Enbridge $ENB Reports Full 2018 Results, 2019 Guidance and Growth Outlook
NEWS RELEASE Enbridge Inc. Reports Strong Fourth Quarter and Full Year 2018 Results CALGARY, ALBERTA – February 15, 2019 – Enbridge Inc. (Enbridge or the Company) (TSX:ENB) (NYSE:ENB) today reported fourth quarter and full year 2018 financial results and provided a quarterly business update. FOURTH QUARTER AND FULL YEAR HIGHLIGHTS(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
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GAAP earnings of $1,089 million or $0.60 per common share for the fourth quarter of 2018 and $2,515 million or $1.46 per common share for the full year 2018, both including the impact of a number of unusual, non-recurring or non-operating factors
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Adjusted earnings were $1,166 million or $0.65 per common share for the fourth quarter of 2018 and $4,568 million or $2.65 per common share for the full year 2018, compared to $1,013 million or $0.61 per common share in the fourth quarter of 2017 and $2,982 million or $1.96 per common share for the full year 2017
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Adjusted earnings before interest, income tax and depreciation and amortization (EBITDA) were $3,320 million for the fourth quarter of 2018 and $12,849 million for the full year, compared to $2,963 million in the fourth quarter of 2017 and $10,317 million for the full year 2017
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Cash Provided by Operating Activities was $2,503 million for the fourth quarter of 2018 and $10,502 million for the full year 2018, compared to $1,341 million for the fourth quarter of 2017 and $6,658 million for the full year 2017
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Distributable Cash Flow (DCF) was $1,863 million for the fourth quarter and $7,618 million for the full year 2018, compared to $1,741 million for the fourth quarter of 2017 and $5,614 million for the full year 2017
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Reaffirmed financial guidance for 2019 and 2020, with the midpoint of the DCF per share guidance range of $4.45 per share and $5.00 per share respectively
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Increased the dividend by 10% for 2019 and reaffirmed expected dividend growth of 10% in 2020; guided to a longer term 5-7% DCF per share CAGR post-2020
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Brought $7 billion of new projects into service in 2018, including the US$1.5 billion NEXUS/TEAL gas pipeline projects in October and the US$1.6 billion Valley Crossing gas pipeline project in November
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Reached significant milestones on the Line 3 Replacement Project, including: Regulatory approval by the Minnesota Public Utilities Commission (MPUC); initiated Federal and Minnesota state permitting process, and made significant progress on construction in Canada
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Announced $1.8 billion of secured growth projects in the fourth quarter across both the natural gas transmission and liquids pipelines businesses
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Announced an additional $0.3 billion of secured growth capital projects consisting of a regulated electricity transmission line in Ontario and a long-term contracted pipeline adjacent to the Nexus Pipeline
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Amalgamated the Company’s Ontario based natural gas utilities effective January 1, 2019, following approval of an incentive based regulatory framework by the Ontario Energy Board
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Simplified the Company’s corporate structure with the buy-in of the public interest of Enbridge’s four sponsored vehicles
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Implemented changes to the Company’s debt funding structure through a series of actions to reduce structural subordination, enhancing the credit profile of the parent corporation and reducing the cost of debt capital
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Announced $7.8 billion of non-core asset sales, $5.7 billion of which have closed; proceeds used to accelerate planned deleveraging and strengthen balance sheet
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Suspended the Dividend Reinvestment Program (DRIP) effective with the December 1, 2018 dividend payment, moving Enbridge to a fully self-funded growth model
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On January 25, 2019, Moody’s upgraded Enbridge Inc.’s senior unsecured debt rating from Baa3 to Baa2 with a positive outlook
CEO COMMENT “It was a strong year for Enbridge, both from a financial and strategic perspective,” commented Al Monaco, President and Chief Executive Officer of Enbridge.“Financially, record operating performance across our natural gas and liquids businesses translated into full year DCF per share results near the top of our guidance range. We are pleased with the 20% DCF per share increase over last year, which reflects strong contributions from each of our core businesses driven by operating performance, optimization of throughput on existing assets, synergy realization from the Spectra acquisition and successfully bringing $7 billion of new projects into service in 2018.”Strategically, we achieved the key priorities laid out in our three year business plan that was rolled out at the end of 2017, ahead of schedule. In addition to delivering strong cash flow and earnings per share growth, we executed significant non-core asset sales, accelerated balance sheet de-leveraging and simplified the corporate structure.”We’ve received close to $6 billion of proceeds from the $7.8 billion of non-core asset sales announced through 2018. These sales allowed us to fully focus attention on our low risk pipeline and utility assets. The proceeds were applied to debt repayment so that at year-end, our consolidated Debt to EBITDA metric was down to 4.7x, well ahead of our original target of 5.0x.”In addition, in the fourth quarter we completed the buy-in of all four of our sponsored vehicles. This now brings all of our core assets together under the Enbridge roof which allows us to retain more cash flow to re-invest in the business and for financial flexibility, as well as significantly enhancing our credit profile.
“It was another successful year for project execution, $7 billion of pipeline and utility assets were brought into service, including the Nexus and the Valley Crossing natural gas pipelines. Both are supported by long term take or pay contracts with strong customers and are perfect examples of our low risk pipeline and utility model.”We made great progress on the Line 3 replacement project. Construction is nearing completion in Canada, and with key approvals now received from the MPUC, we’ve moved into the permitting phase of the project in Minnesota. We continue to expect to bring the full project into service before the end of 2019. This critical integrity enhancement project will support reliable energy supply to local and regional refiners and restore much needed additional pipeline egress for Western Canadian producers.”Lastly, the $1.8 billion of new secured growth projects that we announced at our investor conference in December illustrates the types of opportunities available across our businesses. We expect to capitalize on strong global energy fundamentals to extend and expand our networks, particularly in support of North American energy exports. In fact, post 2020 we expect to be able to deploy $5-6 billion per year on organic growth on a self-funded basis while maintaining prudent debt metrics. However, we’ll continue to take a disciplined approach to investment decisions, comparing each to alternative capital allocation options in order to maximize shareholder value.”In summary, we’re pleased with the accomplishments we made on our key strategic priorities in 2018. We ended the year as a much stronger, lower risk, and simpler company than where we started the year. We’re now well positioned to drive the business forward beyond 2020 as the lowest risk company in our sector with a strong balance sheet, reliable cash flows and a very attractive longer-term growth outlook,” concluded Mr. Monaco.
GUIDANCE AND LONGER TERM GROWTH OUTLOOK At its December 2018 investor conference, Enbridge highlighted that its key strategic priorities for 2019 and beyond remain largely unchanged: • Focusing on the safety, operational reliability and environmental performance of the systems and ensuring cost effective and efficient transportation for our customers; •Ensuring strong execution of the secured capital program that will drive DCF per share growth through 2020; •Concentrating on growth of core businesses through extensions and expansions of the liquids pipeline, natural gas transmission and gas utility franchises to extend growth beyond 2020; •Maintaining a strong financial position and flexibility as secured growth projects are brought on line; •Continuing to exercise rigorous capital allocation to maximize shareholder value
The Company further re-iterated its guidance for the mid-point of the projected range of 2019 and 2020 DCF per share of $4.45 per share and $5.00 per share, respectively. With this robust outlook, Enbridge has announced a 10% dividend increase for 2019 and anticipates another 10% increase for 2020. The 2019 quarterly dividend of $0.738 per share will be payable on March 1, 2019, to shareholders of record on February 15, 2019. Beyond 2020, Enbridge is targeting to achieve annual DCF per share growth in the range of 5%-7%, driven by an attractive suite of organic growth prospects within its three core businesses that can be self-funded using available cash generated by these businesses and managing leverage within targets designed to maintain strong investment grade credit ratings.
Financial Results and full 2018 report available here.