Highlights
(All financial figures are unaudited and in Canadian dollars unless otherwise noted. * identifies non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices.)
- First quarter GAAP earnings of $1.9 billion or $0.95 per common share, compared with GAAP earnings of $1.9 billion or $0.94 per common share in 2021
- Adjusted earnings* of $1.7 billion or $0.84 per common share*, compared with $1.6 billion or $0.81 per common share* in 2021
- Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA)* of $4.1 billion, compared with $3.7 billion in 2021
- Cash provided by operating activities of $2.9 billion, compared with $2.6 billion in 2021
- Distributable cash flow (DCF)* of $3.1 billion or $1.52 per common share*, compared with $2.8 billion or $1.37 per common share* in 2021
- Reaffirmed 2022 full year guidance range for EBITDA of $15.0 billion to $15.6 billion and DCF per share of $5.20 to $5.50
- Placed the 455-kilometre, $0.2 billion East-West Tie Transmission Line into service providing reliable, long-term electricity to Northwest Ontario
- Sanctioned $0.3 billion expansion of the Panhandle Regional Transmission System to meet growing natural gas demand in Southern Ontario; operations to commence in late-2023
- Announced an Open Season for up to a 400 MMcf/d expansion of the B.C. Pipeline System’s T-North section with a 2026 in-service date to meet increasing demand
- Awarded the right to advance the Open Access Wabamun Carbon Hub designed to capture 4 million tonnes of CO2 emissions annually
- Announced Letter of Intent with Humble Midstream LLC to develop blue hydrogen, ammonia and associated carbon capture infrastructure at the Enbridge Ingleside Energy Center near Corpus Christi, Texas on the U.S. Gulf Coast
- Progressing construction of four French offshore renewable projects with combined gross power generation of approximately 1.5 gigawatts (0.3 GW net)
- Advancing capital allocation priorities; on track to achieve Debt to EBITDA of 4.7x or lower by year end and executed initial share repurchases during the first quarter
CEO COMMENT
Al Monaco, President and CEO commented on the following:
“It’s clear we are at an inflection point in global energy markets. Energy demand continues to grow, which combined with underinvestment in new supply, is driving energy shortages and higher prices. Now, more than ever, it’s evident that all forms of energy, conventional and low carbon, are needed to meet the growing demand while ensuring society has access to affordable, reliable, secure and cleaner energy.
“This global energy crisis further heightens the essential role that conventional energy will play for decades to come. But, we also need to meet our global emissions goals across the value chain and leverage existing infrastructure to accelerate investment in low-carbon energy.
“The current environment reinforces that our two-pronged strategy to advance both conventional and low-carbon energy investments is a prudent approach to ensure delivery of the energy that people need and want in their daily lives. Our diversified asset footprint, integrated North American transportation systems, access to tide water, and established renewable power assets and low-carbon execution capabilities, provide us a competitive advantage. We’re working closely with our customers to accelerate new infrastructure investments to meet growing demand, increase connections to export markets, and enable cleaner energies.
“ESG leadership is central to our differentiated approach to energy delivery and our goal is to continue to lead our sector. We have advanced our diversity goals at all levels of the organization, including our Board of Directors, and making good progress. Early actions and business plans have us on track to meet our 2030 emissions intensity and 2050 Net-Zero goals to stay ahead of the curve. We’ve also recently committed to additional actions, including supporting organizations developing science-based guidelines for the midstream sector and engaging with key suppliers to further support Scope 3 emissions reductions.
“First quarter operational performance and utilization across each of our businesses translated into a strong start to the year. The $14 billion of capital we placed into service in 2021, including the Ingleside acquisition, is generating incremental EBITDA and distributable cash flow growth. We are on target to achieve our full year financial guidance.
“In Liquids Pipelines, we’re in discussions with industry on a new commercial framework for our Mainline. Detailed cost information has been shared with shippers, providing the transparency necessary for negotiations, and we continue to expect to have a new commercial model in effect by mid-to-late 2023.
“The acquisition of the Ingleside Energy Center has provided us with the premier crude oil export facility in the U.S. Gulf Coast at a time when greater supply of more sustainable and secure North American energy is needed. In the first quarter, Ingleside loaded over 20% of export volumes on the Gulf Coast, reflecting our ability to offer lowest basin-to-water costs. We continue to see strong customer interest to expand our storage and product loading capabilities, including NGLs. We’re also now developing hydrogen and ammonia opportunities at Ingleside, which will include carbon capture and sequestration that will allow production of low-carbon fuel sources. Our Texas Eastern System on the Gulf Coast can provide feed gas, demonstrating the synergies across our diversified asset base.
“We’re very excited to be moving our Alberta carbon capture strategy forward with the Open Access Wabamun Carbon Hub, which received approval from the Government of Alberta for further development. Our partnerships with Capital Power and Lehigh Cement, and local Indigenous and Métis communities, will enable the sequestration of nearly 4 million tonnes of CO2 annually, and there’s expansion potential beyond that.
“In Gas Transmission, we’re seeing a strong pick up in commercial interest from Asia and Europe to secure export capacity. We currently serve four operating LNG facilities in the Gulf Coast. Three more LNG developments, Plaquemines LNG, Rio Grande and Texas LNG, are moving towards investment decisions and we’ve secured projects to serve those facilities if they reach a final investment decision.
“In Western Canada, the fundamentals for LNG export are strengthening, with abundant low-cost reserves and shorter transport times to Asian markets. Today, we announced an open season for a $1 billion expansion of the T-North section of the B.C. Pipeline to support production and demand growth, including west coast LNG demand. We continue to advance the proposed $2.5+ billion T-South expansion to support growing demand in the Pacific Northwest, including from Woodfibre which recently announced that it is advancing preliminary construction activities. Growing demand in the region could support further growth on our Westcoast system including a second expansion of T-North.
“Our utility franchise continues to generate ratable growth. We’re on track to add more than 40 thousand natural gas customers this year. Yesterday we sanctioned a $300 million expansion of the Panhandle Transmission System to support increased customer demand. The Markham hydrogen blending project has now been successfully operating during the first quarter with good results and we’re developing over fifty in-franchise RNG opportunities.
“In Renewables, we’re making good progress on construction of four offshore wind projects in France with the first project planned to enter service late this year. In North America, our solar self-power projects serving our liquids and gas transmission businesses is well advanced with three projects in service and ten more projects capable of generating 100 megawatts (MW) under construction. We’re developing a further 160MW of utility-scale projects that would serve third parties at our Corpus Christi export terminal in Texas and our Plummer pump station in Minnesota.
“Our existing assets and execution of the secured capital program over our three-year plan is expected to support a 5-7% distributable cash flow per share compound average growth rate through 2024 relative to 2021. After providing for a strong balance sheet and ratable dividend growth, we’ll possess $5-6 billion of annual investable capacity, which we’ll continue to deploy in a disciplined manner to maximize shareholder returns.
“In summary, we are pleased with our progress on our strategic priorities and a good start to the year. Our existing connections to the best markets, paired with leading low-carbon capabilities, position Enbridge to generate long-term shareholder value while building a bridge to a cleaner energy future.
FINANCIAL RESULTS SUMMARY
Financial results for the three months ended March 31, 2022 and 2021 are summarized in the table below:
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars, except per share amounts; number of shares in millions) |
||
GAAP Earnings attributable to common shareholders |
1,927 |
1,900 |
GAAP Earnings per common share |
0.95 |
0.94 |
Cash provided by operating activities |
2,939 |
2,564 |
Adjusted EBITDA1 |
4,147 |
3,743 |
Adjusted Earnings1 |
1,705 |
1,634 |
Adjusted Earnings per common share1 |
0.84 |
0.81 |
Distributable Cash Flow1 |
3,072 |
2,761 |
Weighted average common shares outstanding |
2,026 |
2,022 |
1 Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. |
GAAP earnings attributable to common shareholders for the first quarter of 2022 increased by $27 million or $0.01 per share compared with the same period in 2021.
The period-over-period comparability of GAAP earnings attributable to common shareholders is impacted by certain unusual, infrequent factors or other non-operating factors which are noted in the reconciliation schedule included in Appendix A of this news release. Refer to the Management’s Discussion & Analysis for the first quarter of 2022 filed in conjunction with the first quarter financial statements for a detailed discussion of GAAP financial results.
Adjusted EBITDA in the first quarter of 2022 increased by $404 million compared with the same period in 2021. This is primarily driven by contributions from the U.S portion of the Line 3 Replacement Project and the acquisition of the Enbridge Ingleside Energy Center.
Adjusted earnings in the first quarter of 2022 increased by $71 million, or $0.03 per share, primarily due to higher Adjusted EBITDA contributions, partially offset by increased depreciation expense on new assets placed into service in 2021 and higher income taxes on higher earnings.
DCF for the first quarter of 2022 increased by $311 million, or $0.15 per share, primarily due to higher Adjusted EBITDA contributions partially offset by higher cash taxes on higher taxable earnings and higher financing costs due to lower capitalized interest with the completion of U.S. portion of the Line 3 Replacement Project.
Detailed financial information and analysis can be found below under First Quarter 2022 Financial Results.
FINANCIAL OUTLOOK
The Company reaffirms its 2022 financial guidance announced at its December Investor Day, which included adjusted EBITDA between $15.0 and $15.6 billion and distributable cash flow per share between $5.20 to $5.50. Strong first quarter results are in line with expectations and the Company anticipates that its businesses will continue to experience strong utilization and good operating results through the balance of the year with normal course seasonality. Forward financial guidance reflects a provision in recognition of the uncertainty of future Mainline tolls associated with the ongoing commercial framework discussions with shippers.
Strong operational performance is expected to be offset by challenging market conditions which continue to impact Energy Services, along with moderately higher financing costs, due to rising interest rates, relative to 2022 financial guidance.
FINANCING UPDATE
On February 17, 2022, Enbridge secured US$1.5 billion of debt financing at attractive rates consisting of US$600 million of 2-year floating rate senior notes, US$400 million of 2-year senior notes, and US$500 million of 3-year senior notes. Proceeds from this offering were primarily used to repay existing indebtedness and for other general corporate purposes.
On March 1, 2022, Enbridge redeemed the $750 million outstanding Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17 (TSX: ENB.PF.I) using proceeds from the previously announced issuance of $750 million of hybrid securities in the Canadian debt market earlier this year. On May 2, 2022, Enbridge notified holders of its outstanding Cumulative Redeemable Preference Shares, Series J (TSX: ENB.PR.U) of the Company’s intention to redeem all of its US$200 million outstanding Cumulative Redeemable Preference Shares, Series J on June 1, 2022. Going forward, Enbridge will opportunistically redeem at par series of Enbridge preference shares with high reset rates and refinance with equity equivalent hybrid securities when economic to do so.
SECURED GROWTH PROJECT EXECUTION UPDATE
Today, the Company announced the $0.3 billion expansion of the Panhandle Transmission System, which supplies natural gas from the Dawn Hub to customers in Southern Ontario. The project is expected to receive a full cost-of-service regulated return with target phased in-service dates of late-2023 and late-2024.
The Company’s current secured growth program is approximately $10 billion and is supported by commercial models consistent with Enbridge’s low-risk model. The program includes ratable capital requirements for both Gas Transmission’s modernization and Gas Distribution’s utility growth programs, as well as four offshore wind projects in France providing a combined 1.5 GW (0.3 GW net) of generation capacity, and a number of other smaller projects across each of Enbridge’s businesses.
OTHER BUSINESS UPDATES
Mainline Commercial Framework
The Company is currently advancing two potential commercial frameworks for the Mainline in parallel: i) a new incentive rate-making agreement that may be similar to the Competitive Toll Settlement (CTS) agreement that expired on June 30, 2021, and ii) a Canadian Mainline cost-of-service application. Either framework is anticipated to provide attractive risk-adjusted returns for operating the Canadian Mainline and the range of financial outcomes is not expected to materially impact Enbridge’s financial outlook.
During the first quarter, Enbridge initiated consultation with industry participants, including sharing of detailed cost information with an industry negotiation group comprised of a cross-section of industry, including producers and refiners, and Enbridge.
The Company anticipates that its consultation and negotiation with industry will progress through the first half of this year, with the potential to file either a proposed incentive tolling settlement or a cost-of-service application with the Canada Energy Regulator (CER) for review later this year.
As per the terms of the CTS, Enbridge is collecting interim tolls which are consistent with the tolls in effect on June 30, 2021 when the CTS agreement expired and which are subject to refund. The Company’s forward financial guidance reflects a provision in recognition of the uncertainty of future Mainline tolls.
Westcoast Canada LNG Development
Today, Enbridge announced that its subsidiary, Westcoast Energy Inc., will conduct an Open Season to for an expansion project of the T-North section of the B.C. Pipeline System (T-North Expansion). The expansion will add approximately 400 MMcf/d of additional capacity to meet supply growth in Northeast B.C. and increasing LNG export demand.
The T-North Expansion will consist of pipeline looping, compressor unit additions and other ancillary station modifications to be placed into service in 2026. The capital cost estimate is approximately $1 billion and the investment will be underpinned by a cost-of-service commercial model.
Additionally, the Company continues to develop the previously announced $2.5+ billion expansion of the T-South segment of the B.C. Pipeline System for up to 300 MMcf/d which could involve an additional upstream expansion of the T-North system. The Company is targeting an Open Season to underpin the T-South portion of the expansion in the third quarter of 2022. The expansions are necessary to support demand for natural gas in the Pacific Northwest including Westcoast LNG.
Carbon Capture and Storage (CCS)
On March 31, 2022, the Government of Alberta announced that Enbridge was awarded the right to pursue further development of the Company’s proposed Open Access Wabamun Carbon Hub (the Hub). The proposed Hub will support near-term carbon capture projects being advanced by project partners, Capital Power Corporation (Capital Power) and Lehigh Cement, a division of Lehigh Hanson Materials Limited (Lehigh Cement). Combined, the projects represent an opportunity to capture nearly 4 million tonnes of atmospheric carbon dioxide emissions, with phased in-service dates starting as early as 2026, which can be further scaled to meet the needs of other nearby industrial emitters.
The Hub’s carbon transportation and sequestration facilities will be co-developed and ultimately co-owned with local Indigenous partners including the First Nations Capital Investment Partnership (comprised of Alexander First Nation, Alexis Nakota Sioux Nation, Enoch Cree Nation and Paul First Nation) and the Lac Ste. Anne Métis Community.
Advancing Low-Carbon Projects at Enbridge Ingleside Energy Center
The Company continues to leverage the Enbridge Ingleside Energy Center (EIEC) location, assets, and undeveloped land to advance conventional and low-carbon energy projects, which unlock further value associated with the EIEC acquisition.
Enbridge and Humble Midstream LLC (Humble), a privately held company backed by Encap Flatrock Midstream, announced a letter of intent to collaborate on the development and joint marketing of a blue hydrogen and ammonia production and export facility which will be located at EIEC, along with related carbon capture infrastructure. Natural gas to supply the facility would be provided by Enbridge’s Texas Eastern system. Enbridge and Humble intend to jointly market the capacity of the proposed blue hydrogen and ammonia production facilities, and Enbridge will develop the associated carbon capture and sequestration infrastructure. The construction of any facilities will be subject to sufficient customer support and receipt of all necessary regulatory approvals.
In addition, Enbridge is continuing to develop a 60 MW solar facility at EIEC which will provide renewable power generation for the export terminal as well as other local demand in the region which will enable net negative facility emissions.
Normal Course Issuer Bid (NCIB) Execution
On December 31, 2021, the TSX approved Enbridge’s NCIB to purchase, for cancellation, up to 31,062,331 of its outstanding common shares to an aggregate amount of up to $1.5 billion. The NCIB commenced on January 5, 2022 and expires on the earlier date of January 4, 2023, or when the Company reaches its share repurchase limit.
Share repurchases made pursuant to the Company’s NCIB will be predicated upon maintaining a strong balance sheet, strong business performance, and the availability and attractiveness of alternative capital investment opportunities.
The NCIB implementation provides flexibility to repurchase Enbridge’s common shares and creates an additional avenue to supplement the return of capital to shareholders, while increasing per share earnings and distributable cash flow.
During the first quarter of 2022, the Company initiated utilization of the NCIB program to repurchase and cancel approximately 1 million of its common shares.
FIRST QUARTER 2022 FINANCIAL RESULTS
GAAP Segment EBITDA and Cash Flow from Operations
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
Liquids Pipelines |
2,329 |
2,039 |
Gas Transmission and Midstream |
1,014 |
973 |
Gas Distribution and Storage |
665 |
634 |
Renewable Power Generation |
162 |
156 |
Energy Services |
(101) |
64 |
Eliminations and Other |
355 |
220 |
EBITDA1 |
4,424 |
4,086 |
Earnings attributable to common shareholders |
1,927 |
1,900 |
Cash provided by operating activities |
2,939 |
2,564 |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
For purposes of evaluating performance, the Company makes adjustments to GAAP reported earnings, segment EBITDA and cash flow provided by operating activities for unusual, infrequent or other non-operating factors, which allow Management and investors to more accurately compare the Company’s performance across periods, normalizing for factors that are not indicative of underlying business performance. Tables incorporating these adjustments follow below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted EBITDA by segment, adjusted earnings, adjusted earnings per share and DCF to their closest GAAP equivalent are provided in the Appendices to this news release.
Adjusted EBITDA By Segment
Adjusted EBITDA generated from U.S. dollar denominated businesses was translated to Canadian dollars at a comparable average exchange rate of C$1.27/US in both the first quarter of 2022 and 2021. A portion of U.S. dollar earnings is hedged under the Company’s enterprise-wide financial risk management program. The offsetting hedge settlements are reported within Eliminations and Other.
Liquids Pipelines
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
Mainline System |
1,284 |
1,131 |
Regional Oil Sands System |
245 |
237 |
Gulf Coast and Mid-Continent System |
347 |
189 |
Other Systems1 |
341 |
324 |
Adjusted EBITDA2 |
2,217 |
1,881 |
Operating Data (average deliveries – thousands of bpd) |
||
Mainline System – ex-Gretna volume3 |
3,004 |
2,746 |
International Joint Tariff (IJT)4 |
$4.27 |
$4.27 |
Competitive Tolling Settlement (CTS) Surcharges4 |
$0.26 |
$0.26 |
Line 3 Replacement Surcharge4,5 |
$0.94 |
$0.20 |
1 |
Other consists of Southern Lights Pipeline, Express-Platte System, Bakken System, and Feeder Pipelines & Other. |
2 |
Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
3 |
Mainline System throughput volume represents mainline system deliveries ex-Gretna, Manitoba which is made up of U.S. and Eastern Canada deliveries originating from Western Canada. |
4 |
The IJT benchmark toll and its components are set in U.S. dollars and the majority of the Company’s foreign exchange risk on the Canadian portion of the Mainline is hedged. The Canadian portion of the Mainline represents approximately 55% of total Mainline System revenue and the average effective FX rate realized for the Canadian portion of the Mainline during the first quarter of 2021 was C$1.24/US$ (Q1 2021: C$1.24/US$). The U.S. portion of the Mainline System is subject to FX translation similar to the Company’s other U.S. based businesses, which are translated at the average spot rate for a given period. A portion of this U.S. dollar translation exposure is hedged under the Company’s enterprise-wide financial risk management program with offsetting hedge settlements reported within Eliminations and Other. The Company is currently recording a provision against the IJT in recognition of the uncertainty of the final Mainline tolls upon the completion of the Mainline commercial framework negotiations. |
5 |
The interim surcharge of US$0.20 for the Canadian portion of the Line 3 Replacement Project, which was placed into service on December 1, 2019, was collected until October 1, 2021. With the completion of the U.S. portion of the Line 3 Replacement Project on October 1, 2021, the interim surcharge was replaced by the full Line 3 Replacement surcharge. |
Liquids Pipelines adjusted EBITDA increased $336 million compared with the first quarter of 2021, primarily related to:
- higher Mainline System throughput enabled by incremental Line 3 capacity placed into service October 1, 2021, higher tolls due to the implementation of the full Line 3 Replacement surcharge of US$0.935 per barrel compared with the surcharge on the Canadian portion of the project of US$0.20 per barrel in effect prior to October 2021, partially offset by the recognition of a provision against the interim Mainline IJT for barrels shipped in 2022; and
- higher contributions from the Gulf Coast and Mid-Continent System due primarily to the acquisition of the Ingleside Energy Center, and related assets, in the fourth quarter of 2021 and higher contributions from market access pipelines on higher volumes to meet growing U.S. Gulf Coast crude oil demand.
Gas Transmission And Midstream
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
U.S. Gas Transmission |
759 |
782 |
Canadian Gas Transmission |
177 |
142 |
U.S. Midstream |
89 |
43 |
Other |
33 |
40 |
Adjusted EBITDA1 |
1,058 |
1,007 |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
Gas Transmission and Midstream adjusted EBITDA increased $51 million compared with the first quarter of 2021, primarily related to:
- higher Canadian Gas Transmission contributions from the T-South Expansion and Spruce Ridge projects placed fully into service in the fourth quarter of 2021; and
- higher U.S. midstream contributions resulting from higher commodity prices at Enbridge’s Aux Sable and DCP joint ventures; partially offset by
- lower U.S. Gas Transmission contributions on the timing of operating cost expenditures, partially offset by contributions from the Cameron Extension, Middlesex Extension and the Appalachia to Market projects placed into service in the fourth quarter of 2021.
Gas Distribution And Storage
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
Enbridge Gas Inc. (EGI) |
656 |
604 |
Other |
18 |
42 |
Adjusted EBITDA1 |
674 |
646 |
Operating Data |
||
EGI |
||
Volumes (billions of cubic feet) |
816 |
671 |
Number of active customers2 (millions) |
3.8 |
3.8 |
Heating degree days3 |
||
Actual |
2,028 |
1,807 |
Forecast based on normal weather4 |
1,921 |
1,924 |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
2 Number of active customers is the number of natural gas consuming customers at the end of the reported period. |
3 Heating degree days is a measure of coldness that is indicative of volumetric requirements for natural gas utilized for heating purposes in EGI’s distribution franchise areas. |
4 Normal weather is the weather forecast by EGI in its legacy rate zones, using the forecasting methodologies approved by the Ontario Energy Board. |
Gas Distribution and Storage adjusted EBITDA will typically follow a seasonal profile. It is generally highest in the first and fourth quarters of the year reflecting greater volumetric demand during the heating season. The magnitude of the seasonal EBITDA fluctuations will vary from year-to-year reflecting the impact of colder or warmer than normal weather on distribution volumes.
Gas Distribution and Storage adjusted EBITDA increased $28 million compared with the first quarter of 2021 primarily related to:
- the positive impact of colder weather in 2022 of approximately $51 million; and
- higher distribution charges resulting from increases in rates and customer base; partially offset by
- the absence of earnings from our minority interest in Noverco Inc. which was sold on December 30, 2021.
When compared with the normal weather forecast embedded in rates, the colder weather in the first quarter of 2022 positively impacted EBITDA by approximately $27 million, compared to a negative impact of approximately $24 million in the first quarter of 2021.
Renewable Power Generation
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
Adjusted EBITDA1 |
160 |
154 |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
Renewable Power Generation adjusted EBITDA increased $6 million compared with the first quarter of 2021 primarily related to:
- stronger wind resources at Canadian and European offshore wind facilities;
- higher energy pricing at the Rampion offshore wind facilities; and
- the absence in 2022 of the effects from the winter storm in Texas during February 2021; partially offset by
- the absence of the promote fee received in the first quarter of 2021 associated with the closing of the sale to Canada Pension Plan (CPP) Investments of 49% of Enbridge’s interest in three French offshore wind projects under construction.
Energy Services
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
Adjusted EBITDA1 |
(71) |
(75) |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
Energy Services adjusted EBITDA increased $4 million compared with the first quarter of 2021. The increase is the result of:
- the absence of adverse impacts from the winter storm in Texas during February 2021; partially offset by
- a more pronounced market structure backwardation than in the same period of 2021 limiting storage opportunities and significant compression of location and quality differentials in certain markets.
Eliminations and Other
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars) |
||
Operating and administrative recoveries |
68 |
106 |
Realized foreign exchange hedge settlement gains |
41 |
24 |
Adjusted EBITDA1 |
109 |
130 |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
Operating and administrative recoveries captured in this segment reflect the cost of centrally delivered services (including depreciation of corporate assets) inclusive of amounts recovered from business units for the provision of those services. U.S. dollar denominated earnings within operating segment results are translated at average foreign exchange rates during the quarter, and the offsetting impact of settlements made under the Company’s enterprise foreign exchange hedging program are captured in this corporate segment.
Eliminations and Other adjusted EBITDA decreased $21 million compared with the first quarter of 2021 due to:
- the timing of recovery of operating and administrative costs from the business segments; partially offset by
- higher realized foreign exchange gains.
Distributable Cash Flow
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars; number of shares in millions) |
||
Liquids Pipelines |
2,217 |
1,881 |
Gas Transmission and Midstream |
1,058 |
1,007 |
Gas Distribution and Storage |
674 |
646 |
Renewable Power Generation |
160 |
154 |
Energy Services |
(71) |
(75) |
Eliminations and Other |
109 |
130 |
Adjusted EBITDA1,3 |
4,147 |
3,743 |
Maintenance capital |
(104) |
(109) |
Interest expense1 |
(733) |
(677) |
Current income tax1 |
(173) |
(101) |
Distributions to noncontrolling interests1 |
(60) |
(68) |
Cash distributions in excess of equity earnings1 |
33 |
43 |
Preference share dividends |
(91) |
(92) |
Other receipts of cash not recognized in revenue2 |
41 |
19 |
Other non-cash adjustments |
12 |
3 |
DCF3 |
3,072 |
2,761 |
Weighted average common shares outstanding |
2,026 |
2,022 |
1 Presented net of adjusting items. |
2 Consists of cash received, net of revenue recognized, for contracts under make-up rights and similar deferred revenue arrangements. |
3 Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. |
First quarter 2022 DCF increased $311 million compared with the same period of 2021 primarily due to operational factors discussed above contributing to higher Adjusted EBITDA, as well as:
- higher current income tax due to higher taxable earnings and an increase in U.S. minimum taxes; and
- higher interest expense due to lower capitalized interest associated with the U.S. portion of the Line 3 Replacement Project placed into service in the fourth quarter of 2021 as well as higher debt balances associated with advancing the Company’s secured growth program in 2021.
Adjusted Earnings
Three months ended March 31, |
||
2022 |
2021 |
|
(unaudited; millions of Canadian dollars, except per share amounts) |
||
Adjusted EBITDA1,2 |
4,147 |
3,743 |
Depreciation and amortization |
(1,065) |
(932) |
Interest expense2 |
(722) |
(665) |
Income taxes2 |
(526) |
(399) |
Noncontrolling interests2 |
(27) |
(21) |
Preference share dividends |
(102) |
(92) |
Adjusted earnings1 |
1,705 |
1,634 |
Adjusted earnings per common share1 |
0.84 |
0.81 |
1 Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. |
2 Presented net of adjusting items. |
Adjusted earnings increased $71 million and adjusted earnings per share increased $0.03 compared with the first quarter in 2021 primarily due to operational factors discussed above contributing to higher Adjusted EBITDA, as well as:
- higher depreciation expense on new assets placed into service throughout 2021, including the U.S. portion of the Line 3 Replacement Project, which was placed into service in the fourth quarter and the Ingleside Energy Center acquired in October, 2021;
- higher interest expense due to lower capitalized interest associated with the U.S. portion of the Line 3 Replacement Project placed into service in the fourth quarter of 2021 as well as higher debt balances associated with advancing the Company’s secured growth program in 2021; and
- higher income taxes due to higher taxable earnings and an increase in U.S. minimum taxes.
CONFERENCE CALL
Enbridge will host a conference call and webcast on May 6, 2022 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) to provide an enterprise wide business update and review 2022 first quarter results. Analysts, members of the media and other interested parties can access the call toll free at (833) 233-4460 or within and outside North America at (647) 689-4543 using the participant passcode of 6486063. The call will be audio webcast live at https://event.on24.com/wcc/r/3723407/50E30FC946507CDB8C2D1CE3C43B544D. It is recommended that participants dial in or join the audio webcast fifteen minutes prior to the scheduled start time. A webcast replay will be available soon after the conclusion of the event and a transcript will be posted to the website. The replay will be available for seven days after the call toll-free (800) 585-8367 or within and outside North America at (416) 621-4642 (conference ID: 6486063).
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 May 3, 2022, the Company’s Board of Directors declared the following quarterly dividends. All dividends are payable on June 1, 2022 to shareholders of record on May 13, 2022.
Dividend per share |
|
Common Shares1 |
$0.86000 |
Preference Shares, Series A |
$0.34375 |
Preference Shares, Series B |
$0.21340 |
Preference Shares, Series C2 |
$0.18400 |
Preference Shares, Series D |
$0.27875 |
Preference Shares, Series F |
$0.29306 |
Preference Shares, Series H |
$0.27350 |
Preference Shares, Series J3 |
US$0.30540 |
Preference Shares, Series L |
US$0.30993 |
Preference Shares, Series N |
$0.31788 |
Preference Shares, Series P |
$0.27369 |
Preference Shares, Series R |
$0.25456 |
Preference Shares, Series 1 |
US$0.37182 |
Preference Shares, Series 3 |
$0.23356 |
Preference Shares, Series 5 |
US$0.33596 |
Preference Shares, Series 7 |
$0.27806 |
Preference Shares, Series 9 |
$0.25606 |
Preference Shares, Series 11 |
$0.24613 |
Preference Shares, Series 13 |
$0.19019 |
Preference Shares, Series 15 |
$0.18644 |
Preference Shares, Series 19 |
$0.30625 |
1 |
The quarterly dividend per common share was increased 3% to $0.86 from $0.835, effective March 1, 2022. |
2 |
The quarterly dividend per share paid on Series C was increased to $0.18400 from $0.15719 on March 1, 2022, due to reset on a quarterly basis following the date of issuance of the Series C Preference Shares. |
3 |
On May 2, 2022, Enbridge notified holders of its outstanding Cumulative Redeemable Preference Shares, Series J (Series J Shares) (TSX: ENB.PR.U) of the Company’s intention to redeem all of its US$200 million outstanding Series J Shares on June 1, 2022. |