CALGARY, AB, Aug. 2, 2024 /CNW/ - Enbridge Inc. (Enbridge or the Company) (TSX:ENB) (NYSE:ENB) today reported second quarter 2024 financial results, recast its 2024 financial guidance and provided a quarterly business update. Highlights (All financial figures are unaudited and in Canadian dollars unless otherwise noted. * identifies non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices.) Recast 2024 full year financial outlook to include contributions from the U.S. Gas Utilities acquisitions announced on September 5, 2023 (the "Acquisitions") and the associated financing (previously excluded). The full year adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA)* guidance range has increased to $17.7 billion to $18.3 billion and distributable cash flow (DCF)* per share is unchanged at $5.40 to $5.80 despite the impact of our fully funding the Acquisitions prior to closing and benefiting from full year EBITDA contributions Second quarter GAAP earnings of $1.8 billion or $0.86 per common share, compared with GAAP earnings of $1.8 billion or $0.91 per common share in 2023 Adjusted earnings* of $1.2 billion or $0.58 per common share*, compared with $1.4 billion or $0.68 per common share in 2023 Adjusted EBITDA of $4.3 billion, an increase of 8%, compared with $4.0 billion in 2023 Cash provided by operating activities of $2.8 billion, compared with $3.4 billion in 2023 Distributable cash flow of $2.9 billion, an increase of 3%, compared with $2.8 billion in 2023 Re-affirmed the Company's growth outlook announced at Enbridge Day on March 6, 2024 Closed the acquisition of Questar Gas Company and Wexpro (together "Questar" and conducting business as "Enbridge Gas Utah") from Dominion Energy Inc. on May 31, 2024 for a purchase price of US$4.3 billion (including US$1.3 billion of assumed debt) Completed the Acquisitions funding and terminated the Company's at-the-market (ATM) equity issuance program; returning to an equity self-funded model Announced Final Investment Decision (FID) of Blackcomb Pipeline, an up to 2.5 Bcf/d natural gas pipeline which will provide transportation service from Rankin, Texas to the Agua Dulce area in South Texas providing much needed export capacity for Permian shippers Reached a negotiated settlement with customers on Texas Eastern Transmission to ensure appropriate cost recovery by increasing rates effective October 1, 2024 Sanctioned Orange Grove solar farm (130 MW) northwest of Corpus Christi, Texas, for ~US$250 million, backed by a long-term power purchase agreement with AT&T for 100% of capacity Sanctioned a 120 kbpd expansion of Gray Oak Pipeline following a successful open season Exited the quarter with Debt-to-EBITDA of 4.7x; Enbridge expects annualized EBITDA contributions from the US$14 billion of Acquisitions in 2024 to strengthen Enbridge's Debt-to-EBITDA position CEO COMMENT Greg Ebel, President and CEO commented the following: "During the quarter, we made significant progress on our strategic priorities. We completed the acquisition of Questar and filed a settlement with the Public Staff for the North Carolina Utilities Commission giving us a clear path to closing the acquisition of PSNC in Q3. In addition, we completed all the remaining financing for the Acquisitions and discontinued the company's at-the-market equity issuance program. As such, we are recasting our 2024 financial outlook to include contributions from the acquired assets. I'm proud of our team's commitment to execution and look forward to working with our new team members and customers. "The scale and connectivity of our business is extending growth opportunities across our four business franchises. Enbridge is a one-stop shop for a wide range of customers and partners. Deep relationships, strategic incumbency and proven ability to deliver makes us a first-choice partner. A great example of this is the Seven Stars Energy project, which brought Enbridge and Indigenous communities together to develop a 200 MW wind farm in Saskatchewan. This was the result of our Liquids and Renewable Power teams partnering to strengthen existing relationships and create new opportunities. "The need for reliable and affordable energy drove high utilization across all of our systems during the quarter. Customer demand and operational reliability of our assets helped generate record second quarter EBITDA. "In Liquids, Mainline demand remained strong, and the system was in apportionment throughout the second quarter. Volumes averaged 3.1 mmbpd and we are advancing discussions with customers for further egress out of Western Canada. In the Permian, we sanctioned an expansion of the Gray Oak pipeline to accommodate growing demand for crude exports at our Ingleside facility. The terminal remains highly utilized, setting new daily and quarterly delivery records as global demand for North American energy products continues to grow. "In Gas Transmission, we closed the 19% acquisition in an integrated Permian natural gas pipeline and storage JV (the "Whistler Parent JV"), which is immediately accretive and directly connected to our existing infrastructure at Agua Dulce. This investment is already yielding additional growth opportunities through the announced FID of Blackcomb Pipeline which is expected to provide much needed egress for Permian natural gas shippers in 2026. On Texas Eastern, we've reached a negotiated settlement with shippers ensuring we earn a reasonable return on our rate base investments as we continue delivering safe and reliable energy. "In Gas Distribution, integration is well underway with Enbridge Gas Ohio and Enbridge Gas Utah. The new utilities have been fully funded and will provide long-term, rate-regulated, low risk, capital investment opportunities. We are seeing this play out In Utah where we are in negotiations to connect up to 200 MW of power to serve data center customers and have had numerous inbounds to connect up to an additional 1.5 GW over the long-term. "In Renewable Power, we sanctioned the Orange Grove solar farm in Texas backed by a long-term PPA with AT&T. We also placed into service our Fécamp offshore wind project which is designed to provide power for nearly 770,000 French residents. "Looking forward, disciplined capital allocation remains a key area of focus. Positive credit rating agency actions during the quarter reinforces our long-held view that our balance sheet is strong. Our leverage is well within our target range and provides flexibility to fully fund our $24 billion secured capital backlog. A well supported dividend and visible growth is expected to deliver low double digit annual shareholder returns for many years to come, which positions us as a first-choice investment opportunity." FINANCIAL RESULTS SUMMARY Financial results for the three and six months ended June 30, 2024 and 2023 are summarized in the table below: Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (unaudited; millions of Canadian dollars, except per share amounts; number of shares in millions) GAAP Earnings attributable to common shareholders 1,848 1,848 3,267 3,581 GAAP Earnings per common share 0.86 0.91 1.53 1.77 Cash provided by operating activities 2,814 3,439 5,965 7,305 Adjusted EBITDA1 4,335 4,008 9,289 8,476 Base Business Adjusted EBITDA1,2 4,106 4,008 8,951 8,476 Adjusted Earnings1 1,248 1,380 3,203 3,106 Adjusted Earnings per common share1 0.58 0.68 1.50 1.53 Distributable Cash Flow1 2,858 2,783 6,321 5,963 Base Business Distributable Cash Flow1,2 2,798 2,783 6,241 5,963 Weighted average common shares outstanding 2,137 2,024 2,131 2,025 Base Business weighted average common shares outstanding2 2,023 2,024 2,023 2,025 1 Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. 2 Base Business results are adjusted to exclude the contributions from, and the impact of financing of the Acquisitions. These include associated EBITDA, DCF, capital expenditures, and common share and debt issuances attributable to the Acquisitions. For a full reconciliation, see Appendix D of this news release. GAAP earnings attributable to common shareholders is the same for the second quarter of 2024 and 2023, primarily due to a gain on sale of $1.1 billion ($765 million after-tax) from the disposition of interests in Alliance Pipeline and Aux Sable to Pembina Pipeline Corporation ("Pembina"). This was offset by a non-cash, net unrealized derivative fair value loss of $208 million ($160 million after-tax) in 2024, compared with a net unrealized gain of $595 million ($456 million after-tax) in 2023, reflecting changes in the mark-to-market value of derivative financial instruments used to manage foreign exchange, interest rate and commodity price risks as well as quarterly operating performance factors. The period-over-period comparability of GAAP earnings attributable to common shareholders is impacted by certain unusual, infrequent factors or other non-operating factors which are noted in the reconciliation schedule included in Appendix A of this news release. Refer to the Company's Management's Discussion & Analysis for the second quarter of 2024 filed in conjunction with the second quarter financial statements for a detailed discussion of GAAP financial results. Adjusted EBITDA in the second quarter of 2024 increased by $327 million compared with the same period in 2023. This was due to higher throughput on Flanagan South Pipeline driven by recent open season commitments, higher volumes on Express-Platte, contributions from recently acquired assets including EOG, Questar, additional Hohe See and Albatros interests, Aitken Creek and Tomorrow RNG. These impacts were partially offset by the absence of contributions from Alliance Pipeline and Aux Sable due to the sale of our interests in these investments in April 2024 and warmer weather in Ontario affecting Gas Distribution and Storage. Adjusted earnings in the second quarter of 2024 decreased by $132 million, or $0.10 per share, compared with the same period in 2023, primarily from higher financing costs due to higher interest rates and long-term debt principal, higher income taxes driven by higher earnings and higher depreciation expense from assets acquired and placed into service since last year, partially offset by higher Adjusted EBITDA contributions discussed above. DCF for the second quarter of 2024 increased by $75 million compared with the same period in 2023, primarily due to the higher Adjusted EBITDA contributions discussed above, partially offset by higher financing costs from higher interest rates and long-term debt principal, and higher U.S. Corporate Alternative Minimum taxes. Per share metrics in 2024 are impacted by the bought deal equity issuance in the third quarter of 2023 and ATM issuances in the second quarter of 2024 as part of the financing plan for the Acquisitions. Detailed financial information and analysis can be found below under Second Quarter 2024 Financial Results. FINANCIAL OUTLOOK The Company has recast its 2024 financial guidance. Adjusted EBITDA is expected to be between $17.7 billion to $18.3 billion (previously $16.6 billion to $17.2 billion). The DCF per share guidance range of $5.40 to $5.80 is maintained. Relative to Enbridge's previous guidance, announced November 28, 2023, the Company's recast guidance for 2024 adds incremental contributions from the two U.S. gas Acquisitions that have closed and assumes a Q3 closing for PSNC. It also now includes the impact of the pre-funding of the Acquisitions, which was completed in Q2. The company also reaffirmed it's 2023 to 2026, near-term growth outlook of 7-9% for adjusted EBITDA growth, 4-6% for adjusted EPS growth and approximately 3% for DCF per share growth. FINANCING UPDATE Financing the Acquisitions Enbridge has now fully financed the $12.8 billion (US$9.4 billion) cash consideration for the Acquisitions. The funding plan was completed through the issuance of common shares through the $4.6 billion offering in the third quarter of 2023 and $2.5 billion of at-the-market equity issuances in the second quarter of 2024, issuances of hybrid subordinated notes, and a portion of the proceeds from the sale of the Alliance Pipeline and Aux Sable which closed in the second quarter of 2024. Enbridge terminated its ATM equity issuance program, without having issued any additional shares in Q3, and intends to return to an equity-self funding model. The Company expects annualized EBITDA contributions from the US$14 billion of Acquisitions in 2024 to strengthen Enbridge's Debt-to-EBITDA position throughout 2025. Other Financing On June 24th, 2024, Enbridge issued US$1.2 billion of 30-year junior subordinated hybrid notes, consisting of US$700 million callable after 5 years and US$500 million callable after 10 years. These notes receive partial equity treatment from rating agencies. A portion of the proceeds from these offerings will be allocated to fund the acquisition of PSNC, with the remainder used to reduce existing indebtedness, fund capital expenditures, and for general corporate purposes. SECURED GROWTH PROJECT EXECUTION UPDATEDuring the quarter the Fécamp offshore wind facility was placed into service and that project has been removed from the secured growth backlog. In addition, the newly sanctioned Orange Grove solar farm has been added to the secured backlog. Since closing the acquisition of an interest in the Whistler JV, and contributing ownership of Rio Bravo to the joint venture, the Company has removed this project from its secured backlog due to commercial sensitivity. The Company's secured growth backlog now sits at $24 billion and is underpinned by commercial frameworks consistent with Enbridge's low-risk model. Financing of the secured growth program is expected to be provided entirely through the Company's anticipated $8-9 billion of annual growth capital investable capacity. BUSINESS UPDATES Liquids Pipelines: Sanctioned Gray Oak Expansion Following Successful Open Season Enbridge has sanctioned a 120 kbpd expansion of the Gray Oak pipeline following a successful open season. The incremental volumes will serve growing demand at the Company's Enbridge Ingleside Energy Center. This expansion will add capacity from Crane, Texas to Corpus Christi, Texas, is expected to require minimal capital and come fully online in 2026. Gas Transmission: Reached a Negotiated Settlement with Shippers on Texas Eastern In May 2024, Texas Eastern Transmission, LP (Texas Eastern) reached a negotiated settlement with customers to increase rates and filed a Stipulation and Agreement with the FERC on June 3, 2024. Base rates will increase by 6% effective October 1, 2024 and by another 2.75% effective January 2026. The Settlement was approved by the Federal Energy Regulatory Commission on July 31 and helps ensure Texas Eastern will continue to earn an appropriate risk-adjusted return and that its customers receive rate certainty through October 2027.   Gas Transmission: Closed Acquisition of Permian Basin Natural Gas Joint Venture Interest On May 29, 2024, Enbridge closed the previously announced agreement with WhiteWater/I Squared and MPLX to form the Whistler Parent JV that will develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing LNG and other U.S. Gulf Coast demand. The transaction is immediately accretive to both per share metrics and the debt-to-EBITDA metric. Longer term, this joint venture is expected to unlock future growth opportunities for Enbridge, similar to the one noted below, by connecting natural gas production to export markets. The joint venture is owned by WhiteWater/I Squared (50.6%), MPLX (30.4%), and Enbridge (19.0%). Gas Transmission: Announced FID of Blackcomb Natural Gas Pipeline Whitewater, MPLX LP, and Enbridge, through the Whistler Parent JV, partnered with Targa Resources, LLC to reach the final investment decision to move forward with the Blackcomb Pipeline. The Blackcomb Pipeline is a joint venture owned 70% by the Whistler Parent JV, 17.5% by Targa Resources, and 12.5% by MPLX. This pipeline is designed to transport up to 2.5 Bcf/d of natural gas providing additional egress for Permian shippers including direct connections to processing facilities in the Midland Basin. The pipeline is backed by firm transportation agreements with predominantly investment grade counterparties and is expected to enter service in the second half of 2026 pending the receipt of customary regulatory and other approvals. Gas Distribution and Storage: Enbridge's Acquisition of Gas Utilities from Dominion On May 31, 2024 Enbridge closed its acquisition of Questar from Dominion for a purchase price of US$4.3 billion inclusive of US$1.3 billion of assumed debt. The Questar Gas utility in Utah will do business as Enbridge Gas Utah, in Wyoming as Enbridge Gas Wyoming, and in Idaho as Enbridge Gas Idaho. Questar serves as a multi-state utility distributing gas in Utah, Southern Wyoming, and Southeastern Idaho to approximately 1.2 million customers via 21,000 miles of transmission and distribution pipelines. Questar also has a cost-of-service regulated supply agreement with Wexpro, which provides source gas directly to the utility. Together, EOG (conducting business as Enbridge Gas Ohio) and Questar are expected to contribute approximately 80% of the total annualized EBITDA from the Acquisitions. The closing of the purchase of the PSNC is expected to occur following the receipt of required regulatory approvals, which Enbridge expects to occur in the third quarter of 2024. Renewable Power: Sanctioned Orange Grove Solar in Texas Enbridge sanctioned the Orange Grove Solar development, a 130 MW solar project strategically located approximately 30 miles from Corpus Christi in the ERCOT South region in Texas. The project benefits from nearby industrial power demand growth and is supported by a long- term power purchase agreement with AT&T. Total project costs are expected to be approximately US$250 million and the project is expected to be in-service in 2025. SECOND QUARTER 2024 FINANCIAL RESULTS GAAP Segment EBITDA and Cash Flow from Operations Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (unaudited; millions of Canadian dollars) Liquids Pipelines 2,450 2,427 4,854 4,780 Gas Transmission 2,095 1,042 3,360 2,247 Gas Distribution and Storage 567 367 1,332 1,083 Renewable Power Generation 138 129 395 265 Eliminations and Other (155) 575 (797) 592 EBITDA1 5,095 4,540 9,144 8,967 Earnings attributable to common shareholders 1,848 1,848 3,267 3,581 Cash provided by operating activities 2,814 3,439 5,965 7,305 1  Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. For purposes of evaluating performance, the Company makes adjustments to GAAP reported earnings, segment EBITDA and cash flow provided by operating activities for unusual, infrequent or other non-operating factors, which allow Management and investors to more accurately compare the Company's performance across periods, normalizing for factors that are not indicative of underlying business performance. Tables incorporating these adjustments follow below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted EBITDA by segment, adjusted earnings, adjusted earnings per share and DCF to their closest GAAP equivalent are provided in the Appendices to this news release. Adjusted EBITDA By Segment Adjusted EBITDA generated from U.S. dollar denominated businesses was translated to Canadian dollars at a higher average exchange rates (C$1.37/US$) in the second quarter of 2024 when compared with the same quarter in 2023 (C$1.34/US$). A significant portion of U.S. dollar earnings are hedged under the Company's enterprise-wide financial risk management program. The hedge settlements are reported within Eliminations and Other. Liquids Pipelines Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (unaudited; millions of Canadian dollars) Mainline System 1,317 1,453 2,655 2,790 Regional Oil Sands System 243 249 470 480 Gulf Coast and Mid-Continent Systems1 436 382 863 766 Other Systems2 460 345 928 735 Adjusted EBITDA3 2,456 2,429 4,916 4,771 Operating Data (average deliveries – thousands of bpd) Mainline System volume4 3,078 2,991 3,103 3,056 Canadian International Joint Tariff5 ($C) $1.65 $— $1.65 $— U.S. International Joint Tariff5 ($US) $2.57 $— $2.57 $— Competitive Tolling Settlement IJT and surcharges6 ($US) $— $4.53 $— $4.53 Line 3 Replacement Surcharge ($US)6,7 $0.76 $0.77 $0.77 $0.80 1 Consists of Flanagan South Pipeline, Seaway Pipeline, Gray Oak Pipeline, Cactus II Pipeline, Enbridge Ingleside Energy Center, and others. 2 Other consists of Southern Lights Pipeline, Express-Platte System, Bakken System, and others. 3 Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. 4 Mainline System throughput volume represents Mainline System deliveries ex-Gretna, Manitoba which is made up of U.S. and Eastern Canada deliveries originating from Western Canada. 5 Tariff tolls, per barrel, for heavy crude oil movements from Hardisty, AB to Chicago, IL. Effective July 1, 2023 the Company began collecting a dual currency, international joint tariff set within the negotiated settlement for tolls on the Mainline pipeline system. Excludes abandonment surcharge. 6 Includes the international joint tariff (IJT) benchmark toll, for heavy crude oil movements from Hardisty, AB to Chicago, IL, and its components are set in U.S. dollars and Competitive Tolling Settlement Surcharges which were in effect on an interim basis from July 1, 2021 until June 30, 2023. 7 Effective July 1, 2022, the Line 3 Replacement Surcharge (L3R), exclusive of the receipt terminalling surcharge, is determined on a monthly basis by a volume ratchet based on the 9-month rolling average of ex-Gretna volumes. Each 50 kbpd volume ratchet above 2,835 kbpd (up to 3,085 kbpd) applies a US$0.035/bbl discount whereas each 50 kbpd volume ratchet below 2,350 kbpd (down to 2,050 kbpd) adds a US$0.04/bbl charge. Refer to Enbridge's Application for a Toll Order respecting the implementation of the L3R Surcharges and CER Order TO-003-2021 for further details. Liquids Pipelines adjusted EBITDA increased $27 million compared with the second quarter of 2023, primarily related to: higher Mainline system throughput of 3.1 million barrels per day (mmbpd) in 2024 as compared to 3.0 mmbpd in 2023; higher contributions from the Gulf Coast and Mid-Continent System due primarily to higher volumes on the Flanagan South Pipeline driven by the open season commitments that commenced in the first quarter of 2024; higher contributions from Express-Platte System due primarily to greater long-haul deliveries and certain Feeder pipelines due to higher volumes on Southern Access Extension and Toledo pipelines; the favorable effect of translating US dollar earnings at a higher average exchange rate in 2024, as compared to 2023; higher contributions from Southern Lights Pipeline due primarily to the discontinuation of rate-regulated accounting in the fourth quarter of 2023; partially offset by lower Mainline System tolls as a result of new tolls effective July 1, 2023 and a lower L3R surcharge. Gas Transmission Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (unaudited; millions of Canadian dollars) U.S. Gas Transmission 891 811 1,840 1,736 Canadian Gas Transmission 98 140 294 322 Other 93 82 222 164 Adjusted EBITDA1 1,082 1,033 2,356 2,222 1  Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. Gas Transmission adjusted EBITDA increased $49 million compared with the second quarter of 2023, primarily related to: lower US Gas Transmission and Storage operating costs; contributions from the acquisitions of Aitken Creek in the fourth quarter of 2023 and Tomorrow RNG in the first quarter of 2024, and the favorable effect of translating US dollar earnings at a higher average exchange rate in 2024, compared to the same period in 2023; partially offset by the absence of contributions from Alliance Pipeline and Aux Sable due to the sale of ownership interests to Pembina in April 2024. Gas Distribution and Storage Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (unaudited; millions of Canadian dollars) Enbridge Gas Ontario 376 358 1,073 1,057 U.S. Gas Utilities1 178 — 228 — Other 13 9 31 26 Adjusted EBITDA2 567 367