CALGARY, ALBERTA--(Marketwired - May 7, 2014) - Enbridge Inc. (TSX:ENB)(NYSE:ENB) -
HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
Enbridge Inc. (Enbridge or the Company) - "Enbridge performed well in the first quarter of 2014, reflecting solid operating results across our businesses," said Al Monaco, President and Chief Executive Officer. "Adjusted earnings for the first quarter of 2014 were $492 million, or $0.60 per common share. Backed by the successful execution of our organic growth program, including projects recently placed into service and those expected to be completed over the balance of 2014, we are on track to be within our full year adjusted earnings per share guidance range of $1.84 to $2.04 per share.
"During the quarter, we added to our portfolio of commercially secured growth projects, reflecting continued demand for safe and reliable energy infrastructure," said Mr. Monaco. "In March, we announced the $7 billion Line 3 Replacement Program, the largest project in our Company's history. This is a very important project for us as it represents a major enhancement of our mainline liquids pipeline system and it comes with significant benefits to our customers. The increased reliability of throughput on our system will provide customers with greater certainty of service to key markets, and aligns well with our number one priority of safety and operational reliability."
Investments in the Company's regional oil sands systems and renewable power generation business also added to the Company's growth portfolio in the first quarter. In January, Enbridge announced the $0.2 billion Sunday Creek Terminal expansion which will improve service in the oil sands and contribute to maintaining Enbridge's leading position in the region. Earlier in the same month, Enbridge announced the approximate US$0.2 billion investment in the 110-megawatt (MW) Keechi Wind Project (Keechi), located in Jack County, Texas.
"With a commercially secured portfolio of growth projects totalling a record $36 billion, and an additional $5 billion of projects expected to be secured and placed into service by 2017, there is a high degree of transparency that we will deliver average annual earnings per share growth of 10 to 12% to 2017. The secured slate of organically driven projects also provides confidence in our ability to generate industry leading earnings per share growth well beyond 2017."
Forward-Looking Information and Non-GAAP Measures
This news release contains forward-looking information and references to non-GAAP measures. Significant related assumptions and risk factors, and reconciliations are described under the Forward-Looking Information and Non-GAAP Measures sections of this news release, respectively.
Mr. Monaco commented on the Company's focus on project execution. "In 2014 and 2015, we expect to place into service more than $18 billion of projects to expand capacity and extend market access for our customers," said Mr. Monaco. "Since 2008, we've put over 40 projects into service representing about $18 billion of capital. We continue to build on our proven project management expertise, experience in cost estimation, ability to anticipate challenges and solid on-the-ground execution.
"We're also working to enhance and strengthen our relationships with project stakeholders. The National Energy Board's approval in March of the Line 9B Reversal and Line 9B Expansion Project was supported in large part by the extra lengths taken to engage communities along the right of way and to incorporate stakeholder input, which led to further safety enhancements to the project."
Financing the growth plan also remains a top priority and Enbridge continues to bolster funding and liquidity support. Since the end of 2013, Enbridge has issued $275 million in preference shares, approximately $1.8 billion in medium-term notes and increased its entity-wide general purpose credit facilities by approximately $0.5 billion. Included in the total debt offerings, was a $130 million issuance with a 50-year maturity date, which is a rarity in the Canadian debt capital market. Enbridge also issued a $300 million three-year medium-term note at a coupon rate of 1.9%, the lowest ever by a Canadian corporate issuer.
"Our consistent access to debt and equity markets demonstrates the confidence investors have in Enbridge, our ability to execute on our record growth capital program and the reliability of our business model," Mr. Monaco said.
Results of Operations
Enbridge delivered a strong first quarter in 2014 and the Company is on track to achieve its full year adjusted earnings per share guidance range. Liquids Pipelines performance was slightly below last year as throughput growth on Canadian Mainline, primarily owing to strong supply from western Canada, was offset by lower tolls and the absence of revenues from Line 9B. As part of the Company's Eastern Access program, Line 9B is currently in the process of being reversed and expanded and is expected to return to service later in the year. Higher volumes on the Athabasca mainline and contributions from growth projects, including the Suncor Bitumen Blending facilities completed in 2013, provided a small earnings growth within Regional Oil Sands System.
Enbridge's sponsored vehicles, Enbridge Energy Partners, L.P. (EEP) and Enbridge Income Fund (the Fund), both had strong starts to 2014. EEP's adjusted earnings reflected higher volumes and tolls across the majority of its liquids business. Also contributing to the increase in adjusted earnings were new assets recently placed into service by EEP, in particular the Bakken Expansion and Access programs which enhanced crude oil gathering capabilities on the North Dakota system. Similarly, the Fund also experienced positive contributions from its portion of the Bakken Expansion Program and benefitted from higher wind and solar resources across its renewable energy portfolio.
Enbridge Gas Distribution Inc. (EGD) continued to contribute to Enbridge's reliable business model in the first quarter, with a slight increase in customer base offset by an increase in expenses. EGD is currently operating under interim rates pending review by the Ontario Energy Board of a new five-year Customized Incentive Regulation mechanism.
Adjusted earnings from Energy Services for the first quarter of 2014 were not as favourable as in the exceptionally strong first quarter of 2013. Adjusted earnings were unfavourably affected by narrowing location spreads and less favourable market conditions in certain physical markets, along with realized losses on certain financial contracts intended to hedge physical transportation capacity but which were not effective in doing so. Partially offsetting the decrease were favourable natural gas location differentials which arose due to abnormal winter weather conditions.
The adjusted earnings discussed above excludes the impact of unusual, non-recurring or non-operating factors, the most significant of which are changes in unrealized derivative fair value gains and losses from the Company's long-term hedging program, gains on the disposal of non-core assets and investments, as well as certain costs and related insurance recoveries arising from crude oil releases. See Non-GAAP Measures.
FIRST QUARTER 2014 OVERVIEW
For more information on Enbridge's growth projects and operating results, please see the Management's Discussion and Analysis (MD&A) which is filed on SEDAR and EDGAR and also available on the Company's website at www.enbridge.com/InvestorRelations.aspx.
DIVIDEND DECLARATION
On April 23, 2014, the Enbridge Board of Directors declared the following quarterly dividends. All dividends are payable on June 1, 2014 to shareholders of record on May 15, 2014.
| Common Shares | $0.35000 |
| Preference Shares, Series A | $0.34375 |
| Preference Shares, Series B | $0.25000 |
| Preference Shares, Series D | $0.25000 |
| Preference Shares, Series F | $0.25000 |
| Preference Shares, Series H | $0.25000 |
| Preference Shares, Series J | US$0.25000 |
| Preference Shares, Series L | US$0.25000 |
| Preference Shares, Series N | $0.25000 |
| Preference Shares, Series P | $0.25000 |
| Preference Shares, Series R | $0.25000 |
| Preference Shares, Series 1 | US$0.25000 |
| Preference Shares, Series 3 | $0.25000 |
| Preference Shares, Series 5 | US$0.27500 |
| Preference Shares, Series 7 | $0.27500 |
| Preference Shares, Series 91 | $0.24110 |
| (1) This first dividend declared for the Preference Shares, Series 9 includes accrued dividends from March 13, 2014, the date the shares were issued. The regular quarterly dividend of $0.275 per share will take effect on September 1, 2014. |
CONFERENCE CALL
Enbridge will hold a conference call on Wednesday, May 7, 2014 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) to discuss the first quarter 2014 results. Analysts, members of the media and other interested parties can access the call toll-free at 1-800-708-4540 from within North America and outside North America at 1-847-619-6397, using the access code of 36975702#. The call will be audio webcast live at http://www.media-server.com/m/p/8cn6j46m. A webcast replay and podcast will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within 24 hours. The replay will be available toll-free at 1-888-843-7419 within North America and outside North America at 1-630-652-3042 (access code 36975702#) until May 14, 2014.
The conference call will begin with presentations by the Company's President and Chief Executive Officer and the Chief Financial Officer, followed by a question and answer period for investment analysts. A question and answer period for members of the media will then immediately follow.
Enbridge Inc., a Canadian Company, is a North American leader in delivering energy and has been included on the Global 100 Most Sustainable Corporations in the World ranking for the past six years. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has a significant and growing involvement in the natural gas gathering transmission and midstream businesses, and an increasing involvement in power transmission. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. As a generator of energy, Enbridge has interests in over 1,800 megawatts of renewable and alternative energy generating capacity and is expanding its interests in wind, solar and geothermal energy. Enbridge employs more than 10,000 people, primarily in Canada and the U.S., and is ranked as one of Canada's Greenest Employers, and one of Canada's Top 100 Employers for 2013. Enbridge's common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit www.enbridge.com. None of the information contained in, or connected to, Enbridge's website is incorporated in or otherwise part of this news release.
FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements, have been included in this news release to provide the Company's shareholders and potential investors with information about the Company and its subsidiaries and affiliates, including management's assessment of Enbridge's 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" 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: expected earnings/(loss) or adjusted earnings/(loss); expected earnings/(loss) or adjusted earnings/(loss) per share; expected future cash flows; expected costs related to projects under construction; expected in-service dates for projects under construction; expected capital expenditures; estimated future dividends; and expected costs related to leak remediation and potential insurance recoveries.
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 expected supply and demand for crude oil, natural gas, natural gas liquids (NGL) and renewable energy; prices of crude oil, natural gas, NGL and renewable energy; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; customer and regulatory approvals; maintenance of support and regulatory approvals for the Company's projects; anticipated in-service dates; and weather. Assumptions regarding the expected supply and demand of crude oil, natural gas, NGL and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements. These factors are relevant to all forward-looking statements as they may impact current and future levels of demand for the Company's services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company operates, 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 earnings/(loss) or adjusted earnings/(loss) and associated per share amounts, or estimated future dividends. The most relevant assumptions associated with forward-looking statements on projects under construction, including estimated in-service date and expected capital expenditures include: 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; and the impact of weather and customer and regulatory approvals on construction schedules.
Enbridge's forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic and competitive conditions, changes in tax law and tax rate increases, exchange rates, interest rates, commodity prices and supply and demand for commodities, including but not limited to those risks and uncertainties discussed in this news release and in the Company's other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements.
NON-GAAP MEASURES
This news release contains references to adjusted earnings/(loss), which represent earnings or loss attributable to common shareholders adjusted for unusual, non-recurring or non-operating factors on both a consolidated and segmented basis. These factors, referred to as adjusting items, are reconciled and discussed in the financial results sections for the affected business segments in the Company's MD&A. Adjusting items referred to as changes in unrealized derivative fair value gains or loss are presented net of amounts realized on the settlement of derivative contracts during the applicable period. Management believes the presentation of adjusted earnings/(loss) provides useful information to investors and shareholders as it provides increased transparency and predictive value. Management uses adjusted earnings/(loss) to set targets, including setting the Company's dividend payout target, and to assess performance of the Company. Adjusted earnings/(loss) and adjusted earnings/(loss) for each of the segments are not measures that have a standardized meaning prescribed by accounting principles generally accepted in the United States of America (U.S. GAAP) and are not considered GAAP measures; therefore, these measures may not be comparable with similar measures presented by other issuers.
| NON-GAAP RECONCILIATIONS | |||
| Three months ended | |||
| March 31, | |||
| 2014 | 2013 | ||
| (millions of Canadian dollars) | |||
| Earnings attributable to common shareholders | 390 | 250 | |
| Adjusting items: | |||
| Liquids Pipelines | |||
| Canadian Mainline - changes in unrealized derivative fair value loss | 172 | 72 | |
| Regional Oil Sands System - make-up rights adjustment | 2 | - | |
| Gas Distribution | |||
| EGD - warmer/(colder) than normal weather | (33) | 6 | |
| Gas Pipelines, Processing and Energy Services | |||
| Energy Services - changes in unrealized derivative fair value (gains)/loss | (136) | 30 | |
| Offshore - gain on sale of non-core assets | (43) | - | |
| Other - changes in unrealized derivative fair value loss | 1 | - | |
| Sponsored Investments | |||
| EEP - leak remediation costs | - | 24 | |
| EEP - changes in unrealized derivative fair value loss | - | 1 | |
| Corporate | |||
| Noverco - changes in unrealized derivative fair value (gains)/loss | 4 | (1) | |
| Other Corporate - changes in unrealized derivative fair value loss | 149 | 105 | |
| Other Corporate - gain on sale of investment | (14) | - | |
| Other Corporate - foreign tax recovery | - | (4) | |
| Other Corporate - impact of tax rate changes | - | 5 | |
| Adjusted earnings | 492 | 488 | |
| HIGHLIGHTS | ||||
| Three months ended | ||||
| March 31, | ||||
| 2014 | 2013 | |||
| (unaudited; millions of Canadian dollars, except per share amounts) | ||||
| Earnings attributable to common shareholders | ||||
| Liquids Pipelines | 44 | 147 | ||
| Gas Distribution | 136 | 107 | ||
| Gas Pipelines, Processing and Energy Services | 191 | 29 | ||
| Sponsored Investments | 84 | 42 | ||
| Corporate | (111) | (75) | ||
| Earnings attributable to common shareholders from continuing operations | 344 | 250 | ||
| Discontinued operations - Gas Pipelines, Processing and Energy Services | 46 | - | ||
| 390 | 250 | |||
| Earnings per common share | 0.48 | 0.32 | ||
| Diluted earnings per common share | 0.47 | 0.31 | ||
| Adjusted earnings1 | ||||
| Liquids Pipelines | 218 | 219 | ||
| Gas Distribution | 103 | 113 | ||
| Gas Pipelines, Processing and Energy Services | 59 | 59 | ||
| Sponsored Investments | 84 | 67 | ||
| Corporate | 28 | 30 | ||
| 492 | 488 | |||
| Adjusted earnings per common share | 0.60 | 0.62 | ||
| Cash flow data | ||||
| Cash provided by operating activities | 333 | 793 | ||
| Cash used in investing activities | (2,743) | (1,643) | ||
| Cash provided by financing activities | 2,465 | 420 | ||
| Dividends | ||||
| Common share dividends declared | 291 | 254 | ||
| Dividends paid per common share | 0.3500 | 0.3150 | ||
| Shares outstanding (millions) | ||||
| Weighted average common shares outstanding | 820 | 789 | ||
| Diluted weighted average common shares outstanding | 830 | 801 | ||
| Operating data | ||||
| Liquids Pipelines - Average deliveries (thousands of barrels per day) | ||||
| Canadian Mainline2 | 1,904 | 1,783 | ||
| Regional Oil Sands System3 | 671 | 462 | ||
| Spearhead Pipeline | 184 | 165 | ||
| Gas Distribution - Enbridge Gas Distribution (EGD) | ||||
| Volumes (billions of cubic feet) | 212 | 181 | ||
| Number of active customers (thousands)4 | 2,076 | 2,042 | ||
| Heating degree days5 | ||||
| Actual | 2,206 | 1,798 | ||
| Forecast based on normal weather | 1,777 | 1,871 | ||
| Gas Pipelines, Processing and Energy Services - Average | ||||
| throughput volume (millions of cubic feet per day) | ||||
| Alliance Pipeline US | 1,728 | 1,632 | ||
| Vector Pipeline | 1,783 | 1,720 | ||
| Enbridge Offshore Pipelines | 1,371 | 1,452 | ||
| (1) Adjusted earnings represent earnings attributable to common shareholders adjusted for unusual, non-recurring or non-operating factors. Adjusted earnings and adjusted earnings per common share are non-GAAP measures that do not have any standardized meaning prescribed by GAAP. |
| (2) Canadian Mainline includes deliveries ex-Gretna, Manitoba which is made up of United States and eastern Canada deliveries originating from western Canada. |
| (3) Volumes are for the Athabasca mainline and Waupisoo Pipeline and exclude laterals on the Regional Oil Sands System. |
| (4) Number of active customers is the number of natural gas consuming EGD customers at the end of the period. |
| (5) Heating degree days is a measure of coldness that is indicative of volumetric requirements for natural gas utilized for heating purposes in EGD's franchise area. It is calculated by accumulating, for the fiscal period, the total number of degrees each day by which the daily mean temperature falls below 18 degrees Celsius. The figures given are those accumulated in the Greater Toronto Area. |
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