Enbridge(ENB) - 2025 Q1 - Quarterly Results

Enbridge Q1 2025 Earnings Release Highlights Enbridge reported record Q1 2025 results with significant growth, reaffirmed its 2025 guidance, and announced several strategic capital projects and acquisitions Q1 2025 vs Q1 2024 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Earnings | $2.3 billion | $1.4 billion | | GAAP EPS | $1.04 | $0.67 | | Adjusted Earnings* | $2.2 billion | $2.0 billion | | Adjusted EPS* | $1.03 | $0.92 | | Adjusted EBITDA* | $5.8 billion | $5.0 billion | | Distributable Cash Flow (DCF)* | $3.8 billion | $3.5 billion | - The company reaffirmed its 2025 full-year financial guidance and multi-year outlook[2] - Key strategic actions announced include sanctioning up to $2.0 billion for Mainline capital investment, acquiring a 10% interest in the Matterhorn Express Pipeline, and sanctioning the Traverse and Birch Grove pipeline expansions[2] CEO Comment The CEO emphasized Enbridge's strong position, highlighting record Q1 results, progress across all segments, and an increased secured project backlog of $28 billion - The Liquids Mainline delivered a record 3.2 million barrels per day in Q1, leading to the sanctioning of up to $2 billion in further capital investment[3] - In Gas Transmission, the company sanctioned the Traverse Pipeline and acquired a 10% interest in the Matterhorn Express Pipeline, advancing its $23 billion of identified growth opportunities[4] - The company has secured approximately $3 billion of capital in 2025, increasing its secured project backlog to $28 billion, which is expected to extend growth through the end of the decade[7] - The disciplined capital allocation strategy is designed to support a strong balance sheet, an annual investment capacity of $9 to $10 billion, and sustainable shareholder returns[8] Financial Performance Adjusted EBITDA grew 18% to $5.8 billion and DCF rose 9% to $3.8 billion, driven by US gas utility acquisitions and strong segment performance Overall Financial Results Summary Q1 2025 GAAP earnings rose to $2.3 billion, while Adjusted EBITDA increased to $5.8 billion, driven by acquisitions and operational strength Q1 2025 Financial Summary (vs. Q1 2024) | Metric | Q1 2025 (millions CAD) | Q1 2024 (millions CAD) | | :--- | :--- | :--- | | GAAP Earnings | 2,261 | 1,419 | | Adjusted EBITDA* | 5,828 | 4,954 | | Adjusted Earnings* | 2,242 | 1,955 | | Distributable Cash Flow* | 3,777 | 3,463 | - The increase in GAAP earnings was primarily due to non-cash, unrealized changes in the value of derivative financial instruments and the absence of severance costs that were present in 2024[12] - Adjusted EBITDA growth was driven by contributions from US gas utility acquisitions, higher Mainline throughput and tolls, favorable contracting on U.S. Gas Transmission assets, and colder weather benefiting Enbridge Gas Ontario[14] Financial Outlook and Guidance The company reaffirmed its 2025 guidance and long-term outlook, projecting approximately 5% annual growth in key metrics post-2026 2025 Full Year Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Adjusted EBITDA | $19.4 billion - $20.0 billion | | DCF per share | $5.50 - $5.90 | Multi-Year Growth Outlook | Period | Metric | Expected Annual Growth | | :--- | :--- | :--- | | 2023-2026 | Adjusted EBITDA | 7-9% | | | Adjusted EPS | 4-6% | | | DCF per share | ~3% | | Post-2026 | Adj. EBITDA, EPS, DCF/share | ~5% | Segment Performance Analysis Adjusted EBITDA growth was led by Gas Distribution and Storage, with strong contributions from Liquids Pipelines and Gas Transmission offsetting a decline in Renewables Adjusted EBITDA by Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 (millions CAD) | Q1 2024 (millions CAD) | Change | | :--- | :--- | :--- | :--- | | Liquids Pipelines | 2,621 | 2,460 | +$161M | | Gas Transmission | 1,439 | 1,274 | +$165M | | Gas Distribution and Storage | 1,600 | 765 | +$835M | | Renewable Power Generation | 241 | 279 | -$38M | - Liquids Pipelines growth was driven by higher Mainline volumes and tolls, partially offset by lower volumes on the Flanagan South and Spearhead pipelines[42] - Gas Transmission growth was due to revised rates from settlements, favorable contracting, and contributions from new assets, partially offset by the sale of Alliance Pipeline and Aux Sable[43] - Gas Distribution and Storage saw a significant increase primarily from the full-quarter contributions of the newly acquired US gas utilities and colder weather benefiting Enbridge Gas Ontario[47] Distributable Cash Flow (DCF) Q1 2025 DCF increased by 9% to $3.8 billion, reflecting higher Adjusted EBITDA partially offset by increased financing and maintenance costs Q1 DCF Comparison | Metric | Q1 2025 (millions CAD) | Q1 2024 (millions CAD) | | :--- | :--- | :--- | | Distributable Cash Flow (DCF) | 3,777 | 3,463 | - The $314 million increase in DCF was driven by higher adjusted EBITDA[53] - Growth was partially offset by higher interest expense, current taxes, and maintenance capital, mainly attributable to the recent US gas utility acquisitions[53] Adjusted Earnings Adjusted earnings rose to $2.24 billion and adjusted EPS to $1.03, driven by higher Adjusted EBITDA but moderated by increased costs and share issuances Q1 Adjusted Earnings Comparison | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted Earnings | $2,242 million | $1,955 million | | Adjusted EPS | $1.03 | $0.92 | - The increase in adjusted earnings was primarily due to higher adjusted EBITDA[55] - Growth was partially offset by higher depreciation from new assets, increased interest expense from higher debt, and higher income taxes on higher earnings[58] - Per share metrics were negatively impacted by at-the-market (ATM) share issuances used to pre-fund the recent acquisitions[55] Business & Operations Update Enbridge advanced its growth strategy by adding $3 billion to its secured backlog, now $28 billion, through key investments in its Mainline and gas systems Secured Growth Project Execution The company added $3 billion in new low-risk projects, increasing its secured growth backlog to $28 billion - The secured growth backlog increased by $3 billion to a total of $28 billion[22] - Newly added projects include Mainline Capital Investment (up to $2 billion), Birch Grove expansion of T-North ($0.4 billion), and T15 expansion (US$0.1 billion)[24] - Financing for the secured growth program is expected to be provided entirely through the company's annual investment capacity of $9-10 billion[22] First Quarter Business Updates Key Q1 initiatives included a $2 billion Mainline investment, acquiring a stake in the Matterhorn pipeline, and sanctioning multiple gas transmission and distribution expansions - Liquids Pipelines: Announced plans to invest up to $2 billion in the Mainline through 2028 to enhance reliability and launched a binding open season on Flanagan South Pipeline for 100 kbpd of incremental capacity[25][27] - Gas Transmission (Permian): Signed a definitive agreement to acquire a 10% interest in the 2.5 bcf/d Matterhorn Express natural gas pipeline for US$0.3 billion[29] - Gas Transmission (Gulf Coast & Montney): Sanctioned the 1.8 bcf/d Traverse Pipeline in Texas and the $0.4 billion Birch Grove expansion of its BC Pipeline to serve growing egress from the Montney basin[31][33] - Gas Distribution: Sanctioned a US$0.1 billion expansion of the T15 project, doubling its capacity to deliver natural gas to Duke Energy's Roxboro plant in North Carolina[35] Shareholder Returns The Board of Directors declared a quarterly common share dividend of $0.94250, reinforcing its commitment to stable shareholder returns Dividend Declaration A quarterly dividend of $0.94250 per common share was declared, payable on June 1, 2025 Common Share Dividend | Security | Dividend per share (CAD) | | :--- | :--- | | Common Shares | $0.94250 | - All declared dividends are payable on June 1, 2025, to shareholders of record on May 15, 2025[59] Corporate Updates Enbridge executed a $2.8 billion senior notes offering, maintained a Debt-to-EBITDA ratio of 4.9x, and scheduled its Q1 conference call Financing Update The company issued $2.8 billion in senior notes and ended Q1 with a Debt-to-EBITDA ratio of 4.9x, which is expected to improve during 2025 - Issued $2.8 billion of senior notes in February 2025 with maturities of 3, 5, 10, and 30 years[20] - The Debt-to-EBITDA metric was 4.9x at the end of the quarter[21] - The company expects the Debt-to-EBITDA metric to move towards the midpoint of its 4.5-5.0x target range during 2025[21] Conference Call Information A conference call to review Q1 2025 results was scheduled for May 9, 2025, at 9:00 a.m. Eastern Time - A conference call and webcast will be held on May 9, 2025, at 9:00 a.m. Eastern Time[56] Appendices The appendices provide definitions and detailed reconciliations for non-GAAP financial measures to their nearest U.S. GAAP equivalents Non-GAAP Reconciliations This section details the reconciliation of non-GAAP measures like EBITDA and DCF to their comparable GAAP figures to clarify underlying business performance - This section provides definitions for non-GAAP measures including EBITDA, Adjusted EBITDA, Adjusted Earnings, and DCF, which management believes give useful information to investors[69] - Appendix A reconciles consolidated GAAP earnings to Adjusted EBITDA and Adjusted Earnings[77][78][79] - Appendix B provides a breakdown of adjustments from Adjusted EBITDA to segmented EBITDA for each business unit[81][82][83][84] - Appendix C reconciles Cash Provided by Operating Activities to Distributable Cash Flow (DCF)[87]