirements, which
includes funding for the Moda Midstream Operating LLC acquisition
consisting of the Ingleside Energy Center and related pipeline and
logistics assets, which closed subsequent to the
quarter.
Included in the third quarter financings was a $1.1 billion Canadian market issuance of 12-year
Sustainability-Linked senior notes which links directly to the
Company's ESG goals. Together with the US$1.0 billion of senior notes and $1.0 billion credit facility issued earlier in
2021, this brings Enbridge's total sustainability-linked financings
to approximately $3.3 billion
demonstrating the Company's ongoing commitment to ESG
leadership.
Proceeds from these offerings were primarily used to repay
existing indebtedness, partially fund capital projects, and for
other general corporate purposes.
FINANCIAL OUTLOOK
The Company expects full year 2021 EBITDA and DCF to remain
within its previously provided guidance range of $13.9 billion to $14.3
billion and $4.70 to
$5.00 per share, respectively.
EBITDA across each of the Company's four businesses benefited
from strong operating performance in the first nine months of 2021,
which is expected to continue in the fourth quarter. In addition,
the completion of the Line 3 Replacement Project, the T-South
Reliability and Expansion Program, the Spruce Ridge Project, the
Moda acquisition discussed in detail below, and several smaller
capital projects within the third quarter, are expected to provide
incremental EBITDA contributions in the fourth quarter and in 2022.
However, these positive operating factors have been, and are
expected to continue to be, impacted by a weaker USD currency (net
of foreign exchange hedges), warmer than normal weather in
Ontario impacting Gas Distribution
and Storage and negative contributions from Energy Services, which
remains challenged by narrow location and quality differentials, as
well as backwardation in commodity prices.
DCF is expected to benefit from lower overall financing costs
resulting from favorable short-term interest rates and USD
denominated interest expense which benefits from a weaker USD
currency, lower cash taxes primarily due to increased utilization
of existing tax pools to offset U.S. taxable income, and slightly
lower than planned Gas Distribution and Storage maintenance
spending.
SECURED GROWTH PROJECT EXECUTION UPDATE
The Company's approximately $17
billion secured growth capital program is well-diversified
across its four businesses and contractually underpinned by
commercial frameworks consistent with its low-risk pipeline-utility
model. Capital expenditures to date across the secured capital
program are approximately $10
billion, with $7 billion
remaining to be spent.
Enbridge is on track to place approximately $10 billion of capital into service in 2021,
which is expected to generate significant EBITDA and free cash flow
growth in 2022. Since July 1, 2021,
Enbridge has placed approximately $8
billion of capital projects into service, including:
- the US$4.0 billion U.S. portion
of the Line 3 Replacement Project and associated US$0.5 billion Southern Access Expansion to 1.2
million barrels per day (mmbpd);
- the $1.0 billion T-South
Reliability and Expansion Program and the $0.5 billion Spruce Ridge Project, which increase
capacity on the B.C. Pipeline; and,
- the combined US$0.1 billion
Appalachia to Market and Middlesex Extension projects, which
support reliable natural gas supply into the U.S. Northeast.
In addition, Enbridge continues to advance execution of its
multi-year US$2.1 billion Gas
Transmission and Midstream modernization program, and is on track
to add an estimated 45 thousand Gas Distribution and Storage
customers in 2021, including related capital expenditures.
In Renewable Power Generation, construction of the three
previously announced French offshore wind projects, Saint-Nazaire, Fécamp, and Calvados, is
advancing on schedule for the targeted in-service dates ranging
between late 2022 and 2024. Combined, these projects will provide
1.4 GW (0.3 GW net) of generation capacity in France, enough to power over 1 million homes
with renewable energy.
Line 3 Replacement Project and Southern Access
Expansion
The U.S. portion of the Line 3 Replacement Project was placed
into service on October 1, 2021. This
completes the final step of the full replacement project from
Hardisty, AB to Superior, WI, restoring its capacity to 760
kbpd. This project enhances the continued safe and reliable
operations of Enbridge's Mainline System, which provides essential
feedstock to meet U.S. and Canadian refinery demand.
For the first nine months of 2021, Enbridge has been collecting
a partial surcharge of US$0.20 per
barrel on the Canadian portion of Line 3 Replacement Project, which
commenced operations in late 2019. As of October 1, 2021, the full Line 3 Replacement
surcharge of US$0.935 per barrel,
inclusive of a US$0.04 per barrel
receipt terminalling surcharge, is in effect. Inclusive of the
surcharge increase and restored capacity, the project is expected
to contribute approximately $200
million of incremental EBITDA in the fourth quarter of 2021,
and support significant cash flow growth in 2022 and
beyond.
In addition, the Company has placed into service the expansion
of Southern Access (Line 61) originating at Enbridge's Superior, Wisconsin Terminal and flowing to
the Flanagan, Illinois Terminal.
The expansion increases Southern Access's capacity by approximately
200 thousand barrels per day (kbpd) to 1.2 mmbpd and ensures market
access for additional barrels flowing on the Mainline with the
completion of the Line 3 Replacement Project.
Upon completion of the Line 3 Replacement Project and Southern
Access Expansion, and net of system optimizations already in
operation, the Company anticipates average annual ex-Gretna
Mainline capacity of approximately 3.1 mmbpd and average throughput
for the fourth quarter of approximately 2.95 mmbpd.
OTHER BUSINESS UPDATES
Changes to Board of Directors
Today, Enbridge announced that its Board of Directors has
appointed Gaurdie Banister and Jane
Rowe as directors of Enbridge, effective November 4, 2021.
Also, on November 1, 2021, Mr.
Marcel R. Coutu and Ms. V.
Maureen Kempston Darkes each
notified Enbridge of their intention to resign from the Board of
Directors of the Company, effective November
1, 2021. Neither Mr. Coutu's nor Ms. Kempston Darkes'
decision to resign from the Board of Directors was the result of
any disagreement relating to the Company's operations, policies or
practices.
"On behalf of the Board of Directors of Enbridge, we are very
pleased to welcome Gaurdie and Jane to the Enbridge Board. They
each have extensive business experience and will be excellent
additions to our Board. We look forward to their contributions. At
the same time, we would like to thank Marcel and Maureen for their
valuable service and contributions to Enbridge over the years,"
stated Greg Ebel, the Chair of the
Board of Directors of Enbridge.
Liquids Pipelines
Mainline Contracting
The Mainline Contracting hearing
before the Canada Energy Regulator (CER) concluded during the
quarter. The CER is now reviewing the record developed throughout
the regulatory process and has indicated that it anticipates it
will release its decision in November of this year.
The current Competitive Toll Settlement (CTS) expired on
June 30, 2021 and, consistent with
the terms of the CTS agreement, the tolls in effect at that time
remained in effect on July 1, 2021 on
an interim basis subject to finalization and refund, if any. With
the U.S. portion of the Line 3 Replacement Project entering
service, these interim tolls have been updated effective
October 1, 2021 to include the full
Line 3 Replacement surcharge of US$0.935 per barrel inclusive of a US$0.04 receipt terminalling
surcharge.
Moda Acquisition
On October 12,
2021, Enbridge closed the previously announced acquisition
of Moda Midstream Operating LLC for US$3.0
billion. The acquisition included a 100 percent operating
interest in the Ingleside Energy Center, North America's largest crude oil export
terminal, located near Corpus Christi,
Texas. This state-of-the-art terminal consists of 15.3
million barrels of storage, fully contracted under long-term
take-or-pay storage contracts, and 1.6 mmbpd of export capacity
underpinned by 925 kbpd of long-term take-or-pay vessel loading
contracts.
In addition, Enbridge acquired a 20 percent interest in the
670-kbpd Cactus II Pipeline, a 100 percent operating interest in
the 300-kbpd Viola pipeline, and a 100 percent interest in the
350-thousand-barrel Taft Terminal. Together with the Ingleside
Energy Center, these pipelines and storage assets provide a fully
integrated light crude export platform.
This acquisition significantly advances Enbridge's U.S. Gulf
Coast export strategy and provides connectivity to low-cost and
long-lived reserves in the Permian and Eagle Ford basins. The
acquired assets are expected to be immediately and strongly
accretive to DCF and earnings per share and provide further organic
growth opportunities supporting Enbridge's post-2023 growth
outlook.
Gas Transmission and Midstream
Regulatory Update
The Company's regulatory strategy
requires periodic rate case filings to ensure just and reasonable
returns on and of the capital invested into its critical energy
delivery systems.
On September 10, 2021, the Federal
Energy Regulatory Commission (FERC) approved a Stipulation and
Agreement filed with regards to the Section 4 East Tennessee rate case filed on June 30, 2020. On an annualized basis, this
settlement is expected to provide an incremental EBITDA
contribution of approximately US$10
million.
During the quarter, Enbridge filed a Section 4 rate case on the
Texas Eastern system to reflect growth in the system's rate base
and an increase in cost of service, primarily as a result of system
modernization, and safety and reliability investments. The FERC has
accepted the filing, allowing filed rate increases to take effect
after a 5 month suspension period, subject to refund. Negotiations
with shippers are expected to begin in early 2022.
Gas Distribution and Storage
Hydrogen Blending
On October
1, 2021, Enbridge's first large scale green hydrogen
blending facility located in Markham,
Ontario was commissioned, adding up to 2% hydrogen by volume
into the gas stream for 3,600 customers. This project has the
potential to contribute to the avoidance of up to 120
tCO2e annually, and could pave the way for blending into
the entire Ontario gas
distribution system.
In addition, Enbridge continues to develop a second green
hydrogen blending facility in Gatineau,
Quebec, in partnership with Evolugen. This facility could
blend up to 15% hydrogen by volume for 43,000 customers and has the
potential to contribute to the avoidance of up to 15,000
tCO2e annually.
RNG Development
The Company announced its seventh RNG
project located at the City of
Toronto's Disco Road Solid Waste Management Facility. This
facility will produce RNG from biodegradable waste collected as
part of the City of Toronto's
Green Bin program and inject it into Enbridge Gas Inc.'s natural
gas distribution system lowering natural gas related CO2
emissions. The project is expected to be in service in 2023.
Enbridge is developing a further 10 to 15 projects independently
within its franchise, and across Canada in partnership with Comcor Technologies
and Walker Industries.
Renewable Power Generation
Formation of New Energies Team and Additional
Partnerships
During the third quarter, Enbridge announced
the creation of a dedicated team focused on advancing low-carbon
energy infrastructure opportunities across the Company's energy
delivery businesses. The team will leverage and build on Enbridge's
early investments in RNG, hydrogen and carbon capture, utilization
and storage (CCUS), as well as other low-carbon technologies.
The Company announced a MoU with Shell to develop low-carbon
energy solutions across North
America leveraging both companies' extensive experience,
complimentary assets and commitment to ESG leadership. Enbridge and
Shell will explore opportunities to collaborate on potential green
and blue hydrogen production, renewable power generation where the
parties bring unique strengths, and CCUS opportunities, which at
present excludes the Alberta
market given various opportunities already under development.
Enbridge also announced a partnership with Vanguard Renewables,
a leading U.S. developer of RNG infrastructure. Under the
partnership, Vanguard Renewables will initially build and operate
up to 8 digesters in the U.S. Northeast and Midwest capable of
producing approximately
2 Bcf/year of RNG from food and farm waste, with Enbridge investing
up to $100 million in RNG upgrading
and transportation assets, and providing marketing services that
leverage its extensive energy infrastructure assets and
capabilities. This partnership positions Enbridge as the partner of
choice for future mixed-waste RNG development projects.
THIRD QUARTER 2021 FINANCIAL RESULTS
The following table summarizes the Company's GAAP reported
results for segment EBITDA, earnings attributable to common
shareholders and cash provided by operating activities for the
third quarter of 2021.
GAAP SEGMENT EBITDA AND CASH FLOW FROM OPERATIONS
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Liquids
Pipelines
|
1,673
|
2,090
|
5,756
|
5,280
|
Gas Transmission and
Midstream
|
884
|
334
|
2,725
|
230
|
Gas Distribution and
Storage
|
282
|
298
|
1,374
|
1,285
|
Renewable Power
Generation
|
91
|
93
|
362
|
376
|
Energy
Services
|
(204)
|
(34)
|
(379)
|
(12)
|
Eliminations and
Other
|
(121)
|
207
|
191
|
(498)
|
EBITDA
|
2,605
|
2,988
|
10,029
|
6,661
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
682
|
990
|
3,976
|
1,208
|
|
|
|
|
|
Cash provided by
operating activities
|
2,163
|
2,302
|
6,954
|
7,527
|
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
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Liquids
Pipelines
|
1,898
|
1,732
|
5,623
|
5,395
|
Gas Transmission and
Midstream
|
986
|
945
|
2,928
|
3,017
|
Gas Distribution and
Storage
|
296
|
315
|
1,403
|
1,330
|
Renewable Power
Generation
|
89
|
93
|
356
|
361
|
Energy
Services
|
(116)
|
(110)
|
(277)
|
(37)
|
Eliminations and
Other
|
116
|
22
|
281
|
6
|
Adjusted
EBITDA1,3
|
3,269
|
2,997
|
10,314
|
10,072
|
Maintenance
capital
|
(142)
|
(256)
|
(412)
|
(595)
|
Interest
expense1
|
(665)
|
(721)
|
(1,977)
|
(2,141)
|
Current income
tax1
|
(89)
|
(83)
|
(210)
|
(325)
|
Distributions to
noncontrolling interests1
|
(66)
|
(68)
|
(207)
|
(232)
|
Cash distributions in
excess of equity earnings1
|
52
|
197
|
248
|
479
|
Preference share
dividends
|
(92)
|
(94)
|
(274)
|
(284)
|
Other receipts of
cash not recognized in revenue2
|
23
|
118
|
74
|
250
|
Other non-cash
adjustments
|
—
|
(2)
|
(2)
|
7
|
DCF3
|
2,290
|
2,088
|
7,554
|
7,231
|
Weighted average
common shares outstanding
|
2,024
|
2,021
|
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
|
Schedules
reconciling adjusted EBITDA and DCF are available as Appendices to
this news release.
|
Third quarter 2021 DCF increased $202
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 due to
timing of spend; and
- lower interest expense due to favorable interest rates on
short-term borrowings as well as the impact of a weaker USD
currency that positively impacts the translation of interest
payments on USD denominated debt; partially offset by
- 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; and
- lower receipts of cash not recognized in revenue primarily due
to shippers utilizing take-or-pay commitments on contracted assets
that contain make-up right provisions in the third quarter of 2021
when compared with the third quarter of 2020, which allows for the
recognition of the revenue in Adjusted EBITDA.
ADJUSTED EARNINGS
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Adjusted
EBITDA1
|
3,269
|
2,997
|
10,314
|
10,072
|
Depreciation and
amortization
|
(944)
|
(935)
|
(2,805)
|
(2,766)
|
Interest
expense2
|
(654)
|
(708)
|
(1,941)
|
(2,099)
|
Income
taxes2
|
(355)
|
(278)
|
(1,023)
|
(1,133)
|
Noncontrolling
interests2
|
(34)
|
(21)
|
(90)
|
(28)
|
Preference share
dividends
|
(98)
|
(94)
|
(280)
|
(284)
|
Adjusted
earnings1
|
1,184
|
961
|
4,175
|
3,762
|
Adjusted earnings
per common share
|
0.59
|
0.48
|
2.06
|
1.86
|
1
|
Schedules
reconciling adjusted EBITDA and adjusted earnings are available as
Appendices to this news release.
|
2
|
Presented net of
adjusting items.
|
Adjusted earnings increased $223
million and adjusted earnings per share increased
$0.11 compared with the third quarter
in 2020. The increase in adjusted earnings was driven by the same
factors impacting business performance and adjusted EBITDA as
discussed under Adjusted EBITDA by Segments below, as well
as lower interest expense due to favorable interest rates on
short-term borrowings as well as the impact of a weaker USD
currency that positively impacts the translation of interest
payments on USD denominated debt.
ADJUSTED EBITDA BY SEGMENTS
Adjusted EBITDA by segment is reported on a Canadian dollar
basis. Adjusted EBITDA generated from U.S. dollar
denominated businesses, primarily within Liquids Pipelines and Gas
Transmission and Midstream, were translated at a lower average
Canadian dollar exchange rate in the third quarter of 2021
(C$1.26/US$) when compared with the
corresponding 2020 period (C$1.33/US$).
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,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Mainline
System
|
1,083
|
994
|
3,264
|
3,070
|
Regional Oil Sands
System
|
225
|
195
|
693
|
605
|
Gulf Coast and
Mid-Continent System
|
252
|
213
|
702
|
714
|
Other1
|
338
|
330
|
964
|
1,006
|
Adjusted
EBITDA2
|
1,898
|
1,732
|
5,623
|
5,395
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
Mainline System -
ex-Gretna volume3
|
2,673
|
2,555
|
2,680
|
2,612
|
Regional Oil Sands
System4
|
1,899
|
1,399
|
1,911
|
1,549
|
International Joint
Tariff (IJT)5
|
$4.27
|
$4.27
|
$4.27
|
$4.23
|
Competitive Tolling
Settlement Surcharges5
|
$0.26
|
$0.26
|
$0.26
|
$0.19
|
Line 3 Canada Interim
Surcharge5,6
|
$0.20
|
$0.20
|
$0.20
|
$0.20
|
1
|
Other consists of
Southern Lights Pipeline, Express-Platte System, Bakken System, and
Feeder Pipelines & Other.
|
2
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
3
|
Mainline System
throughput volume represents mainline system deliveries ex-Gretna,
Manitoba which is made up of U.S. and Eastern Canada deliveries
originating from Western Canada.
|
4
|
Volumes are for the
Athabasca Pipeline, Waupisoo Pipeline, Woodland Pipeline and Wood
Buffalo system and exclude laterals on the Regional Oil Sands
System.
|
5
|
The IJT benchmark
toll and its components are set in U.S. dollars and the majority of
the Company's foreign exchange risk on the Canadian portion of the
Mainline is hedged. The Canadian portion of the Mainline represents
approximately 55% of total Mainline System revenue and the average
effective FX rate for the Canadian portion of the Mainline during
the third quarter of 2021 was C$1.26/US$ (Q3 2020:
C$1.20/US$).
|
|
The U.S. portion
of the Mainline System is subject to FX translation similar to the
Company's other U.S. based businesses, which are translated at the
average spot rate for a given period. A portion of this U.S. dollar
translation exposure is hedged under the Company's enterprise-wide
financial risk management program. The offsetting hedge settlements
are reported within Eliminations and Other.
|
6
|
Interim surcharge
for the Canadian portion of the Line 3 Replacement Project, which
was placed into service on December 1, 2019. The interim surcharge
was replaced by the full Line 3 Replacement surcharge beginning on
October 1, 2021 with the completion of the U.S. portion of the Line
3 Replacement Project.
|
Liquids Pipelines adjusted EBITDA increased $166 million compared with the third quarter of
2020, primarily related to:
- higher Mainline System throughput compared with the third
quarter of 2020 driven by the rebounding demand for crude oil and
related products from the impacts of the COVID-19 pandemic, and a
higher effective foreign exchange hedge rate (C$1.26 in 2021 vs. C$1.20 in 2020) on hedges used to manage foreign
exchange risk of the U.S. dollar denominated Canadian Mainline
revenue;
- higher throughput within the Regional Oil Sands System due to
recovery from the impacts of the COVID-19 pandemic and completion
of the Woodland Pipeline expansion in June
2021; and
- higher contributions from the Gulf Coast and Mid-Continent
System due primarily to higher throughput on the Seaway Crude
Pipeline System; partially offset by
- lower throughput on the Flanagan South Pipeline reflected in
Gulf Coast and Mid-Continent System driven by robust PADD II
refinery demand resulting in less volumes available to move towards
the U.S. Gulf Coast; and
- the negative effect of translating U.S. dollar denominated
EBITDA at a lower Canadian to U.S. dollar average exchange rate,
which is partially offset by realized gains in the Eliminations and
Other segment as part of the Company's enterprise-wide financial
risk management program.
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
U.S. Gas
Transmission
|
732
|
762
|
2,235
|
2,417
|
Canadian Gas
Transmission
|
130
|
111
|
412
|
354
|
U.S.
Midstream
|
85
|
36
|
169
|
116
|
Other
|
39
|
36
|
112
|
130
|
Adjusted
EBITDA1
|
986
|
945
|
2,928
|
3,017
|
1 Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
- Gas Transmission and Midstream adjusted EBITDA increased
$41 million compared with the third
quarter of 2020 primarily related to:
- higher U.S. Gas Transmission contributions from the Atlantic
Bridge Phase III project, with in-service notifications to FERC in
January of 2021 and increased revenue due to the absence of
pressure restrictions that existed on the Texas Eastern system in
2020;
- higher Canadian Gas Transmission contributions due timing of
operating and administrative expenses; and
- higher U.S. midstream contributions as a result of higher
commodity prices benefiting Enbridge's Aux
Sable and DCP joint ventures; partially offset by
- 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, which
is partially offset by realized gains in the Eliminations and Other
segment as part of the Company's enterprise-wide financial risk
management program.
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Enbridge Gas Inc.
(EGI)
|
294
|
327
|
1,317
|
1,286
|
Other
|
2
|
(12)
|
86
|
44
|
Adjusted
EBITDA1
|
296
|
315
|
1,403
|
1,330
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
EGI
|
|
|
|
|
Volumes (billions
of cubic feet)
|
302
|
297
|
1,383
|
1,286
|
Number of active
customers2 (millions)
|
|
|
3.8
|
3.8
|
Heating degree
days3
|
|
|
|
|
Actual
|
61
|
90
|
2,350
|
2,423
|
Forecast based on
normal weather4
|
94
|
94
|
2,538
|
2,533
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
2
|
Number of active
customers is the number of natural gas consuming customers at the
end of the reported period.
|
3
|
Heating degree days
is a measure of coldness that is indicative of volumetric
requirements for natural gas utilized for heating purposes in EGI's
distribution franchise areas.
|
4
|
Normal weather is the
weather forecast by EGI in its legacy rate zones, using the
forecasting methodologies approved by the Ontario Energy
Board.
|
Gas Distribution and Storage adjusted EBITDA will typically
follow a seasonal profile. It is generally highest in the first and
fourth quarters of the year reflecting greater volumetric demand
during the heating season. The magnitude of the seasonal EBITDA
fluctuations will vary from year-to-year reflecting the impact of
colder or warmer than normal weather on distribution volumes.
Results include contributions from Noverco within Other. The
Noverco transaction is anticipated to close in late 2021 or early
2022.
Gas Distribution and Storage adjusted EBITDA decreased
$19 million compared with the third
quarter of 2020 primarily related to the timing of operating
expenditures. This has been partially offset by higher distribution
revenue charges resulting from increases in annual rates and
customer base growth.
RENEWABLE POWER GENERATION
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA1
|
89
|
93
|
356
|
361
|
1 Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Renewable Power Generation adjusted EBITDA decreased
$4 million compared with the third
quarter of 2020 primarily related to lower wind resources at the
Canadian wind facilities partially offset by lower mechanical
repair costs at certain U.S. wind facilities.
ENERGY SERVICES
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA1
|
(116)
|
(110)
|
(277)
|
(37)
|
1 Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Energy Services adjusted EBITDA decreased $6 million compared with the third quarter of
2020. Significant compression of location and quality differentials
in certain markets remain, along with limited storage opportunities
in 2021 due to market price backwardation. 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
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Operating and
administrative recoveries
|
66
|
58
|
153
|
166
|
Realized foreign
exchange hedge settlement gains/(losses)
|
50
|
(36)
|
128
|
(160)
|
Adjusted
EBITDA1
|
116
|
22
|
281
|
6
|
1 Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Operating and administrative recoveries captured in this segment
reflect the cost of centrally delivered services (including
depreciation of corporate assets) inclusive of amounts recovered
from business units for the provision of those services. Also, as
previously noted, U.S. dollar denominated earnings within the
segment results are translated at average foreign exchange rates
during the quarter. The offsetting impact of settlements made under
the Company's enterprise foreign exchange hedging program are
captured in this segment.
Eliminations and Other adjusted EBITDA increased $94 million compared with the third quarter of
2020 due to realized foreign exchange gains in 2021 compared with
realized foreign exchange losses in 2020 as a result of a weakening
U.S. dollar average exchange rate of $1.26 for the third quarter of 2021 (Q3
2020:$1.33) compared with a hedge
rate of $1.32 for the third quarter
of 2021 (Q3 2020:$1.29).
CONFERENCE CALL
Enbridge will host a conference call and webcast on
November 5, 2021 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise wide business
update and review 2021 third 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 9798691. The call will be audio webcast live at
https://event.on24.com/wcc/r/3402404/9DF8A3A8FCEFF35C5F575413CA0478CB.
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 approximately
24 hours after the event. The replay will be available for seven
days after the call toll-free (800) 585-8367 or within and outside
North America at (416) 621-4642
(conference ID: 9798691).
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 3, 2021, the Company's
Board of Directors declared the following quarterly dividends. All
dividends are payable on December 1,
2021 to shareholders of record on November 15, 2021.
|
Dividend per
share
|
Common
Shares1
|
$0.83500
|
Preference Shares,
Series A
|
$0.34375
|
Preference Shares,
Series B
|
$0.21340
|
Preference Shares,
Series C2
|
$0.16081
|
Preference Shares,
Series D
|
$0.27875
|
Preference Shares,
Series F
|
$0.29306
|
Preference Shares,
Series H
|
$0.27350
|
Preference Shares,
Series J
|
US$0.30540
|
Preference Shares,
Series L
|
US$0.30993
|
Preference Shares,
Series N
|
$0.31788
|
Preference Shares,
Series P
|
$0.27369
|
Preference Shares,
Series R
|
$0.25456
|
Preference Shares,
Series 1
|
US$0.37182
|
Preference Shares,
Series 3
|
$0.23356
|
Preference Shares,
Series 5
|
US$0.33596
|
Preference Shares,
Series 7
|
$0.27806
|
Preference Shares,
Series 9
|
$0.25606
|
Preference Shares,
Series 11
|
$0.24613
|
Preference Shares,
Series 13
|
$0.19019
|
Preference Shares,
Series 15
|
$0.18644
|
Preference Shares,
Series 17
|
$0.32188
|
Preference Shares,
Series 19
|
$0.30625
|
1
|
The quarterly
dividend per common share was increased 3% to $0.835 from $0.81,
effective March 1, 2021.
|
2
|
The quarterly
dividend per share paid on Series C was increased to $0.15501 from
$0.15349 on March 1, 2021, increased to $0.15753 from $0.15501 on
June 1, 2021, and increased to $0.16081 from $0.15753 on September
1, 2021, due to reset on a quarterly basis following the date of
issuance of the Series C Preference Shares.
|
FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements,
have been included in this news release to provide information
about Enbridge and its subsidiaries and affiliates, including
management's assessment of Enbridge and its subsidiaries' future
plans and operations. This information may not be appropriate for
other purposes. Forward-looking statements are typically identified
by words such as ''anticipate'', ''expect'', ''project'',
''estimate'', ''forecast'', ''plan'', ''intend'', ''target'',
''believe'', "likely" and similar words suggesting future outcomes
or statements regarding an outlook. Forward-looking information or
statements included or incorporated by reference in this document
include, but are not limited to, statements with respect to the
following: Enbridge's corporate vision and strategy; 2021 financial
guidance; energy intensity and emissions reduction targets; the
expected supply of, demand for and prices of crude oil, natural
gas, natural gas liquids, liquified natural gas and renewable
energy; anticipated utilization of our existing assets, including
throughput on the Mainline; expected EBITDA and expected adjusted
EBITDA; expected earnings/(loss) and adjusted earnings/(loss);
expected DCF and DCF per share; expected future cash flows;
expected performance of the Company's businesses; financial
strength and flexibility and investment capacity; capital
allocation priorities; expectations on sources of liquidity and
sufficiency of financial resources; expected in-service dates and
costs related to announced projects and projects under construction
and for maintenance; expected future growth and expansion
opportunities; expected benefits of transactions; and expected
future actions and decisions of regulators and courts and the
timing and impact thereof; toll and rate case discussions and
filings, including Mainline Contracting.
Although Enbridge believes these forward-looking statements
are reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Material assumptions
include assumptions about the following: the COVID-19 pandemic and
the duration and impact thereof; the expected supply of and demand
for crude oil, natural gas, natural gas liquids (NGL) and renewable
energy; prices of crude oil, natural gas, NGL and renewable energy;
energy transition; anticipated utilization of our existing assets;
exchange rates; inflation; interest rates; availability and price
of labour and construction materials; operational reliability;
customer and regulatory approvals; maintenance of support and
regulatory approvals for the Company's projects; anticipated
in-service dates; weather; anticipated reductions in operating
costs; the timing and closing of acquisitions and dispositions; the
realization of anticipated benefits and synergies of transactions
and projects; governmental legislation; litigation; impact of the
Company's dividend policy on its future cash flows; credit ratings;
capital project funding; hedging program; expected EBITDA and
expected adjusted EBITDA; expected earnings/(loss) and adjusted
earnings/(loss); expected earnings/(loss) or adjusted
earnings/(loss) per share; expected future cash flows and expected
future DCF and DCF per share; and estimated future dividends.
Assumptions regarding the expected supply of and demand for crude
oil, natural gas, NGL and renewable energy, and the prices of these
commodities, are material to and underlie all forward-looking
statements, as they may impact current and future levels of demand
for the Company's services. Similarly, exchange rates, inflation,
interest rates and the COVID-19 pandemic impact the economies and
business environments in which the Company operates and may impact
levels of demand for the Company's services and cost of inputs, and
are therefore inherent in all forward-looking statements. Due to
the interdependencies and correlation of these macroeconomic
factors, the impact of any one assumption on a forward-looking
statement cannot be determined with certainty, particularly with
respect to expected EBITDA, expected adjusted EBITDA, expected
earnings/(loss), expected adjusted earnings/(loss), expected DCF
and associated per share amounts, and estimated future dividends.
The most relevant assumptions associated with forward-looking
statements regarding announced projects and projects under
construction, including estimated completion dates and expected
capital expenditures, include the following: the availability and
price of labour and construction materials; the effects of
inflation and foreign exchange rates on labour and material costs;
the effects of interest rates on borrowing costs; the impact of
weather; customer, government and regulatory approvals on
construction and in-service schedules and cost recovery regimes;
and the COVID-19 pandemic and the duration and impact
thereof.
Enbridge's forward-looking statements are subject to risks
and uncertainties pertaining to the realization of anticipated
benefits and synergies of projects and transactions, successful
execution of our strategic priorities, operating performance, the
Company's dividend policy, regulatory parameters, changes in
regulations applicable to the Company's business, litigation,
acquisitions and dispositions and other transactions, project
approval and support, renewals of rights-of-way, weather, economic
and competitive conditions, public opinion, changes in tax laws and
tax rates, changes in trade agreements, political decisions,
exchange rates, interest rates, commodity prices, supply of and
demand for commodities and the COVID-19 pandemic, including but not
limited to those risks and uncertainties discussed in this and in
the Company's other filings with Canadian and U.S. securities
regulators. The impact of any one risk, uncertainty or factor on a
particular forward-looking statement is not determinable with
certainty as these are interdependent and Enbridge's future course
of action depends on management's assessment of all information
available at the relevant time. Except to the extent required by
applicable law, Enbridge assumes no obligation to publicly update
or revise any forward-looking statements made in this news release
or otherwise, whether as a result of new information, future events
or otherwise. All forward-looking statements, whether written or
oral, attributable to Enbridge or persons acting on the Company's
behalf, are expressly qualified in their entirety by these
cautionary statements.
ABOUT ENBRIDGE INC.
Enbridge Inc. is a leading North American energy
infrastructure company. We safely and reliably deliver the energy
people need and want to fuel quality of life. Our core businesses
include Liquids Pipelines, which transports approximately 25
percent of the crude oil produced in North America; Gas Transmission and Midstream,
which transports approximately 20 percent of the natural gas
consumed in the U.S.; Gas Distribution and Storage, which serves
approximately 3.8 million retail customers in Ontario and Quebec; and Renewable Power Generation, which
owns approximately 1,766 megawatts (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 adjusted EBITDA,
adjusted earnings, adjusted earnings per common share and DCF.
Management believes the presentation of these metrics gives useful
information to investors and shareholders as they provide increased
transparency and insight into the performance of the Company.
Adjusted EBITDA represents EBITDA adjusted for unusual,
infrequent or other non-operating factors on both a consolidated
and segmented basis. Management uses adjusted EBITDA to set targets
and to assess the performance of the Company and its Business
Units.
Adjusted earnings represent earnings attributable to common
shareholders adjusted for unusual, infrequent or other
non-operating factors included in adjusted EBITDA, as well as
adjustments for unusual, infrequent or other non-operating factors
in respect of depreciation and amortization expense, interest
expense, income taxes and noncontrolling interests on a
consolidated basis. Management uses adjusted earnings as another
measure of the Company's ability to generate earnings.
DCF is defined as cash flow provided by operating
activities before the impact of changes in operating assets and
liabilities (including changes in environmental liabilities) less
distributions to noncontrolling interests, preference share
dividends and maintenance capital expenditures, and further
adjusted for unusual, infrequent or other non-operating factors.
Management also uses DCF to assess the performance of the Company
and to set its dividend payout target.
Reconciliations of forward-looking non-GAAP financial measures
to comparable GAAP measures are not available due to the challenges
and impracticability with estimating some of the items,
particularly certain contingent liabilities, and non-cash
unrealized derivative fair value losses and gains which are subject
to market variability. Because of those challenges, a
reconciliation of forward-looking non-GAAP financial measures is
not available without unreasonable effort.
Our non-GAAP measures described above are not measures that have
standardized meaning prescribed by generally accepted accounting
principles in the United States of
America (U.S. GAAP) and are not U.S. GAAP measures.
Therefore, these measures may not be comparable with similar
measures presented by other issuers.
The tables below provide a reconciliation of the non-GAAP
measures to comparable GAAP measures.
APPENDIX A
NON-GAAP RECONCILIATIONS – ADJUSTED
EBITDA AND ADJUSTED EARNINGS
CONSOLIDATED EARNINGS
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Liquids
Pipelines
|
1,673
|
2,090
|
5,756
|
5,280
|
Gas Transmission and
Midstream
|
884
|
334
|
2,725
|
230
|
Gas Distribution and
Storage
|
282
|
298
|
1,374
|
1,285
|
Renewable Power
Generation
|
91
|
93
|
362
|
376
|
Energy
Services
|
(204)
|
(34)
|
(379)
|
(12)
|
Eliminations and
Other
|
(121)
|
207
|
191
|
(498)
|
EBITDA
|
2,605
|
2,988
|
10,029
|
6,661
|
Depreciation and
amortization
|
(944)
|
(935)
|
(2,805)
|
(2,766)
|
Interest
expense
|
(648)
|
(718)
|
(1,923)
|
(2,105)
|
Income tax
expense
|
(199)
|
(231)
|
(952)
|
(273)
|
Earnings attributable
to noncontrolling interests
|
(34)
|
(20)
|
(93)
|
(25)
|
Preference share
dividends
|
(98)
|
(94)
|
(280)
|
(284)
|
Earnings
attributable to common shareholders
|
682
|
990
|
3,976
|
1,208
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Liquids
Pipelines
|
1,898
|
1,732
|
5,623
|
5,395
|
Gas Transmission and
Midstream
|
986
|
945
|
2,928
|
3,017
|
Gas Distribution and
Storage
|
296
|
315
|
1,403
|
1,330
|
Renewable Power
Generation
|
89
|
93
|
356
|
361
|
Energy
Services
|
(116)
|
(110)
|
(277)
|
(37)
|
Eliminations and
Other
|
116
|
22
|
281
|
6
|
Adjusted
EBITDA
|
3,269
|
2,997
|
10,314
|
10,072
|
Depreciation and
amortization
|
(944)
|
(935)
|
(2,805)
|
(2,766)
|
Interest
expense
|
(654)
|
(708)
|
(1,941)
|
(2,099)
|
Income tax
expense
|
(355)
|
(278)
|
(1,023)
|
(1,133)
|
Earnings attributable
to noncontrolling interests
|
(34)
|
(21)
|
(90)
|
(28)
|
Preference share
dividends
|
(98)
|
(94)
|
(280)
|
(284)
|
Adjusted
earnings
|
1,184
|
961
|
4,175
|
3,762
|
Adjusted earnings
per common share
|
0.59
|
0.48
|
2.06
|
1.86
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
EBITDA
|
2,605
|
2,988
|
10,029
|
6,661
|
Adjusting
items:
|
|
|
|
|
Change in unrealized
derivative fair value (gain)/loss - Foreign exchange
|
436
|
(569)
|
(85)
|
201
|
Change in unrealized
derivative fair value (gain)/loss - Commodity prices
|
88
|
(73)
|
102
|
(24)
|
Equity investment
impairment
|
111
|
615
|
111
|
2,351
|
Equity investment
asset and goodwill impairment
|
—
|
—
|
—
|
324
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
—
|
—
|
159
|
Employee severance,
transition and transformation costs
|
34
|
24
|
106
|
303
|
Other
|
(5)
|
12
|
51
|
97
|
Total adjusting
items
|
664
|
9
|
285
|
3,411
|
Adjusted
EBITDA
|
3,269
|
2,997
|
10,314
|
10,072
|
Depreciation and
amortization
|
(944)
|
(935)
|
(2,805)
|
(2,766)
|
Interest
expense
|
(648)
|
(718)
|
(1,923)
|
(2,105)
|
Income tax
expense
|
(199)
|
(231)
|
(952)
|
(273)
|
Earnings attributable
to noncontrolling interests
|
(34)
|
(20)
|
(93)
|
(25)
|
Preference share
dividends
|
(98)
|
(94)
|
(280)
|
(284)
|
Adjusting items in
respect of:
|
|
|
|
|
Interest
expense
|
(6)
|
10
|
(18)
|
6
|
Income tax
expense
|
(156)
|
(47)
|
(71)
|
(860)
|
Earnings attributable
to noncontrolling interests
|
—
|
(1)
|
3
|
(3)
|
Adjusted
earnings
|
1,184
|
961
|
4,175
|
3,762
|
Adjusted earnings
per common share
|
0.59
|
0.48
|
2.06
|
1.86
|
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED
EBITDA TO SEGMENTED EBITDA
LIQUIDS PIPELINES
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
1,898
|
1,732
|
5,623
|
5,395
|
Change in unrealized
derivative fair value gain/(loss)
|
(222)
|
360
|
84
|
(90)
|
Property tax
settlement
|
—
|
—
|
57
|
—
|
Asset write-down
loss
|
—
|
—
|
—
|
(13)
|
Employee severance,
transition and transformation costs
|
(3)
|
(2)
|
(8)
|
(9)
|
Other
|
—
|
—
|
—
|
(3)
|
Total
adjustments
|
(225)
|
358
|
133
|
(115)
|
EBITDA
|
1,673
|
2,090
|
5,756
|
5,280
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
986
|
945
|
2,928
|
3,017
|
Equity investment
impairment
|
(111)
|
(615)
|
(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
|
(38)
|
(5)
|
(104)
|
26
|
Other
|
47
|
9
|
12
|
21
|
Total
adjustments
|
(102)
|
(611)
|
(203)
|
(2,787)
|
EBITDA
|
884
|
334
|
2,725
|
230
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
296
|
315
|
1,403
|
1,330
|
Change in unrealized
derivative fair value gain/(loss)
|
(2)
|
11
|
12
|
2
|
Employee transition
and transformation costs
|
(10)
|
(20)
|
(38)
|
(35)
|
Other
|
(2)
|
(8)
|
(3)
|
(12)
|
Total
adjustments
|
(14)
|
(17)
|
(29)
|
(45)
|
EBITDA
|
282
|
298
|
1,374
|
1,285
|
RENEWABLE POWER GENERATION
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
89
|
93
|
356
|
361
|
Change in unrealized
derivative fair value gain
|
2
|
—
|
6
|
2
|
Disposition - MATL
transmission assets
|
—
|
—
|
—
|
13
|
Total
adjustments
|
2
|
—
|
6
|
15
|
EBITDA
|
91
|
93
|
362
|
376
|
ENERGY SERVICES
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
(116)
|
(110)
|
(277)
|
(37)
|
Change in unrealized
derivative fair value gain/(loss)
|
(88)
|
73
|
(102)
|
24
|
Net inventory
adjustment
|
—
|
3
|
—
|
1
|
Total
adjustments
|
(88)
|
76
|
(102)
|
25
|
EBITDA
|
(204)
|
(34)
|
(379)
|
(12)
|
ELIMINATIONS AND OTHER
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
116
|
22
|
281
|
6
|
Change in unrealized
derivative fair value gain/(loss)
|
(214)
|
198
|
(17)
|
(115)
|
Change in corporate
guarantee obligation
|
—
|
—
|
—
|
(74)
|
Investment write-down
loss
|
—
|
—
|
—
|
(43)
|
Employee severance,
transition and transformation costs
|
(21)
|
(2)
|
(60)
|
(259)
|
Other
|
(2)
|
(11)
|
(13)
|
(13)
|
Total
adjustments
|
(237)
|
185
|
(90)
|
(504)
|
EBITDA
|
(121)
|
207
|
191
|
(498)
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED BY OPERATING
ACTIVITIES TO DCF
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Cash provided by
operating activities
|
2,163
|
2,302
|
6,954
|
7,527
|
Adjusted for changes
in operating assets and liabilities1
|
443
|
(110)
|
1,068
|
(213)
|
|
2,606
|
2,192
|
8,022
|
7,314
|
Distributions to
noncontrolling interests2
|
(66)
|
(68)
|
(207)
|
(232)
|
Preference share
dividends
|
(92)
|
(94)
|
(274)
|
(284)
|
Maintenance capital
expenditures3
|
(142)
|
(256)
|
(412)
|
(595)
|
Significant adjusting
items:
|
|
|
|
|
Other receipts of cash
not recognized in revenue4
|
23
|
118
|
74
|
250
|
Employee severance,
transition and transformation costs
|
36
|
25
|
108
|
304
|
Distributions from
equity investments in excess of cumulative
earnings2
|
52
|
159
|
297
|
412
|
Other
items
|
(127)
|
12
|
(54)
|
62
|
DCF
|
2,290
|
2,088
|
7,554
|
7,231
|
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-2021-results-executing-on-business-priorities-301417358.html
SOURCE Enbridge Inc.