On Friday, Shares of Enbridge Inc. (NYSE: ENB) showed the bullish trend with a higher momentum of 0.19% to $37.19. The company traded total volume of 2,285,792 shares as contrast to its average volume of 3.45M shares. The company has a market value of $75.11B and about 2.02B shares outstanding.
Enbridge Inc. (Enbridge or the Company) (ENB.TO) (ENB) recently stated fourth quarter and full year 2018 financial results and offered a quarterly business update.
FINANCIAL RESULTS SUMMARY:
GAAP earnings attributable to common shareholders increased by $882.0M or $0.47 per share for the fourth quarter of 2018 and reduced by $14.0M or $0.20 per share for the year ended 2018 contrast to the same periods in 2017.
Adjusted earnings in the fourth quarter of 2018 increased by $153.0M or $0.04 per share contrast to the same period in 2017. The increase was mainly driven by strong operating results and operating cost efficiencies across many of the Company’s business units, new projects coming into service in the Liquids Pipelines, Gas Transmission and Midstream, Green Power and Transmission and Gas Distribution segments since the fourth quarter of 2017 and synergy realization from the Spectra Energy acquisition.
Adjusted earnings for the year ended 2018 increased by $1,586.0M or $0.69 per share contrast to the same period in 2017. The increase is in large part because of the timing of the merger with Spectra Energy Corp (the Merger Transaction) which closed on February 27, 2017.
DCF for the fourth quarter of 2018 was $1,863.0M and for the year ended 2018 was $7,618.0M, increases of $122.0M and $2,004.0M respectively over the comparable prior periods in 2017, driven mostly by the same factors noted above.
PROJECT EXECUTION UPDATE:
In 2018, the Company accomplished $7.0B of growth projects, substantially on time and on budget. These were comprised of almost a dozen projects across all business units, counting expansions to the existing Canadian and US gas transmission systems, the Company’s first European offshore wind project and ongoing capital investment to support customer growth within the utility franchises. Most recently in the fourth quarter, the US$1.30B (Enbridge’s share) NEXUS and the associated US$0.20B TEAL natural gas pipeline projects were brought into service, providing much needed export capacity out of the Marcellus and Utica basins into the upper Midwest and Eastern Canadian markets. In addition, the US$1.60B Valley Crossing natural gas pipeline project entered service on October 31. All of these pipeline projects are underpinned by long-term take-or-pay transportation contracts.
Enbridge continues to make good progress executing the remainder of its secured growth capital program. The Company has a $16.0B inventory of secured projects at various stages of execution which are planned to come into service between 2019 and 2023.
OTHER BUSINESS UPDATES:
On December 11, 2018, the Company declared $1.80B of new accretive growth capital investments:
- Gray Oak Pipeline – Enbridge will invest US$600.0M for a 22.75% interest in the Gray Oak Liquids Pipeline, which will deliver light crude oil from the Permian Basin to Corpus Christi and other markets. Gray Oak, presently under construction, is expected to begin service in late 2019, contribute to the post-2020 growth outlook and is an important component of Enbridge’s broader emerging U.S. Gulf Coast liquids infrastructure strategy.
- Gas Transmission Expansions – Enbridge will invest about $800.0M on four Gas Transmission expansion projects coming into service in the 2020-23 timeframe. The Vito Offshore Pipeline will provide service to Shell’s offshore Gulf Coast operations. The Cameron Lateral expansion project will connect Texas Eastern with Gulf Coast LNG export facilities. In addition, the Gulfstream and Sabal Trail Pipelines into Florida will both undergo additional expansion (Phase VI and Phases 2 & 3 respectively). All of these expansion projects are underpinned by long-term take-or-pay commercial arrangements.
In January 2019, the Company secured an additional $0.30B of attractive and low-risk pipeline and utility growth capital projects:
- Generation Pipeline – Enbridge, through its investment in Nexus, declared an attractive investment to acquire Generation Pipeline, a 355.0M cubic feet a day pipeline that will interconnect with Nexus. Enbridge’s share of the acquisition is about US$0.10B and the pipeline is fully contracted with long term arrangements. This acquisition offers additional opportunity to expand the Company’s footprint to supply natural gas to power generation and industrial customers in Northern Ohio.
ASSET SALE AND FINANCING UPDATE:
The Company reached agreements to sell over $7.80B of non-core assets in 2018, well in excess of the $3.0B targeted in the financing plan. The Company has now received proceeds from asset sales of about $5.70B, with the balance expected by mid-2019. These proceeds will provide the Company with noteworthy additional financial flexibility to further strengthen the balance sheet and fund the secured growth program. As of the end of the year, the Company’s consolidated Debt to EBITDA ratio was 4.7x on a trailing twelve month basis. This is in line with its updated long term target credit metric range of 4.5x to comfortably below 5.0x Debt to EBITDA.
The sponsored vehicle buy-ins has also offered an opportunity to simplify the Company’s debt financing structure and strategy. A number of actions have been taken:
- Completion of a debt exchange on December 21, 2018 whereby $1.60B of term debt securities issued by Enbridge Income Fund (the Fund) were exchanged for notes of Enbridge Inc. with identical coupons and terms to maturity; the Company intends to discontinue external debt financing by the Fund
- The redemption of US$400.0M of EEP junior subordinated notes which is expected to be accomplished by the end of February 2019
ADJUSTED EARNINGS:
For the year ended December 31, 2018, adjusted earnings increased by $1,586.0M contrast to the comparative 2017 year. The increase is in large part attributed to the timing of the Merger Transaction. As a result, the 2017 results reflect only ten months contributions from Spectra Energy assets.
The Company offered net profit margin of 5.40% while its gross profit margin was 36.60%. ROE was recorded as 4.50% while beta factor was 0.69. The stock, as of recent close, has shown the weekly upbeat performance of 0.05% which was maintained at 19.66% in this year.
