Enbridge Inc. has reported third quarter 2018 financial results and provided a quarterly business update.
THIRD QUARTER 2018 HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
- GAAP loss of $90 million or $0.05 loss per common share for the third quarter, compared to earnings of $765 millionor $0.47 earnings per common share in the third quarter of 2017, both including the impact of a number of unusual, non-recurring or non-operating factors
- Adjusted earnings were $933 million or $0.55 per common share for the third quarter, compared to $632 million or $0.39 per common share in the third quarter of 2017
- Adjusted earnings before interest, income tax and depreciation and amortization (EBITDA) were $2,958 million for the third quarter, compared to $2,586 million in the third quarter of 2017
- Cash Provided by Operating Activities was $1,461 million for the third quarter, compared to $1,568 million for the third quarter of 2017
- Distributable Cash Flow (DCF) was $1,585 million for the third quarter, compared to $1,334 million for the third quarter of 2017
- On track to achieve financial guidance for 2018, with outlook for DCF per share expected to be in the upper half of the guidance range of $4.15 to $4.45 per share
- Bringing $7 billion of new projects into service in 2018, including the US$1.3 billion NEXUS and US$0.2 billion TEAL gas pipeline projects that began service in October and the US$1.6 billion Valley Crossing gas pipeline project that is now complete and in service for November
- Continuing progress on the Line 3 Replacement Project: Agreement with the Fond Du Lac Tribe in Minnesota on final routing; Minnesota Public Utilities Commission (MPUC) Written Orders for the Certificate of Need and Route Permit received; and construction progressing in Canada
- Proceeding with the amalgamation of the Company's Ontario based natural gas utilities following approval by the Ontario Energy Board (OEB)
- Receipt of $5.7 billion of proceeds from non-core asset sales which will accelerate de-leveraging, provide increased financial flexibility and further focus the Company on its low-risk pipeline and utility businesses; remaining $1.8 billion of announced sales proceeds expected in first half of 2019
- Reached agreements with the Independent Committees of the Company's sponsored vehicles for the acquisition of all of the outstanding equity securities not already beneficially owned by Enbridge; targeting all closings by the end of the fourth quarter
- Suspended the Dividend Reinvestment Program (DRIP) effective with the December 1, 2018 dividend payment; no additional equity capital required to fund the current $22 billion secured growth program
- Responded quickly to restore partial transportation service following a rupture on the BC Pipeline T-South natural gas transmission system; continuing work to safely restore the system to full capacity
"It was another very productive quarter, both from a financial and strategic perspective," commented Al Monaco, President and Chief Executive Officer of Enbridge.
"The strong financial results in the third quarter underscores the quality and predictability of our business model. The 13% year over year increase in distributable cash flow reflects a growing contribution from each of our core businesses driven by strong operating performance, optimization of throughput on existing assets, synergy realization from the Spectra acquisition and the successful execution of new projects. As a result, we remain confident in achieving our financial guidance for 2018, and expect to end up in the top half of the DCF per share guidance range.
"From a strategic standpoint, we've made great progress in achieving the key priorities that we laid out in our three year business plan last November. In addition to delivering solid distributable cash flow and earnings per share growth, those priorities included executing significant non-core asset sales, accelerating balance sheet de-leveraging and simplifying the overall corporate structure.
"This past quarter we received close to $6 billion of proceeds from the $7.5 billion of non-core asset sales agreements announced this year. These sales will further focus our business on low risk pipeline and utility assets and a significant portion of the proceeds will immediately be put towards debt repayment. At quarter-end our consolidated Debt to EBITDA metric was down to 4.7x, well ahead of our year end target of 5.0x.
"In addition, we reached agreement with each of the Independent Committees on terms for the buy-in of our sponsored vehicles. These transactions are good for sponsored vehicle unitholders and Enbridge shareholders, all of whom will benefit from bringing in these core assets under one simpler corporate structure with greater diversification, more retained cash flow, and an enhanced credit profile.
"Execution of our $22 billion secured capital program also remains nicely on track. We're very pleased that the Nexus natural gas pipeline was placed into service in October and the Valley Crossing natural gas pipeline is now complete and available for service as of this week. These two projects are good examples of the growth from the premium natural gas franchise we acquired through the Spectra transaction.
"The Minnesota PUC has now issued its Written Orders for the Certificate of Need and Route Permit for the Line 3 Replacement Project. We expect to begin construction activities in Minnesota in the first quarter of 2019, bringing the full project into service in the second half of the year.
"Finally, the pipeline rupture on the T-South segment of our BC Pipeline System in early October serves as an important reminder as to why the safety of our systems has and always will remain our number one priority. Fortunately there were no injuries or long-term environmental impacts to the site and we were able to quickly restore partial service to our customers. I'd like to thank the emergency responders for their efforts and the communities and First Nations in the region for their support and cooperation throughout the incident response.
"In summary, thanks to our ongoing strong business performance and the progress we're making on our strategic priorities, including the execution of the Line 3 project, we continue to expect a 10% compound annual growth in cash flow and dividends per share through 2020. We look forward to a more in-depth update to the investment community on our business and financial outlook at our annual investor conference on December 11th," concluded Mr. Monaco.