(Enbridge, 11.Feb.2022) — Enbridge Inc. (TSX: ENB) (NYSE: ENB) reported strong full year 2021 financial results, reaffirmed its 2022 financial outlook, and provided a quarterly business update.
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” section of this news release.)
- Full year GAAP earnings of $5.8bn or $2.87 per common share, compared with GAAP earnings of $3.0bn or $1.48 per common share in 2020
- Adjusted earnings* of $5.6bn or $2.74 per common share*, compared with $4.9bn or $2.42 per common share* in 2020
- Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA)* of $14.0bn, compared with $13.3bn in 2020
- Cash provided by operating activities of $9.3bn, compared with $9.8bn in 2020
- Distributable cash flow (DCF)* of $10.0bn or $4.96 per common share*, compared with $9.4bn or $4.67 per common share* in 2020
- Reaffirmed 2022 full year guidance range for EBITDA of $15.0bn to $15.6bn and DCF per share of $5.20 to $5.50
- Increased the 2022 quarterly dividend by 3% to $0.86 ($3.44 annually) per share reflecting the 27th consecutive annual increase
- Placed approximately $10bn of capital projects into service in 2021, which is expected to generate significant EBITDA growth in 2022
- Advanced the current $10 bn secured growth program, which supports the company’s 5 to 7% DCF per share growth through 2024
- Successfully closed the previously announced US$3.0bn acquisition of Moda Midstream Operating LLC including the Ingleside Energy Center
- Announced US$0.4bn Texas Eastern Phase II Modernization program to upgrade and electrify aging compressors increasing safety and reliability and lowering emissions
- Announced US$0.1bn Appalachia to Market Phase II system expansion, expanding natural gas supply into the U.S. Northeast to meet growing local demand
- Executed pipeline transportation precedent agreement with Texas LNG Brownsville LLC for a US$0.4bn expansion of the Valley Crossing Pipeline to supply its LNG export terminal
- Entered into a Memorandum of Understanding with Lehigh Cement and announced Letters of Intent with local Indigenous Nations to develop the Open Access Wabamun Carbon Hub
- Advanced ESG priorities by executing on emissions reduction pathways and increasing the diversity of Enbridge’s leadership and Board of Directors
- Announced additional measures to further align the business with our net-zero emissions goals
- Completed the previously announced $1.1bn sale of Enbridge’s interest in Noverco Inc., providing for additional financial flexibility
- Announced the approval by the Toronto Stock Exchange (TSX) of Enbridge’s normal course issuer bid (NCIB) of up to $1.5bn
- Issued $750mn of 60-year hybrid debt in the Canadian debt markets with proceeds to be used to redeem the $750mn Enbridge Inc. Preferred Shares – Series 17
CEO COMMENT
Al Monaco, President and CEO commented on the following:
“The last year has once again demonstrated the importance of reliable and affordable energy to the world’s social and economic well-being. While it’s clear we need to reduce global emissions to achieve our climate objectives, it’s also important that we transition our energy systems prudently by ensuring adequate supply of conventional energy, while increasing lower-carbon forms of energy. That approach is driving our strategies at Enbridge, including investment in renewables and new low-carbon energy infrastructure, and setting near-term emissions reduction targets and net zero by 2050.
“2021 was a pivotal year for Enbridge; we delivered strong safety, operating and financial performance, advanced our strategic priorities, and strengthened the competitive positioning of our conventional and low-carbon businesses.
“Operationally, each of our businesses performed well, driven by a rebound in the global economy, customer demand, and the critical role our assets play in delivering essential energy supply. We placed $10 billion of growth capital into service, including the Line 3 Replacement Project, which will generate significant cash flow growth in 2022 and provide a foundation for future growth.
“Financially, we achieved solid results, near the top of our DCF per share guidance range for the year. And, we sold $1.2 billion of non-core assets at attractive valuations, including Noverco, which will provide additional financial flexibility. Along with the cash flows from new projects placed into service, we expect our leverage to be at the low end of our target range in 2022.
“We also advanced our strategic priorities and added $2bn of new conventional and low-carbon growth capital to our commercially secured backlog and executed on our natural gas and crude oil export strategies.
“In Liquids Pipelines, we closed the acquisition of the Ingleside Energy Center, North America’s premier light crude oil export platform, with over $1bn in embedded conventional and low-carbon organic growth potential. As we enter 2022, we’re progressing plans to expand Ingleside’s export capacity while adding up to 60 MWs of solar power to the site, which will enable net negative facility emissions.
“We’re also executing on our carbon capture strategy. For example, our recently announced partnerships and collaboration with Capital Power, Lehigh Cement and local indigenous communities on a carbon capture and storage hub in central Alberta has the potential to sequester nearly 4 million tonnes of CO2 emissions annually. Carbon capture and storage will be critical to meeting society’s emissions reductions goals and we’re excited to be leveraging our expertise and footprint with great partners.
“In Gas Transmission, we placed our Cameron Extension project into service supplying the Calcasieu Pass LNG facility, and our agreement to serve Texas LNG further extends our U.S. Gulf Coast export opportunity set. In Western Canada, our B.C. Pipeline is advancing a $2.5bn expansion to serve west coast LNG and local market demand growth. And, we’re expanding our multi-billion Texas Eastern modernization program to upgrade and electrify additional compressors, which will improve system safety and performance and drive emissions lower.
“At our Utility, we added more than 40 thousand natural gas customers last year, and continued to develop new low-carbon projects that fit well within our low-risk commercial model and lower emissions for our customers. We now have seven renewable natural gas projects operating or under construction with a healthy backlog of new projects in development. Our new hydrogen blending facility in Markham, the first of its kind in North America, just began operations.
“In Renewables, construction of four offshore wind projects off the coast of France, including our first floating facility, are progressing on schedule with the first expected to enter service by the end of this year. In North America, we have ten solar self-power projects under construction across our liquids and gas transmission systems, which will generate about 100 MW of renewable power, and further lower our emissions.
“Throughout 2021, we accelerated our leadership in all aspects of environmental, social and governance performance. We’ve embedded our goals into our business and capital allocation framework, and aligned those plans with enterprise-wide compensation. On our diversity and inclusion goals, we’ve added diversity at all levels of the organization, including the Board of Directors. We’re also making good progress towards our medium and long-term emissions goals across our operations. And, we’ve added new Scope 3 metrics to track the emissions intensity of the energy we deliver and our contribution to reducing global emissions through demand-side management programs and our growing renewable and low-carbon investments. Our demand-side management programs at the utility, for example, have helped our customers avoid 55 million tonnes of greenhouse gas emissions over the last 26 years.
“As our shareholders and other stakeholders know, we are committed to leadership in sustainably delivering affordable, reliable and secure energy to millions of people in North America and globally. We recognize that leading our industry also comes with the responsibility of continuous improvement, which is why we are committing to new measures that further align our business with the emissions reductions targets we established in late 2020.
“These measures include ensuring that investment decision making reflects our interim and long-term targets, working with our supply chain to lower Scope 3 emissions, and developing lower carbon partnerships to drive innovation across our businesses. We will also continue to work proactively with the organizations developing science-based guidelines for emissions targets in the midstream sector, and in May, our 21st annual sustainability report will include scenario analysis based on a net-zero emissions pathway.
“In 2022, we’re positioned to grow EBITDA and DCF per share by over 8%. Execution of our secured growth program and embedded growth supports our 5-7% distributable cash flow per share compound annual growth from 2021 to 2024. This visible cash flow growth outlook and a healthy balance sheet supports our 27th consecutive annual dividend increase, reinforcing the importance we place on returning capital as part of our shareholder value proposition.
“Looking forward to our 3-year planning horizon, we expect to have $5-6bn of annual investment capacity, of which $3-4bn is prioritized to core utility-like investments. The remaining $2bn will be deployed to the next best alternatives including share repurchases. Our recent implementation of a normal course issuer bid provides flexibility to repurchase up to $1.5bn of our common shares and creates an additional avenue to supplement the return of capital to shareholders, while increasing per share earnings and distributable cash flow.
“The strong demand for our system capacity and execution on our secured capital continues to drive stable and growing cash flows. As we look to the future, embedded conventional and low-carbon organic growth opportunities across our assets, along with our disciplined approach to investment, provides a compelling growth outlook and value proposition for our shareholders.”
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