CALGARY - Enbridge Inc. (Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today reported second quarter 2021 financial results, reaffirmed its 2021 financial outlook, and provided a mid-year business update.
Highlights
Second quarter GAAP earnings of $1.4 billion or $0.69 per common share, compared with GAAP earnings of $1.6 billion or $0.82 per common share in 2020
Adjusted earnings of $1.4 billion or $0.67 per common share, compared with $1.1 billion or $0.56 per common share in 2020
Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) of $3.3 billion, compared with $3.3 billion in 2020
Cash Provided by Operating Activities of $2.2 billion, compared with $2.4 billion in 2020
Distributable Cash Flow (DCF) of $2.5 billion or $1.24 per common share, compared with $2.4 billion or $1.21 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
Construction of the final leg of the U.S. Line 3 Replacement Project is progressing on schedule with an expected fourth quarter in-service date
Placed initial phases of the $1.0 billion T-South Expansion and $0.5 billion Spruce Ridge projects into service; both projects expected to be fully in-service in the fourth quarter
Announced collaboration with the Government of Ontario to expand natural gas access to rural, northern and Indigenous communities
Announced development of Ridgeline Expansion Project in Tennessee to provide affordable and reliable natural gas power generation to displace higher carbon coal generation
Advancing the US$2.1 billion multi-year Gas Transmission modernization program
Announced plans to file a rate case on Texas Eastern with rates effective in early 2022, ensuring the system continues to earn an appropriate rate of return on invested capital
Construction on three French offshore wind projects progressing well, which will collectively generate 1.4 GW (0.3 GW net) of renewable power once placed into service
Continued development of solar self-power program in both Liquids Pipelines and Gas Transmission; 3 facilities in operation and 4 more under construction
Announced the $1.14 billion sale of Enbridge's interest in Noverco Inc. (Noverco), which is expected to close by early 2022, providing increased financial flexibility
Received Moody's upgrade to Baa1 for Enbridge Inc.; All four agencies' ratings are BBB+, or equivalent, reflecting Enbridge's sector leading financial strength and cash flow resiliency
Published Enbridge's 20th annual Sustainability Report and announced the first midstream sector sustainability-linked bond issuance of US$1.0 billion
CEO COMMENT
Commenting on Enbridge's second quarter operational performance and financial results, Al Monaco, President and CEO of Enbridge noted the following: 'Following a strong start to the year, our four franchises delivered solid financial performance in the second quarter, with good operating performance and high utilization across our systems. The global economic recovery is now well underway, and our assets have been essential in assuring access to reliable and affordable conventional and renewable energy throughout this critical period.
'Our performance in the first half of 2021 has set us up well for the full year. We're on track to bring $10 billion of projects into service this year and we're reaffirming our full year 2021 financial guidance. Our secured growth execution and embedded asset growth gives us confidence that we'll generate 5-7% distributable cash flow growth through 2023, and we're continuing to advance strategic priorities across each of our franchises.
'In Liquids Pipelines, nominations for July were robust, which highlights the strength of the markets we serve and the demand for our system capacity. As expected, lower mainline volumes in the second quarter reflected the planned maintenance of oil sands upgraders and downstream refineries, and are factored into our full year outlook of 2.8 mmbpd on average for 2021.
'Construction of the final leg of the Line 3 Replacement Project is progressing well and the project is on schedule. We are proud of the fact that Line 3 has provided significant business and employment to Indigenous companies and workers in both Canada and the U.S., and contributed over $750 million of spending with Indigenous and Tribal communities with over US$250 million of spending in Minnesota alone so far.
'With the Canadian, North Dakota and Wisconsin segments complete, and Minnesota construction progressing well, we expect Line 3 to be fully in service during the fourth quarter. Line 3 is, first and foremost, a critical integrity project that will improve safety and further reduce environmental risks, while driving significant incremental EBITDA growth once fully in service.
'During the quarter, we placed the 160 kbpd Woodland Pipeline Expansion Project into service to meet the needs of the Kearl oilsands project. This expansion is a great example of the ongoing executable, low-risk, solid return opportunities for growth in the Liquids business.
'In Gas Transmission, we are proud to be working with the Tennessee Valley Authority (TVA) on an opportunity that has the potential to provide affordable and cleaner energy for the utility's customers. The potential expansion of the East Tennessee Natural Gas system, if selected, would supply natural gas to serve one of the power generation options that TVA is currently scoping to replace a coal-fired power plant in Northeast Tennessee. This is an exciting opportunity reflecting the vital role that natural gas is expected to play in displacing higher-carbon sources of power generation, while providing reliable and affordable energy to the people of Tennessee.
'We are also advancing the $0.5 billion Spruce Ridge and $1.0 billion T-South BC Pipeline expansion projects. We've completed and placed into service initial segments of each project, which remain on schedule to be fully in-service by the end of the year. More broadly, the execution of our 3-year, US$2.1 billion modernization program is also progressing well. And, we plan to file a rate case shortly so that we earn an appropriate return on our invested capital, including the modernization program.
'Our natural gas distribution utility also continues to see strong growth. We recently announced plans to expand access to natural gas to remote and Indigenous communities across Ontario. This joint effort with the Government of Ontario will provide reliable, low-cost access to lower carbon energy for consumers. And, we continue to advance construction of three renewable natural gas projects in Ontario to go along with the three currently in operation. Similarly, construction on our hydrogen blending facility in Markham, Ontario is on schedule.
'Construction of three offshore wind facilities off the coast of France is progressing well. Combined, these three projects will generate enough renewable energy to power over 1 million homes. And, through our offshore wind joint venture development company Maple Power, we continue to develop further opportunities in Europe that capitalize on our growing development, construction and operating capability. Finally, we're continuing to progress our solar self-power strategy with three projects now in service and four more underway - another great example of how we're lowering emissions and costs to generate shareholder value.
'Through strong cash flow growth and disciplined capital allocation, we continue to build financial flexibility to position Enbridge for the future. Our balance sheet is strong and we're further enhancing it through the recently announced $1.14 billion divestment of our non-operating minority interest in Noverco. This was an excellent opportunity to monetize a non-strategic investment at a premium valuation.
'We're pleased with our progress through the first half of 2021, having advanced our strategic priorities, including adding opportunities to the backlog. Our solid execution positions us well to achieve our three-year plan and helps to solidify our growth trajectory beyond 2023.
'Last month we published our 20th annual Sustainability Report, which highlights our long-standing focus on sustainable practices and our industry-leading performance across environmental, social and governance issues, including a 32% reduction in Scope 1 and 14% reduction in Scope 2 emissions between 2018 and 2020. We reinforced our commitments with the issuance of our first Sustainability-Linked Bond which ties our financial performance to the achievement of the ESG goals we set out in 2020.
'We believe that in all practical scenarios, our assets will remain critical to supporting long term energy demand. Existing infrastructure is going to play a key role in the transportation and storage of future energy supplies, ensuring affordable and reliable access to conventional and low-carbon energy.
'We're leveraging our existing assets and working, along with our customers, to identify early stage investments in embedded low-carbon infrastructure opportunities across our businesses, while modernizing our assets to ensure we're serving society's energy needs for decades to come. Over the last two decades we've built a strong renewables platform and made early stage investments in renewable natural gas, hydrogen and compressed natural gas that will help us grow well into the future as a differentiated energy service provider.'
GAAP earnings attributable to common shareholders for the second quarter of 2021 decreased by $253 million or $0.13 per share compared with the same period in 2020.
Adjusted earnings in the second quarter of 2021 increased by $224 million, or $0.11 per share and was driven largely by the net impact of the operating factors discussed below along with lower interest rates on short-term borrowings, the positive impact of a weaker USD on the translation of USD denominated interest expense, and the recognition of lower taxes in 2021.
Adjusted EBITDA in the second quarter of 2021 decreased by $10 million compared with the same period in 2020. This is primarily driven by rebounding demand for energy as economies continue to recover from the impacts of the COVID-19 pandemic offset by weaker contributions from Energy Services and the impacts of a weaker USD, which negatively impacts the translation of the Company's USD denominated EBITDA. The average CAD to USD exchange rate in the second quarter fell approximately 12% in 2021 to $1.23, compared with $1.39 in the second quarter of 2020. Enbridge's enterprise-wide financial risk management program has partially mitigated the impact of this foreign exchange weakening through its USD earnings hedges.
DCF for the second quarter was $2.5 billion, an increase of $66 million over the second quarter of 2020, driven primarily by the impact of the operating factors discussed above, along with lower interest rates on short-term borrowings, the positive impact of a weaker USD on the translation of USD denominated interest expense, and the recognition of lower cash taxes in 2021.
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; expected performance of the Company's businesses; expected debt-to-EBITDA ratio; financial strength and flexibility and investment capacity; capital allocation priorities; expectations on sources of liquidity and sufficiency of financial resources; expected in-service dates and costs related to announced projects and projects under construction and for maintenance, including B.C. Pipeline Systems expansions; expected future growth and expansion opportunities; expected benefits of transactions, including the use of proceeds and realization of efficiencies and synergies; expected future actions and decisions of regulators and courts and the timing and impact thereof; toll and rate case discussions and filings, including Mainline Contracting, and the anticipated benefits thereof; Line 3 Replacement Project, including anticipated in-service date, capital costs, EBITDA and cash flow contribution and economics and Line 5 dual pipelines, the Great Lakes Tunnel Project and related 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.
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 1,766 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.
Contact:
Jonathan Morgan
Tel: (800) 481-2804
Email: investor.relations@enbridge.com
ENBRIDGE INC. 
