Enbridge Inc. · TSX:ENB
Enbridge — Q1 2017 Earnings Presentation
44 slides from Enbridge's earnings presentation, May 11, 2017
Slide 1: First Quarter 2017 Financial Results and Strategic Update
First Quarter 2017 Financial Results and Strategic Update May 11, 2017 Al Monaco, Chief Executive Officer | John Whelen, Chief Financial Officer
Slide 2: First Quarter 2017 Joint Financial Update Call
First Quarter 2017 Joint Financial Update Call ENB ENF SEP SEP EEP EEP 2
Slide 3: Legal Notice
Legal Notice Forward Looking Information This presentation includes certain forward looking statements and information (FLI) to provide potential investors, shareholders and unitholders of Enbridge Inc. (“Enbridge” or the “Company”), Enbridge Income Fund Holdings Inc. (“ENF”), Enbridge Energy Partne
Slide 4: Excellent Progress on Strategic Priorities
Excellent Progress on Strategic Priorities • Successful deal close; integration progressing well • Financial outlook on track • Progress in growth program • Enbridge Inc. balance sheet enhancement • Sponsored vehicle restructuring and simplification Well positioned for future growth post-Spectra Ene
Slide 5: Q1 2017 Enbridge Inc. Financial Highlights
Q1 2017 Enbridge Inc. Financial Highlights Adjusted EBIT ACFFO $ Millions $ Millions, except per share amounts $1,515 $1,374 $1,215 $1,114 2016 2017 2016 2017 $1.27/ share $1.03/ share One month of contribution from new gas assets and seasonality of results impact Q1 ACFFO per share Adjusted earning
Slide 6: Financial Outlook on Track
Financial Outlook on Track ACFFO1 per Share $4.15 $3.90 $3.85 $3.60 2017 Guidance 2017 Annualized 2018 Outlook Annualized 2017 in line with forecast; New projects drive 2018+ growth 1Available cash flow from operations (ACFFO) is a non-GAAP measure. For more information on non-GAAP measures please r
Slide 7: Industry Leading $28B Secured Project Program
Industry Leading $28B* Secured Project Program Project Expected ISD Capital (C$B) Project Expected ISD Capital (C$B) Regional Oil Sands Optimization – Valley Crossing Pipeline 2H 18 1.5 USD Athabasca Twin In service 1.3 CAD Rampion Wind – UK 2018 0.3 CAD Jackfish Lake In service 0.2 CAD Norlite In s
Slide 8: Regulatory Update
Regulatory Update Alberta Clipper Line 3 Replacement Program NEXUS • Public comment period on Draft • Canada: Working to comply with • Commercial agreements in place SEIS closed March 27, 2017 pre-construction conditions • FERC approval expected once quorum • 90 day inter-agency consultation • US: M
Slide 9: Progress on Project Backlog
Progress on Project Backlog Probability weighted Hohe See Offshore Proposed T South project inventory C$ billions Wind: $1.7B Expansion: $1.0B Renewable Liquids Pipelines Power Canadian & US Midstream $48B • 497 MW (50% ENB) • System at full capacity Utilities Gas Pipelines • 20 year fixed price PPA
Slide 10: Integration Update and Synergy Tracking
Integration Planning and Synergy Tracking Integration Update Forecast annual run rate synergies by 2019 13% • Operations integrated seamlessly on Day 1 Supply chain …..optimization • First wave of synergies achieved in March 12% • On track to achieve synergy targets $540Million Other costs • Working
Slide 11: Balance Sheet Enhancement
Balance Sheet Enhancement Actions taken since $2B Asset Monetization beginning of 2016 Target Exceeded (C$) $2.3B Executed • Raised additional $4.5B of equity $2B Target capital and ~$2B of hybrid financing South Prairie Region • 100% equity consideration for Spectra Energy shares Ozark Pipeline
Slide 12: Sponsored Vehicles
Sponsored Vehicles Compelling Differentiated Minimize Strategic Stand-Alone Investor Value Cost of objectives : Simplification Businesses Propositions Capital Detail : • Eliminated one • Visible embedded • SEP • Sponsored public vehicle organic growth Leading Gas Pipeline MLP Vehicles self-fund (MEP
Slide 13: 2017 Enbridge Inc. Consolidated Guidance
2017 Enbridge Inc. Consolidated Guidance Reflects partial year contributions from Spectra Energy assets Other Items Adjusted EBIT ACFFO per Share • Maintenance capital: $1.35 – 1.45B $ Millions • Cash taxes: $170 – 230 MM Guidance drivers: $7,200 - $7,600 $3.60 - $3.90 • Strong Mainline volumes • Fu
Slide 14: 2017 Guidance Bridge to Ongoing Outlook
2017 Guidance Bridge to Ongoing Outlook Meaningful, visible increase by year-end 2017 Annualized Guidance Build-Up (ACFFO/Share) 4 ~$4.00 1• Spectra Energy seasonality 3 2 impact (loss of Jan/Feb): 1 ~$0.12/share $3.75 2• Wood Buffalo Extension delay from mid 2017 to December: ~$0.06/share 3• Annual
Slide 15: Preliminary 2018 ACFFO/s Direction
2017 Guidance Bridge to 2018 Strong outlook continues through 2018 1• Full year of 2017 projects in service Preliminary 2018 ACFFO/s Direction – $13B in service 2017 (ACFFO/Share) – 70% of capital in service in the 3 4 second half of 2017 2 2• $4B projects scheduled for 2018 in service 1 3• Incremen
Slide 16: Q1 2017 Consolidated Adjusted EBIT Performance
Q1 2017 Consolidated Adjusted EBIT Performance Liquids Pipelines Adjusted EBIT (C$ Millions) 1Q16 1Q17 • Lower effective FX rate for revenues on Liquids Pipelines 1,084 970 Canadian Mainline • Lower average spot rate for translation of USD Gas Pipelines and Processing 87 336 to CAD Gas Distribution
Slide 17: Q1 2017 Consolidated ACFFO Performance
Q1 2017 Consolidated ACFFO Performance (C$ Millions) 1Q16 1Q17 Consolidated Adjusted EBIT 1Q17 vs. 1Q16 ACFFO Analysis 1,374 1,515 Favorable operating performance due to Depreciation and amortization 559 672 close of Spectra transaction Maintenance capital (151) (182) • Increased costs due to close
Slide 18: ENF & Fund Group: Q1 2017 Financial Summary
ENF & Fund Group: Q1 2017 Financial Summary (C$ millions, except per share amounts) 1Q16 1Q17 FY 2017 Guidance 1Q17 vs. 1Q16 Fund Group ACFFO Analysis Fund Group ACFFO 515 422 $1,900 - $2,100 • Lower toll and effective FX hedge Distributions Paid 388 403 - rate on Canadian Mainline Higher Mainline
Slide 19: Spectra Energy Partners: Q1 2017 Financial Summary
Spectra Energy Partners: Q1 2017 Financial Summary (US$ millions, except per unit amounts) 1Q16 1Q17 FY 2017 Guidance 1Q17 vs. 1Q16 DCF Analysis Ongoing EBITDA 447 545 - Higher due to expansion projects in service Ongoing Distributable Cash Flow 371 403 $1,400 - $1,480 • Partially offset by change
Slide 20: Enbridge Energy Partners: Q1 2017 Financial Summary
Enbridge Energy Partners: Q1 2017 Financial Summary 2017 1Q17 vs. 1Q16 DCF Analysis (US$ millions, except per unit amounts) 1Q16 1Q17 Pro Forma5 • Expiration of Phase 5 and 6 Adjusted EBITDA 1 $466 $414 $1,580-$1,680 surcharge tolls on North Dakota system Distributable Cash Flow2 $245 $198 $700 - $7
Slide 21: Enterprise Wide Financial Strength and Flexibility
Enterprise Wide Financial Strength and Flexibility Demonstrated access to capital; Ample liquidity to support ongoing growth Enbridge Financing Execution Committed Credit Facilities (C$ Billion) YTD C$ Billion 3 20164 2017 Equity Funding1 $30B ENB Common Shares 2.3 - ENF Common Shares 0.6 - ENB/ENF
Slide 22: Longer Term Outlook on Track
Longer Term Outlook on Track Dividend / Share Outlook (2017-2024) • 15% dividend increase in 20171 • 10-12% annual dividend growth (2018 - 2024) • Conservative payout ratio of 50% - 60% Dividend growth beyond 2019 supported by: • Embedded growth/tilted returns $2.12 • $48B in probability-weighted de
Slide 23: Investor Outreach Plan
Committed to “Best in Class” IR Outreach Investor Outreach Plan Second Quarter 2017 Fourth Quarter 2017 Mid-Year Investor Update, June 8 – 9 Enbridge Days investor conference, early December - Business unit updates - Roll-out of strategic plan - Integration and synergy progress - 2018 guidance - Lon
Slide 24: Key Takeaways
Key Takeaways • Successful deal close; integration progressing well • Financial outlook on track • Progress in growth program • Enbridge Inc. balance sheet enhancement • Sponsored vehicle restructuring and simplification 24
Slide 25: ENBRIDGE
ENBRIDGE
Slide 26: Enbridge Income Fund Holdings Inc. First Quarter 2017 Supplemental Slides
Enbridge Income Fund Holdings Inc. First Quarter 2017 Supplemental Slides Investor Relations Adam McKnight 403-266-7922 | adam.mcknight@enbridge.com
Slide 27: Fund Group: Available Cash Flow from Operations
Fund Group: Available Cash Flow from Operations (C$ Millions) 1Q16 1Q17 Liquids Pipelines 447 361 Gas Pipelines 49 57 Green Power 37 39 Eliminations and Other 20 7 Adjusted earnings before interest and tax 553 464 Depreciation and amortization 161 159 Other distributions received in excess of/(less
Slide 28: Fund Group: 2017 Outlook
Fund Group: 2017 Outlook Fund Group 2017 ACFFO Secured Growth Projects in Execution C$ millions PROJECTS EST. COST ($B) $2,100 $0.2 JACOS Hangingstone $1,900 Norlite Diluent Pipeline $0.9 2017 Regional Oilsands Optimization $2.6 Athabasca Pipeline Twin • Wood Buffalo Extension 2019 Line 3 Replac
Slide 29: Fund Group: Key Balance Sheets Metrics & Funding Progress
Fund Group: Key Balance Sheets Metrics & Funding Progress April 2016 03/31/17 $0.6 billion ENF common share offering Consolidated Fund Group Leverage 42.4% December 2016 Consolidated Fund Group Debt/EBITDA 6.0x $1.075 billion sale of South Enbridge Income Fund Credit Ratings Baa2 / BBB (High)(2) Pra
Slide 30: Dividend per Share Growth Beyond 2019
Significant Dividend Income Dividend per Share Growth Beyond 2019 2014 – 2019e • Low cost, phased expansions of $2.50 the Mainline • Alliance pipeline expansion $2.00 $2.05 – Expression of interest underway $1.87 $1.50 $1.59 • Right of first offer on growth within $1.40 existing asset footprint $1.0
Slide 31: Investor Value Proposition
Investor Value Proposition Premier Canadian Energy Infrastructure Income Investment Outstanding Low risk Visible growth Strong sponsor asset footprint business model • High quality, strategically • Minimal commodity price • 10% annual DPS growth • Aligned with ENF positioned Canadian and throughput
Slide 32: Spectra Energy Partners First Quarter 2017 Supplemental Slides
Spectra Energy Partners First Quarter 2017 Supplemental Slides Investor Relations Roni Cappadonna 713-627-4778 | Roni.Cappadonna@enbridge.com
Slide 33: Spectra Energy Partners: Ongoing Distributable Cash Flow
Spectra Energy Partners: Ongoing Distributable Cash Flow (US$ Millions) 1Q16 1Q17 US Transmission 411 499 Liquids Other 56 (20) 68 (22) 9 years of consecutive quarterly Ongoing EBITDA 447 545 distribution increases ADD: Earnings from equity investments (27) (38) Distributions from equity investments
Slide 34: Spectra Energy Partners: 2017 Distributable Cash Flow Outlook
Spectra Energy Partners: 2017 Distributable Cash Flow Outlook1 (US$ Millions) Low Mid High US Transmission 2,020 1.05x to 1.15x Liquids 260 Other (80) EBITDA 2,200 Coverage ratio ADD: Earnings from equity investments (200) Distributions from equity investments Other 150 10 $0.0125/quarter LESS: dist
Slide 35: Spectra Energy Partners: Key Balance Sheets Metrics
Spectra Energy Partners: Key Balance Sheets Metrics 03/31/17 Total Debt $7.7B Financial Covenant Metrics 4.1x Debt/EBITDA(1) Credit Ratings Baa2 / BBB / BBB(2) Available Liquidity $1.7B (1) Calculated in accordance with the credit agreements; max 5.0x (2) Moody’s / S&P / Fitch senior unsecured ratin
Slide 36: $4+B Projects in Execution, ~75% Demand Pull
$4+B Projects in Execution, ~75% Demand Pull Continue to pursue development projects Est. CapEx In-Service Counterparties (USD $MM) Sabal Trail 1H17 ~1,600 Gulf Markets – Phase II 2H17 110 Access South, 2017 Adair Southwest & Lebanon Extension 2H17 450 Atlantic Bridge 2H17 – 2H18 500 NEXUS 2H17 1,10
Slide 37: Investor Value Proposition
Investor Value Proposition Stable. Disciplined. Reliable. We go “where the lights are” – connecting diverse supply basins with regional demand markets – “last mile” competitive advantage Attractive Stable Outstanding Prudent financial distribution business model asset footprint management growth • P
Slide 38: Enbridge Energy Partners First Quarter 2017 Supplemental Slides
Enbridge Energy Partners First Quarter 2017 Supplemental Slides Investor Relations Adam McKnight 403-266-7922 | Adam.McKnight@enbridge.com
Slide 39: Enbridge Energy Partners: Adjusted EBITDA to Distributable Cash Flow
Enbridge Energy Partners: Adjusted EBITDA to Distributable Cash Flow (US$ Millions) 1Q16 1Q17 Adjusted EBITDA 466.2 414.1 Interest Expense (Net)1 (104.4) (99.9) Income Tax Expense (2.5) (1.5) Distributions in excess of equity earnings 1.5 0.8 Maintenance capital expenditures (8.1) (9.0) Non-controll
Slide 40: EEP Unit Structure Rationalized and Simplified
EEP Unit Structure Rationalized and Simplified (Millions of units) BEFORE AFTER Unit Class1 ENB5 Public TOTAL Unit Class1 ENB5 Public TOTAL Cash Paying LP units2 Cash Paying LP units2 A 46.5 215.7 262.2 A 110.8 215.7 326.5 B 7.8 - 7.8 B 7.8 - 7.8 D 66.1 - 66.1 E 18.1 - 18.1 E 18.1 - 18.1 EEQ PIKing
Slide 41: Significantly Enhanced Balance Sheet
Significantly Enhanced Balance Sheet Committed to strong investment-grade credit rating Sources & Uses of Transaction Proceeds1 (US$B) Consolidated Debt/EBITDA2 (2017-2020) Sources Uses 6.0x ~5.3x ~5.3 Line 3 Step Down $0.45 EA Step Up $(0.36) 5.0x 4.5x Class A Proceeds 1.20 Preferred Repayment (1.2
Slide 42: Low-Risk “Utility-Like” Business
Low-Risk “Utility-Like” Business Reliable Business Model Provides Highly Predictable Cash Flows Investment Grade Direct Commodity Stable Business Exposure (CFaR)* Customers ~96% ~100% <1% of cash flow underpinned of revenue from of cash flow directly by long term cost of service or investment grade
Slide 43: DCF/unit Growth Outlook
DCF/unit Growth Outlook Embedded growth supports longer term distribution growth…. Embedded Growth Opportunities (DCF/unit) • ~3% secured DCF/unit growth to 2020 $1,600 – Southern Access to 1,200MMbpd L3 call option $1,400 BPL call option – Eastern Access +15% interest ME call option SA to 1200 – Ba
Slide 44: Investor Value Proposition
Investor Value Proposition Attractive long term risk-return proposition Low risk, pure-play liquids pipeline MLP provides attractive risk-adjusted returns for unitholders Pure-play liquids Low risk Prudent financial Moderate pipeline MLP business model management visible growth • Exceptional North •