CALGARY, Nov. 8, 2019 /CNW/ - Enbridge Inc. (Enbridge or
the Company) (TSX:ENB) (NYSE:ENB) today reported third quarter 2019
financial results and provided a quarterly business update.
THIRD QUARTER 2019 HIGHLIGHTS
(all financial
figures are unaudited and in Canadian dollars unless otherwise
noted)
- GAAP earnings of $949 million or
$0.47 per common share for the third
quarter of 2019, compared to GAAP loss of $90 million or $0.05 loss per common share in the third quarter
of 2018, both including the impact of a number of unusual,
non-recurring or non-operating factors
- Adjusted earnings of $1,124
million or $0.56 per common
share for the third quarter of 2019, compared to $933 million or $0.55 per common share in the third quarter of
2018
- Adjusted earnings before interest, income tax and depreciation
and amortization (EBITDA) of $3,108
million for the third quarter of 2019, compared to
$2,958 million in the third quarter
of 2018
- Cash Provided by Operating Activities of $2,735 million for the third quarter of 2019,
compared to $1,461 million for the
third quarter of 2018
- Distributable Cash Flow (DCF) of $2,105
million for the third quarter of 2019, compared to
$1,585 million for the third quarter
of 2018
- Reaffirmed financial guidance range for 2019 DCF per Share of
$4.30 to $4.60/share; full year results expected to exceed
the mid-point of the guidance range
- Reached an agreement with shippers to place the Canadian
segment of the Line 3 Replacement Project into service with an
interim surcharge
- Continuing progress on the U.S. segment of Line 3 Replacement
Project: Minnesota Supreme Court rejects Environmental Impact
Statement (EIS) appeals; in October the Minnesota Public Utilities
Commission (MPUC) orders EIS remediation work to be completed by
December 9, 2019
- Announced Memorandum of Understanding (MOU) with NextDecade to
jointly pursue the development of the Rio Bravo Pipeline and other
natural gas pipelines in South
Texas to serve the Rio Grande LNG project in Brownsville, Texas
- Achieved a formal settlement on Texas Eastern rates with
customers, which has been filed with the FERC for review
- Seaway pipeline announced an upcoming open season for up to 200
thousand barrels per day (kbpd) expansion on the Seaway crude oil
pipeline
- Receipt of $0.4 billion of
proceeds on previously announced non-core asset sales; further
increasing financial flexibility
CEO COMMENT
"We delivered another strong quarter of operating and financial
results," commented Al Monaco,
President and Chief Executive Officer of Enbridge. "The continued
strength of our operating performance reflects the quality and
predictability of our business model. Once again, we saw strong
throughput on our Mainline system during the quarter, with demand
for crude volumes out of Western
Canada and the Bakken through to U.S. Gulf Coast markets. In
addition, our gas transmission business remained in high demand and
our Ontario gas utility continued
to realize operating synergies following the amalgamation earlier
this year.
"Record third quarter EBITDA and DCF was further bolstered by
reliable and growing cash flow from new capital projects placed
into service over the past year. As a result, we remain confident
in achieving our financial guidance for 2019, despite the delay of
the Line 3 Replacement Project, with full year results expected to
exceed the midpoint of our 2019 DCF guidance range
of $4.30 to $4.60 per share.
"In addition to delivering strong financial results, we advanced
key initiatives in each of our business units during the quarter.
In Liquids Pipelines, we've reached commercial agreement to place
the Canadian portion of the Line 3 Replacement Project into service
later this year, which will further enhance the safety and
reliability of our Mainline system.
"Liquids Pipelines is also moving forward with around 100 kbpd
of optimizations that we'll be implementing by year end and in
addition to that we have successfully completed an open season
supporting a 50 kbpd expansion of the Express Pipeline. Together,
these actions provide much needed additional takeaway capacity out
of the WCSB.
"On the U.S. portion of our Line 3 Replacement Project, the
Minnesota Supreme Court rejected the remaining appeals on the EIS,
and the MPUC has now directed the Minnesota Department of Commerce
to complete the necessary spill modelling work to remediate the
EIS. We're pleased that this regulatory process is moving forward
so we can bring this integrity replacement project into service as
soon as possible.
"On our Liquids Mainline contract offering, the CER's decision,
despite 18 months of negotiations with customers which resulted in
substantial capacity commitments from shippers, was a significant
departure from precedent. We continue to have strong support for a
priority access offering from shippers, including refiners,
producers and marketers that represent a significant majority of
current throughput. Our Mainline system provides a vital connection
for these shippers serving over 3 mbpd of refining demand and
downstream contracted capacity. The Mainline provides the most
economic tolls to the best markets, resulting in the strongest
netback for Western Canadian crude. We remain committed to our
offering and plan to file an application to the regulator as soon
as practical.
"Within the Gas Transmission business, we filed a settlement
agreement with the FERC on the Texas Eastern rate case and continue
to advance rate case discussions on the Algonquin systems, further
optimizing our base business. In addition to recently announced
U.S. Gulf Coast LNG pipeline projects, we entered into a MOU to
jointly pursue the development of the Rio Bravo Pipeline and other
natural gas pipelines in South
Texas to move natural gas to NextDecade's Rio Grande LNG
project in Brownsville, TX. We
continue to see significant opportunities to expand and extend our
competitively positioned gas pipeline network to serve the U.S.
Gulf Coast LNG market.
"Execution of our $19 billion
secured growth capital program remains on track. This includes our
US$0.7 billion investment in the Gray
Oak pipeline, stretching from the Permian and Eagle Ford to the
Texas Gulf Coast, which is expected to come into service before the
end of the year and our $1.1 billion
Hohe See offshore wind power project in Germany which has now completed installation
of all turbines and the facility is expected to be fully
operational in the fourth quarter.
"On the financing front, we've raised over $4 billion of term debt at favourable rates in
the Canadian and U.S. markets this year, the bulk of which has been
used to refinance maturing long term debt. As a result, our
consolidated Debt to EBITDA in the third quarter remained at 4.6x,
well within our longer-term target range.
"Lastly, we remain focused on our key priorities for the year,
which include achieving strong operating and financial results,
adding to the secured project inventory, maintaining our financial
strength and the continued self-funding of new growth. We believe
that these actions, along with our enhanced focus on capital
allocation, growth and return on capital, will maximize shareholder
value and deliver on our attractive investor value proposition.
"In summary, it was another strong quarter for the Company and
we're pleased with the performance across each of the business
units as well as the progress being made on key priorities,"
concluded Mr. Monaco.
FINANCIAL RESULTS SUMMARY
Financial results for the three and nine months ended
September 30, 2019, are summarized in
the table below:
|
|
|
|
|
Three months
ended
September 30,
|
|
Nine months ended
September 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars, except per share
amounts;
|
|
|
|
|
|
number of shares in
millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
949
|
(90)
|
|
4,576
|
1,426
|
GAAP Earnings per
common share
|
0.47
|
(0.05)
|
|
2.27
|
0.84
|
Cash provided by
operating activities
|
2,735
|
1,461
|
|
7,405
|
7,999
|
Adjusted
EBITDA1
|
3,108
|
2,958
|
|
10,085
|
9,529
|
Adjusted
Earnings1
|
1,124
|
933
|
|
4,113
|
3,402
|
Adjusted Earnings per
common share1
|
0.56
|
0.55
|
|
2.04
|
2.01
|
Distributable Cash
Flow1
|
2,105
|
1,585
|
|
7,173
|
5,755
|
Weighted average
common shares outstanding
|
2,018
|
1,705
|
|
2,017
|
1,695
|
|
|
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 2019 increased by $1,039
million or $0.52 per share
compared to the same period in 2018. The period-over-period
comparability of earnings attributable to common shareholders was
impacted by certain unusual and infrequent factors, the most
prominent being the absence of a goodwill impairment charge of
$1,019 million after-tax recognized
in 2018 resulting from the classification of the Canadian natural
gas gathering and processing businesses as being held for sale.
Partially offsetting the increase in GAAP earnings attributable to
common shareholders was the change in non-cash derivative fair
value gains and losses between periods.
Adjusted earnings in the third quarter 2019 increased by
$191 million. The increase was
primarily driven by strong operating results across many of the
Company's business units and from new projects placed into service
in late 2018, partially offset by the loss of contributions from
assets that were sold during 2018. On a per share basis, adjusted
earnings increased by $0.01 per share
compared to the same period in 2018, reflecting the same operating
factors noted above, partially offset by a higher share count which
reflected Enbridge's common equity financed acquisitions during the
fourth quarter of 2018 of all of the outstanding equity securities
of its sponsored vehicles not beneficially owned.
DCF for the third quarter was $2,105
million, an increase of $520
million over the comparable prior period in 2018, driven
largely by the operating factors noted above as well as lower
distributions to noncontrolling interests following the completion
of Enbridge's buy-in of the publicly held interest in its sponsored
vehicles, which were completed in the fourth quarter of 2018.
Detailed segmented financial information and analysis can be
found below under Adjusted EBITDA by Segments.
PROJECT EXECUTION UPDATE
Enbridge continues to make good progress advancing its
$19 billion of secured growth capital
program, which includes approximately $2.5
billion of projects secured year to date, which will drive
highly transparent growth over the near to medium term horizon. The
individual projects that make up the secured program are all
supported by long-term take-or-pay contracts, cost-of-service
frameworks or similar low-risk commercial arrangements and are
diversified across a wide range of business platforms and
regulatory jurisdictions.
The Company continues to anticipate that several growth projects
will be placed into service in 2019, including the US$0.7 billion investment in the Gray Oak
pipeline and the $1.1 billion HoHe
See offshore wind power project in Germany and the Canadian portion of the Line 3
replacement project at interim tolls (discussed further below).
The Gray Oak pipeline is on track for completion by the end of
the year, with volumes expected to ramp up in the first quarter of
2020, providing incremental crude pipeline capacity out of the
Permian basin, and is underpinned by take-or-pay contracts.
The 497MW HoHe See Offshore Wind project, located in the German
North Sea, commenced operations in October with turbines connected
and feeding electricity into the grid. The adjacent 112MW
expansion, Albatros, continues to advance as planned with all wind
turbines installed and is expected to be fully operational by the
end of the year. Power generated by the project will receive
long-term fixed pricing for 20 years, providing strong returns
underpinned by a low-risk commercial model.
Line 3 Replacement
The $9 billion Line 3 Replacement
Project is a significant component of the Company's secured project
inventory. It is a critical integrity replacement project that will
enhance the safety and reliability of Enbridge's Liquids Mainline
System.
The Company reached a commercial agreement with its shippers on
an interim surcharge until the US portion of the line is completed
and it plans to move ahead to place the Canadian segment of the
Line 3 Replacement in service on December 1,
2019. This agreement reaffirms the Company's commitment to
construct and operate a safe new state of the art pipeline. The
capital cost for the Line 3 Replacement Project came in slightly
below budget in Canada.
On September 17, the Minnesota
Supreme Court denied all remaining appeals of the EIS, thus
returning jurisdiction to the MPUC to address the one narrow
deficiency in the EIS that was previously identified. The MPUC had
indicated that the agency will seek public comment and work
expeditiously to address the EIS deficiency. Consistent with this
statement, at a hearing on October 1,
the MPUC directed the Department of Commerce to complete the
additional spill modelling work and submit a revised EIS by
December 9. At this time, Enbridge
cannot determine when all necessary permits will be issued pending
receipt of further information from the MPUC on a timeline to
finalize the EIS and reaffirm the Certificate of Need and Route
Permit. The State environmental permitting agencies have continued
to advance their work, to the extent possible, in parallel with the
ongoing EIS process. The Company expects to hear from the MPUC
regarding further updated process and timelines after which the
agencies are expected to reset their schedules to align with the
MPUC process.
Depending on the final in-service date, there is a risk that the
project may exceed the Company's total cost estimate of
$9 billion for the combined Line 3
Replacement Project. However, at this time, the Company does not
anticipate any capital cost impacts that would be material to
Enbridge's financial position and outlook.
OTHER BUSINESS UPDATES
Mainline Contracting
On September 27, in light of select
producer complaints, the Canada Energy Regulator (CER) decided that
Enbridge may not offer firm service to prospective shippers on the
Liquids Mainline System until such firm service has been approved
by the CER. While this decision was a significant departure from
past regulatory precedents, the CER noted that its decision to hold
a regulatory review prior to the open season does not prejudice
Enbridge's ability to offer long term priority access contracts on
the Mainline system.
Enbridge's Mainline contract offering is the result of 18 months
of extensive negotiations with its diverse customer base and was
formulated in direct response to its core customer base who want
toll certainty and priority access. These shippers, which represent
the majority of Mainline throughput, continue to support the
offering.
As a result, Enbridge plans to file an application to the CER
seeking approval of a firm service offering as soon as
practical.
WCSB Egress Initiatives
By the end of this year, the Company expects to deliver
approximately 100 kbpd of incremental Mainline capacity. This
additional capacity will be achieved within the Company's current
system capacity and operating parameters through crude delivery and
receipt window efficiencies further enhanced by the operational
flexibility of bringing the Canadian segment of Line 3 Replacement
into service, optimization of crude quality slates, as well as the
recovery of existing capacity. Together, these capital efficient
initiatives will provide much needed and cost effective near-term
egress for Western Canadian Sedimentary Basin (WCSB)
production.
The Company successfully completed an open season resulting in a
50 kbpd expansion of the Express pipeline. This expansion will
provide additional takeaway capacity out of the WCSB to serve the
PADD IV market and is expected to ramp up in the first half of
2020.
Market Access Initiatives
Seaway Pipeline announced its intention to launch an open season
for up to 200 kbpd of incremental light crude capacity on Seaway's
existing system originating in Cushing,
Oklahoma and extending to the Texas Gulf Coast area. This
highly cost effective expansion would de-bottleneck and optimize
the system principally through pump upgrades. Initial expansion
capacity could be available by mid-2020, with the expansion
expected to be fully in-service in 2022.
In the Bakken, the binding open season on the Dakota Access
Pipeline that was launched this summer has recently been extended
and modified to include HFOTCO as a destination for shippers. This
open season will solicit additional shipper commitments for
transportation service that would further support a capacity
optimization of up to 1.1 million barrels per day.
Gas Transmission Rate Cases
One of the Company's strategic priorities is to ensure timely and
fair returns on existing and new capital additions to the Company's
U.S. natural gas transmission systems. Following extensive
negotiations on the Texas Eastern rate case, Enbridge reached an
agreement with shippers and filed the Stipulation and Agreement on
October 28 with the Federal Energy
Regulatory Commission (FERC) and expects an approval in the second
quarter of next year. The Company has also commenced rate
discussions with Algonquin customers with the expectation of a
pre-packaged settlement on that system.
Utilities Update
During the quarter, the Company received a Decision and Order from
the Ontario Energy Board (OEB) on its application for 2019 rates.
The 2019 rate application was filed in December 2018 in accordance with the parameters
of the Company's OEB approved incentive based regulatory framework
and represents the first year of a five-year term. The Decision and
Order approved an effective date for base rates of April 1, 2019, and the inclusion of incremental
capital module amounts to allow for the recovery of incremental
capital investments.
ASSET SALES & FINANCING UPDATE
In 2018, Enbridge reached agreements to sell over $7.8 billion of non-core assets. Enbridge has now
received total proceeds of $6.1
billion, including $0.4
billion from the closing of the sale of Enbridge Gas New
Brunswick on October 1, 2019 and St.
Lawrence Gas Company on November 1,
2019. Enbridge anticipates the remaining proceeds related to
the close of the CER regulated Canadian gas gathering and
processing assets in the fourth quarter of 2019. These sales
provide the Company with further financial flexibility to self-fund
its secured growth program, including $2.5
billion of newly secured projects in 2019. As of
September 30, the Company's
consolidated Debt-to-EBITDA ratio was 4.6x on a trailing twelve
month basis. This is well within the Company's long term target
credit metric range of 4.5x to below 5.0x Debt-to-EBITDA.
The Company continued to execute on its capital funding plan in
the third quarter with total year to date term debt issuances
exceeding $4 billion. The bulk of
these issuances have been to re-finance maturing debt at
significantly lower coupon rates. Notably, in August, Enbridge Gas
Inc. completed its inaugural term debt offerings in the Canadian
debt capital markets for a total of $700
million. Also in August, Algonquin Gas Transmission, LLC
issued US$500 million of 10 year
notes through a private placement transaction. In early October,
Enbridge Inc. completed a $1 billion
single tranche offering of 10 year notes in the Canadian debt
capital markets.
EXECUTIVE LEADERSHIP CHANGES
Today, Enbridge announced the following executive leadership
changes, effective February 28, 2020.
Guy Jarvis, Executive Vice
President, Liquids Pipelines, has decided to retire at the end of
February 2020, after close to 20
years with Enbridge.
Guy has been in the energy business for over 33 years. His
career with Enbridge began as VP, Gas Services and over the years
he has held numerous leadership roles in Liquids Pipelines,
Investor Relations & Enterprise Risk, and as President,
Enbridge Gas Distribution and President, Liquids Pipelines &
Major Projects.
"Several of Guy's accomplishments stand out", said President
& CEO Al Monaco. "His extensive
efforts to optimize throughput on the Mainline system resulting in
record volumes while also driving record pipeline safety
performance; execution of our regional oil sands strategy;
delivering the Line 3 Replacement Project in Canada and navigating the US portion through a
challenging process; and leading the execution of our US Gulf Coast
strategy."
In alignment with our long-standing commitment to succession
planning, Vern Yu, President and
Chief Operating Officer Liquids Pipelines, who has been developed
as successor for this role, will assume responsibilities as the
Executive Vice President & President Liquids Pipelines.
In June 2019, Vern was appointed
President & Chief Operating Officer, Liquids Pipelines
accountable for Operations, Engineering and Asset Management, and
Pipeline Control for Liquids Pipelines. Prior to this, Vern was
Executive Vice President & Chief Development Officer. During
his 25+ years with Enbridge, Vern has held leadership roles in
Finance and Corporate Development as well as leading the business
and market development activities for Liquids Pipelines. Vern is a
professional engineer and has a Master of Business Administration
and Bachelor of Applied Science (Engineering).
"Among his achievements Vern led Liquids Pipelines through the
largest slate of organic growth projects in Enbridge history. As
Chief Development Officer, he led the $37B acquisition of Spectra Energy and in 2018
executed our priority of selling non-core assets and simplifying
the corporate structure," said President & CEO Al Monaco.
THIRD QUARTER 2019 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 2019.
GAAP SEGMENT EBITDA AND CASH FLOW FROM OPERATIONS
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Liquids
Pipelines
|
1,646
|
1,875
|
5,710
|
4,353
|
Gas Transmission and
Midstream
|
772
|
(60)
|
2,733
|
1,080
|
Gas
Distribution
|
252
|
256
|
1,304
|
1,262
|
Renewable Power
Generation and Transmission
|
82
|
51
|
300
|
286
|
Energy
Services
|
91
|
(96)
|
318
|
108
|
Eliminations and
Other
|
(40)
|
29
|
315
|
(368)
|
EBITDA
|
2,803
|
2,055
|
10,680
|
6,721
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
949
|
(90)
|
4,576
|
1,426
|
|
|
|
|
|
Cash provided by
operating activities
|
2,735
|
1,461
|
7,405
|
7,999
|
For purposes of evaluating performance, the Company makes
adjustments for unusual, non-recurring or non-operating factors to
GAAP reported earnings, segment EBITDA, and cash flow provided by
operating activities, which allow Management and investors to more
accurately compare the Company's performance across periods,
normalizing for factors that are not indicative of the underlying
business performance. Tables incorporating these adjustments follow
below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted
EBITDA by segment, adjusted earnings, adjusted earnings per common
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,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Liquids
Pipelines
|
1,826
|
1,633
|
5,321
|
4,889
|
Gas Transmission and
Midstream
|
944
|
1,038
|
2,920
|
3,116
|
Gas
Distribution
|
255
|
259
|
1,338
|
1,274
|
Renewable Power
Generation and Transmission
|
82
|
73
|
305
|
337
|
Energy
Services
|
27
|
10
|
291
|
94
|
Eliminations and
Other
|
(26)
|
(55)
|
(90)
|
(181)
|
Adjusted
EBITDA1,3
|
3,108
|
2,958
|
10,085
|
9,529
|
Maintenance
capital
|
(293)
|
(324)
|
(741)
|
(783)
|
Interest
expense1
|
(666)
|
(705)
|
(2,012)
|
(2,060)
|
Current income
tax1
|
(94)
|
(71)
|
(305)
|
(228)
|
Distributions to
noncontrolling interests and redeemable
|
|
|
|
|
noncontrolling
interests1
|
(50)
|
(302)
|
(150)
|
(901)
|
Cash distributions in
excess of equity earnings1
|
144
|
90
|
427
|
267
|
Preference share
dividends
|
(96)
|
(94)
|
(287)
|
(268)
|
Other receipts of
cash not recognized in revenue2
|
53
|
53
|
139
|
157
|
Other non-cash
adjustments
|
(1)
|
(20)
|
17
|
42
|
DCF3
|
2,105
|
1,585
|
7,173
|
5,755
|
Weighted average
common shares outstanding
|
2,018
|
1,705
|
2,017
|
1,695
|
|
|
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 2019 DCF increased by $520
million compared to the same period in 2018. The key drivers
of quarter-over-quarter growth are summarized below:
- An increase in adjusted EBITDA primarily due to strong base
operating performance including higher throughput, and incremental
contributions from new projects placed into service. For further
detail on business performance refer to Adjusted EBITDA by
Segments below.
- Lower distributions to noncontrolling and redeemable
noncontrolling interests following the completion of Enbridge's
buy-in of the publicly held interest in its sponsored vehicles,
which were completed in the fourth quarter of 2018.
- Higher equity distributions in excess of equity earnings from
equity investments due to strong performance as well as new equity
investments placed into service.
Partially offsetting the DCF growth drivers noted above:
- Higher current income taxes in part as a result of higher
earnings before income taxes.
ADJUSTED
EARNINGS
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Adjusted
EBITDA2
|
3,108
|
2,958
|
10,085
|
9,529
|
Depreciation and
amortization
|
(844)
|
(799)
|
(2,526)
|
(2,452)
|
Interest
expense1
|
(651)
|
(682)
|
(1,962)
|
(1,981)
|
Income
taxes1
|
(377)
|
(212)
|
(1,144)
|
(701)
|
Noncontrolling
interests and redeemable
|
|
|
|
|
noncontrolling
interests1
|
(16)
|
(238)
|
(53)
|
(721)
|
Preference share
dividends
|
(96)
|
(94)
|
(287)
|
(272)
|
Adjusted
earnings2
|
1,124
|
933
|
4,113
|
3,402
|
Adjusted earnings
per common share
|
0.56
|
0.55
|
2.04
|
2.01
|
|
|
1
|
Presented net of
adjusting items.
|
2
|
Schedules
reconciling adjusted EBITDA and adjusted earnings are available as
Appendices to this news release.
|
Adjusted earnings increased by $191
million for the third quarter of 2019 compared to the same
period in 2018. Growth in adjusted earnings was driven by the same
factors impacting business performance and adjusted EBITDA as
discussed under Distributable Cash Flow above, partially
offset by the following factors:
- Higher depreciation and amortization expense as a result of
placing new assets into service, net of depreciation expense no
longer recorded for assets which were classified as assets held for
sale or sold during second half of 2018.
- Higher income tax expense, in part due to higher earnings
before tax and a higher effective income tax rate. The
period-over-period increase in the effective income tax rate is
partly due to the buy-in of the US Master Limited Partnerships
(MLP), Enbridge Energy Partners, L.P. and Spectra Energy Partners,
LP, which results in the Company being taxed on 100% of the MLP
earnings rather than the Company's proportionate share of their
earnings.
Adjusted earnings per share for the third quarter of 2019
increased by $0.01 compared with the
third quarter of 2018. The increase in adjusted earnings noted
above was partially offset on a per share basis by the issuance of
approximately 297 million common shares to acquire, in separate
transactions, all of the outstanding equity securities of the
Company's sponsored vehicles not beneficially owned by Enbridge
during the fourth quarter of 2018.
ADJUSTED EBITDA BY SEGMENTS
Adjusted EBITDA by segment is reported on a Canadian dollar
basis. Adjusted EBITDA generated from U.S. dollar
denominated businesses were translated at weaker average Canadian
dollar exchange rates in the third quarter of 2019 (C$1.32/$US) when compared to the corresponding
2018 period (C$1.31/$US). A portion
of the U.S. dollar earnings are 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,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Mainline
System1
|
1,026
|
952
|
2,940
|
2,850
|
Regional Oil Sands
System
|
218
|
214
|
648
|
642
|
Gulf Coast and
Mid-Continent System
|
227
|
169
|
708
|
508
|
Other2
|
355
|
298
|
1,025
|
889
|
Adjusted
EBITDA3
|
1,826
|
1,633
|
5,321
|
4,889
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
Mainline System -
ex-Gretna volume4
|
2,714
|
2,578
|
2,698
|
2,613
|
Regional Oil Sands
System5
|
1,839
|
1,863
|
1,803
|
1,789
|
International Joint
Tariff (IJT)6
|
$4.21
|
$4.15
|
$4.17
|
$4.10
|
|
|
1
|
Mainline System
includes the Canadian Mainline and the Lakehead System, which were
previously reported separately.
|
2
|
Included within
Other are Southern Lights Pipeline, Express-Platte System, Bakken
System and Feeder Pipelines & Other.
|
3
|
Schedules
reconciling adjusted EBITDA are provided in the Appendices to this
news release.
|
4
|
Mainline System
throughput volume represents mainline system deliveries ex-Gretna,
Manitoba which is made up of United
States and eastern Canada deliveries originating from Western
Canada.
|
5
|
Volumes are for
the Athabasca mainline, Athabasca Twin, Waupisoo Pipeline and
Woodland Pipeline and exclude laterals on the
Regional Oil Sands System.
|
6
|
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 45% of total Mainline
System revenue and the average effective FX rate for the Canadian
portion of the Mainline during the third quarter of 2019 was
US$1.19 (Q3 2018: US$1.26).
The US portion of the Mainline System is subject to FX translation
similar to the Company's other US based businesses, which
are translated at the average spot rate for a given period. A
portion of this US dollar translation exposure is hedged under
the
Company's enterprise-wide financial risk management program. The
offsetting hedge settlements are reported within Eliminations
and Other.
|
Liquids Pipelines adjusted EBITDA increased by $193 million for the third quarter of 2019 when
compared to the same period in 2018. The key quarter-over-quarter
performance drivers are summarized below:
- Mainline System adjusted EBITDA reflected higher throughput,
driven by strong supply and continued optimizations of the system,
as well as a higher period-over-period IJT. Partially offsetting
the increase to EBITDA was a lower foreign exchange rate on
contracts used to hedge U.S. dollar denominated revenues from the
Canadian portion of the Mainline System.
- Gulf Coast and Mid-Continent System growth was driven by strong
demand in the US Gulf Coast for Canadian crude which drove higher
volumes on the Flanagan South and Seaway pipelines.
- Other increased primarily as a result of strong throughput on
the Bakken Pipeline System.
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
US Gas
Transmission
|
689
|
661
|
2,052
|
1,979
|
Canadian Gas
Transmission1
|
163
|
249
|
569
|
775
|
US
Midstream
|
43
|
97
|
146
|
265
|
Other
|
49
|
31
|
153
|
97
|
Adjusted
EBITDA2
|
944
|
1,038
|
2,920
|
3,116
|
|
|
1
|
Canadian Gas
Transmission includes Alliance Pipeline, which was previously
reported separately.
|
2
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Gas Transmission and Midstream adjusted EBITDA decreased by
$94 million for the third quarter of
2019 when compared to the same period in 2018. The key
quarter-over-quarter performance drivers are summarized below:
- US Gas Transmission adjusted EBITDA reflected higher
contributions from new pipelines places into service in late 2018,
including Valley Crossing. The increase in EBITDA was partially
offset by higher planned integrity expenditures and lower revenues
and higher operating costs associated with the Texas Eastern
pipeline system incident in Lincoln
County, Kentucky.
- Canadian Gas Transmission adjusted EBITDA period-over-period
results primarily reflect the absence of contributions from the
provincially regulated Canadian natural gas gathering and
processing business which was sold on October 1, 2018 as well as higher operating
costs. The sale of the remaining CER regulated assets is expected
to close in the fourth quarter of 2019.
- US Midstream adjusted EBITDA primarily reflects the absence of
EBITDA from Midcoast Operating, L.P. which was sold on August 1, 2018, as well as lower commodity prices
impacting fractionation margins at Aux Sable.
- Other adjusted EBITDA growth is driven by contributions from
the Big Foot Oil and Gas offshore pipelines which was placed into
service during 2018.
GAS DISTRIBUTION
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Enbridge Gas Inc.
(EGI)
|
255
|
258
|
1,270
|
1,191
|
Other
|
—
|
1
|
68
|
83
|
Adjusted
EBITDA1
|
255
|
259
|
1,338
|
1,274
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
EGI
|
|
|
|
|
Volumes (billions of
cubic feet)
|
269
|
271
|
1,328
|
1,290
|
Number of active
customers (thousands)2
|
|
|
3,731
|
3,689
|
Heating degree
days3
|
|
|
|
|
Actual
|
60
|
69
|
2,699
|
2,526
|
Forecast based on
normal weather4
|
97
|
96
|
2,535
|
2,533
|
|
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
2
|
Number of active
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
|
As per Ontario
Energy Board approved methodology used in setting
rates.
|
Enbridge Gas Distribution and Union Gas were amalgamated on
January 1, 2019. The amalgamated
company has been renamed Enbridge Gas Inc. (EGI). Post amalgamation
the financial results of EGI reflect the combined performance of
the two legacy utility operations.
Gas Distribution adjusted EBITDA will typically follow a
seasonal profile. It is generally highest in the first and fourth
quarters of the year reflecting greater volumetric usage during the
heating season, and lowest in the third quarter as there is
generally less volumetric usage during the summer. 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 in a given quarter.
Gas Distribution adjusted EBITDA decreased by $4 million for the third quarter 2019 when
compared to the same period in 2018. The key quarter-over-quarter
performance drivers are summarized below:
- EGI adjusted EBITDA increased due to higher distribution
charges primarily resulting from increases in distribution rates
and customer base, as well as synergy captures realized from the
amalgamation of Enbridge Gas Distribution and Union Gas.
- These increases were more than offset by accelerated capital
cost allowance deductions reflected as a pass through to
customers.
On October 1, 2019, the Company
completed the sale of Enbridge Gas New Brunswick.
RENEWABLE POWER GENERATION AND TRANSMISSION
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA1
|
82
|
73
|
305
|
337
|
|
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Renewable Power Generation and Transmission adjusted EBITDA
increased by $9 million for the third
quarter of 2019 when compared to the same period in 2018. The key
quarter-over-quarter performance drivers are summarized below:
- Stronger wind resources across the majority of the Company's
North American wind facilities, partially offset by higher
mechanical repair costs at certain United
States wind facilities.
- Higher contributions from the Rampion Offshore Wind
Project.
ENERGY SERVICES
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA1
|
27
|
10
|
291
|
94
|
|
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Energy Services adjusted EBITDA increased by $17 million for the third quarter of 2019 when
compared to the same period in 2018. The key quarter-over-quarter
performance drivers are summarized below:
- Higher EBITDA contributions from Energy Services crude
operations as a result of the widening of certain location and
quality differentials during the second half of 2018 and the first
quarter of 2019, which increased opportunities to generate
profitable transportation margins that were realized during
2019.
ELIMINATIONS AND OTHER
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Operating and
administrative
|
24
|
4
|
76
|
(27)
|
Realized foreign
exchange hedge settlements
|
(50)
|
(59)
|
(166)
|
(154)
|
Adjusted loss
before interest, income taxes, and
|
|
|
|
|
depreciation and
amortization1
|
(26)
|
(55)
|
(90)
|
(181)
|
|
|
1
|
Schedules
reconciling adjusted EBITDA are available as Appendices to this
news release.
|
Operating and administrative costs 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 is
captured in this segment.
Eliminations and Other adjusted loss before interest, income
taxes and depreciation and amortization decreased by $29 million for the third quarter of 2019, when
compared to the same period in 2018. The key quarter-over-quarter
performance drivers are summarized below:
- Lower operating and administrative costs in 2019.
- Lower realized foreign exchange hedge settlement losses
primarily due to a favourable spread between the average exchange
rate of $1.32 for the third quarter
of 2019 (Q3 2018: $1.31) and the
third quarter 2019 hedge rate of $1.24 (Q3 2018: $1.16), partially offset by a higher notional
amount of foreign currency derivatives.
CONFERENCE CALL
Enbridge will host a conference call and webcast on
November 8, 2019 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise wide business
update and review 2019 third quarter financial results. Analysts,
members of the media and other interested parties can access the
call toll free at (877) 930-8043 or within and outside North America at (253) 336-7522 using the
access code of 1219978#. The call will be audio webcast live at
https://edge.media-server.com/mmc/p/2zy7rez2. A webcast replay and
podcast will be available approximately two hours after the
conclusion of the event and a transcript will be posted to the
website within 24 hours. The replay will be available for seven
days after the call toll-free (855) 859-2056 or within and outside
North America at (404) 537-3406
(access code 1219978#).
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 5, 2019, the Company's
Board of Directors declared the following quarterly dividends. All
dividends are payable on December 1,
2019, to shareholders of record on November 15, 2019.
|
Dividend per
share
|
Common
Shares
|
$0.73800
|
Preference Shares,
Series A
|
$0.34375
|
Preference Shares,
Series B
|
$0.21340
|
Preference Shares,
Series C1
|
$0.25243
|
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 P2
|
$0.27369
|
Preference Shares,
Series R3
|
$0.25456
|
Preference Shares,
Series 1
|
US$0.37182
|
Preference Shares,
Series 34
|
$0.23356
|
Preference Shares,
Series 55
|
US$0.33596
|
Preference Shares,
Series 76
|
$0.27806
|
Preference Shares,
Series 9
|
$0.27500
|
Preference Shares,
Series 11
|
$0.27500
|
Preference Shares,
Series 13
|
$0.27500
|
Preference Shares,
Series 15
|
$0.27500
|
Preference Shares,
Series 17
|
$0.32188
|
Preference Shares,
Series 19
|
$0.30625
|
|
|
1
|
The quarterly
dividend per share paid on Series C was decreased to $0.25395 from
$0.25459 on March 1, 2019, was increased
to $0.25647 from $0.25395 on June 1, 2019 and was decreased to
$0.25243 from $0.25647 on September 1, 2019, due to reset
on a quarterly basis following the date of issuance of the Series C
Preference Shares
|
2
|
The quarterly
dividend per share paid on Series P was increased to $0.27369 from
$0.25000 on March 1, 2019, due to reset of
the annual dividend on March 1, 2019, and every five years
thereafter.
|
3
|
The quarterly
dividend per share paid on Series R was increased to $0.25456 from
$0.25000 on June 1, 2019, due to the reset of
the annual dividend on June 1, 2019, and every five years
thereafter.
|
4
|
The quarterly
dividend per share paid on Series 3 was decreased to $0.23356 from
$0.25000 on September 1, 2019, due to the
reset of the annual dividend on September 1, 2019, and every five
year thereafter.
|
5
|
The quarterly
dividend per share paid on Series 5 was increased to US$0.33596
from US$0.27500 on March 1, 2019, due to
reset of the annual dividend on March 1, 2019, and every five years
thereafter.
|
6
|
The quarterly
dividend per share paid on Series 7 was increased to $0.27806 from
$0.27500 on March 1, 2019, due to reset of t
he annual dividend on March 1, 2019, 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 the Company 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:
expected EBITDA or expected adjusted EBITDA; expected
earnings/(loss) or adjusted earnings/(loss); expected
earnings/(loss) or adjusted earnings/(loss) per share; expected DCF
or DCF per share; expected future cash flows; expected performance
of the Company's businesses; financial strength and flexibility;
expectations on sources of liquidity and sufficiency of financial
resources; expected credit metrics and debt to EBITDA levels;
expected cost of capital and costs related to announced projects
and projects under construction; expected in-service dates for
announced projects and projects under construction; expected
capital expenditures; expected equity funding requirements for the
Company's commercially secured growth program; expected future
growth and expansion opportunities, including optimization plans;
expectations about the Company's joint venture partners' ability to
complete and finance projects under construction; expected closing
of acquisitions and dispositions and the timing thereof; expected
future actions of regulators and courts; expectations regarding
commodity prices; supply forecasts; expectations regarding the
impact of transactions, including the transactions undertaken to
simplify the Company's corporate structure; plans to launch binding
open seasons, including the terms and timing thereof; toll and rate
case discussions and filings, including Mainline Contracting; and
dividend growth and dividend payout expectation.
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, natural gas liquids (NGL) and
renewable energy; prices of crude oil, natural gas, NGL and
renewable energy; 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; the timing and
closing of acquisitions and dispositions; the realization of
anticipated benefits and synergies of transactions; governmental
legislation; litigation; the success of integration plans; impact
of the Company's dividend policy on its future cash flows; credit
ratings; capital project funding; expected EBITDA or expected
adjusted EBITDA; expected earnings/(loss) or 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
and interest rates 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
the expected EBITDA, expected adjusted EBITDA, earnings/(loss),
expected adjusted earnings/(loss), expected DCF and associated per
share amounts, or 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 and
customer, government and regulatory approvals on construction and
in-service schedules and cost recovery regimes.
Enbridge's forward-looking statements are subject to risks
and uncertainties pertaining to the realization of anticipated
benefits and synergies of projects and transactions, operating
performance, the Company's dividend policy, regulatory parameters,
changes in regulations applicable to the Company's business,
acquisitions and dispositions, litigation, 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, exchange rates, interest rates,
commodity prices, political decisions and supply of and demand for
commodities, including but not limited to those risks and
uncertainties discussed in this news release and in the Company's
other filings with Canadian and United
States 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.; and Utilities and Power
Operations, which serves approximately 3.7 million retail customers
in Ontario and Quebec, and generates approximately 1,750 MW
of net renewable power in North
America and Europe. The
Company's common shares trade on the Toronto and New
York stock exchanges under the symbol ENB. For more
information, visit www.enbridge.com.
None of the information contained in, or connected to,
Enbridge's website is incorporated in or otherwise 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,
non-recurring or 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, non-recurring or non-operating
factors included in adjusted EBITDA, as well as adjustments for
unusual, non-recurring or non-operating factors in respect of
depreciation and amortization expense, interest expense, income
taxes, noncontrolling interests and redeemable 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 and redeemable
noncontrolling interests, preference share dividends and
maintenance capital expenditures, and further adjusted for unusual,
non-recurring or 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,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Liquids
Pipelines
|
1,646
|
1,875
|
5,710
|
4,353
|
Gas Transmission and
Midstream
|
772
|
(60)
|
2,733
|
1,080
|
Gas
Distribution
|
252
|
256
|
1,304
|
1,262
|
Renewable Power
Generation and Transmission
|
82
|
51
|
300
|
286
|
Energy
Services
|
91
|
(96)
|
318
|
108
|
Eliminations and
Other
|
(40)
|
29
|
315
|
(368)
|
EBITDA
|
2,803
|
2,055
|
10,680
|
6,721
|
Depreciation and
amortization
|
(844)
|
(799)
|
(2,526)
|
(2,452)
|
Interest
expense
|
(644)
|
(696)
|
(1,966)
|
(2,042)
|
Income tax
expense
|
(255)
|
(347)
|
(1,275)
|
(177)
|
Earnings attributable
to noncontrolling interests and
|
|
|
|
|
redeemable
noncontrolling interests
|
(15)
|
(209)
|
(50)
|
(352)
|
Preference share
dividends
|
(96)
|
(94)
|
(287)
|
(272)
|
Earnings/(loss)
attributable to common
shareholders
|
949
|
(90)
|
4,576
|
1,426
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Liquids
Pipelines
|
1,826
|
1,633
|
5,321
|
4,889
|
Gas Transmission and
Midstream
|
944
|
1,038
|
2,920
|
3,116
|
Gas
Distribution
|
255
|
259
|
1,338
|
1,274
|
Renewable Power
Generation and Transmission
|
82
|
73
|
305
|
337
|
Energy
Services
|
27
|
10
|
291
|
94
|
Eliminations and
Other
|
(26)
|
(55)
|
(90)
|
(181)
|
Adjusted
EBITDA
|
3,108
|
2,958
|
10,085
|
9,529
|
Depreciation and
amortization
|
(844)
|
(799)
|
(2,526)
|
(2,452)
|
Interest
expense
|
(651)
|
(682)
|
(1,962)
|
(1,981)
|
Income
taxes
|
(377)
|
(212)
|
(1,144)
|
(701)
|
Noncontrolling
interests and redeemable noncontrolling
|
|
|
|
|
interests
|
(16)
|
(238)
|
(53)
|
(721)
|
Preference share
dividends
|
(96)
|
(94)
|
(287)
|
(272)
|
Adjusted
earnings
|
1,124
|
933
|
4,113
|
3,402
|
Adjusted earnings
per common share
|
0.56
|
0.55
|
2.04
|
2.01
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
EBITDA
|
2,803
|
2,055
|
10,680
|
6,721
|
Adjusting
items:
|
|
|
|
|
Change in unrealized
derivative fair value (gain)/loss
|
79
|
(264)
|
(1,052)
|
295
|
Asset write-down
loss
|
105
|
1,019
|
105
|
2,086
|
Loss on sale of
assets
|
—
|
94
|
—
|
94
|
Employee severance,
transition and transformation
|
|
|
|
|
costs
|
23
|
17
|
88
|
143
|
Asset monetization
transaction costs
|
—
|
45
|
—
|
65
|
Equity investment
asset impairment
|
62
|
—
|
62
|
33
|
Write-down of
inventory to the lower of cost or market
|
27
|
7
|
171
|
23
|
Other
|
9
|
(15)
|
31
|
69
|
Total adjusting
items
|
305
|
903
|
(595)
|
2,808
|
Adjusted
EBITDA
|
3,108
|
2,958
|
10,085
|
9,529
|
Depreciation and
amortization
|
(844)
|
(799)
|
(2,526)
|
(2,452)
|
Interest
expense
|
(644)
|
(696)
|
(1,966)
|
(2,042)
|
Income tax
expense
|
(255)
|
(347)
|
(1,275)
|
(177)
|
Earnings attributable
to noncontrolling interests and
|
|
|
|
|
redeemable
noncontrolling interests
|
(15)
|
(209)
|
(50)
|
(352)
|
Preference share
dividends
|
(96)
|
(94)
|
(287)
|
(272)
|
Adjusting items in
respect of:
|
|
|
|
|
Interest
expense
|
(7)
|
14
|
4
|
61
|
Income
taxes
|
(122)
|
135
|
131
|
(524)
|
Noncontrolling
interests and redeemable
|
|
|
|
|
noncontrolling
interests
|
(1)
|
(29)
|
(3)
|
(369)
|
Adjusted
earnings
|
1,124
|
933
|
4,113
|
3,402
|
Adjusted earnings
per common share
|
0.56
|
0.55
|
2.04
|
2.01
|
APPENDIX B
NON-GAAP RECONCILIATION – SEGMENTED EBITDA TO ADJUSTED
EBITDA
LIQUIDS PIPELINES
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
1,826
|
1,633
|
5,321
|
4,889
|
Change in unrealized
derivative fair value gain/(loss)
|
(180)
|
211
|
390
|
(362)
|
Asset write-down loss
- asset held for sale
|
—
|
—
|
—
|
(154)
|
Gain on sale of
pipe
|
—
|
28
|
—
|
28
|
Employee severance,
transition and transformation costs
|
—
|
3
|
—
|
(25)
|
Other
|
—
|
—
|
(1)
|
(23)
|
Total
adjustments
|
(180)
|
242
|
389
|
(536)
|
EBITDA
|
1,646
|
1,875
|
5,710
|
4,353
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
944
|
1,038
|
2,920
|
3,116
|
Change in unrealized
derivative fair value gain
|
—
|
23
|
—
|
25
|
Asset write-down loss
- US Midstream
|
—
|
(1,019)
|
—
|
(1,932)
|
Asset write-down loss
- US Gas Transmission
|
(105)
|
—
|
(105)
|
—
|
Equity investment
asset impairment
|
(62)
|
—
|
(62)
|
—
|
Loss on sale of
assets
|
—
|
(74)
|
—
|
(74)
|
Asset monetization
transaction costs
|
—
|
(20)
|
—
|
(20)
|
Employee severance,
transition and transformation
|
|
|
|
|
costs
|
—
|
(3)
|
—
|
(10)
|
Other
|
(5)
|
(5)
|
(20)
|
(25)
|
Total
adjustments
|
(172)
|
(1,098)
|
(187)
|
(2,036)
|
EBITDA
|
772
|
(60)
|
2,733
|
1,080
|
GAS DISTRIBUTION
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
255
|
259
|
1,338
|
1,274
|
Change in unrealized
derivative fair value gain
|
1
|
—
|
9
|
3
|
Noverco Inc. equity
earnings adjustment
|
—
|
—
|
—
|
(9)
|
Employee severance,
transition and transformation
|
|
|
|
|
costs
|
(4)
|
(3)
|
(43)
|
(6)
|
Total
adjustments
|
(3)
|
(3)
|
(34)
|
(12)
|
EBITDA
|
252
|
256
|
1,304
|
1,262
|
RENEWABLE POWER GENERATION AND TRANSMISSION
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
82
|
73
|
305
|
337
|
Change in unrealized
derivative fair value gain/(loss)
|
—
|
(2)
|
2
|
2
|
Equity investment
asset impairment
|
—
|
—
|
—
|
(33)
|
Loss on sale of
assets
|
—
|
(20)
|
—
|
(20)
|
Other
|
—
|
—
|
(7)
|
—
|
Total
adjustments
|
—
|
(22)
|
(5)
|
(51)
|
EBITDA
|
82
|
51
|
300
|
286
|
ENERGY SERVICES
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
27
|
10
|
291
|
94
|
Change in unrealized
derivative fair value gain/(loss)
|
91
|
(99)
|
198
|
37
|
Write-down of
inventory to the lower of cost or market
|
(27)
|
(7)
|
(171)
|
(23)
|
Total
adjustments
|
64
|
(106)
|
27
|
14
|
EBITDA
|
91
|
(96)
|
318
|
108
|
ELIMINATIONS AND OTHER
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
earnings/(loss) before interest, income taxes,
|
|
|
|
|
and depreciation and
amortization
|
(26)
|
(55)
|
(90)
|
(181)
|
Change in unrealized
derivative fair value gain
|
9
|
131
|
453
|
—
|
Asset monetization
transaction costs
|
—
|
(25)
|
—
|
(45)
|
Employee severance,
transition and transformation
|
|
|
|
|
costs
|
(19)
|
(14)
|
(45)
|
(102)
|
Other
|
(4)
|
(8)
|
(3)
|
(40)
|
Total
adjustments
|
(14)
|
84
|
405
|
(187)
|
Earnings/(loss)
before interest, income taxes, and
|
|
|
|
|
depreciation and
amortization
|
(40)
|
29
|
315
|
(368)
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED BY OPERATING
ACTIVITIES TO DCF
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Cash provided by
operating activities
|
2,735
|
1,461
|
7,405
|
7,999
|
Adjusted for changes
in operating assets and liabilities1
|
(228)
|
657
|
451
|
(943)
|
|
2,507
|
2,118
|
7,856
|
7,056
|
Distributions to
noncontrolling interests and redeemable
|
|
|
|
|
noncontrolling
interests4
|
(50)
|
(302)
|
(150)
|
(901)
|
Preference share
dividends
|
(96)
|
(94)
|
(287)
|
(268)
|
Maintenance capital
expenditures2
|
(293)
|
(324)
|
(741)
|
(783)
|
Significant adjusting
items:
|
|
|
|
|
Other receipts of
cash not recognized in revenue3
|
53
|
53
|
139
|
157
|
Employee severance,
transition and transformation
|
|
|
|
|
costs
|
20
|
19
|
91
|
189
|
Asset monetization
costs
|
—
|
64
|
—
|
84
|
Distributions from
equity investments in excess of
|
|
|
|
|
cumulative
earnings4
|
17
|
112
|
207
|
312
|
Other
items
|
(53)
|
(61)
|
58
|
(91)
|
DCF
|
2,105
|
1,585
|
7,173
|
5,755
|
|
|
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:http://www.prnewswire.com/news-releases/enbridge-inc-reports-strong-third-quarter-2019-results-300954574.html
SOURCE Enbridge Inc.