01—Abstract
Summary
Summary of the 8-K filed November 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Enbridge Inc. (ENB) reported third quarter 2024 results on November 1, 2024, with GAAP earnings attributable to common shareholders of C$1.3 billiona (C$0.59 per share), up sharply from C$532 million (C$0.26) a year earlier.
That increase was driven largely by a non-cash unrealized derivative fair value gain of C$112 millionb versus a C$782 million loss in 2023, and the absence of a C$124 million litigation provision. On a normalized basis, adjusted earnings fell 6% to C$1.2 billion (C$0.55 per share, down from C$0.62), reflecting higher interest expense and depreciation tied to the U.S. utility acquisitions, while adjusted EBITDA rose 8% to C$4.2 billion and DCF was flat at C$2.6 billion. The quarter's most significant development was the closing of the Public Service Company of North Carolina acquisition on September 30, 2024 for about US$3.2 billion including US$1.3 billion of assumed debt, completing the three-utility U.S. gas distribution acquisition announced in September 2023.
Management reaffirmed 2024 guidance, expecting to finish near the top of the C$17.7c–18.3 billion EBITDA range and around the midpoint of the DCF per share range. Enbridge also reaffirmed its 2023–2026 outlook of 7–9% adjusted EBITDA growth, 4–6% adjusted EPS growth and roughly 3% DCF per share growth, and exited the quarter with a Debt-to-EBITDA ratio of 4.9x, which management expects to improve through 2025. Growth activity remained active: the secured growth backlog reached US$27 billion after adding the Canyon System Pipelines (about US$0.7 billion, supporting bp's Kaskida development), the Sequoia Solar project (815 MW, about US$1.1 billion, substantially contracted with AT&T and Toyota), and phase three of Fox Squirrel Solar.
Enbridge also acquired a 15% interest in the Delaware Basin Residue system and closed additional docks and land adjacent to the Ingleside Energy Center for about US$0.2 billiond. The company declared its regular quarterly common dividend of C$0.915 per share, payable December 1, 2024.
02—Key points
Key Highlights
- GAAP earnings attributable to common shareholders of C$1.3B (C$0.59/share) vs. C$532M (C$0.26/share) in Q3 2023, helped by a C$112M unrealized derivative gain and no repeat of a C$124M litigation provision.
- Adjusted earnings of C$1.2B (C$0.55/share), down from C$0.62, mainly due to higher interest expense and depreciation from the U.S. utility acquisitions; adjusted EBITDA rose 8% to C$4.2B.
- DCF of C$2.6B, in line with prior year; 2024 guidance reaffirmed with EBITDA expected near the top of the C$17.7–18.3B range and DCF per share near the midpoint.
- Closed the ~US$3.2B PSNC (Enbridge Gas North Carolina) acquisition on September 30, 2024, completing the three-utility U.S. gas distribution deal, which serves ~600,000 customers.
- Secured growth backlog of US$27B after adding Canyon System Pipelines (~US$0.7B), Sequoia Solar (815 MW, ~US$1.1B) and Fox Squirrel phase three (US$168M Enbridge share).
- Debt-to-EBITDA of 4.9x at quarter end, with management expecting improvement through 2025 as acquired EBITDA contributes; 2023–2026 outlook of 7–9% EBITDA growth and 4–6% adjusted EPS growth reaffirmed.
- Quarterly common dividend of C$0.915 per share declared, payable December 1, 2024, continuing a 29-year dividend growth record referenced by management.
03—Questions
Frequently Asked Questions
Why did GAAP earnings rise sharply while adjusted earnings declined?
GAAP earnings were boosted by a non-cash unrealized derivative fair value gain of C$112M in 2024 versus a C$782M loss in 2023, plus the absence of a C$124M litigation provision. Adjusted earnings strip out these items and fell C$80M to C$1.2B because higher interest expense on acquisition debt and higher depreciation from new assets outweighed the 8% growth in adjusted EBITDA.
Has the U.S. utility acquisition been completed, and what did it cost?
Yes. The PSNC acquisition closed on September 30, 2024 for approximately US$3.2B, including US$1.3B of assumed debt. This completes the three U.S. gas utility acquisitions from Dominion Energy first announced in September 2023. Management expects these assets to offer an approximately 8% rate base CAGR through 2027.
Is Enbridge on track to meet its 2024 guidance, and how is leverage trending?
Enbridge reaffirmed 2024 guidance and expects EBITDA near the top of the C$17.7–18.3B range and DCF per share around the midpoint. Results through nine months are in line with expectations. Debt-to-EBITDA ended the quarter at 4.9x, and management expects annualized EBITDA from the acquisitions to strengthen this ratio through 2025.
What new growth projects were added, and how will they be funded?
New backlog additions include the Canyon System Pipelines (~US$0.7B, in service 2029, supporting bp's Kaskida development), the 815 MW Sequoia Solar project (~US$1.1B, phased in 2025–2026, contracted with AT&T and Toyota), and phase three of Fox Squirrel Solar (177 MW, Enbridge funding US$168M). Management says the secured growth program will be financed entirely through the company's C$8–9B of annual growth capital capacity under its equity self-funding model.
Are there any risks investors should weigh from this report?
Key risks include higher financing costs from elevated debt and rates, which pressured adjusted earnings and DCF this quarter; per-share dilution from the 2023 bought deal and 2024 ATM equity issuances; and the reliance on the acquired utilities' execution and regulatory outcomes. GAAP results are also volatile due to mark-to-market derivative swings. Forward-looking statements carry the usual exposure to commodity prices, interest rates, FX, and project timing.
04—Continue