Summary
Enbridge Inc.'s (ENB) Q3 2020 report, filed on November 5, 2020, shows a mixed financial performance with some positive operational highlights tempered by significant non-cash charges. For the third quarter, earnings attributable to common shareholders increased slightly to $990 million ($0.49 per share) from $949 million ($0.47 per share) in the prior year. However, the nine-month period paints a different picture, with earnings attributable to common shareholders significantly down to $1.208 billion ($0.60 per share) from $4.576 billion ($2.27 per share) in 2019. A substantial driver of this year-over-year decline in earnings for the nine-month period was the recognition of significant impairment losses on equity method investments, notably in DCP Midstream ($1.7 billion), SESH ($394 million), and Steckman ($221 million). These non-cash charges, while impacting reported earnings, do not directly affect operational cash flow. The company also experienced a non-cash, unrealized derivative fair value loss of $201 million for the nine-month period, contrasting with a gain in the prior year. Operationally, Enbridge highlighted strength in its Liquids Pipelines segment, benefiting from a higher International Joint Tariff Benchmark Toll and contributions from the Canadian Line 3 Replacement Program. The Gas Transmission and Midstream segment saw improved earnings due to rate settlements on Texas Eastern and Algonquin. The company is actively managing its liquidity, with over $14 billion in net available liquidity, and has taken steps to reduce operating costs by approximately $300 million in 2020. Despite the impact of COVID-19 on volumes and commodity prices, Enbridge maintains a resilient business model supported by highly contracted assets and strong customer creditworthiness.
Key Highlights
- 1Third-quarter earnings attributable to common shareholders increased to $990 million ($0.49/share) from $949 million ($0.47/share) year-over-year.
- 2Nine-month earnings attributable to common shareholders significantly decreased to $1.208 billion ($0.60/share) from $4.576 billion ($2.27/share) due to substantial non-cash impairment losses on equity investments ($2.351 billion total).
- 3The Liquids Pipelines segment showed resilience with higher International Joint Tariff Benchmark Tolls and contributions from the Line 3 Replacement Program.
- 4Gas Transmission and Midstream segment benefited from positive rate settlements on Texas Eastern and Algonquin.
- 5Enbridge maintained strong liquidity with over $14 billion in net available liquidity and implemented cost reduction measures of approximately $300 million in 2020.
- 6COVID-19 impacted volumes in the Liquids Pipelines segment, leading to an expected underutilization of 100-300 kbpd in Q4 2020, but a gradual recovery is anticipated.
- 7The company is managing its debt effectively, completing its 2020 debt funding plan and extending credit facilities to ensure financial flexibility through 2021.