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.)
- Second quarter GAAP earnings of
$0.5 billion or$0.22 per common share, compared with GAAP earnings of$1.4 billion or$0.69 per common share in 2021 - Adjusted earnings* of
$1.4 billion or$0.67 per common share*, compared with$1.4 billion or$0.67 per common share* in 2021 - Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA)* of
$3.7 billion , compared with$3.3 billion in 2021 - Cash provided by operating activities of
$2.5 billion , compared with$2.5 billion in 2021 - Distributable cash flow (DCF)* of
$2.7 billion or$1.36 per common share*, compared with$2.5 billion or$1.24 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 - Executing the Company's diversified secured capital program with approximately
$4 billion on track to enter service in 2022, providing visible EBITDA growth in the years ahead - Reached a settlement in principle with participants on Texas Eastern ensuring the system continues to earn an appropriate return on invested capital
- Sanctioned two projects totaling
US$0.4 billion to deliver 1.5 billion cubic feet per day (bcf/d) of natural gas to Venture Global's Plaquemines LNG facility - Secured estimated
$1.2 billion expansion of B.C. Pipeline's T-North section to serve growing regional demand and west coast LNG exports - Launched a binding open season for a
$2 .5+ billion expansion of B.C. Pipeline's T-South section adding approximately 300 million cubic feet per day of new capacity - Announced an investment in the 2.1 million tonnes per annum (mtpa) Woodfibre LNG facility, representing a 30% interest, further advancing
Enbridge's LNG export strategy - Concluded three successful open seasons for capacity on the Alliance Pipeline highlighting the unique value of its liquids-rich transportation capability
- Issued 21st Sustainability Report, demonstrating the Company's ongoing progress towards the goals set in
November 2020 - The Company remains committed to its equity self-funding model and is on track to achieve Debt to EBITDA of 4.7x or lower by year end, providing significant financial flexibility
CEO COMMENT
"Rising global energy shortages and high commodity prices are highlighting the importance of secure, affordable, and reliable energy supply. Energy markets are at a pivotal point, requiring renewed investment in both conventional and low-carbon energy supply to meet growing energy demand, while achieving society's emissions reductions goals.
"The current energy outlook validates our dual-pronged strategy to expand our existing conventional pipeline and export businesses, while ramping up investment in low-carbon opportunities to drive future growth platforms. As we execute our strategy, we're committed to maintaining our low-risk business model which provides predictable and resilient cash flows in all market cycles.
"In the second quarter, we continued to progress well on our strategic priorities.
"Operational performance remained strong, translating into good second quarter financial results. Through the first six months, we're tracking to plan and are on target to achieve our full-year EBITDA and DCF per share guidance.
"Our recently published 21st annual Sustainability Report provides an update on our performance versus the targets we set in 2020. Emissions continue to trend positively towards our 2030 interim target, employee diversity is growing, and our safety results remain industry leading.
"We're progressing discussions with shippers on a new mainline tolling agreement, with two attractive commercial paths under evaluation, an incentive tolling or cost-of-service model. Both options keep us aligned with our customers and provide predictable cash flows at an appropriate return. We aim to make a decision by the end of the summer on the best path forward.
"We're executing on our
"In May, we sanctioned an extension of our Texas Eastern system to serve Venture Global's Plaquemines LNG facility in the
"To compliment the great progress we've made on building our
"Strong natural gas demand fundamentals and growing exports are driving a significant opportunity on our B.C. Pipeline System. We're moving forward with a 535 mmcf/d expansion of the T-North system stemming from a recent binding open season that garnered strong commercial support from our customers and is expected to be in service in 2026. This project will ensure growing regional supply gets to local and global demand centers.
"We also announced an exciting investment in the 2.1 mtpa Woodfibre LNG facility, which fits our low-risk pipeline-utility commercial model and will generate an attractive return. This investment is a natural extension of our B.C. Pipeline System, which will supply gas to the facility under a long-term transportation agreement, and supports further expansion of the B.C. Pipeline System. Export fundamentals for western Canadian LNG to Asian markets are strong and the Woodfibre facility provides a cost-competitive source of supply.
"This investment also aligns very well with our ESG criteria on two fronts. First, the project has strong local community and Indigenous support, with the potential for future Indigenous equity participation. Second, Woodfibre will be among the leaders globally in emissions per mtpa produced thanks to the use of hydroelectricity to power the facility.
"With Woodfibre moving forward, we've also announced we're kicking off an open season on the T-South section of our B.C. Pipeline to ensure
"Our secured growth backlog is now
"Through the first half of 2022, we've made excellent progress advancing our strategic priorities and we believe our strategy will generate long-term value and an attractive return of capital to shareholders while supporting growing global demand for secure and affordable energy needed to bridge to a cleaner energy future.
FINANCIAL RESULTS SUMMARY
Financial results for the three months ended
Three months ended | Six months ended | |||
2022 | 2021 | 2022 | 2021 | |
(unaudited; millions of Canadian dollars, except per share amounts; | ||||
GAAP Earnings attributable to common shareholders | 450 | 1,394 | 2,377 | 3,294 |
GAAP Earnings per common share | 0.22 | 0.69 | 1.17 | 1.63 |
Cash provided by operating activities | 2,534 | 2,489 | 5,473 | 5,053 |
Adjusted EBITDA1 | 3,715 | 3,302 | 7,862 | 7,045 |
Adjusted Earnings1 | 1,350 | 1,357 | 3,055 | 3,294 |
Adjusted Earnings per common share1 | 0.67 | 0.67 | 1.51 | 1.48 |
Distributable Cash Flow1 | 2,747 | 2,503 | 5,819 | 5,264 |
Weighted average common shares outstanding | 2,026 | 2,024 | 2,026 | 2,023 |
1 Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. |
GAAP earnings attributable to common shareholders for the second quarter of 2022 decreased by
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 second quarter of 2022 filed in conjunction with the second quarter financial statements for a detailed discussion of GAAP financial results.
Adjusted EBITDA in the second quarter of 2022 increased by
Adjusted earnings in the second quarter of 2022 decreased by
DCF for the second quarter of 2022 increased by
Detailed financial information and analysis can be found below under Second Quarter 2022 Financial Results.
FINANCIAL OUTLOOK
The Company reaffirms its 2022 financial guidance announced at its December Investor Day, which included adjusted EBITDA between
Strong operational performance is expected to be offset by challenging market conditions which continue to impact Energy Services, along with higher financing costs, due to rising interest rates, relative to 2022 financial guidance.
FINANCING UPDATE
In May of 2022,
On
The Company expects to continue to fund its secured capital growth program within its equity self-funding model utilizing internally generated cash flows and future debt financings while maintaining its debt-to-EBITDA ratio within the Company's target range of 4.5 to 5.0x.
SECURED GROWTH PROJECT EXECUTION UPDATE
During the second quarter, the Company added
The Company's current secured growth program is now approximately
Funding of the secured growth program will be provided for entirely through the Company's
Venice Extension and Gator Express Meter Projects
The Company has sanctioned the
These projects will involve 36-inch diameter pipe, metering, and compressor station additions and improvements on the Texas Eastern System, with a combined estimated capital cost of
T-North Expansion
During the second quarter,
The T-North Expansion will consist of compressor unit additions, pipeline looping and other ancillary station modifications.
The project is expected to be placed in service in 2026 and will be underpinned by a cost-of-service commercial model.
Today,
The total project cost of the Woodfibre LNG facility is approximately
The project holds a 40-year export license and has received all major environmental permits, including the Squamish Nation Environmental Agreement. Woodfibre LNG has strong Indigenous support gained through extensive and meaningful consultation with local Indigenous Peoples and has signed a benefits agreement with the
The facility is expected to be placed into service in 2027.
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
The Company anticipates that it will decide at the end of the third quarter whether to file either a negotiated incentive tolling settlement or a cost-of-service application with the Canada Energy Regulator.
On
T-South Expansion Open Season
The Company has announced a binding open season to secure the proposed expansion of the T-South section of its B.C. Pipeline System for up to 300 MMcf/d with an estimated capital cost of
Alliance Pipeline (Alliance) Recontracting
During the second quarter of 2022, Alliance successfully concluded three open seasons for capacity on its system. The largest of the open seasons resulted in approximately 270 MMcf/d of incremental long-term firm service, with a volume weighted average term of 15 years, commencing in
Normal Course Issuer Bid (NCIB) Execution
In the second quarter of 2022,
SECOND QUARTER 2022 FINANCIAL RESULTS
GAAP Segment EBITDA and Cash Flow from Operations
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Liquids Pipelines | 1,818 | 2,044 | 4,147 | 4,083 | |
Gas Transmission and Midstream | 1,119 | 868 | 2,133 | 1,841 | |
Gas Distribution and Storage | 417 | 458 | 1,082 | 1,092 | |
122 | 115 | 284 | 271 | ||
Energy Services | (177) | (239) | (278) | (175) | |
Eliminations and Other | (704) | 92 | (349) | 312 | |
EBITDA1 | 2,595 | 3,338 | 7,019 | 7,424 | |
Earnings attributable to common shareholders | 450 | 1,394 | 2,377 | 3,294 | |
Cash provided by operating activities | 2,534 | 2,489 | 5,473 | 5,053 |
1 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
For purposes of evaluating performance, the Company makes adjustments to GAAP reported earnings, segment EBITDA and cash flow provided by operating activities for unusual, infrequent or other non-operating factors, which allow Management and investors to more accurately compare the Company's performance across periods, normalizing for factors that are not indicative of underlying business performance. Tables incorporating these adjustments follow below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted EBITDA by segment, adjusted earnings, adjusted earnings per share and DCF to their closest GAAP equivalent are provided in the Appendices to this news release.
Adjusted EBITDA By Segment
Adjusted EBITDA generated from U.S. dollar denominated businesses was translated to Canadian dollars at a higher average exchange rate (
Liquids Pipelines
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Mainline System | 1,223 | 1,050 | 2,507 | 2,181 | |
Regional Oil Sands System | 213 | 231 | 458 | 468 | |
284 | 261 | 631 | 450 | ||
Other Systems1 | 375 | 302 | 716 | 626 | |
Adjusted EBITDA2 | 2,095 | 1,844 | 4,312 | 3,725 | |
Operating Data (average deliveries – thousands of bpd) | |||||
Mainline System - ex- | 2,782 | 2,623 | 2,892 | 2,684 | |
International Joint Tariff (IJT)4 | |||||
Competitive Tolling Settlement (CTS) Surcharges4 | |||||
Line 3 Replacement Surcharge4,5 |
1 | Other consists of Southern Lights Pipeline, Express-Platte System, Bakken System, and Feeder |
2 | Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
3 | Mainline System throughput volume represents Mainline System deliveries ex- |
4 | The IJT benchmark toll and its components are set in |
5 | The interim surcharge of |
Liquids Pipelines adjusted EBITDA increased
- 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 ofUS$0.935 per barrel compared with the surcharge on the Canadian portion of the project ofUS$0.20 per barrel in effect prior toOctober 2021 , partially offset by the recognition of a provision against the interim Mainline IJT for barrels shipped in 2022; - higher contributions from the
Gulf Coast and Mid-Continent System due primarily to the acquisition of the Enbridge Ingleside Energy Center and higher contributions from the Flanagan South Pipeline; partially offset by lower contributions from the Seaway Crude Pipeline System, the Spearhead Pipeline andCushing storage assets as a result of lower demand; receipts of cash not recognized in revenue related to unshipped contracted volumes at the Enbridge Ingleside Energy Center that have a contractual right to ship at a later date are recognized in DCF; and - the positive effect of translating
U.S. dollar denominated EBITDA at a higher Canadian toU.S. dollar average exchange rate, which is partially offset in the Eliminations and Other segment as part of the Company's enterprise-wide financial risk management program.
Gas Transmission And Midstream
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
760 | 721 | 1,519 | 1,503 | ||
Canadian Gas Transmission | 151 | 140 | 328 | 282 | |
131 | 41 | 220 | 84 | ||
Other | 42 | 33 | 75 | 73 | |
Adjusted EBITDA1 | 1,084 | 935 | 2,142 | 1,942 |
1 | Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations |
Gas Transmission and Midstream adjusted EBITDA increased
- higher
U.S. Gas Transmission contributions from the Cameron Extension, Middlesex Extension and the Appalachia to Market projects placed into service in the fourth quarter of 2021; - higher Canadian Gas Transmission contributions from the T-South Expansion and
Spruce Ridge projects placed fully into service in the fourth quarter of 2021 and higher contributions fromEnbridge's investment in the Alliance Pipeline due to higher AECO-Chicago basis differential, which were partially offset by increased operating costs incurred in the second quarter of 2022; - higher
U.S. midstream contributions resulting from higher commodity prices atEnbridge's DCP andAux Sable joint ventures; and - the positive effect of translating
U.S. dollar denominated EBITDA at a higher Canadian toU.S. dollar average exchange rate, which is partially offset in the Eliminations and Other segment as part of the Company's enterprise-wide financial risk management program.
Gas Distribution And Storage
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
417 | 419 | 1,073 | 1,023 | ||
Other | 5 | 42 | 23 | 84 | |
Adjusted EBITDA1 | 422 | 461 | 1,096 | 1,107 | |
Operating Data | |||||
EGI | |||||
Volumes (billions of cubic feet) | 391 | 352 | 1,207 | 1,023 | |
Number of active customers2(millions) | 3.8 | 3.8 | 3.8 | 3.8 | |
Heating degree days3 | |||||
Actual | 495 | 482 | 2,523 | 2,289 | |
Forecast based on normal weather4 | 523 | 520 | 2,444 | 2,444 |
1 | Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations |
2 | Number of active customers is the number of natural gas consuming customers at |
3 | Heating degree days is a measure of coldness that is indicative of volumetric |
4 | Normal weather is the weather forecast by EGI in its legacy rate zones, using |
Gas Distribution and Storage adjusted EBITDA will typically follow a seasonal profile. It is generally highest in the first and fourth quarters of the year reflecting greater volumetric demand during the heating season. The magnitude of the seasonal EBITDA fluctuations will vary from year-to-year reflecting the impact of colder or warmer than normal weather on distribution volumes.
Gas Distribution & Storage adjusted EBITDA decreased
- the absence of earnings from
Enbridge's minority interest inNoverco Inc. which was sold onDecember 30, 2021 ; and - the timing of operating costs incurred in the second quarter of 2022 when compared with the second quarter of 2021; partially offset by
- higher distribution charges at EGI resulting from increases in rates and customer base.
When compared with the normal weather forecast embedded in rates, the weather in the second quarter of 2022 and 2021 had no impact on EBITDA.
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA1 | 127 | 113 | 287 | 267 |
1 | Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
- stronger wind resources at Canadian and
U.S. wind facilities; and - higher energy pricing at the Rampion offshore wind facilities.
Energy Services
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA1 | (99) | (86) | (170) | (161) |
1 | Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. |
Energy Services adjusted EBITDA decreased
Eliminations and Other
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Operating and administrative recoveries | 17 | (19) | 85 | 87 | |
Realized foreign exchange hedge settlement gains | 69 | 54 | 110 | 78 | |
Adjusted EBITDA1 | 86 | 35 | 195 | 165 |
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.
Eliminations and Other adjusted EBITDA increased $51 million compared with the second quarter of 2021 due to:
- the timing of recovery of operating and administrative costs from the business segments; and
- higher realized foreign exchange gains on hedge settlements.
Distributable Cash Flow
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars; number of shares in millions) | |||||
Liquids Pipelines | 2,095 | 1,844 | 4,312 | 3,725 | |
Gas Transmission and Midstream | 1,084 | 935 | 2,142 | 1,942 | |
Gas Distribution and Storage | 422 | 461 | 1,096 | 1,107 | |
127 | 113 | 287 | 267 | ||
Energy Services | (99) | (86) | (170) | (161) | |
Eliminations and Other | 86 | 35 | 195 | 165 | |
Adjusted EBITDA1,3 | 3,715 | 3,302 | 7,862 | 7,045 | |
Maintenance capital | (147) | (161) | (251) | (270) | |
Interest expense1 | (787) | (635) | (1,520) | (1,312) | |
Current income tax1 | (89) | (20) | (262) | (121) | |
Distributions to noncontrolling interests1 | (64) | (73) | (124) | (141) | |
Cash distributions in excess of equity earnings1 | 111 | 153 | 144 | 196 | |
Preference share dividends | (82) | (90) | (173) | (182) | |
Other receipts of cash not recognized in revenue2 | 84 | 32 | 125 | 51 | |
Other non-cash adjustments | 6 | (5) | 18 | (2) | |
DCF3 | 2,747 | 2,503 | 5,819 | 5,264 | |
Weighted average common shares outstanding | 2,026 | 2,024 | 2,026 | 2,023 |
1 | Presented net of adjusting items. |
2 | Consists of cash received, net of revenue recognized, for contracts under make-up rights and similar deferred |
3 | Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. |
Second quarter 2022 DCF increased $244 million compared with the same period of 2021 primarily due to operational factors discussed above contributing to higher Adjusted EBITDA, as well as:
- higher receipts of cash not recognized in revenue related to unshipped contracted volumes at the Enbridge Ingleside Energy Center that have a contractual right to ship at a later date; offset by
- higher interest expense due to lower capitalized interest associated with the
U.S. portion of the Line 3Replacement 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 interest rates impacting floating-rate debt; and - higher current income tax due to higher taxable earnings and an increase in
U.S. minimum taxes.
Adjusted Earnings
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars, except per share amounts) | |||||
Adjusted EBITDA1,2 | 3,715 | 3,302 | 7,862 | 7,045 | |
Depreciation and amortization | (1,103) | (929) | (2,168) | (1,861) | |
Interest expense2 | (776) | (622) | (1,498) | (1,287) | |
Income taxes2 | (388) | (269) | (914) | (668) | |
Noncontrolling interests2 | (11) | (35) | (38) | (56) | |
Preference share dividends | (87) | (90) | (189) | (182) | |
Adjusted earnings1 | 1,350 | 1,357 | 3,055 | 2,991 | |
Adjusted earnings per common share1 | 0.67 | 0.67 | 1.51 | 1.48 |
1 | Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. |
2 | Presented net of adjusting items. |
Adjusted earnings decreased $7 million and adjusted earnings per share was consistent when compared with the second quarter in 2021 primarily due to operational factors discussed above contributing to higher Adjusted EBITDA, offset by:
- higher depreciation expense on new assets placed into service throughout 2021, including the
U.S. portion of the Line 3Replacement Project , which was placed into service in the fourth quarter and the Enbridge Ingleside Energy Center acquired in October, 2021; - higher interest expense due to lower capitalized interest associated with the
U.S. portion of the Line 3Replacement 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 interest rates impacting floating-rate debt; and - higher income taxes due to higher taxable earnings and an increase in
U.S. minimum taxes.
CONFERENCE CALL
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.
DIVIDEND DECLARATION
On
Dividend per share | |
Common Shares | |
Preference Shares, Series A | |
Preference Shares, Series B2 | |
Preference Shares, Series D | |
Preference Shares, Series F | |
Preference Shares, Series H | |
Preference Shares, Series L | |
Preference Shares, Series N | |
Preference Shares, Series P | |
Preference Shares, Series R | |
Preference Shares, Series 1 | |
Preference Shares, Series 3 | |
Preference Shares, Series 5 | |
Preference Shares, Series 7 | |
Preference Shares, Series 9 | |
Preference Shares, Series 11 | |
Preference Shares, Series 13 | |
Preference Shares, Series 15 | |
Preference Shares, Series 19 |
1 | The quarterly dividend per common share was |
FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements, have been included in this news release to provide information about
Although
ABOUT
At
None of the information contained in, or connected to,
FOR FURTHER INFORMATION PLEASE CONTACT: | |
Toll Free: (888) 992-0997 | Toll Free: (800) 481-2804 |
Email: media@enbridge.com | Email: investor.relations@enbridge.com |
NON-GAAP RECONCILIATIONS APPENDICES
This news release contains references to EBITDA, adjusted EBITDA, adjusted earnings, adjusted earnings per common share and DCF. Management believes the presentation of these metrics gives useful information to investors and shareholders, as they provide increased transparency and insight into the performance of the Company.
EBITDA represents earnings before interest, tax, depreciation and amortization.
Adjusted EBITDA represents EBITDA adjusted for unusual, infrequent or other non-operating factors on both a consolidated and segmented basis. Management uses EBITDA and adjusted EBITDA to set targets and to assess the performance of the Company and its business units.
Adjusted earnings represent earnings attributable to common shareholders adjusted for unusual, infrequent or other non-operating factors included in adjusted EBITDA, as well as adjustments for unusual, infrequent or other non-operating factors in respect of depreciation and amortization expense, interest expense, income taxes and noncontrolling interests on a consolidated basis. Management uses adjusted earnings as another measure of the Company's ability to generate earnings.
DCF is defined as cash flow provided by operating activities before the impact of changes in operating assets and liabilities (including changes in environmental liabilities) less distributions to noncontrolling interests, preference share dividends and maintenance capital expenditures and further adjusted for unusual, infrequent or other non-operating factors. Management also uses DCF to assess the performance of the Company and to set its dividend payout target.
This news release also contains references to Debt to EBITDA, a non-GAAP ratio which utilizes adjusted EBITDA as one of its components. Debt to EBITDA is used as a liquidity measure to indicate the amount of adjusted earnings to pay debt, as calculated on the basis of generally accepted accounting principles in
Reconciliations of forward-looking non-GAAP financial measures and non-GAAP ratios to comparable GAAP measures are not available due to the challenges and impracticability of estimating certain items, particularly certain contingent liabilities and non-cash unrealized derivative fair value losses and gains subject to market variability. Because of those challenges, a reconciliation of forward-looking non-GAAP financial measures and non-GAAP ratios is not available without unreasonable effort.
Our non-GAAP financial measures and non-GAAP ratios described above are not measures that have standardized meaning prescribed by
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 | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Liquids Pipelines | 1,818 | 2,044 | 4,147 | 4,083 | |
Gas Transmission and Midstream | 1,119 | 868 | 2,133 | 1,841 | |
Gas Distribution and Storage | 417 | 458 | 1,082 | 1,092 | |
122 | 115 | 284 | 271 | ||
Energy Services | (177) | (239) | (278) | (175) | |
Eliminations and Other | (704) | 92 | (349) | 312 | |
EBITDA | 2,595 | 3,338 | 7,019 | 7,424 | |
Depreciation and amortization | (1,064) | (929) | (2,119) | (1,861) | |
Interest expense | (791) | (618) | (1,510) | (1,275) | |
Income tax expense | (133) | (270) | (726) | (753) | |
Earnings attributable to noncontrolling interests | (12) | (37) | (40) | (59) | |
Preference share dividends | (145) | (90) | (247) | (182) | |
Earnings attributable to common shareholders | 450 | 1,394 | 2,377 | 3,294 |
ADJUSTED EBITDA TO ADJUSTED EARNINGS
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars, except per share amounts) | |||||
Liquids Pipelines | 2,095 | 1,844 | 4,312 | 3,725 | |
Gas Transmission and Midstream | 1,084 | 935 | 2,142 | 1,942 | |
Gas Distribution and Storage | 422 | 461 | 1,096 | 1,107 | |
127 | 113 | 287 | 267 | ||
Energy Services | (99) | (86) | (170) | (161) | |
Eliminations and Other | 86 | 35 | 195 | 165 | |
Adjusted EBITDA | 3,715 | 3,302 | 7,862 | 7,045 | |
Depreciation and amortization | (1,103) | (929) | (2,168) | (1,861) | |
Interest expense | (776) | (622) | (1,498) | (1,287) | |
Income tax expense | (388) | (269) | (914) | (668) | |
Earnings attributable to noncontrolling interests | (11) | (35) | (38) | (56) | |
Preference share dividends | (87) | (90) | (189) | (182) | |
Adjusted earnings | 1,350 | 1,357 | 3,055 | 2,991 | |
Adjusted earnings per common share | 0.67 | 0.67 | 1.51 | 1.48 |
EBITDA TO ADJUSTED EARNINGS
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars, except per share amounts) | |||||
EBITDA | 2,595 | 3,338 | 7,019 | 7,424 | |
Adjusting items: | |||||
Change in unrealized derivative fair value (gain)/loss | 850 | (242) | 417 | (521) | |
Change in unrealized derivative fair value (gain)/loss - | 16 | 153 | 36 | 14 | |
Equity earnings adjustment - | (36) | 47 | 26 | 66 | |
Net inventory adjustment | 62 | — | 72 | — | |
Enterprise insurance strategy restructuring expenses | 100 | — | 100 | — | |
Assets impairment | 47 | — | 91 | — | |
Other | 81 | 6 | 101 | 62 | |
Total adjusting items | 1,120 | (36) | 843 | (379) | |
Adjusted EBITDA | 3,715 | 3,302 | 7,862 | 7,045 | |
Depreciation and amortization | (1,064) | (929) | (2,119) | (1,861) | |
Interest expense | (791) | (618) | (1,510) | (1,275) | |
Income tax expense | (132) | (270) | (725) | (753) | |
Earnings attributable to noncontrolling interests | (12) | (37) | (40) | (59) | |
Preference share dividends | (145) | (90) | (247) | (182) | |
Adjusting items in respect of: | |||||
Depreciation and amortization | (39) | — | (49) | — | |
Interest expense | 15 | (4) | 12 | (12) | |
Income tax recovery | (256) | 1 | (189) | 85 | |
Earnings attributable to noncontrolling interests | 1 | 2 | 2 | 3 | |
Preference share dividends | 58 | — | 58 | — | |
Adjusted earnings | 1,350 | 1,357 | 3,055 | 2,991 | |
Adjusted earnings per common share | 0.67 | 0.67 | 1.51 | 1.48 |
APPENDIX B
NON-GAAP RECONCILIATION – ADJUSTED EBITDA TO SEGMENTED EBITDA
LIQUIDS PIPELINES
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA | 2,095 | 1,844 | 4,312 | 3,725 | |
Change in unrealized derivative fair value gain/(loss) | (196) | 145 | (74) | 306 | |
Property tax settlement | — | 57 | — | 57 | |
Assets impairment | (47) | — | (47) | — | |
Other | (34) | (2) | (44) | (5) | |
Total adjustments | (277) | 200 | (165) | 358 | |
EBITDA | 1,818 | 2,044 | 4,147 | 4,083 |
GAS TRANSMISSION AND MIDSTREAM
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA | 1,084 | 935 | 2,142 | 1,942 | |
Equity earnings adjustment - | 36 | (47) | (26) | (66) | |
Other | (1) | (20) | 17 | (35) | |
Total adjustments | 35 | (67) | (9) | (101) | |
EBITDA | 1,119 | 868 | 2,133 | 1,841 |
GAS DISTRIBUTION AND STORAGE
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA | 422 | 461 | 1,096 | 1,107 | |
Change in unrealized derivative fair value gain | — | 12 | — | 14 | |
Other | (5) | (15) | (14) | (29) | |
Total adjustments | (5) | (3) | (14) | (15) | |
EBITDA | 417 | 458 | 1,082 | 1,092 |
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA | 127 | 113 | 287 | 267 | |
Change in unrealized derivative fair value gain | 2 | 2 | 4 | 4 | |
Other | (7) | — | (7) | — | |
Total adjustments | (5) | 2 | (3) | 4 | |
EBITDA | 122 | 115 | 284 | 271 |
ENERGY SERVICES
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA | (99) | (86) | (170) | (161) | |
Change in unrealized derivative fair value loss | (16) | (153) | (36) | (14) | |
Net inventory adjustment | (62) | — | (72) | — | |
Total adjustments | (78) | (153) | (108) | (14) | |
EBITDA | (177) | (239) | (278) | (175) |
ELIMINATIONS AND OTHER
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars) | |||||
Adjusted EBITDA | 86 | 35 | 195 | 165 | |
Change in unrealized derivative fair value gain/(loss) | (656) | 83 | (347) | 197 | |
Impairment of lease assets | — | — | (44) | — | |
Enterprise insurance strategy restructuring expenses | (100) | — | (100) | — | |
Other | (34) | (26) | (53) | (50) | |
Total adjustments | (790) | 57 | (544) | 147 | |
EBITDA | (704) | 92 | (349) | 312 |
APPENDIX C
NON-GAAP RECONCILIATION – CASH PROVIDED BY OPERATING ACTIVITIES TO DCF
Three months ended | Six months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
(unaudited; millions of Canadian dollars, except per share amounts) | |||||
Cash provided by operating activities | 2,534 | 2,489 | 5,473 | 5,053 | |
Adjusted for changes in operating assets and liabilities1 | (114) | (55) | 138 | 363 | |
2,420 | 2,434 | 5,611 | 5,416 | ||
Distributions to noncontrolling interests2 | (64) | (73) | (124) | (141) | |
Preference share dividends | (82) | (90) | (173) | (182) | |
Maintenance capital expenditures3 | (147) | (161) | (251) | (270) | |
Significant adjusting items: | |||||
Other receipts of cash not recognized in revenue4 | 84 | 32 | 125 | 51 | |
Distributions from equity investments in excess of | 143 | 184 | 326 | 245 | |
Enterprise insurance strategy restructuring expenses | 100 | — | 100 | — | |
Other items | 293 | 177 | 205 | 145 | |
DCF | 2,747 | 2,503 | 5,819 | 5,264 |
1 | Changes in operating assets and liabilities, net of recoveries. |
2 | Presented net of adjusting items. |
3 | Maintenance capital expenditures are expenditures that are required for the ongoing support and maintenance |
4 | Consists of cash received, net of revenue recognized, for contracts under make-up rights and similar deferred |
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