Summary
Enbridge Inc. (ENB) reported solid financial results for the first quarter of 2021, demonstrating a significant recovery from the challenges experienced in the same period of 2020, largely driven by the impacts of the COVID-19 pandemic. Total operating revenues increased slightly to $12.19 billion from $12.01 billion in the prior year, while operating expenses decreased significantly due to lower commodity costs. This led to a substantial increase in operating income, which rose to $2.55 billion from $1.51 billion. Net earnings attributable to common shareholders swung to a profit of $1.90 billion ($0.94 per share) from a loss of $1.43 billion ($0.71 per share) in the prior year. This turnaround was primarily influenced by the absence of significant non-cash impairment charges related to the DCP Midstream investment that impacted the first quarter of 2020, as well as favorable movements in derivative financial instruments. The company's core business segments, including Liquids Pipelines and Gas Transmission and Midstream, showed strong performance improvements. The Liquids Pipelines segment, in particular, saw a significant rise in earnings before interest, taxes, depreciation, and amortization (EBITDA) to $2.04 billion from $0.85 billion, benefiting from improved throughput and favorable foreign exchange hedging. The Gas Transmission and Midstream segment also saw a dramatic swing from an EBITDA loss of $1.05 billion to a gain of $0.97 billion, largely due to the absence of the aforementioned impairment charges. Enbridge also reported continued progress on key growth projects, including the US Line 3 Replacement Program, with the project expected to be completed in Q4 2021.
Key Highlights
- 1Reported a significant turnaround in net earnings attributable to common shareholders, swinging from a loss of $1.43 billion in Q1 2020 to a profit of $1.90 billion in Q1 2021.
- 2Earnings per share (EPS) improved dramatically to $0.94 (diluted) from a loss of $0.71 (diluted) in the prior year's comparable quarter.
- 3EBITDA for the Liquids Pipelines segment increased substantially to $2.04 billion, up from $0.85 billion in Q1 2020, driven by higher throughput and favorable hedging.
- 4The Gas Transmission and Midstream segment's EBITDA improved by $2.1 billion year-over-year, primarily due to the absence of significant impairment charges recognized in Q1 2020.
- 5Total operating revenues remained relatively stable at $12.19 billion, but operating income saw a strong increase to $2.55 billion due to lower operating expenses.
- 6The US Line 3 Replacement Program in Minnesota is over half complete and on schedule for an expected Q4 2021 in-service date.
- 7Enbridge successfully executed several financing activities, including entering into a sustainability-linked credit facility and closing its inaugural SOFR-based Floating Rate Note offering, strengthening its liquidity position.