CALGARY,
AB, Feb. 10, 2023 /CNW/ - Enbridge Inc.
(Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today reported
strong fourth quarter and full year 2022 financial results,
reaffirmed its 2023 financial outlook and provided a quarterly
business update.
Highlights
(All financial figures are unaudited and
in Canadian dollars unless otherwise noted. * identifies non-GAAP
financial measures. Please refer to Non-GAAP Reconciliations
Appendices.)
- Full year GAAP earnings of $2.6
billion or $1.28 per common
share, compared with GAAP earnings of $5.8
billion or $2.87 per common
share in 2021
- Adjusted earnings* of $5.7
billion or $2.81 per common
share*, compared with $5.6 billion or
$2.74 per common share in 2021
- Adjusted earnings before interest, income taxes and
depreciation and amortization (EBITDA)* of $15.5 billion, compared with $14.0 billion in 2021
- Cash provided by operating activities of $11.2 billion, compared with $9.3 billion in 2021
- Distributable cash flow (DCF)* of $11.0
billion or $5.42 per common
share*, compared with $10.0 billion
or $4.96 per common share in
2021
- Exited 2022 in a strong financial position with Debt to EBITDA
of 4.7x
- Reaffirmed 2023 full year guidance range for EBITDA of
$15.9 billion to $16.5 billion and DCF per share of $5.25 to $5.65
- Increased the 2023 quarterly dividend by 3.2% to $0.8875 ($3.55
annualized) per share reflecting the 28th consecutive annual
increase
- Increased ownership in Gray Oak Pipeline by a further 10%
bringing Enbridge's interest to 68.5%
- Toll Settlement reached with B.C. Pipeline shippers and
approved by the CER for a five-year term ending in 2026
- Rate case settlement reached with Texas Eastern Transmission,
LP (TETLP) shippers and approved by the Federal Energy Regulatory
Commission (FERC)
- Completed the previously announced US$1.5 billion investment in Woodfibre LNG
- Successfully placed into service, $4B of conventional and renewable projects in
2022
- Advanced $18 billion portfolio of
growth and expansion projects across the enterprise
- Advanced low-carbon strategy announcing a partnership with Oxy
Low Carbon Ventures to transport and sequester carbon dioxide in
the Corpus Christi area
- Filed rebasing and incentive rate-setting application at
Enbridge Gas Inc. (EGI) for the next five years
- Announced the renewal of Enbridge's normal course issuer bid
(NCIB) of up to $1.5 billion
- Issued a $900 million
Sustainability-Linked Bond (SLB) in Canada, further strengthening Enbridge's
commitment to its emissions reduction goals
CEO COMMENT
Greg Ebel, President and CEO
commented the following:
"We ended the year with strong utilization, operational and
safety performance across our business. Despite the uncertainty and
volatility of 2022, our full year results came in at the top half
of our guidance range, reflecting the strength of our four core
businesses and the resiliency of our low-risk business model.
"We made substantial progress delivering on our strategic
priorities, which is a testament to the entire Enbridge team. We
placed another $4 billion of capital
into service and sanctioned $8
billion of new organic growth. We sold non-core assets,
demonstrating our commitment to recycling capital at attractive
valuations, and our balance sheet continues to be in great shape,
with Debt to EBITDA in the bottom half of our range at 4.7x. These
actions have set us up well for 2023 and beyond.
"As we look forward, it is clear the world needs all forms of
energy to meet demand. At the same time, there is a global
imperative to reduce emissions. Balancing these priorities is
critical and remains foundational to our strategy.
"We will continue to expand, modernize and reduce emissions from
our conventional business to meet our customers' needs, and
increase investments in lower-carbon opportunities that complement
our existing assets. Our balance sheet strength, disciplined
approach to capital allocation, and proven execution capability
will enable us to drive growth and create value for our
shareholders. Our extensive footprint puts us in an enviable
position to deliver safe, secure, affordable and sustainable energy
to our customers.
"I'm excited and honored to be leading the Enbridge team in its
next phase of growth. I'd like to thank Al
Monaco and the entire leadership team for transforming
Enbridge into a diversified energy delivery company. As a team, we
will build on this legacy and continue to position Enbridge as the
first choice energy provider for our customers, investors,
employees and the communities we serve."
FINANCIAL RESULTS SUMMARY
Financial results for the three months and year ended
December 31, 2022 and 2021 are
summarized in the table below:
|
Three months ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts; number of shares in
millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
(1,067)
|
1,840
|
|
2,589
|
5,816
|
GAAP Earnings per
common share
|
(0.53)
|
0.91
|
|
1.28
|
2.87
|
Cash provided by
operating activities
|
3,613
|
1,890
|
|
11,230
|
9,256
|
Adjusted
EBITDA1
|
3,911
|
3,687
|
|
15,531
|
14,001
|
Adjusted
Earnings1
|
1,271
|
1,376
|
|
5,692
|
5,551
|
Adjusted Earnings per
common share1
|
0.63
|
0.68
|
|
2.81
|
2.74
|
Distributable Cash
Flow1
|
2,663
|
2,487
|
|
10,983
|
10,041
|
Weighted average common
shares outstanding
|
2,025
|
2,024
|
|
2,025
|
2,023
|
1 Non-GAAP
financial measures. Please refer to Non-GAAP Reconciliations
Appendices.
|
GAAP Earnings attributable to common shareholders for the fourth
quarter of 2022 decreased by $2.9
billion or $1.44 per share
compared with the same period in 2021 and includes certain
infrequent or other non-operating factors, primarily explained by a
non-cash goodwill impairment of $2.5 billion relating to the Gas
Transmission reporting unit as a result of the increased cost of
capital, partially offset by the operating performance factors
discussed in detail below.
On a full year basis for 2022, GAAP earnings attributable to
common shareholders was negatively impacted by the goodwill
impairment discussed above, as well as non-cash, net unrealized
derivative fair value losses of $1.3 billion ($964
million after-tax) in 2022, compared with unrealized gains
of $197 million ($150 million after-tax) in 2021,
reflecting changes in the mark-to-market value of derivative
financial instruments used to manage foreign exchange risks. These
were partially offset by a non-cash gain of $1.1 billion ($732
million after-tax) on the closing of the joint venture
merger transaction with Phillips 66 (P66) realigning our effective
economic interests in Gray Oak and DCP Midstream LLC.
The period-over-period comparability of GAAP earnings
attributable to common shareholders is impacted by certain other
unusual, infrequent factors or other non-operating factors which
are noted in the reconciliation schedule included in Appendix
A of this news release. Refer to the annual Management's
Discussion & Analysis for 2022 filed in conjunction with
the year-end financial statements for a detailed discussion of GAAP
financial results.
Adjusted EBITDA in the fourth quarter of 2022 increased by
$224 million compared with the same period in 2021. This was
primarily driven by higher contributions from new assets placed
into service including the U.S. portion of the Line 3 Replacement
Project, which came into service in the fourth quarter of 2021, the
acquisition of Enbridge Ingleside Energy Center (EIEC), as well as
the recognition of revenues from increased rates on TETLP as a
result of its recent rate case settlement. The translation of U.S.
denominated earnings also contributed to higher EBITDA in the
period. The average CAD to USD exchange rate for the fourth quarter
of 2022 was $1.36 compared with
$1.26 for the same period in
2021.
Adjusted EBITDA for the year ended December 31, 2022 increased by $1.5 billion compared with 2021. This is
primarily driven by the impact of the operating factors listed
above, as well as translation of U.S dollar denominated
earnings. The average CAD to USD exchange rate in 2022 was
$1.30 compared with $1.25 in 2021.
Adjusted earnings in the fourth quarter of 2022 decreased by
$105 million, or $0.05 per
share, primarily due to higher financing costs from rising interest
rates on floating-rate debt, and increased depreciation expense on
new assets placed into service in the fourth quarter of 2021;
partially offset by higher Adjusted EBITDA contributions.
Adjusted earnings for the year ended December 31, 2022 increased by $141 million compared with 2021. This is
primarily driven by the impact of higher Adjusted EBITDA, partially
offset by the higher financing costs discussed above.
DCF for the fourth quarter of 2022 increased by
$176 million, or $0.08 per
share, primarily due to higher Adjusted EBITDA contributions and
higher equity distributions as a result of strong operating
performance from joint venture investments including Alliance
Pipeline, as well as increased economic interest in the Gray Oak
and Cactus II pipelines, partially offset by higher
maintenance capital spend, higher financing costs and higher
cash taxes on higher taxable earnings.
DCF for the year ended December 31,
2022, increased by $942
million compared with 2021. This is primarily driven by the
same operating factors as listed above.
Detailed financial information and analysis can be found below
under Fourth Quarter and Year-End 2022 Financial
Results.
FINANCIAL OUTLOOK
The Company reaffirmed its 2023 financial guidance, which
includes adjusted EBITDA between $15.9
billion and $16.5 billion and
DCF per share between $5.25 to
$5.65.
Growth in 2023 is anticipated to be driven by strong Mainline
utilization, full-year contributions from the TETLP rate
settlement, rate escalators and customer additions at EGI,
full-year contributions from projects placed into service during
2022 and the impact of foreign exchange rates, partially offset by
higher financing costs and distributions to non-controlling
interests from the sale of an interest in certain Regional Oil
Sands assets.
Enbridge increased its 2023 quarterly dividend by 3.2% to
$0.8875 ($3.55 annualized) per share, commencing with the
dividend payable on March 1, 2023 to
shareholders of record on February 15,
2023.
FINANCING UPDATE
During the fourth quarter of 2022, Enbridge Inc. issued
$2 billion of debt financings
consisting of:
- $600 million of 5-year senior
notes;
- $900 million of 10-year senior
notes (SLB); and
- $500 million of 30-year senior
notes.
These debt offerings were substantially hedged at favorable
rates, with proceeds used to pay down existing indebtedness, fund
capital projects, and for other general corporate purposes. The SLB
terms are consistent with Enbridge's SLB framework announced in
2021, which incorporates emissions and diversity metrics into the
financing terms. This approach to financing reinforces Enbridge's
continuing commitment to achieving the ESG targets it set out in
its November 2020 ESG Goals. The
Company's sustainability-linked financings now total approximately
CAD$4.3 billion.
During the fourth quarter, TETLP issued US$600 million of 10-year Senior Notes in the
U.S. private debt market.
The Company is currently rated BBB+, or equivalent, by all four
of its credit rating agencies, with stable outlooks, reflecting
Enbridge's sector leading financial strength and its low-risk
commercial model. The Company's Debt to EBITDA metric at year-end
2022 was approximately 4.7x, within the lower-half of the Company's
target range of 4.5-5.0x. Enbridge anticipates exiting 2023 with
its Debt to EBITDA metric again within the lower half of the target
range while continuing to fund its secured capital growth program
within its equity self-funding model utilizing internally generated
cash flows, proceeds from recently completed capital recycling
transactions and future debt financings.
SECURED GROWTH PROJECT EXECUTION UPDATE
In 2022, Enbridge placed approximately $4
billion of growth projects into service across each of its
four business, which are expected to provide strong EBITDA and DCF
contributions in 2023 including:
- Gas Distribution's $1.2 billion
2022 Utility Growth Capital;
- Gas Transmission's US$0.6 billion
2022 Modernization program;
- US$0.3 billion Vito Oil and Gas
Pipelines, which provides for offshore production to the U.S. Gulf
Coast, and is mechanically complete;
- $0.2 billion East-West Tie Line,
which provides reliable, long-term electricity to Northwest Ontario;
- US$0.1 billion Gulfstream Phase
VI, providing capacity into Florida; and
- $0.9 billion, 480-megawatt, St.
Nazaire Project, France's first
commercial-scale offshore wind project.
During the year, Enbridge sanctioned $8
billion of new organic growth capital and the Company's
current secured growth program is now approximately $18 billion.
Funding of the secured growth program will be provided for
entirely through the Company's $5-6
billion of annual investable capacity.
OTHER BUSINESS UPDATES
Continuing to Advance U.S. Gulf Coast Crude Oil
Strategy
In January 2023, Enbridge acquired
an additional 10% ownership in the Gray Oak Pipeline from Rattler
Midstream, a subsidiary of Diamondback Energy, bringing the
Company's economic interest to 68.5%. This acquisition further
expands Enbridge's presence in the Permian, aligns with the
Company's export strategy, and simplifies the ownership structure.
Gray Oak is competitively positioned to remain well-utilized as
Permian Basin oil production grows. In combination with EIEC and
Cactus II Pipeline, the Company is well-positioned to meet local
U.S. Gulf Coast demand and access global export markets.
T- North Open Season Postponed
Westcoast Energy Inc. (Westcoast) has been asked by customers to
postpone the open season to the second half of 2023 to give them an
opportunity to further assess their long-term development plans and
gas transportation requirements. Accordingly, Westcoast decided to
terminate this open season in January
2023, and plans to initiate an open season in the second
half of 2023.
EGI Successfully Files 2024 Rebasing and Incentive
Rate-setting Mechanism Application
In October 2022, EGI filed its
application to establish a 2024 through 2028 Incentive Regulation
(IR) rate setting framework. The application and framework seeks
approval to establish 2024 base rates on a cost-of-service basis
and to establish a price cap rate setting mechanism to be used for
the remainder of the IR term (2025-2028). The Ontario Energy Board
(OEB) has determined it will hear the application in two phases,
with Phase 1 addressing items that affect rates effective
January 1, 2024 and Phase 2
addressing items that will affect rates subsequent to January 1, 2024. An OEB decision is expected on
Phase 1 of the application in the second half of 2023.
FERC Approves Texas Eastern Transmission Rate Case
Settlement
On September 8, 2022, TETLP filed
an uncontested Stipulation and Agreement with the FERC to resolve
all issues from the rate proceeding. The comment and reply period
ended October 11, 2022. The FERC
approved the Stipulation and Agreement on November 30, 2022, and the Stipulation and
Agreement became effective on January 1,
2023.
BC Pipeline Rate Case Settlement
In the fourth quarter, B.C. Pipeline reached a Toll
Settlement (the Settlement) with shippers that was approved by the
Canada Energy Regulator (CER) in December. The Settlement spans a
5-year term inclusive of 2022-2026, providing toll stability over a
longer term than previous settlement agreements, and maintains the
low-risk, cost-of-service structure that is characteristic of the
B.C. Pipeline. The Settlement also includes new incentive
mechanisms that provide opportunities to generate incremental
earnings through volume optimization and emission reduction
initiatives undertaken by B.C. Pipeline.
Completed Partnership Agreement in Woodfibre LNG
The Company completed its previously announced agreement with
Pacific Energy Corporation Limited (Pacific Energy) to jointly
invest in the construction and operation of the Woodfibre LNG
project. Enbridge has a 30% ownership stake and Pacific Energy
retains the remaining 70% stake in the project. Enbridge and
Pacific Energy will make pro-rata contributions during
construction, and in exchange for its capital contributions,
Enbridge will receive a preferred equity interest that provides
predictable future cash flows. Pacific Energy will manage daily
operations, while both partners will jointly participate in the
project's execution and governance.
Preliminary construction activities, including site preparation
are underway. The project remains on track for its targeted
in-service date of 2027.
Carbon Capture and Storage (CCS)
Enbridge and Oxy Low Carbon Ventures (OLCV) announced that they
are jointly developing a carbon dioxide (CO2) sequestration hub in
the Corpus Christi area of the Texas Gulf Coast. Enbridge and OLCV
would leverage each company's strengths to advance the development
of a sequestration hub and associated transportation
infrastructure. Enbridge would develop, construct and operate the
pipeline facilities and OLCV would develop, construct and operate
the sequestration facilities. The hub is expected to provide CO2
solutions for Enbridge's proposed facilities as well as other point
source emitters in the Corpus Christi area.
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 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.
Enbridge has already filed and is currently negotiating with
shippers a cost-of-service application with the FERC in the U.S for
the base toll component of 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 Competitive Toll
Settlement (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 2023 financial guidance
reflects a provision in recognition of the uncertainty of future
mainline tolls.
Normal Course Issuer Bid
On January 4, 2023, the TSX
approved Enbridge's NCIB to purchase, for cancellation, up to
27,938,163 of its outstanding common shares for an aggregate amount
of up to $1.5 billion. The NCIB
commenced on January 6, 2023, and
expires on the earlier date of January 5,
2024, when the bid expires, or when the Company reaches its
share repurchase limit.
FOURTH QUARTER AND YEAR-END 2022 FINANCIAL
RESULTS
GAAP Segment EBITDA and Cash Flow from Operations
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
2,271
|
2,141
|
|
8,364
|
7,897
|
Gas
Transmission
|
(1,258)
|
946
|
|
3,126
|
3,671
|
Gas Distribution &
Storage
|
459
|
743
|
|
1,827
|
2,117
|
Renewable Power
Generation
|
(127)
|
146
|
|
262
|
508
|
Energy
Services
|
(69)
|
66
|
|
(417)
|
(313)
|
Eliminations and
Other
|
160
|
165
|
|
(1,124)
|
356
|
EBITDA1
|
1,436
|
4,207
|
|
12,038
|
14,236
|
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
(1,067)
|
1,840
|
|
2,589
|
5,816
|
|
|
|
|
|
|
Cash provided by
operating activities
|
3,613
|
1,890
|
|
11,230
|
9,256
|
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$1.36/US$) in
the fourth quarter of 2022 when compared with the fourth quarter in
2021 (C$1.26/US$). On a full year
basis, adjusted EBITDA generated from U.S. dollar denominated
business was translated at C$1.30/US$, compared with C$1.25/US$ in 2021. A portion
of U.S. dollar earnings is hedged under the Company's
enterprise-wide financial risk management program. The offsetting
hedge settlements are reported within Eliminations and Other.
Liquids Pipelines
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Mainline
System
|
1,343
|
1,202
|
|
5,121
|
4,466
|
Regional Oil Sands
System
|
224
|
234
|
|
918
|
927
|
Gulf Coast and
Mid-Continent System
|
405
|
317
|
|
1,411
|
1,019
|
Other
Systems1
|
355
|
355
|
|
1,458
|
1,319
|
Adjusted
EBITDA2
|
2,327
|
2,108
|
|
8,908
|
7,731
|
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
|
Mainline System -
ex-Gretna volume3
|
3,077
|
3,014
|
|
2,957
|
2,764
|
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
|
$0.87
|
$0.94
|
|
$0.90
|
$0.94
|
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 fourth quarter of 2022 was C$1.24/US$ (Q4 2021:
C$1.27/US$) and for the full year 2022 C$1.24/US$ (2021:
C$1.25/$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 $219 million
compared with the fourth quarter of 2021, primarily related to:
- higher Mainline System ex-Gretna throughput driven by a full quarter of
operations of the U.S. portion of the Line 3 Replacement Project
(L3R), and the timing of the recognition of the provision against
the interim Mainline IJT toll, which in the fourth quarter of 2021
included six months of provision; partially offset by higher power
costs as a result of increased volumes and higher power
prices;
- higher contributions from the Gulf Coast and Mid-Continent
System due to higher volumes on the Flanagan South Pipeline and
Spearhead Pipeline, increased economic interest in the Gray Oak
Pipeline as a result of the joint venture merger transaction with
P66, and increased economic interest in the Cactus II Pipeline;
partially offset by higher power costs and lower contributions from
the Seaway Crude Pipeline System;
- 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.
Full year 2022 Liquids Pipelines adjusted EBITDA increased
$1.2 billion compared with
2021 and was primarily impacted by the same factors discussed
above as well as full year contributions from incremental L3R
capacity, a full year of the L3R surcharge, full year contributions
from EIEC and higher contributions from the Bakken System due to
higher volumes.
Gas Transmission And Midstream
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
U.S. Gas
Transmission
|
844
|
670
|
|
3,216
|
2,905
|
Canadian Gas
Transmission
|
181
|
125
|
|
666
|
537
|
U.S.
Midstream
|
44
|
91
|
|
378
|
260
|
Other
|
48
|
36
|
|
157
|
148
|
Adjusted
EBITDA1
|
1,117
|
922
|
|
4,417
|
3,850
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
Gas Transmission and Midstream adjusted EBITDA increased
$195 million compared with the fourth quarter of 2021,
primarily related to:
- recognition of revenues attributable to the Texas Eastern rate
case resulting from a FERC-approved Stipulation and Agreement;
- recognition of revenues attributable to the B.C. Pipeline rate
settlement, 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 wider
AECO-Chicago basis differential; 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;
partially offset by
- lower U.S. midstream contributions resulting from reduced
economic interest in DCP, as a result of the joint venture merger
transaction with P66 that closed during the third quarter of 2022
and lower fractionation margins impacting Aux Sable
Full year 2022 Gas Transmission and Midstream adjusted EBITDA
increased $567 million compared with 2021, due to the
factors discussed above as well as:
- higher commodity prices benefiting DCP and Aux Sable joint ventures, and full year
contributions from the T-South Expansion and Spruce Ridge
projects;
- the Cameron and Middlesex Extension projects and the Appalachia
to Market project which were placed into service during the fourth
quarter of 2021; partially offset by
- higher operating costs.
Gas Distribution And Storage
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Enbridge Gas
Inc.
|
452
|
427
|
|
1,810
|
1,744
|
Other
|
15
|
23
|
|
46
|
109
|
Adjusted
EBITDA1
|
467
|
450
|
|
1,856
|
1,853
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
EGI
|
|
|
|
|
|
Volumes
(billions of cubic feet)
|
606
|
560
|
|
2,162
|
1,943
|
Number of active
customers2 (millions)
|
|
|
|
3.9
|
3.8
|
Heating degree
days3
|
|
|
|
|
|
Actual
|
1,239
|
1,144
|
|
3,841
|
3,494
|
Forecast based on
normal weather4
|
1,306
|
1,317
|
|
3,841
|
3,855
|
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 increased
$17 million compared with the fourth
quarter of 2021 primarily related to:
- the positive impact of colder weather than for the same period
of 2021;
- higher distribution rates and customer growth; partially offset
by
- higher operating expenses from higher employee costs and
maintenance and integrity spend; and
- the absence of earnings from Noverco Inc due to the sale of the
minority investment in December
2021
Full year 2022 Gas Distribution and Storage adjusted EBITDA
increased $3 million compared with
2021, due to the same factors discussed above. On a full year
basis, when compared with the normal weather forecast embedded in
rates, colder than normal weather in 2022 positively impacted EGI's
2022 EBITDA by approximately $17
million while warmer than normal weather in 2021 negatively
impacted 2021 EBITDA by approximately $55
million.
Renewable Power Generation
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA1
|
122
|
140
|
|
522
|
496
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
Renewable Power Generation adjusted EBITDA decreased
$18 million compared with the fourth quarter of 2021 primarily
related to lower North American wind production and higher
operating expenses.
Full year 2022 Renewable Power Generation adjusted EBITDA
increased $26 million due to the factors discussed above, as
well as:
- higher energy pricing and production at European offshore wind
facilities;
- stronger full year wind resources at Canadian and US onshore
wind facilities;
- the absence in 2022 of the adverse effects from the major
winter storm in Texas during
February 2021; partially offset
by
- the absence in 2022 of a promote fee received in the first
quarter of 2021 associated with the closing of the sale of 49% of
interest in three European offshore wind projects to Canada Pension
Plan Investment Board.
Energy Services
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA1
|
(62)
|
(83)
|
|
(364)
|
(360)
|
1 Non-GAAP
financial measure. Please refer to Non-GAAP Reconciliations
Appendices.
|
EBITDA from Energy Services is dependent on market conditions and
results achieved in one period may not be indicative of results to
be achieved in future periods.
Energy Services adjusted EBITDA increased $21 million
compared with the fourth quarter of 2021. The increase is the
result of significant compression of differentials and limited
storage opportunities in the fourth quarter of 2021 which were less
pronounced in the same period of 2022.
Full year 2022 Energy Services adjusted EBITDA decreased
$4 million. In both 2022 and 2021 there was pronounced market
structure backwardation and significant compression of location
differentials in certain markets. Results in 2021 include adverse
impacts from the major winter storm experienced across the US
Midwest during February 2021.
Eliminations and Other
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Operating and
administrative recoveries
|
8
|
103
|
|
115
|
256
|
Realized foreign
exchange hedge settlement gains/(losses)
|
(68)
|
47
|
|
77
|
175
|
Adjusted
EBITDA1
|
(60)
|
150
|
|
192
|
431
|
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
$210 million compared with the fourth quarter of 2021 due
to:
- realized foreign exchange losses on hedge settlements compared
with gains in the same quarter of 2021 with the average foreign
exchange rate for the fourth quarter of 2022 was $1.36 (Q4 2021: $1.26) compared with the average hedge rate of
$1.32 for the fourth quarter of 2022
(Q4 2021: $1.30); and
- the timing of recovery of operating and administrative costs
from the business segments and higher compensation costs
Full year 2022 Eliminations and Other adjusted EBITDA decreased
$239 million compared with 2021 due to lower realized
foreign exchange gains on hedge settlements and an increase in
employee costs. On a full year basis, the average exchange rate for
2022 was $1.30 (2021: $1.25) compared with the full-year 2022 hedge
rate of $1.32 (2021: $1.30).
Distributable Cash Flow
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars; number of shares in millions)
|
|
|
|
|
|
Liquids
Pipelines
|
2,327
|
2,108
|
|
8,908
|
7,731
|
Gas Transmission and
Midstream
|
1,117
|
922
|
|
4,417
|
3,850
|
Gas Distribution and
Storage
|
467
|
450
|
|
1,856
|
1,853
|
Renewable Power
Generation
|
122
|
140
|
|
522
|
496
|
Energy
Services
|
(62)
|
(83)
|
|
(364)
|
(360)
|
Eliminations and
Other
|
(60)
|
150
|
|
192
|
431
|
Adjusted
EBITDA1,3
|
3,911
|
3,687
|
|
15,531
|
14,001
|
Maintenance
capital
|
(354)
|
(274)
|
|
(820)
|
(686)
|
Interest
expense1
|
(885)
|
(747)
|
|
(3,242)
|
(2,724)
|
Current income
tax1
|
(204)
|
(142)
|
|
(595)
|
(352)
|
Distributions to
noncontrolling interests1
|
(75)
|
(64)
|
|
(259)
|
(271)
|
Cash distributions in
excess of equity earnings1
|
254
|
65
|
|
407
|
313
|
Preference share
dividends
|
(84)
|
(93)
|
|
(338)
|
(367)
|
Other receipts of cash
not recognized in revenue2
|
65
|
53
|
|
238
|
127
|
Other non-cash
adjustments
|
35
|
2
|
|
61
|
—
|
DCF3
|
2,663
|
2,487
|
|
10,983
|
10,041
|
Weighted average
common shares outstanding
|
2,025
|
2,024
|
|
2,025
|
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.
|
Fourth quarter 2022 DCF increased $176 million compared
with the same period of 2021 primarily due to operational factors
discussed above contributing to higher Adjusted EBITDA and higher
cash distributions in excess of equity earnings as a result of the
joint venture merger transaction with P66 which increased
Enbridge's economic interest in the Gray Oak and Cactus II
pipelines, Alliance and International Wind; partially offset by
lower distributions from DCP as a result of the transaction with
P66; partially offset by:
- higher maintenance capital spend across the organization;
- higher interest expense due to higher interest rates impacting
floating-rate debt and higher debt balances associated with
advancing the Company's secured growth program in 2022; and
- higher current income tax due to higher taxable earnings and an
increase in U.S. minimum taxes.
Full year 2022 DCF increased $942
million compared with the same period of 2021 primarily due
to operational factors discussed above as well as higher receipts
of cash not recognized in revenue related to unshipped contracted
volumes at the EIEC that have a contractual right to ship at a
later date offset by lower capitalized interest associated with the
U.S. portion of the L3R Project placed into service in the fourth
quarter of 2021.
Adjusted Earnings
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts)
|
|
|
|
|
|
Adjusted
EBITDA1,2
|
3,911
|
3,687
|
|
15,531
|
14,001
|
Depreciation and
amortization
|
(1,155)
|
(1,047)
|
|
(4,427)
|
(3,852)
|
Interest
expense2
|
(872)
|
(734)
|
|
(3,196)
|
(2,675)
|
Income
taxes2
|
(493)
|
(406)
|
|
(1,767)
|
(1,429)
|
Noncontrolling
interests2
|
(35)
|
(31)
|
|
(93)
|
(121)
|
Preference share
dividends
|
(85)
|
(93)
|
|
(356)
|
(373)
|
Adjusted
earnings1
|
1,271
|
1,376
|
|
5,692
|
5,551
|
Adjusted earnings
per common share1
|
0.63
|
0.68
|
|
2.81
|
2.74
|
1
Non-GAAP financial measures. Please refer to Non-GAAP
Reconciliations Appendices.
|
2
Presented net of adjusting items.
|
Adjusted earnings for the fourth quarter decreased
$105 million and adjusted earnings per share decreased
$0.05 when compared with the fourth
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 L3R Project,
which was placed into service in the fourth quarter and EIEC
acquired in October 2021;
- higher interest expense due to higher interest rates impacting
floating-rate debt and higher debt balances associated with
advancing the Company's secured growth program in 2021; and
- higher income taxes from higher taxable earnings and an
increase in U.S. minimum taxes.
Full year adjusted earnings increased $141 million and adjusted earnings per share
increased $0.07 compared with
2021 due to the same operational factors discussed previously
in Adjusted EBITDA by Segments, partially offset by the higher
depreciation discussed above and by lower capitalized interest
associated with the U.S. portion of the L3R Project placed into
service in the fourth quarter of 2021.
CONFERENCE CALL
Enbridge will host a conference call and webcast on
February 10, 2023 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise-wide business
update and review 2022 fourth and full-year 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/914273160. 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-free 1-800-770-2030
(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 29, 2022, our Board of
Directors declared the following quarterly dividends. All dividends
are payable on March 1, 2023 to
shareholders of record on February 15,
2023.
|
Dividend per
share
|
Common
Shares1
|
$0.88750
|
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 3.2% to $0.8875 from $0.860,
effective March 1, 2023.
|
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 and every five years thereafter.
Following the date of conversion of Preference Shares Series C, 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 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, and every five years
thereafter.
|
FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements,
have been included in this news release to provide information
about Enbridge and its subsidiaries and affiliates, including
management's assessment of Enbridge and its subsidiaries' future
plans and operations. This information may not be appropriate for
other purposes. Forward looking statements are typically identified
by words such as ''anticipate'', ''expect'', ''project'',
'estimate'', ''forecast'', ''plan'', ''intend'', ''target'',
''believe'', "likely" and similar words suggesting future outcomes
or statements regarding an outlook. Forward-looking information or
statements included or incorporated by reference in this document
include, but are not limited to, statements with respect to the
following: Enbridge's corporate vision and strategy, including our
strategic priorities and outlook; 2023 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, practices and performance; 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; financial strength and
flexibility; financing costs; expectations on leverage, including
Debt to EBITDA ratio; sources of liquidity and sufficiency of
financial resources; expected in-service dates and costs related to
announced projects and projects under construction; investable
capacity, and capital allocation framework and priorities; share
repurchases under our normal course issuer bid; impact of weather
and seasonality; expected future growth and expansion
opportunities, including secured growth program, development
opportunities, customer growth and low carbon opportunities and
strategy, including with respect to our U.S. Gulf Coast crude oil
strategy, T-North expansion, Woodfibre LNG project, and carbon
capture and storage projects; 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; and toll and rate case discussions
and filings, including with respect to the Mainline, and
anticipated timing and impact therefrom.
Although Enbridge believes these forward-looking statements
are reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Material assumptions
include assumptions about the following: 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; 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; maintenance of support and regulatory
approvals for our projects; anticipated in-service dates; weather;
announced and potential acquisition, disposition and other
corporate transactions and projects and the timing and benefits
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; 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 our services. Similarly, exchange rates,
inflation, interest rates and the COVID-19 pandemic impact the
economies and business environments in which we operate and may
impact levels of demand for our 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 stability of our
supply chain; 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, court 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 successful execution of our
strategic priorities; operating performance; regulatory parameters;
litigation; acquisitions and dispositions and other transactions,
and the realization of anticipated benefits therefrom; project
approval and support; renewals of rights-of-way; weather; economic
and competitive conditions; global geopolitical conditions;
political decisions; public opinion; dividend policy; changes in
tax laws and tax rates; 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 news release and in Enbridge's
other filings with Canadian and U.S. securities regulators. The
impact of any one assumption, risk, uncertainty or factor on a
particular forward-looking statement is not determinable with
certainty, as these are interdependent and our 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 statement 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 us or persons acting on our 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.
This news release also contains references to Debt to EBITDA, a
non-GAAP ratio which utilizes adjusted EBITDA as one of its
components. Debt to EBITDA is used as a liquidity measure to
indicate the amount of adjusted earnings to pay debt, as calculated
on the basis of generally accepted accounting principles in
the United States of America (U.S.
GAAP), before covering interest, tax, depreciation and
amortization.
Reconciliations of forward-looking non-GAAP financial measures
and non-GAAP ratios to comparable GAAP measures are not available
due to the challenges and impracticability of estimating certain
items, particularly certain contingent liabilities and non-cash
unrealized derivative fair value losses and gains 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
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Liquids
Pipelines
|
2,271
|
2,141
|
|
8,364
|
7,897
|
Gas Transmission and
Midstream
|
(1,258)
|
946
|
|
3,126
|
3,671
|
Gas Distribution and
Storage
|
459
|
743
|
|
1,827
|
2,117
|
Renewable Power
Generation
|
(127)
|
146
|
|
262
|
508
|
Energy
Services
|
(69)
|
66
|
|
(417)
|
(313)
|
Eliminations and
Other
|
160
|
165
|
|
(1,124)
|
356
|
EBITDA
|
1,436
|
4,207
|
|
12,038
|
14,236
|
Depreciation and
amortization
|
(1,122)
|
(1,047)
|
|
(4,317)
|
(3,852)
|
Interest
expense
|
(863)
|
(732)
|
|
(3,179)
|
(2,655)
|
Income tax
expense
|
(560)
|
(463)
|
|
(1,604)
|
(1,415)
|
(Earnings)/loss
attributable to noncontrolling interests
|
126
|
(32)
|
|
65
|
(125)
|
Preference share
dividends
|
(84)
|
(93)
|
|
(414)
|
(373)
|
Earnings
attributable to common shareholders
|
(1,067)
|
1,840
|
|
2,589
|
5,816
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts)
|
|
|
|
|
|
Liquids
Pipelines
|
2,327
|
2,108
|
|
8,908
|
7,731
|
Gas Transmission and
Midstream
|
1,117
|
922
|
|
4,417
|
3,850
|
Gas Distribution and
Storage
|
467
|
450
|
|
1,856
|
1,853
|
Renewable Power
Generation
|
122
|
140
|
|
522
|
496
|
Energy
Services
|
(62)
|
(83)
|
|
(364)
|
(360)
|
Eliminations and
Other
|
(60)
|
150
|
|
192
|
431
|
Adjusted
EBITDA
|
3,911
|
3,687
|
|
15,531
|
14,001
|
Depreciation and
amortization
|
(1,155)
|
(1,047)
|
|
(4,427)
|
(3,852)
|
Interest
expense
|
(872)
|
(734)
|
|
(3,196)
|
(2,675)
|
Income tax
expense
|
(493)
|
(406)
|
|
(1,767)
|
(1,429)
|
Earnings attributable
to noncontrolling interests
|
(35)
|
(31)
|
|
(93)
|
(121)
|
Preference share
dividends
|
(85)
|
(93)
|
|
(356)
|
(373)
|
Adjusted
earnings
|
1,271
|
1,376
|
|
5,692
|
5,551
|
Adjusted earnings
per common share
|
0.63
|
0.68
|
|
2.81
|
2.74
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars, except per share amounts)
|
|
|
|
|
|
EBITDA
|
1,436
|
4,207
|
|
12,038
|
14,236
|
Adjusting
items:
|
|
|
|
|
|
Change in unrealized
derivative fair value (gain)/loss - Foreign exchange
|
(486)
|
(112)
|
|
1,265
|
(197)
|
Change in unrealized
derivative fair value (gain)/loss - Commodity prices
|
49
|
(155)
|
|
27
|
(53)
|
Gain on joint venture
merger transaction
|
—
|
—
|
|
(1,076)
|
—
|
Goodwill
impairment
|
2,475
|
—
|
|
2,475
|
—
|
Equity investment
impairment
|
—
|
—
|
|
—
|
111
|
Equity earnings
adjustment - DCP Midstream, LLC
|
(16)
|
(60)
|
|
10
|
44
|
Assets
impairment
|
436
|
7
|
|
542
|
7
|
Woodfibre LNG
transaction costs
|
114
|
—
|
|
114
|
—
|
Other
|
(97)
|
(200)
|
|
136
|
(147)
|
Total adjusting
items
|
2,475
|
(520)
|
|
3,493
|
(235)
|
Adjusted
EBITDA
|
3,911
|
3,687
|
|
15,531
|
14,001
|
Depreciation and
amortization
|
(1,122)
|
(1,047)
|
|
(4,317)
|
(3,852)
|
Interest
expense
|
(863)
|
(732)
|
|
(3,179)
|
(2,655)
|
Income tax
expense
|
(560)
|
(463)
|
|
(1,604)
|
(1,415)
|
Earnings attributable
to noncontrolling interests
|
126
|
(32)
|
|
65
|
(125)
|
Preference share
dividends
|
(84)
|
(93)
|
|
(414)
|
(373)
|
Adjusting items in
respect of:
|
|
|
|
|
|
Depreciation and
amortization
|
(33)
|
—
|
|
(110)
|
—
|
Interest
expense
|
(9)
|
(2)
|
|
(17)
|
(20)
|
Income tax
expense
|
67
|
57
|
|
(163)
|
(14)
|
Earnings attributable
to noncontrolling interests
|
(161)
|
1
|
|
(158)
|
4
|
Preference share
dividends
|
(1)
|
—
|
|
58
|
—
|
Adjusted
earnings
|
1,271
|
1,376
|
|
5,692
|
5,551
|
Adjusted earnings
per common share
|
0.63
|
0.68
|
|
2.81
|
2.74
|
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED EBITDA TO
SEGMENTED EBITDA
LIQUIDS PIPELINES
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
2,327
|
2,108
|
|
8,908
|
7,731
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
181
|
36
|
|
(183)
|
120
|
Assets
impairment
|
(197)
|
—
|
|
(252)
|
—
|
Property tax
settlement
|
—
|
—
|
|
—
|
57
|
Other
|
(40)
|
(3)
|
|
(109)
|
(11)
|
Total
adjustments
|
(56)
|
33
|
|
(544)
|
166
|
EBITDA
|
2,271
|
2,141
|
|
8,364
|
7,897
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
1,117
|
922
|
|
4,417
|
3,850
|
Equity investment
impairment
|
—
|
—
|
|
—
|
(111)
|
Goodwill
impairment
|
(2,475)
|
—
|
|
(2,475)
|
—
|
Gain from joint venture
merger transaction
|
—
|
—
|
|
1,076
|
—
|
Customer
settlement
|
118
|
—
|
|
118
|
—
|
Equity earnings
adjustment - DCP Midstream, LLC
|
16
|
60
|
|
(10)
|
(44)
|
Other
|
(34)
|
(36)
|
|
—
|
(24)
|
Total
adjustments
|
(2,375)
|
24
|
|
(1,291)
|
(179)
|
EBITDA
|
(1,258)
|
946
|
|
3,126
|
3,671
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
467
|
450
|
|
1,856
|
1,853
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
—
|
2
|
|
—
|
14
|
Gain on sale of equity
investment
|
—
|
303
|
|
—
|
303
|
Other
|
(8)
|
(12)
|
|
(29)
|
(53)
|
Total
adjustments
|
(8)
|
293
|
|
(29)
|
264
|
EBITDA
|
459
|
743
|
|
1,827
|
2,117
|
RENEWABLE POWER GENERATION
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
122
|
140
|
|
522
|
496
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
2
|
2
|
|
8
|
8
|
Assets
impairment
|
(238)
|
—
|
|
(238)
|
—
|
Other
|
(13)
|
4
|
|
(30)
|
4
|
Total
adjustments
|
(249)
|
6
|
|
(260)
|
12
|
EBITDA
|
(127)
|
146
|
|
262
|
508
|
ENERGY SERVICES
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
(62)
|
(83)
|
|
(364)
|
(360)
|
Change in unrealized
derivative fair value gain/(loss) - Commodity prices
|
(49)
|
155
|
|
(27)
|
53
|
Net inventory
adjustment
|
55
|
(6)
|
|
(13)
|
(6)
|
Asset
impairment
|
(13)
|
—
|
|
(13)
|
—
|
Total
adjustments
|
(7)
|
149
|
|
(53)
|
47
|
EBITDA
|
(69)
|
66
|
|
(417)
|
(313)
|
ELIMINATIONS AND OTHER
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Adjusted
EBITDA
|
(60)
|
150
|
|
192
|
431
|
Change in unrealized
derivative fair value gain/(loss) - Foreign exchange
|
303
|
72
|
|
(1,090)
|
55
|
Enterprise insurance
strategy restructuring
|
—
|
—
|
|
(15)
|
—
|
Woodfibre LNG
transaction costs
|
(114)
|
—
|
|
(114)
|
—
|
Impairment of lease
assets
|
12
|
(7)
|
|
(39)
|
(7)
|
Other
|
19
|
(50)
|
|
(58)
|
(123)
|
Total
adjustments
|
220
|
15
|
|
(1,316)
|
(75)
|
EBITDA
|
160
|
165
|
|
(1,124)
|
356
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED BY
OPERATING ACTIVITIES TO DCF
|
Three months
ended
December 31,
|
|
Twelve months ended
December 31,
|
|
2022
|
2021
|
|
2022
|
2021
|
(unaudited; millions
of Canadian dollars)
|
|
|
|
|
|
Cash provided by
operating activities
|
3,613
|
1,890
|
|
11,230
|
9,256
|
Adjusted for changes in
operating assets and liabilities1
|
(590)
|
810
|
|
12
|
1,466
|
|
3,023
|
2,700
|
|
11,242
|
10,722
|
Distributions to
noncontrolling interests
|
(75)
|
(64)
|
|
(259)
|
(271)
|
Preference share
dividends
|
(84)
|
(93)
|
|
(338)
|
(367)
|
Maintenance capital
expenditures2
|
(354)
|
(274)
|
|
(820)
|
(686)
|
Significant adjusting
items:
|
|
|
|
|
|
Other receipts of cash
not recognized in revenue3
|
65
|
53
|
|
238
|
127
|
Distributions from
equity investments in excess of cumulative
earnings4
|
259
|
121
|
|
733
|
418
|
Enterprise insurance
strategy restructuring expenses
|
—
|
—
|
|
100
|
—
|
Other items
|
(171)
|
44
|
|
87
|
98
|
DCF
|
2,663
|
2,487
|
|
10,983
|
10,041
|
1
|
Changes in operating
assets and liabilities, net of recoveries.
|
2
|
Maintenance capital
expenditures are expenditures that are required for the ongoing
support and maintenance of the existing pipeline system or that are
necessary to maintain the service capability of the existing assets
(including the replacement of components that are worn, obsolete or
completing their useful lives). For the purpose of DCF, maintenance
capital excludes expenditures that extend asset useful lives,
increase capacities from existing levels or reduce costs to enhance
revenues or provide enhancements to the service capability of the
existing assets.
|
3
|
Consists of cash
received, net of revenue recognized, for contracts under make-up
rights and similar deferred revenue arrangements.
|
4
|
Presented net of
adjusting items.
|
View original
content:https://www.prnewswire.com/news-releases/enbridge-reports-strong-2022-financial-results-and-advances-strategic-priorities-301743711.html
SOURCE Enbridge Inc.