Slide 1: Q4 2018: Financial Results & Business Update
Q4 2018: Financial Results & Business Update February 15, 2019 Al Monaco, Chief Executive Officer | John Whelen, Chief Financial Officer
Slide 2: Legal Notice
Legal Notice Forward Looking Information This presentation includes certain forward looking statements and information (FLI) to provide potential investors and shareholders of Enbridge Inc. (Enbridge or the Company) with information about Enbridge and its subsidiaries and affiliates, including manag
Slide 3: Agenda
Agenda • Recap of 2018 Priorities • Business Update • Financial Results • 2019+ Strategic Priorities Line 3 Replacement 3 3
Slide 4: 2018 Priorities
2018 Priorities 1 Deliver strong results 2 Focus on low risk pipeline-utility model 3 Accelerate de-leveraging 4 Streamline the business 5 Project execution NEXUS Pipeline 6 Extend growth Priorities established for 2018 to position Enbridge for the future 4
Slide 5: Achieved Record 2018 Financial Results
1 Achieved Record 2018 Financial Results For the three and 12 months ended Dec 31, $ millions Adjusted EBITDA DCF Adjusted Earnings $3,320 Q4 $1,863 Q4 $1,166 Q4 $2,963 $2,958 Q3 $1,741 $1,585 Q3 $933 Q3 $1,013 $2,586 $1,334 Q2 $1,094 Q2 $3,165 Q2 $1,858 $632 $2,581 $1,324 $662 $3,406 Q1 $2,312 Q1 $
Slide 6: $7.8B of Non-Core Asset Sales
2 $7.8B of Non-Core Asset Sales Midcoast G&P Business Renewables Power Assets Canadian G&P Business Gas New Brunswick 49% interest in a portfolio 100% interest in Texas and 100% interest in all 100% interest in of onshore renewables and Oklahoma G&P assets W. Canadian G&P assets non-core gas LDC the
Slide 7: Accelerated De-Leveraging & Financial Flexibility
3 Accelerated De-Leveraging & Financial Flexibility Consolidated DEBT to EBITDA1 Enbridge Inc. Sr. Unsecured Debt Ratings2 6.0x 5.5x Standard & Poors BBB+ stable 4.5x to comfortably below 5.0x 5.0x Fitch BBB+ stable 4.5x 4.0x DBRS BBB High stable 3.5x Moody’s Baa2 Upgraded Jan. ‘19 positive 3.0x 201
Slide 8: Completed 4 Sponsored Vehicle Buy-ins
4 Completed 4 Sponsored Vehicle Buy-ins • Eliminates complexity Before Simplification After Simplification • Enhances credit profile • Improves earnings and cash flow transparency Public Public Public 100% • Reduces consolidated payout ratio • Extends non-taxable horizon 83% 35% 83% ENF/ EEP/ Liquid
Slide 9: Secured $1.8B New Capital Projects
5 Secured $1.8B New Capital Projects Gray Oak AOC Lateral Gas Transmission Expansions Sabal Trail Phase 2 & 3 PERMIAN AOC Lateral Cameron Lateral Gray Oak AB EAGLE SK FORD Freeport Vito Gulfstream Corpus Christi Phase VI • Capital cost: US$0.6B • Capital cost: $0.3B • Combined capital cost: US$0.8B
Slide 10: Executing Secured Growth Project Inventory
6 Executing Secured Growth Project Inventory Project Expected ISD Capital ($B) AOC Lateral Acquisition 1Q19 0.3 CAD East-West Tie-Line Generation Pipeline Generation Pipeline Acquisition 1Q19 0.1 USD Port of Toledo Stratton Ridge 1H19 0.2 USD Hohe See Wind & Expansion – Germany 2H19 1.1 CAD ON OH 20
Slide 11: Mainline Contract Offering
Mainline Contract Offering Annual Mainline Volume (ex-Gretna throughput MMbpd) Key Features of Contract Offering 2,685 • Priority Access for contracted volume 2,625 2,636 • Contract term up to 20 years 2,578 2,530 2,405 • Contracts tailored to shipper type • Toll discounts for high volume shippers 2
Slide 12: Line 3 Replacement Project $9B
Line 3 Replacement Project • Critical energy infrastructure replacement with state of the art pipeline technology, supporting: Edmonton – environmental protection Hardisty – reliable local energy supply Kerrobert – low energy costs – jobs & economic development Regina In service Canadian segments –
Slide 13: Minnesota L3R Execution Timeline
Minnesota L3R Execution Timeline Dec 2017 - FEIS Adequacy Determination by MPUC Jun 2018 - Certificate of Need / Route Permit approval by MPUC Aug 2018 - Easement Agreement with Fond Du Lac Sep - Dec 2018 - 4+ year Regulatory Process MPUC issues CN/ RP Written Orders, approves conditions & rejects P
Slide 14: Gas Transmission Update
Gas Transmission Update Recorded peak pipeline deliveries Clear need for additional natural gas transmission capacity & redundancy, particularly in U.S. Canadian Gas Transmission 98% 2018 contract Northeast renewal rate New England Energy Prices Electricity Prices ($/MWh) Natural Gas Prices ($/MMBtu
Slide 15: Gas Transmission Business Update
Gas Transmission Business Update Regulatory Update Key Cost of Service Regulated Systems Texas Eastern rate case underway – Filed November 30, 2018 – Potential for revenue enhancement with updated cost of service factors Texas Eastern BC Pipeline – Settlement discussions targeted for May 2019 Expect
Slide 16: Utilities Operational Update
Utilities Operational Update Gas Deliveries (Billions of cubic feet) Utility Amalgamation 40 11% OEB allowed ROE Actual ROE 30 10% Expected range of Actual ROE Weekly Consumption1 ~9% Allowed ROE 20 9% 10 8% 0 7% Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 2015 2016 2017 2018 2019+ • Post-amalg
Slide 17: Consolidated Adjusted EBITDA
2018 Financial Performance Consolidated Adjusted EBITDA 4Q18 vs. 4Q17 Adjusted EBITDA Liquids Pipelines (C$ Millions, except per share amounts) 4Q17 4Q18 FY 17 FY 18 + Higher throughput and tolls on the Mainline System + Higher average FX hedge rates on Canadian Mainline Liquids Pipelines 1,482 1,72
Slide 18: Consolidated DCF
2018 Financial Performance Consolidated DCF 4Q18 vs. 4Q17 Distributable Cash Flow + Adjusted EBITDA drivers noted in previous slide (C$ Millions, except per share amounts) 4Q17 4Q18 FY 2017 FY 2018 – Higher proportion of maintenance capital expenditures undertaken in Q4 vs 2017 Consolidated Adjusted
Slide 19: Financial Outlook
Financial Outlook Consolidated Adjusted EBITDA1 ($MM) ~$14,800 Through 2020 Post 2020 10% ~$13,000 5-7% $12,849 DCF & dividend/share DCF/share growth growth rate 2018 2019e 2020e Consolidated DCF1 (per share) $4.85 - 5.15 $4.30 - 4.60 Post 2020 Available Capital $12 $4.42 $5-6B $6 Dividends Maintena
Slide 20: Debt Funding Structure & Strategy
Debt Funding Structure & Strategy After Sponsored Vehicle Buy-ins* Recent Restructuring Actions • Exchange of Enbridge Income Fund sr. term notes for equivalent sr. term notes of Enbridge Inc. • Cross guarantees of Enbridge Inc. sr. term notes with remaining sr. term notes of SEP 100% 100% 100% and
Slide 21: 2019+ Strategic Priorities
2019+ Strategic Priorities Continuing Priorities • Reliable, growing cash flow and dividends • Low risk pipeline-utility model • Strong investment grade balance sheet • Streamlined business • Strong capital execution • Extend growth Areas of Emphasis Enhance Expand, Self core extend funding business
Slide 22: Post 2020 Future Growth Opportunities
Post 2020 Future Growth Opportunities $5-6B self-funding capability ~$2B ~$2-3B ~$1B Liquids Gas Gas Pipelines Transmission Utilities • Mainline system optimizations • USGC market connections • Customer additions and enhancements • US S.E. and US N.E. expansions • New Communities • Market access ext
Slide 23: Investor Value Proposition
Investor Value Proposition • Leading energy infrastructure footprint • Low-risk pure regulated business model • Strong investment grade credit profile • 10% DCF and dividend growth through 2020 • 5-7% DCF growth beyond 2020 Long-life attractive growing yield with lowest risk profile in the sector 23
Slide 24: Q&A
Q&A ZENBRIDGE