CALGARY, AB, Feb. 12, 2021 /CNW/ - Enbridge Inc.
(Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today reported
strong full-year 2020 financial results and provided a quarterly
business update.
Highlights
(all financial figures are unaudited and
in Canadian dollars unless otherwise noted)
- Full year GAAP earnings of $3.0
billion or $1.48 per common
share, compared with GAAP earnings of $5.3
billion or $2.64 per common
share in 2019, all of which amounts include non-recurring and
unrealized items
- Adjusted earnings of $4.9 billion
or $2.42 per common share, compared
with $5.3 billion or $2.65 per common share in 2019
- Adjusted earnings before interest, income tax and depreciation
and amortization (EBITDA) of $13.3
billion, compared with $13.3
billion in 2019
- Cash Provided by Operating Activities of $9.8 billion, compared with $9.4 billion in 2019
- Distributable Cash Flow (DCF) of $9.4
billion, compared with $9.2
billion in 2019
- DCF per share of $4.67, exceeded
mid-point of full-year guidance of $4.50 to $4.80;
exited 2020 with strong financial position with Debt to EBITDA of
4.6x
- Reaffirmed 2021 DCF per share guidance range of $4.70 to $5.00 and
EBITDA range of $13.9 billion to
$14.3 billion.
- Increased the 2021 quarterly dividend by 3% to $0.835 per share reflecting the 26th consecutive
annual increase
- Progressed $16 billion of secured
growth capital supporting 5 to 7% DCF per share growth through
2023; $1.6 billion of growth projects
placed into service in 2020 and early 2021
- Commenced construction on the final leg of the Line 3
Replacement Project in Minnesota
following receipt of all permits and regulatory approvals;
targeting Q4 2021 in-service
- Updated Line 3 Replacement capital cost to $9.3 billion from $8.2
billion (source currency), reflecting final costs for the
Canadian segment and updated estimates for the U.S. segment
- Announced a 35% energy intensity reduction target by 2030,
net-zero emissions by 2050, and diversity and inclusion goals,
furthering nearly two decades of Environmental, Social and
Governance (ESG) leadership
- Secured a 3-year $1.0 billion
Sustainability Linked Credit Facility which incorporates Enbridge's
ESG goals
- Installed first solar self-powered facility on Texas Eastern
gas transmission pipeline; two additional facilities in gas
transmission and liquids pipelines businesses under
construction
- Announced purchase of 6.6 million barrels of storage assets
located in Cushing, further
advancing U.S. Gulf Coast (USGC) strategy
CEO COMMENT
Commenting on the Company's operations, strategic priorities and
outlook, Al Monaco, President and
CEO of Enbridge noted the following:
"Operationally, we performed well in the fourth quarter,
completing a strong 2020 in the face of a very challenging energy
and economic backdrop. Our four rock-solid franchises once again
delivered solid results and provided essential service and reliable
energy supply that is absolutely critical to the everyday lives of
North Americans and the global economy.
"Despite positive indicators early in 2021, the pace of recovery
is still unknown as COVID-19 cases remain high in many parts of the
world. We will continue to be focused on our critical role in
delivering reliable energy, as well as on the safety of our
employees and our stakeholders.
"2020 utilization rates in the Gas Transmission, Gas
Distribution and Renewable Power businesses remained high and
delivered highly predictable financial results this year. On our
Liquids Mainline, volumes were impacted by reduced refinery demand,
but they've steadily recovered in-line with our expectations
reaching 2.65 mmbpd in the fourth quarter. Heavy capacity has been
apportioned since July on strong Midwest and USGC market
demand and light volumes are returning to normal. Our team
also optimized a portion of unutilized light capacity by moving
medium crude blends for customers on our light pipelines.
"Full-year DCF per share of $4.67
exceeded the budget we struck prior to COVID and the mid-point of
our guidance range – a great outcome that reflects the strong
demand pull from the markets we serve, our low-risk commercial
model and the early and decisive actions we took to mitigate the
impacts of the pandemic. This was made possible by the exceptional
efforts of our people across our entire organization in the face of
unprecedented challenges from the pandemic and reduced energy
demand. And, although we were eligible for government support, we
didn't avail ourselves of these options.
"In addition to strong operational and financial performance in
2020, we've moved the ball forward on our strategic priorities.
"That starts with how we've taken steps to further our ESG
leadership and we're pleased to see that the rating firms continue
to recognize our work in this area with a top ranking in Midstream.
ESG has long been integrated into our business and strategies, and
in 2020, we raised the bar again by committing to a 35% reduction
in energy intensity by 2030, net-zero emissions by 2050 and setting
new diversity and inclusion goals all tied to management
compensation. And, in February, we launched the first
Sustainability Linked credit facility in our sector, aligning our
ESG performance with funding costs.
"In Liquids Pipelines, Line 3 construction is underway in
Minnesota after a comprehensive
and thorough regulatory process over the last 6 years, and we're
proud of the broad community support for the project. We're focused
on executing world class construction and environmental practices
and we've implemented the most up-to-date health and safety
protocols to protect communities and our crews. Construction is
progressing to our targeted Q4 in-service date.
"We've updated our cost estimate for the full Line 3 project to
reflect winter construction, further enhancements to our
industry-leading environmental protections and construction
techniques, regulatory and permitting delays, higher capitalized
interest and COVID-19 protocols. The higher project costs will be
managed well within our funding plans and strong financial
position. Our updated economics for Line 3 remain attractive.
"In Gas Transmission, we completed our U.S. $0.7 billion 2020 modernization program, the U.S.
$0.1 billion Sabal Trail Phase II,
and the final phase of the U.S. $0.1
billion Atlantic Bridge project. We also came to an
agreement with our customers for new rates on Texas Eastern,
Algonquin and the BC Pipeline, and we're advancing rate proceedings
on a few other systems.
"In Gas Distribution, we added 43 thousand customers and
completed the 2020 $0.5 billion
growth capital program, including the Owen Sound Reinforcement
project and the Windsor Line Replacement project. We also continue
to make progress on synergy capture related to the amalgamation of
our utilities.
"In our Renewable Power business, construction of the
Saint-Nazaire and Fécamp offshore
wind projects are advancing well. Also, in this business, we
completed our first self-powering facility on Texas Eastern with
another under construction, as well as an additional solar facility
on the Liquids Pipelines' Mainline in Alberta.
"Looking forward, execution on our $16
billion of secured growth capital and further optimization
of business performance provide excellent visibility to 5-7% DCF
per share growth through 2023. In 2021, we anticipate another
year of robust EBITDA and cash flow growth, driven by $10 billion of growth capital to be placed into
service and embedded growth within the business, including a
further $100 million of cost savings.
This investment program is also timely in supporting the reboot of
economies in which we operate.
"While we expect the economic recovery will be gradual, North
American energy fundamentals are steadily improving with recovering
energy prices, increasing exports and long-term global demand
growth drivers still intact. This outlook reinforces our strategic
priorities and view of organic growth potential.
"Post completion of Line 3, we expect to generate $5-6 billion of annual investment capacity. We'll
remain disciplined and deploy capital towards the best uses,
prioritizing balance sheet strength, investment in low capital
intensity growth and regulated utility or utility-like projects. We
will carefully utilize our remaining investable capacity on the
most value enhancing opportunities including further organic
growth, and potential for share buybacks.
"Our dividend remains central to our value proposition and we
expect to ratably grow it up to the level of average annual DCF per
share growth, while maintaining a payout of 60-70% of DCF. In 2021,
we're very pleased to have increased the dividend again for our
shareholders, for the 26th consecutive year.
"Finally, our long-lived, demand-pull assets and low risk
pipeline-utility model have demonstrated resiliency and predictable
cash flow generation in the most difficult economic conditions
we've seen in decades, and we're positioned to continue to generate
strong long-term cash flow growth."
FINANCIAL RESULTS SUMMARY
Financial results for three and twelve months ended December 31, 2020, are summarized in the table
below:
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share amounts;
number of shares in millions)
|
|
|
|
|
|
GAAP Earnings
attributable to common shareholders
|
1,775
|
746
|
|
2,983
|
5,322
|
GAAP Earnings per
common share
|
0.88
|
0.37
|
|
1.48
|
2.64
|
Cash provided by
operating activities
|
2,254
|
1,993
|
|
9,781
|
9,398
|
Adjusted
EBITDA1
|
3,201
|
3,186
|
|
13,273
|
13,271
|
Adjusted
Earnings1
|
1,132
|
1,228
|
|
4,894
|
5,341
|
Adjusted Earnings per
common share1
|
0.56
|
0.61
|
|
2.42
|
2.65
|
Distributable Cash
Flow1
|
2,209
|
2,051
|
|
9,440
|
9,224
|
Weighted average
common shares outstanding
|
2,022
|
2,018
|
|
2,020
|
2,017
|
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 fourth
quarter of 2020 increased by $1.0
billion or $0.51 per share
compared with the same period in 2019 and decreased by $2.3 billion or $1.16 per share for the full-year 2020 compared
with 2019.
On a full-year basis, GAAP earnings attributable to common
shareholders for 2020 were negatively impacted by $2.4 billion ($1.8
billion after-tax) impairments to the carrying value of
certain equity investments, as well as $0.8
billion ($0.5 billion
after-tax) lower non-cash, unrealized derivative fair value gains
on the mark-to-market value of derivative financial instruments
used to manage foreign exchange risks. In addition, the
period-over-period and year-over-year comparability of GAAP
earnings attributable to common shareholders was impacted by other
certain unusual, infrequent factors or other non-operating factors,
which are noted in the reconciliation schedule included in Appendix
A of this news release.
Adjusted EBITDA in the fourth quarter of 2020 increased by
$15 million compared with the same
period in 2019. The business benefited from incremental earnings in
Liquids Pipelines from the Canadian Line 3 Replacement Program,
rate settlements on Texas Eastern and Algonquin, contributions from
new assets that were placed into service in late 2019 and the first
half of 2020, as well as customer growth and synergy capture in Gas
Distribution and Storage. Strong business performance was partially
offset by lower contributions from Energy Services due to a
significant compression of certain key regional differentials,
lower Mainline throughput related to COVID-19 and the absence of
contributions from the federally regulated Canadian natural gas
gathering and processing business sold on December 31, 2019.
Full-year Adjusted EBITDA for 2020 was $13.3 billion, compared with $13.3 billion in 2019, and impacted by the
annualized impacts of the quarterly items discussed above. In
addition, the Company received approximately $0.2 billion in cash receipts on certain
contracted Liquids pipelines, which are not recognized in revenues
until the related make-up rights are utilized or expire. This is
primarily related to the effects of COVID-19 on system utilization
during 2020, and is not anticipated to be recurring in nature.
Adjusted earnings in the fourth quarter of 2020 decreased by
$96 million, or $0.05 per share and for the full-year 2020
decreased by $447 million, or
$0.23 per share. The decrease was
primarily driven by a reduction in capitalized interest and higher
depreciation from new assets placed into service throughout 2019,
primarily on the Canadian Line 3 Replacement Program. DCF for the
fourth quarter was $2.2 billion, an
increase of $158 million over the
fourth quarter of 2019 driven largely by the net impact of the
operating factors noted above and higher cash distributions in
excess of equity earnings due to new assets placed into
service.
DCF for the year ended December 31,
2020 was $9.4 billion, an
increase of $216 million over 2019,
due to the same factors discussed above, as well as higher cash
receipts not recognized in EBITDA or earnings for contracts with
make-up rights on certain assets within Liquids Pipelines. This
impact was partially offset due to higher interest expense as a
result of additional debt incurred to fund capital expenditures
along with a reduction in capitalized interest on the Canadian Line
3 Replacement Program placed into service in December 2019.
These factors are discussed in detail under Distributable
Cash Flow. Detailed segmented financial information and
analysis can be found below under Adjusted EBITDA by
Segments.
FINANCIAL POSITION AND OUTLOOK
Enbridge has exited 2020 in a strong financial position with
Debt to EBITDA of 4.6x and expects to remain within the Company's
target range of 4.5 to 5.0x throughout 2021, inclusive of spending
on its secured growth capital program.
Enbridge ended the fourth quarter with over $13 billion of available liquidity, which is more
than sufficient to meet all of its funding requirements through the
end of 2021 without further access to capital markets. In February
of 2021, Enbridge entered into a three-year, syndicated
Sustainability Linked Credit Facility for $1.0 billion. The facility includes terms that
allow Enbridge to reduce borrowing costs if the Company achieves an
interim threshold on its ESG goals. As a result of the
sustainability linked credit facility and other financing
activities completed in 2020, our resilient cash flows and our
current liquidity position, we concurrently cancelled a one year,
revolving, syndicated credit facility for $3.0 billion, ahead of its scheduled March 2021 maturity.
At the Company's December 2020
investor conference, Enbridge released its 3-Year Outlook,
reaffirming its growth expectation of 5-7% annualized DCF per share
through 2023. Enbridge also provided 2021 financial guidance which
included EBITDA between $13.9 and
$14.3 billion with a projected range
of 2021 DCF of $4.70 to $5.00 per share.
Included within the Company's 2021 guidance is a Mainline volume
forecast of 2.7 mmbpd or more in the first quarter of 2021, with
continued improvement in volumes through the remainder of the year.
This outlook also assumes the U.S. portion of Line 3 comes into
service in the fourth quarter of 2021 and contributes approximately
$200 million of EBITDA this year.
The Company increased the 2021 dividend by 3% to $0.835 per share quarterly, commencing with the
dividend payable on March 1, 2021 to
shareholders of record on February 12,
2021.
PROJECT EXECUTION UPDATE
The Company continues to advance its approximately $16 billion secured growth capital program. This
diversified organic growth program is entirely consistent with our
low-risk commercial model and will generate approximately
$2 billion of additional EBITDA
between 2020 and 2023. This includes $1.6
billion of growth projects which were placed into service in
2020 and early 2021, including:
- Gas Transmission's US$0.7 billion
2020 Modernization Program;
- the U.S. $0.1 billion Sabal Trail
Phase II project;
- Gas Distribution's $0.5 billion
2020 Utility Growth, including the Owen Sound Reinforcement and the
Windsor Line Replacement projects; and
- the Atlantic Bridge Project, which fully commenced service in
January 2021 with the US$0.1 billion Weymouth Compressor station being
brought online.
After considering the $1.1 billion
(in source currency) update to the Line 3 Replacement Program and
the $1.6 billion of capital already
placed into service, the Company's secured growth capital program
through 2023 remains at approximately $16
billion, of which $5 billion
has already been spent.
The Company anticipates placing approximately $10 billion of its secured growth capital into
service in 2021, including the U.S segment of Line 3 and the
associated Southern Access Expansion, the T-South Expansion and
Spruce Ridge, along with the 2021 Gas Transmission Modernization
Program and the 2021 Gas Utility capital program.
Line 3 Replacement
The Line 3 Replacement Project is a critical integrity project
that will enhance the continued safe and reliable operations of our
Mainline System well into the future, reflecting Enbridge's
long-standing commitment to protecting the environment.
The project will restore capacity on the line to its original
design specifications of 760 kbpd and bring the total Mainline
System capacity to approximately 3.2 mmbpd.
In the fourth quarter, Enbridge received all necessary permits
in Minnesota, including the 401
Water Quality Certificate issued by the Minnesota Pollution Control
Agency, all remaining federal permits from the U.S. Army Corps of
Engineers, including the Section 404 permit, and the Authorization
to Construct from the Minnesota Public Utilities Commission. These
permits are in addition to environmental permits received from the
Fond du Lac Band in 2019, including its 401 Water Quality
Certificate.
Construction of the Minnesota
portion of Line 3 is underway, while construction on the
North Dakota, Wisconsin and the Canadian portions have
already been completed. The U.S. portion of Line 3 is expected to
be placed into service in the fourth quarter of 2021.
The Company has worked closely with local health officials to
put in place a comprehensive health and safety program to protect
communities and our crews from COVID-19.
Estimated capital costs for the Line 3 Replacement Project,
including the Canadian segment already in service, have been
updated from $8.2 billion to
$9.3 billion (in source currency).
The increase in costs reflects winter construction, further
enhancements to industry-leading environmental protections and
construction techniques, the extended regulatory and permitting
timeframe, higher capitalized interest and COVID-19 protocols.
Notwithstanding higher estimated capital costs, the project's
cash flows and the expected equity return remain attractive. Upon
the Line 3 Replacement Project being placed fully into service a
surcharge of US$0.895 per barrel will
be applied, inclusive of the current interim US$0.20 surcharge for the Canadian portion of
Line 3. In addition, incremental throughput related to the restored
Line 3 capacity will receive an international joint toll charge for
each barrel.
In 2021, Line 3 is expected to contribute approximately
$200 million of EBITDA and supports
significant free cash flow growth in 2022 and beyond.
The incremental funding requirements are accommodated within the
Company's 2021 financing plan, and target leverage range of 4.5 to
5.0x Debt to EBITDA and will not significantly impact Enbridge's
strong financial position.
OTHER BUSINESS UPDATES
Mainline Contracting
The Company continues to advance its application to contract the
Canadian Mainline, which is currently being reviewed by the Canada
Energy Regulator (CER). The contract offering reflects two years of
negotiations with shippers and has the support of shippers
transporting more than 75% of mainline volumes. This support
reflects the competitiveness of the offering, which will support
the best netbacks for shippers and secure long-term demand for
Western Canadian crude oil.
During the fourth quarter, Enbridge continued to respond to
multiple rounds of information requests from the CER and
intervenors, continuing to demonstrate that the proposed contract
tolls are just and reasonable and that Mainline Contracting is in
the Canadian public interest. In February, Enbridge requested
additional information from intervenors and the written process
will conclude in April. Subsequent to April, an oral hearing is
anticipated, but a hearing date has not yet been set. If Enbridge's
application has not been approved by the expiry of the Competitive
Toll Settlement (CTS) on June 30,
2021, the tolls in effect on that date are expected to
continue on an interim basis.
Line 5 - Straits of Mackinac
Line 5 is a critical source of energy for residents, businesses
and refineries throughout Michigan, neighboring U.S. states,
Ontario and Quebec. It provides 55% of the state of
Michigan's propane demand and
serves regional refineries located in Michigan, Ohio, Pennsylvania, Ontario and Quebec. Residents, businesses and refineries
throughout the region rely on the safe transportation of oil,
propane and other products provided by Line 5.
Enbridge is committed to the safe and reliable operations of
Line 5 as it crosses the Straits of Mackinac (the Straits). The crossing is
continuously monitored by trained staff and state-of-the-art
technologies and this is backed up with visual surveillance.
In the fourth quarter, Enbridge initiated legal filings to
request the United States District
Court dismiss the State of
Michigan's attempt to terminate the 1953 easement across the
Straits and thereby close the Line 5 dual pipelines located within
the easement. The revocation of the easement by the State of Michigan is contrary to federal law
and the Canada-US Transit Pipeline Treaty. In addition, oversight
of pipeline safety resides with the Pipeline and Hazardous
Materials Safety Administration (PHMSA) under the federal Pipeline
Safety Act.
The dual lines that cross the Straits are safe and in full
compliance with the federal pipeline safety standards that govern
them and has been deemed fit for service by PHMSA in June and
September of 2020. Enbridge has no intention of shutting down the
pipelines based on the State's unspecified allegations and its
violation of federal law.
Enbridge continues to advance construction related activities on
its state-of-the-art tunnel designed to further protect the Great
Lakes and make an already safe pipeline safer. On January 29, 2021 the Michigan Department of
Environment, Great Lakes and Energy issued permits relating to
wetlands and submerged lands, along with National Pollutant
Discharge Elimination System permits. The Company continues to work
with the U.S. Army Corps of Engineers and the Michigan Public
Service Commission on additional permits and regulatory
approvals.
Gas Transmission and Midstream Pressure Restrictions
In 2020, Enbridge undertook a comprehensive integrity program to
ensure continued safe and reliable service. During the program,
Enbridge reduced operating pressure across the Texas Eastern system
to enable necessary integrity work to be completed. In the fourth
quarter, the Company lifted the pressure restrictions and returned
the system to service.
FOURTH QUARTER AND YEAR-END 2020 FINANCIAL RESULTS
The following table summarizes the Company's GAAP reported
results for segment EBITDA, earnings attributable to common
shareholders and cash provided by operating activities for the
fourth quarter and full year of 2020.
GAAP SEGMENT EBITDA AND CASH FLOW FROM OPERATIONS
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Liquids
Pipelines
|
2,403
|
1,971
|
7,683
|
7,681
|
Gas Transmission and
Midstream
|
857
|
638
|
1,087
|
3,371
|
Gas Distribution and
Storage
|
463
|
443
|
1,748
|
1,747
|
Renewable Power
Generation
|
147
|
(189)
|
523
|
111
|
Energy
Services
|
(224)
|
(68)
|
(236)
|
250
|
Eliminations and
Other
|
385
|
114
|
(113)
|
429
|
EBITDA
|
4,031
|
2,909
|
10,692
|
13,589
|
|
|
|
|
|
Earnings
attributable to common shareholders
|
1,775
|
746
|
2,983
|
5,322
|
|
|
|
|
|
Cash provided by
operating activities
|
2,254
|
1,993
|
9,781
|
9,398
|
For purposes of evaluating performance, the Company makes
adjustments for unusual, infrequent or other 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 underlying
business performance. Tables incorporating these adjustments follow
below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted
EBITDA by segment, adjusted earnings, adjusted earnings per share
and DCF to their closest GAAP equivalent are provided in the
Appendices to this news release.
DISTRIBUTABLE CASH FLOW
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Liquids
Pipelines
|
1,787
|
1,720
|
7,182
|
7,041
|
Gas Transmission and
Midstream
|
878
|
948
|
3,895
|
3,868
|
Gas Distribution and
Storage
|
492
|
481
|
1,822
|
1,819
|
Renewable Power
Generation
|
146
|
119
|
507
|
424
|
Energy
Services
|
(82)
|
(22)
|
(119)
|
269
|
Eliminations and
Other
|
(20)
|
(60)
|
(14)
|
(150)
|
Adjusted
EBITDA1,3
|
3,201
|
3,186
|
13,273
|
13,271
|
Maintenance
capital
|
(320)
|
(342)
|
(915)
|
(1,083)
|
Interest
expense1
|
(705)
|
(704)
|
(2,846)
|
(2,716)
|
Current income
tax1
|
(17)
|
(81)
|
(342)
|
(386)
|
Distributions to
noncontrolling interests1
|
(68)
|
(54)
|
(300)
|
(204)
|
Cash distributions in
excess of equity earnings1
|
170
|
107
|
649
|
534
|
Preference share
dividends
|
(96)
|
(96)
|
(380)
|
(383)
|
Other receipts of
cash not recognized in revenue2
|
42
|
30
|
292
|
169
|
Other non-cash
adjustments
|
2
|
5
|
9
|
22
|
DCF3
|
2,209
|
2,051
|
9,440
|
9,224
|
Weighted average
common shares outstanding
|
2,022
|
2,018
|
2,020
|
2,017
|
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.
|
Fourth quarter 2020 DCF increased $158
million compared with the same period of 2019 primarily due
to operational factors discussed below in Adjusted EBITDA by
Segments as well as:
- marginally lower maintenance capital due to cost savings and
program efficiencies; and
- higher cash distributions in excess of equity earnings due new
assets placed into service, including Gray
Oak crude oil pipeline and Hohe See Offshore Wind Project;
partially offset by a 50% distribution cut at DCP Midstream, LP
(DCP Midstream).
Full year 2020 DCF increased $216
million compared with 2019 due to the same factors discussed
above as well as:
- higher receipts of cash not recognized in revenue due primarily
to cash received on certain take-or-pay contracted assets that
contain make-up right provisions for contracted volumes not shipped
which are not included in Adjusted EBITDA due to revenue
recognition guidance, but are included in DCF;
- partially offset by higher interest expense due to a
combination of additional debt incurred to fund capital
expenditures as well as a reduction in capitalized interest
associated with the Canadian portion of Line 3 placed into service
in December 2019, which has been
partially offset by lower rates on short-term and newly issued
long-term notes.
ADJUSTED EARNINGS
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Adjusted
EBITDA1
|
3,201
|
3,186
|
13,273
|
13,271
|
Depreciation and
amortization
|
(946)
|
(865)
|
(3,712)
|
(3,391)
|
Interest
expense2
|
(694)
|
(687)
|
(2,793)
|
(2,649)
|
Income
taxes2
|
(304)
|
(237)
|
(1,437)
|
(1,381)
|
Noncontrolling
interests2
|
(29)
|
(73)
|
(57)
|
(126)
|
Preference share
dividends
|
(96)
|
(96)
|
(380)
|
(383)
|
Adjusted
earnings1
|
1,132
|
1,228
|
4,894
|
5,341
|
Adjusted earnings
per common share
|
0.56
|
0.61
|
2.42
|
2.65
|
1
|
Schedules
reconciling adjusted EBITDA and adjusted earnings are available as
Appendices to this news release.
|
2
|
Presented net of
adjusting items.
|
Adjusted earnings decreased $96
million and adjusted earnings per share decreased
$0.05 compared with the fourth
quarter in 2019. The decrease in adjusted earnings was driven by
the same factors impacting business performance and adjusted EBITDA
as discussed under Distributable Cash Flow above, as well as
the following factors:
- higher depreciation and amortization expense as a result of new
assets placed into service throughout 2019, primarily on the
Canadian portion of Line 3 which entered service in December 2019; and
- higher interest expense due to debt issued to fund new growth
capital as well as a reduction in capitalized interest associated
with the Canadian portion of Line 3 which has been partially offset
by lower rates on short-term debt and newly issued long-term
notes.
Full year adjusted earnings decreased $447 million and adjusted earnings per share
decreased $0.23 compared with 2019
due to the same factors discussed above.
ADJUSTED EBITDA BY SEGMENTS
Adjusted EBITDA by segment is reported on a Canadian dollar
basis. Adjusted EBITDA generated from U.S. dollar
denominated businesses was translated at a higher average Canadian
dollar exchange rate in the fourth quarter of 2020 (C$1.30/US$) when compared with the corresponding
2019 period (C$1.32/US$).
On a full year basis, adjusted EBITDA generated from U.S dollar
denominated businesses was translated at a weaker Canadian exchange
rate of C$1.34/US$ in 2020 compared
with C$1.33/US$ in 2019.
A portion of the 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,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Mainline
System
|
1,032
|
960
|
4,102
|
3,900
|
Regional Oil Sands
System
|
234
|
208
|
839
|
856
|
Gulf Coast and
Mid-Continent System
|
206
|
214
|
920
|
922
|
Other1
|
315
|
338
|
1,321
|
1,363
|
Adjusted
EBITDA2
|
1,787
|
1,720
|
7,182
|
7,041
|
|
|
|
|
|
Operating Data
(average deliveries – thousands of bpd)
|
|
|
|
|
Mainline System -
ex-Gretna volume3
|
2,651
|
2,728
|
2,622
|
2,705
|
Regional Oil Sands
System4
|
1,919
|
1,864
|
1,641
|
1,817
|
International Joint
Tariff (IJT)5
|
$4.27
|
$4.21
|
$4.24
|
$4.18
|
1
|
Other consists of
Southern Lights Pipeline, Express-Platte System, Bakken System,
Gray Oak and Feeder Pipelines & Other.
|
2
|
Schedules reconciling
adjusted EBITDA are provided in the Appendices to this news
release.
|
3
|
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.
|
4
|
Volumes are for the
Athabasca mainline, Athabasca Twin, Waupisoo Pipeline and Woodland
Pipeline and exclude laterals on the Regional Oil Sands
System.
|
5
|
The IJT benchmark
toll and its components are set in U.S. dollars and the majority of
the Company's foreign exchange risk on the Canadian portion of the
Mainline is hedged. The Canadian portion of the Mainline represents
approximately 55% of total Mainline System revenue and the average
effective FX rate for the Canadian portion of the Mainline during
the fourth quarter of 2020 was C$1.21/US$ (Q4 2019: C$1.19/US$) and
for the full year 2020 C$1.19/US$ (2019: C$1.19/US$).
|
|
The U.S. portion of
the Mainline System is subject to FX translation similar to the
Company's other U.S. based businesses, which are translated at the
average spot rate for a given period. A portion of this U.S. dollar
translation exposure is hedged under the Company's enterprise-wide
financial risk management program. The offsetting hedge settlements
are reported within Eliminations and Other.
|
Liquids Pipelines adjusted EBITDA increased $67 million compared with the fourth quarter of
2019 primarily due to:
- contributions from the Canadian Line 3 Replacement Program that
was placed into service on December 1,
2019, with an interim surcharge on Mainline System volumes
of US$0.20 per barrel, a higher IJT
Benchmark Toll, partially offset by lower Mainline System
throughput, with ex-Gretna
throughput on average 77 kbpd lower driven by the impact of
COVID-19 on supply and demand for oil and related products;
- lower contributions from the Gulf Coast and Mid-Continent
System due to lower light volume throughput on the Seaway Crude
Pipeline driven by the impact of COVID-19 on the Gulf Coast demand
mostly offset by higher Flanagan South Pipeline throughput and
contribution; and
- lower throughput on the Bakken Pipeline System, included in
Other, driven by the impact of lower prices and COVID-19 on supply
and demand for oil and products.
Full year 2020 Liquids Pipeline adjusted EBITDA increased
$141 million compared with 2019 and
were primarily impacted by the same factors discussed above. On a
full year basis, Regional Oil Sands contributions are slightly
lower due to a decrease in delivered volumes. The majority of these
assets are underpinned by take-or-pay arrangements. In addition,
for the full year 2020, Mainline System throughput ex-Gretna was on average 83 kbpd lower, but was
more than offset by decreased costs, including power.
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
US Gas
Transmission1
|
673
|
705
|
3,090
|
2,838
|
Canadian Gas
Transmission1
|
140
|
164
|
494
|
652
|
US
Midstream
|
40
|
48
|
156
|
194
|
Other
|
25
|
31
|
155
|
184
|
Adjusted
EBITDA2
|
878
|
948
|
3,895
|
3,868
|
1
|
US Gas Transmission
includes the Canadian portion of the Maritimes & Northeast
Pipeline which was previously included in Canadian Gas
Transmission. The comparable 2019 adjusted EBITDA has been restated
to reflect this change.
|
2
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Gas Transmission and Midstream adjusted EBITDA decreased
$70 million compared with the fourth
quarter of 2019 primarily due to:
- lower contributions from US Gas Transmission due to lower
revenues on Texas Eastern due to pressure restrictions, partially
offset by higher revenues due to the rate settlement on Texas
Eastern and Algonquin; and
- the absence of earnings in Canadian Gas Transmission in 2020
from the federally-regulated portion of the Canadian natural gas
gathering and processing assets that were sold on December 31, 2019.
Full year 2020 Gas Transmission and Midstream adjusted EBITDA
increased $27 million compared with
2019 due to the factors discussed above as well as:
- higher contributions in US Gas Transmission from the second
phase of the Atlantic Bridge project which was put into service
fourth quarter of 2019 and the Stratton Ridge project which was put
into service in the second quarter of 2019; partially offset
by
- lower contributions due to the impact of a narrowed
AECO-Chicago basis at our Alliance Pipeline joint venture and lower
commodity prices impacting our Aux
Sable joint venture.
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Enbridge Gas Inc.
(EGI)
|
455
|
444
|
1,741
|
1,714
|
Other
|
37
|
37
|
81
|
105
|
Adjusted
EBITDA1
|
492
|
481
|
1,822
|
1,819
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
EGI
|
|
|
|
|
Volumes (billions of
cubic feet)
|
507
|
532
|
1,793
|
1,860
|
Number of active
customers (millions)2
|
|
|
3.8
|
3.8
|
Heating degree
days3
|
|
|
|
|
Actual
|
1,234
|
1,383
|
3,657
|
4,082
|
Forecast based on
normal weather4
|
1,310
|
1,314
|
3,843
|
3,849
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
2
|
Number of active
customers is the number of natural gas consuming customers at the
end of the reported period.
|
3
|
Heating degree days
is a measure of coldness that is indicative of volumetric
requirements for natural gas utilized for heating purposes in EGI's
distribution franchise areas.
|
4
|
Normal weather is the
weather forecast by EGI in its legacy rate zones, using the
forecasting methodologies approved by the Ontario Energy
Board.
|
Gas Distribution and Storage adjusted EBITDA will typically
follow a seasonal profile. It is generally highest in the first and
fourth quarters of the year reflecting greater volumetric demand
during the heating season. The magnitude of the seasonal EBITDA
fluctuations will vary from year-to-year reflecting the impact of
colder or warmer than normal weather on distribution volumes.
Gas Distribution and Storage adjusted EBITDA increased
$11 million compared with the fourth
quarter of 2019 primarily due to:
- higher distribution charges resulting from increases in rates
and customer base growth; and
- synergy capture realized from the amalgamation of Enbridge Gas
Distribution Inc. and Union Gas Limited;
- partially offset by the impact of warmer weather experienced in
our franchise service areas in the fourth quarter of 2020 when
compared with the fourth quarter of 2019.
When compared with the normal weather forecast embedded in
rates, the warmer weather in the fourth quarter of 2020 negatively
impacted EBITDA by approximately $15
million while the fourth quarter of 2019 was positively
impacted by approximately $16 million
due to colder than normal weather.
Full year 2020 Gas Distribution and Storage adjusted EBITDA
increased $3 million compared with
2019 due to the factors discussed above as well as the absence of
earnings in 2020 from Enbridge Gas New Brunswick and St. Lawrence
Gas Company, Inc. which were sold on October
1, 2019, and November 1, 2019,
respectively.
On a full year basis, when compared with the normal weather
forecast embedded in rates, warmer weather negatively impacted
EBITDA by approximately $33 million
compared with a positive impact of $67
million on EBITDA in 2019 due to colder than normal weather
in our franchise service areas last year.
RENEWABLE POWER GENERATION
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA1
|
146
|
119
|
507
|
424
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Renewable Power Generation adjusted EBITDA increased
$27 million compared with the fourth
quarter of 2019 primarily due to:
- contributions from the Albatros expansion of the Hohe See
Offshore Wind Project, which was placed into service in
January 2020; and
- stronger wind resources at both Canadian and United States wind facilities.
Full year 2020 Renewable Power Generation adjusted EBITDA
increased $83 million compared with
2019 due to the factors discussed above as well as:
- contributions from the Hohe See Offshore Wind Project, which
reached full operating capacity in October
2019; and
- reimbursements received at certain Canadian wind facilities
resulting from a change in operator.
ENERGY SERVICES
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA1
|
(82)
|
(22)
|
(119)
|
269
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Energy Services adjusted EBITDA decreased $60 million compared with the fourth quarter of
2019 and $388 million compared with
full year 2019 as a result of significant compression of location
and quality differentials in certain markets which led to fewer
opportunities to achieve profitable margins on capacity
obligations. The first quarter of 2019 was exceptionally strong,
benefiting from favorable location and quality differentials, which
increased opportunities to realize profitable margins.
ELIMINATIONS AND OTHER
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Operating and
administrative recoveries/(expenses)
|
(8)
|
(10)
|
158
|
66
|
Realized foreign
exchange hedge settlements
|
(12)
|
(50)
|
(172)
|
(216)
|
Adjusted
EBITDA1
|
(20)
|
(60)
|
(14)
|
(150)
|
1
|
Schedules reconciling
adjusted EBITDA are available as Appendices to this news
release.
|
Operating and administrative recoveries captured in this segment
reflect the cost of centrally delivered services (including
depreciation of corporate assets) inclusive of amounts recovered
from business units for the provision of those services. Also, as
previously noted, U.S. dollar denominated earnings within the
segment results are translated at average foreign exchange rates
during the quarter. The offsetting impact of settlements made under
the Company's enterprise foreign exchange hedging program are
captured in this segment.
Eliminations and Other adjusted EBITDA increased $40 million compared with the fourth quarter of
2019 due to:
- lower operating and administrative costs as a result of cost
containment actions; and
- lower realized foreign exchange settlement losses primarily due
to a narrower spread between the average exchange rate of
$1.30 for the fourth quarter of 2020
(Q4 2019:$1.32) and the fourth
quarter 2020 hedge rate of $1.29 (Q4
2019:$1.24).
Full year 2020 Eliminations and Other adjusted EBITDA increased
$136 million compared with 2019 due
to the same factors discussed above. On a full year basis, the
average exchange rate for 2020 was $1.34 (2019:$1.33)
compared with the full-year 2020 hedge rate of $1.29 (2019: $1.24).
CONFERENCE CALL
Enbridge will host a conference call and webcast on
February 12, 2021 at 9:00 a.m. Eastern Time (7:00
a.m. Mountain Time) to provide an enterprise wide business
update and review 2020 fourth quarter and full-year 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 8891852#. The call will be audio
webcast live at https://edge.media-server.com/mmc/p/9sroqj75. It is
recommended that participants dial in or join the audio webcast
fifteen minutes prior to the scheduled start time. 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 8891852#).
The conference call format will include prepared remarks from
the executive team followed by a question and answer session for
the analyst and investor community only. Enbridge's media and
investor relations teams will be available after the call for any
additional questions.
DIVIDEND DECLARATION
On December 7, 2020, the Company's
Board of Directors declared the following quarterly dividends. All
dividends are payable on March 1,
2021, to shareholders of record on February 12, 2021.
|
Dividend per
share
|
Common
Shares1
|
$0.83500
|
Preference Shares,
Series A
|
$0.34375
|
Preference Shares,
Series B
|
$0.21340
|
Preference Shares,
Series C2
|
$0.15349
|
Preference Shares,
Series D
|
$0.27875
|
Preference Shares,
Series F
|
$0.29306
|
Preference Shares,
Series H
|
$0.27350
|
Preference Shares,
Series J
|
US$0.30540
|
Preference Shares,
Series L
|
US$0.30993
|
Preference Shares,
Series N
|
$0.31788
|
Preference Shares,
Series P
|
$0.27369
|
Preference Shares,
Series R
|
$0.25456
|
Preference Shares,
Series 1
|
US$0.37182
|
Preference Shares,
Series 3
|
$0.23356
|
Preference Shares,
Series 5
|
US$0.33596
|
Preference Shares,
Series 7
|
$0.27806
|
Preference Shares,
Series 9
|
$0.25606
|
Preference Shares,
Series 113
|
$0.24613
|
Preference Shares,
Series 134
|
$0.19019
|
Preference Shares,
Series 155
|
$0.18644
|
Preference Shares,
Series 17
|
$0.32188
|
Preference Shares,
Series 19
|
$0.30625
|
1
|
The quarterly
dividend per common share was increased 3% to $0.835 from $0.81,
effective March 1, 2021.
|
2
|
The quarterly
dividend per share paid on Series C was increased to $0.25458 from
$0.25305 on March 1, 2020, was decreased to $0.16779 from $0.25458
on June 1, 2020, was decreased to $0.15975 from $0.16779 on
September 1, 2020 and was decreased to $0.15349 from $0.15975 on
December 1, 2020, due to reset on a quarterly basis following the
date of issuance of the Series C Preference
Shares.
|
3
|
The quarterly
dividend per share paid on Series 11 was decreased to $0.24613 from
$0.275 on March 1, 2020, due to the reset of the annual dividend on
March 1, 2020, and every five years thereafter.
|
4
|
The quarterly
dividend per share paid on Series 13 was decreased to $0.19019 from
$0.275 on June 1, 2020, due to the reset of the annual dividend on
June 1, 2020, and every five years thereafter.
|
5
|
The quarterly
dividend per share paid on Series 15 was decreased to $0.18644 from
$0.275 on September 1, 2020, due to the reset of the annual
dividend on September 1, 2020, 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; 2021 financial
guidance; the COVID-19 pandemic and the duration and impact
thereof; energy intensity and emissions reduction targets;
diversity and inclusion goals; the expected supply of, demand for
and prices of crude oil, natural gas, natural gas liquids,
liquified natural gas and renewable energy; anticipated
utilization of our existing assets, including throughput on the
Mainline; expected EBITDA and expected adjusted EBITDA; expected
earnings/(loss) and adjusted earnings/(loss); expected DCF and DCF
per share; expected future cash flows; expected dividend growth and
payout ratio; anticipated cost savings; expected performance of the
Company's businesses; expected debt-to-EBITDA ratio; financial
strength and flexibility; expectations on sources of liquidity and
sufficiency of financial resources; expected costs related to
announced projects and projects under construction and for
maintenance; expected in-service dates for announced projects and
projects under construction; expected capital expenditures,
investment capacity and capital allocation priorities; expected
future growth and expansion opportunities; expected benefits of
transactions, including the realization of efficiencies and
synergies; expected future actions of regulators and courts; toll
and rate case discussions and filings, including Mainline
Contracting and the anticipated benefits thereof; Line 3
Replacement Program, including anticipated in-service date, capital
costs, EBITDA contribution and economics; and Line 5 dual pipelines
and their continued safe operations, and related litigation and
other matters.
Although Enbridge believes these forward-looking statements
are reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Material assumptions
include assumptions about the following: the COVID-19 pandemic and
the duration and impact thereof; the expected supply of and demand
for crude oil, natural gas, natural gas liquids (NGL) and renewable
energy; prices of crude oil, natural gas, NGL and renewable energy;
anticipated utilization of our existing assets; exchange rates;
inflation; interest rates; availability and price of labour and
construction materials; operational reliability; customer and
regulatory approvals; maintenance of support and regulatory
approvals for the Company's projects; anticipated in-service dates;
weather; anticipated reductions in operating costs; the timing and
closing of acquisitions and dispositions; the realization of
anticipated benefits and synergies of transactions; governmental
legislation; litigation; impact of the Company's dividend policy on
its future cash flows; credit ratings; capital project funding;
hedging program; expected EBITDA and expected adjusted EBITDA;
expected earnings/(loss) and adjusted earnings/(loss); expected
earnings/ (loss) or adjusted earnings/(loss) per share; expected
future cash flows and expected future DCF and DCF per share; and
estimated future dividends. Assumptions regarding the expected
supply of and demand for crude oil, natural gas, NGL and renewable
energy, and the prices of these commodities, are material to and
underlie all forward-looking statements, as they may impact current
and future levels of demand for the Company's services. Similarly,
exchange rates, inflation, interest rates and the COVID-19 pandemic
impact the economies and business environments in which the Company
operates and may impact levels of demand for the Company's services
and cost of inputs, and are therefore inherent in all
forward-looking statements. Due to the interdependencies and
correlation of these macroeconomic factors, the impact of any one
assumption on a forward-looking statement cannot be determined with
certainty, particularly with respect to expected EBITDA, expected
adjusted EBITDA, expected earnings/(loss), expected adjusted
earnings/(loss), expected DCF and associated per share amounts, and
estimated future dividends. The most relevant assumptions
associated with forward-looking statements regarding announced
projects and projects under construction, including estimated
completion dates and expected capital expenditures, include the
following: the availability and price of labour and construction
materials; the effects of inflation and foreign exchange rates on
labour and material costs; the effects of interest rates on
borrowing costs; the impact of weather; customer, government and
regulatory approvals on construction and in-service schedules and
cost recovery regimes; and the COVID-19 pandemic and the duration
and impact thereof.
Enbridge's forward-looking statements are subject to risks
and uncertainties pertaining to the realization of anticipated
benefits and synergies of projects and transactions, successful
execution of our strategic priorities, operating performance, the
Company's dividend policy, regulatory parameters, changes in
regulations applicable to the Company's business, litigation,
acquisitions and dispositions and other transactions, project
approval and support, renewals of rights-of-way, weather, economic
and competitive conditions, public opinion, changes in tax laws and
tax rates, changes in trade agreements, political decisions,
exchange rates, interest rates, commodity prices, supply of and
demand for commodities and the COVID-19 pandemic, including but not
limited to those risks and uncertainties discussed in this and in
the Company's other filings with Canadian and 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.; Gas Distribution and Storage,
which serves approximately 3.8 million retail customers in
Ontario and Quebec; and Renewable Power Generation, which
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 forms part of
this news release.
FOR FURTHER
INFORMATION PLEASE CONTACT:
|
|
Enbridge Inc. –
Media
|
Enbridge Inc. –
Investment Community
|
Jesse
Semko
|
Jonathan
Morgan
|
Toll Free: (888)
992-0997
|
Toll Free: (800)
481-2804
|
Email:
media@enbridge.com
|
Email:
investor.relations@enbridge.com
|
NON-GAAP RECONCILIATIONS APPENDICES
This news release contains references to adjusted EBITDA,
adjusted earnings, adjusted earnings per common share and DCF.
Management believes the presentation of these metrics gives useful
information to investors and shareholders as they provide increased
transparency and insight into the performance of the Company.
Adjusted EBITDA represents EBITDA adjusted for unusual,
infrequent or other non-operating factors on both a consolidated
and segmented basis. Management uses adjusted EBITDA to set targets
and to assess the performance of the Company and its Business
Units.
Adjusted earnings represent earnings attributable to common
shareholders adjusted for unusual, infrequent or other
non-operating factors included in adjusted EBITDA, as well as
adjustments for unusual, infrequent or other non-operating factors
in respect of depreciation and amortization expense, interest
expense, income taxes and noncontrolling interests on a
consolidated basis. Management uses adjusted earnings as another
measure of the Company's ability to generate earnings.
DCF is defined as cash flow provided by operating
activities before the impact of changes in operating assets and
liabilities (including changes in environmental liabilities) less
distributions to noncontrolling interests, preference share
dividends and maintenance capital expenditures, and further
adjusted for unusual, infrequent or other non-operating factors.
Management also uses DCF to assess the performance of the Company
and to set its dividend payout target.
Reconciliations of forward-looking non-GAAP financial measures
to comparable GAAP measures are not available due to the challenges
and impracticability with estimating some of the items,
particularly certain contingent liabilities, and non-cash
unrealized derivative fair value losses and gains which are subject
to market variability. Because of those challenges, a
reconciliation of forward-looking non-GAAP financial measures is
not available without unreasonable effort.
Our non-GAAP measures described above are not measures that have
standardized meaning prescribed by generally accepted accounting
principles in the United States of
America (U.S. GAAP) and are not U.S. GAAP measures.
Therefore, these measures may not be comparable with similar
measures presented by other issuers.
The tables below provide a reconciliation of the non-GAAP
measures to comparable GAAP measures.
APPENDIX A
NON-GAAP RECONCILIATIONS – ADJUSTED
EBITDA AND ADJUSTED EARNINGS
CONSOLIDATED EARNINGS
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Liquids
Pipelines
|
2,403
|
1,971
|
7,683
|
7,681
|
Gas Transmission and
Midstream
|
857
|
638
|
1,087
|
3,371
|
Gas Distribution and
Storage
|
463
|
443
|
1,748
|
1,747
|
Renewable Power
Generation
|
147
|
(189)
|
523
|
111
|
Energy
Services
|
(224)
|
(68)
|
(236)
|
250
|
Eliminations and
Other
|
385
|
114
|
(113)
|
429
|
EBITDA
|
4,031
|
2,909
|
10,692
|
13,589
|
Depreciation and
amortization
|
(946)
|
(865)
|
(3,712)
|
(3,391)
|
Interest
expense
|
(685)
|
(697)
|
(2,790)
|
(2,663)
|
Income tax
expense
|
(501)
|
(433)
|
(774)
|
(1,708)
|
Earnings attributable
to noncontrolling interests
|
(28)
|
(72)
|
(53)
|
(122)
|
Preference share
dividends
|
(96)
|
(96)
|
(380)
|
(383)
|
Earnings
attributable to common shareholders
|
1,775
|
746
|
2,983
|
5,322
|
ADJUSTED EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
Liquids
Pipelines
|
1,787
|
1,720
|
7,182
|
7,041
|
Gas Transmission and
Midstream
|
878
|
948
|
3,895
|
3,868
|
Gas Distribution and
Storage
|
492
|
481
|
1,822
|
1,819
|
Renewable Power
Generation
|
146
|
119
|
507
|
424
|
Energy
Services
|
(82)
|
(22)
|
(119)
|
269
|
Eliminations and
Other
|
(20)
|
(60)
|
(14)
|
(150)
|
Adjusted
EBITDA
|
3,201
|
3,186
|
13,273
|
13,271
|
Depreciation and
amortization
|
(946)
|
(865)
|
(3,712)
|
(3,391)
|
Interest
expense
|
(694)
|
(687)
|
(2,793)
|
(2,649)
|
Income tax
expense
|
(304)
|
(237)
|
(1,437)
|
(1,381)
|
Earnings attributable
to noncontrolling interests
|
(29)
|
(73)
|
(57)
|
(126)
|
Preference share
dividends
|
(96)
|
(96)
|
(380)
|
(383)
|
Adjusted
earnings
|
1,132
|
1,228
|
4,894
|
5,341
|
Adjusted earnings
per common share
|
0.56
|
0.61
|
2.42
|
2.65
|
EBITDA TO ADJUSTED EARNINGS
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars, except per share
amounts)
|
|
|
|
|
EBITDA
|
4,031
|
2,909
|
10,692
|
13,589
|
Adjusting
items:
|
|
|
|
|
Change in unrealized
derivative fair value gain - Foreign exchange
|
(1,057)
|
(783)
|
(856)
|
(1,637)
|
Change in unrealized
derivative fair value loss - Commodity prices
|
146
|
54
|
122
|
110
|
Hedging program
pre-settlement payment
|
—
|
310
|
—
|
310
|
Asset write-down
loss
|
—
|
297
|
—
|
402
|
Loss on sale of
assets
|
—
|
268
|
—
|
268
|
Equity investment
impairment
|
—
|
—
|
2,351
|
—
|
Equity investment
asset and goodwill impairment
|
—
|
24
|
324
|
86
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
—
|
159
|
—
|
Employee severance,
transition and transformation costs
|
34
|
47
|
339
|
135
|
Other
|
47
|
60
|
142
|
8
|
Total adjusting
items
|
(830)
|
277
|
2,581
|
(318)
|
Adjusted
EBITDA
|
3,201
|
3,186
|
13,273
|
13,271
|
Depreciation and
amortization
|
(946)
|
(865)
|
(3,712)
|
(3,391)
|
Interest
expense
|
(685)
|
(697)
|
(2,790)
|
(2,663)
|
Income tax
expense
|
(501)
|
(433)
|
(774)
|
(1,708)
|
Earnings attributable
to noncontrolling interests
|
(28)
|
(72)
|
(53)
|
(122)
|
Preference share
dividends
|
(96)
|
(96)
|
(380)
|
(383)
|
Adjusting items in
respect of:
|
|
|
|
|
Interest
expense
|
(9)
|
10
|
(3)
|
14
|
Income tax
expense
|
197
|
196
|
(663)
|
327
|
Earnings attributable
to noncontrolling interests
|
(1)
|
(1)
|
(4)
|
(4)
|
Adjusted
earnings
|
1,132
|
1,228
|
4,894
|
5,341
|
Adjusted earnings
per common share
|
0.56
|
0.61
|
2.42
|
2.65
|
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED EBITDA TO SEGMENTED
EBITDA
LIQUIDS PIPELINES
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
1,787
|
1,720
|
7,182
|
7,041
|
Change in unrealized
derivative fair value gain
|
635
|
586
|
545
|
976
|
Hedging program
pre-settlement payment
|
—
|
(310)
|
—
|
(310)
|
Other
|
(19)
|
(25)
|
(44)
|
(26)
|
Total
adjustments
|
616
|
251
|
501
|
640
|
EBITDA
|
2,403
|
1,971
|
7,683
|
7,681
|
GAS TRANSMISSION AND MIDSTREAM
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
878
|
948
|
3,895
|
3,868
|
Asset write-down
loss
|
—
|
—
|
—
|
(105)
|
Equity investment
impairment
|
—
|
—
|
(2,351)
|
—
|
Equity investment
asset and goodwill impairment
|
—
|
(24)
|
(324)
|
(86)
|
Texas Eastern
re-establishment of EDIT regulated liability
|
—
|
—
|
(159)
|
—
|
Loss on sale of
assets
|
—
|
(268)
|
—
|
(268)
|
Other
|
(21)
|
(18)
|
26
|
(38)
|
Total
adjustments
|
(21)
|
(310)
|
(2,808)
|
(497)
|
EBITDA
|
857
|
638
|
1,087
|
3,371
|
GAS DISTRIBUTION AND STORAGE
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited;
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
492
|
481
|
1,822
|
1,819
|
Change in unrealized
derivative fair value loss
|
(12)
|
(21)
|
(10)
|
(12)
|
Employee severance,
transition and transformation costs
|
(17)
|
(8)
|
(60)
|
(51)
|
Other
|
—
|
(9)
|
(4)
|
(9)
|
Total
adjustments
|
(29)
|
(38)
|
(74)
|
(72)
|
EBITDA
|
463
|
443
|
1,748
|
1,747
|
RENEWABLE POWER GENERATION
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
146
|
119
|
507
|
424
|
Change in unrealized
derivative fair value gain
|
1
|
—
|
3
|
2
|
Asset write-down
loss
|
—
|
(297)
|
—
|
(297)
|
Other
|
—
|
(11)
|
13
|
(18)
|
Total
adjustments
|
1
|
(308)
|
16
|
(313)
|
EBITDA
|
147
|
(189)
|
523
|
111
|
ENERGY SERVICES
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
(82)
|
(22)
|
(119)
|
269
|
Change in unrealized
derivative fair value loss
|
(146)
|
(54)
|
(122)
|
(110)
|
Net inventory
adjustment
|
4
|
8
|
5
|
91
|
Total
adjustments
|
(142)
|
(46)
|
(117)
|
(19)
|
EBITDA
|
(224)
|
(68)
|
(236)
|
250
|
ELIMINATIONS AND OTHER
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Adjusted
EBITDA
|
(20)
|
(60)
|
(14)
|
(150)
|
Change in unrealized
derivative fair value gain
|
433
|
218
|
318
|
671
|
Change in corporate
guarantee obligation
|
—
|
—
|
(74)
|
—
|
Investment write-down
loss
|
—
|
—
|
(43)
|
—
|
Employee severance,
transition and transformation costs
|
(17)
|
(39)
|
(279)
|
(84)
|
Other
|
(11)
|
(5)
|
(21)
|
(8)
|
Total
adjustments
|
405
|
174
|
(99)
|
579
|
EBITDA
|
385
|
114
|
(113)
|
429
|
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED BY OPERATING ACTIVITIES TO
DCF
|
Three months
ended
December 31,
|
Twelve months
ended
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
(unaudited,
millions of Canadian dollars)
|
|
|
|
|
Cash provided by
operating activities
|
2,254
|
1,993
|
9,781
|
9,398
|
Adjusted for changes
in operating assets and liabilities1
|
120
|
(192)
|
(93)
|
259
|
|
2,374
|
1,801
|
9,688
|
9,657
|
Distributions to
noncontrolling interests4
|
(68)
|
(54)
|
(300)
|
(204)
|
Preference share
dividends
|
(96)
|
(96)
|
(380)
|
(383)
|
Maintenance capital
expenditures2
|
(320)
|
(342)
|
(915)
|
(1,083)
|
Significant adjusting
items:
|
|
|
|
|
Other receipts of cash
not recognized in revenue3
|
42
|
30
|
292
|
169
|
Employee severance,
transition and transformation costs
|
31
|
52
|
335
|
143
|
Distributions from
equity investments in excess of cumulative
earnings4
|
263
|
154
|
675
|
361
|
Other
items
|
(17)
|
506
|
45
|
564
|
DCF
|
2,209
|
2,051
|
9,440
|
9,224
|
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-reports-strong-2020-financial-results-301227421.html
SOURCE Enbridge Inc.