Enbridge Inc. (TSX: ENB) (NYSE: ENB) today reported first quarter 2021 financial results, reaffirmed its 2021 financial outlook, and provided a quarterly business update.
– First quarter GAAP earnings of $1.9 billion or $0.94 per common share, compared with GAAP loss of $1.4 billion or $0.71 per common share in 2020.
– Adjusted earnings of $1.6 billion or $0.81 per common share, compared with $1.7 billion or $0.83 per common share in 2020
– Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) of $3.7 billion, compared with $3.8 billion in 2020
– Cash Provided by Operating Activities of $2.6 billion, compared with $2.8 billion in 2020
-Distributable Cash Flow (DCF) of $2.8 billion or $1.37 per common share, compared with $2.7 billion or $1.34 per common share in 2020
-Reaffirmed 2021 full year guidance range of EBITDA of $13.9 billion to $14.3 billion and DCF per share of $4.70 to $5.00
-Advancing $17 billion secured capital program with $10 billion expected to be placed into service in 2021, supporting significant cash flow growth in 2022
-Construction of the final leg of the U.S. Line 3 Replacement Project is progressing on schedule towards the targeted Q4 2021 in-service date
-Reached rate settlements in principle with customers on several Gas Transmission assets, which provide cash flow stability and an appropriate return on our investments
-Gas Distribution capital growth program advancing; on track for another 45 thousand customer additions this year
-Sanctioned 4 additional self-power projects for the Liquids system and placed the 10.5 MW Alberta Solar One facility into service, reducing pump station CO2 emissions
-Sanctioned the 448 MW Calvados offshore wind farm backed by a 20-year fixed price power purchase agreement
-Announced development of a 20 MW green hydrogen production and blending project in Quebec through Gazifere, in partnership with Evolugen
-Closed the previously announced sale of 49% of Enbridge’s interests in three French offshore wind projects under construction to CPP Investments
-Completed the previously announced purchase of 6.6 million barrels of storage assets located in Cushing, further advancing our U.S. Gulf Coast strategy.
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
Commenting on the Company’s results and outlook, Al Monaco, President and CEO of Enbridge noted the following:
“We’ve had a strong start to the year. Each of our four blue chip businesses were very highly utilized in the first quarter, reflecting their resilient demand-pull franchises, top-notch customers and the ongoing recovery of global economic activity.
“Throughout the pandemic, we’ve consistently provided North Americans with safe and reliable access to affordable energy that’s absolutely critical to their daily lives. In the face of the worst disruption to economic activity and energy markets, we delivered on our 2020 financial targets set prior to the pandemic.
“Thanks to the hard work of our people, we delivered operationally again in the first quarter while managing a brutal winter storm in Texas that had wide-ranging impacts on North American energy markets.
“Our strong operational performance combined with highly contracted and utility cash flows translated into strong financial results. Distributable cash flow for the quarter is up over the first quarter of last year, which was largely unaffected by the pandemic. That’s an excellent outcome and it shows how resilient our business is in the most turbulent economic conditions. Our balance sheet is in great shape and provides us with a lot of flexibility.
“We also continued to strengthen our base business and are on track to achieve the cost efficiencies we set out in our 2021 guidance, and are confident in our ability to further enhance returns through our leading edge technology and innovation labs in Calgary and Houston.
“On the regulatory front, we’ve reached agreements in principle on Maritimes & Northeast U.S, which was recently approved by FERC, and Alliance U.S. and East Tennessee, both of which are pending FERC approval. These filings will ensure that we earn an appropriate return on our invested capital. In Liquids, the Mainline Contracting initiative continues to have strong customer support and we’re looking forward to the Canada Energy Regulator hearing, which is set to start this month.
“We’re also advancing the strategic priorities we set out in the three-year plan that we discussed at Enbridge Day in December. We’re making great progress on our $17 billion secured capital program, which is expected to generate about $2 billion of incremental EBITDA annually, and are on track to deliver $10 billion of that program into service this year.
“In Liquids, construction of the final leg of the Line 3 Replacement Project in Minnesota is about half complete and is progressing on schedule to be in service in the fourth quarter of 2021. In Gas Transmission, we’re moving $3 billion of expansion and modernization capital forward for in-service later this year. In Renewables, the foundations on our Saint-Nazaire offshore wind project are being installed and early construction is advancing on two more utility scale French projects. Finally, our gas utility continues to grow, and is on-track to add another 45 thousand customers this year.
“Also in Liquids, we’ve now finished the design and engineering for the Line 5 Great Lakes Tunnel, and we’re in the process of selecting a contractor to build this state-of-the-art infrastructure. This is clearly the best way to replace and modernize the existing pipelines while maintaining absolutely essential supply of crude oil and propane that Michigan, Ohio, Indiana, Ontario, Quebec and the surrounding region rely on.
“Completion of our three-year plan is expected to generate $5-6 billion of annual investment capacity, beginning in 2022, without the need for external equity. We’ll remain disciplined and deploy capital towards the most valuable uses, prioritizing balance sheet strength, investment in low capital intensity growth and regulated utility or utility-like projects. Beyond that, we’ll utilize our remaining investable capacity on the best opportunities including further organic growth, and, potentially, share repurchases.
“ESG leadership is essential to our strategy, and that’s why we’ve been integrating sustainability, diversity and community engagement practices into our operations for over two decades and continue to set new goals for ourselves. Last year we set our net-zero emissions by 2050 target and enhanced diversity goals; these goals are now linked to company-wide compensation and this year we also completed our first sustainability linked loan.
“We’re very excited about our zero emissions investment opportunities that will support our core businesses and help us achieve our ESG goals. This quarter, we put our first solar self-powering facility along our Liquids Mainline into service and sanctioned a second phase comprised of four projects, which will further support our emissions reduction goals. In addition, a second facility on our Texas Eastern system in Gas Transmission should start producing power in May, giving us three solar self-power facilities in operation.
“We’re also building out a portfolio of capital efficient low carbon energy projects with commercial frameworks and returns that fit our low risk business model. Our Markham hydrogen blending pilot is now underway, plus we have four more renewable natural gas projects under construction in Ontario. In Quebec, we’re now developing a new 20 MW green hydrogen facility with Evolugen and last week we announced a new partnership with Walker Industries and Comcor Environmental to develop renewable natural gas projects across Canada.
“Finally, as global economic activity ramps back up, we’re seeing renewed interest in both crude and LNG exports off the U.S. Gulf Coast. Our solid regional footprint and premier North American integrated pipeline networks are ideally positioned to capitalize on these opportunities and we continue to advance several export pipeline and crude oil terminal opportunities.
“This year is setting up to be a pivotal one for Enbridge. We’ve reaffirmed our EBITDA and cash flow guidance for the year, and we’re executing on our strategic priorities. This gives us great visibility to 5-7% cash flow growth through 2023, which along with a growing dividend, translates into a very attractive value proposition for shareholders.”