Why did GAAP earnings decline in 2024 even though adjusted earnings were stable?

GAAP earnings attributable to common shareholders fell to C$5.1 billion (C$2.34/share) from C$5.8 billion (C$2.84/share). The decline was primarily due to non-cash unrealized losses on derivatives used to hedge foreign exchange, interest rate and commodity risks (C$2.2 billion for the year) and the absence of 2023's non-cash gains from discontinuing rate-regulated accounting for Southern Lights. These were partly offset by a C$1.1 billion gain on the sale of the Alliance and Aux Sable interests. Adjusted earnings strip out these items and rose to C$6.0 billion (C$2.80/share).

Is the 2025 guidance still on track despite tariff uncertainty?

Yes. Enbridge reaffirmed 2025 guidance of C$19.4-20.0 billion in adjusted EBITDA and C$5.50-5.90 in DCF per share. Management said proposed U.S. tariffs on energy imports are not expected to be material to this guidance. Growth in 2025 is expected to come mainly from annualized contributions of the acquisitions, projects placed into service in 2024, and the TETLP rate settlement.

How is Enbridge funding its growth program and what is the leverage outlook?

Enbridge is funding its secured growth capital within an equity self-funding model, with financing expected to come from its anticipated C$8-9 billion of annual growth capital investable capacity. Debt-to-EBITDA ended 2024 at 5.0x, but this metric includes only partial-year acquisition EBITDA and was inflated by about 0.2x from U.S. dollar debt translation. Management expects it to move toward the 4.5-5.0x target midpoint during 2025 as annualized acquisition EBITDA flows through.

Is the dividend safe and how much is it growing?

The dividend was raised 3.0% to C$0.9425 per quarter (C$3.77 annualized), payable March 1, 2025 to holders of record on February 14, 2025. This marks the 30th consecutive annual increase. Dividend growth is tied to DCF per share growth, and the company's outlook calls for about 3% DCF per share growth through 2026, consistent with the modest dividend increase. The company also has a stated track record of meeting or exceeding guidance for 19 consecutive years.

What are the key risks or catalysts to watch in 2025?

Key catalysts include the Ontario Energy Board's expected decision in the first half of 2025 on Enbridge Gas Ontario's unresolved Phase 2 rebasing issues, FERC approval of the Algonquin and Maritimes & Northeast Pipeline settlements (filings expected in Q1 2025), and closing of the East-West Tie Line sale (expected 1H 2025, about C$129 million). Ongoing risks include the sensitivity of GAAP earnings to non-cash derivative mark-to-market swings, weather impacts on Enbridge Gas Ontario volumes, and the execution and in-service timing of the roughly C$26 billion secured growth backlog.

ENBRIDGE INC 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 14, 2025. Cited figures are marked; the original filing is the authoritative source.

Enbridge Inc. (ENB) reported record full-year 2024 results in its February 14, 2025 earnings release, with adjusted EBITDA up 13% to C$18.6 billion^a and DCF up 6% to C$12.0 billion, driven largely by the completed C$19 billion acquisition of three U.S. gas utilities (Dominion Energy's Ohio, Utah and North Carolina businesses).

GAAP earnings attributable to common shareholders fell to C$5.1 billion^b (C$2.34 per share) from C$5.8 billion, primarily due to non-cash unrealized derivative losses on foreign exchange, interest rate and commodity hedges. Adjusted earnings rose modestly to C$6.0 billion (C$2.80 per share, versus C$2.79), with per-share growth muted by the equity issued to pre-fund the acquisitions. All figures are unaudited and in Canadian dollars unless otherwise noted.

Management reaffirmed 2025 guidance of C$19.4^c-20.0 billion adjusted EBITDA and DCF per share of C$5.50-5.90, and reaffirmed its 2023-2026 outlook of 7-9% adjusted EBITDA growth, 4-6% adjusted EPS growth and roughly 3% DCF per share growth. The quarterly common dividend was raised 3.0% to C$0.9425 (C$3.77 annualized), marking the 30th consecutive annual increase. Enbridge expects annualized acquisition contributions to bring Debt-to-EBITDA (5.0x at year-end, including only partial-year acquisition EBITDA) toward the midpoint of its 4.5-5.0x target range during 2025.

The company stated that proposed U.S. tariffs on energy imports are not expected to be material to its guidance, and it continues to fund growth through its equity self-funding model. The release also highlights a secured growth backlog of roughly C$26 billion^d, approximately C$5 billion of projects placed into service in 2024, and about C$8 billion of new projects sanctioned, including Tennessee Ridgeline and Permian/Gulf Coast investments.

Portfolio actions included the sale of the 24% East-West Tie Line interest for about C$129 million (closing expected in 1H 2025), the divestiture of Alliance Pipeline and Aux Sable interests in April 2024, and settlements in principle on Algonquin and Maritimes & Northeast pipeline rates. Key items to monitor include the pending OEB decision on Enbridge Gas Ontario's unresolved Phase 2 rebasing issues in 1H 2025, FERC approval of the pipeline settlements, and the sensitivity of GAAP earnings to mark-to-market derivative swings.

02—Key points

Key Highlights

Record 2024 adjusted EBITDA of C$18.6 billion, up 13% from C$16.5 billion, driven largely by contributions from the C$19 billion U.S. gas utility acquisitions.
Full-year GAAP EPS fell to C$2.34 from C$2.84, mainly due to non-cash unrealized derivative losses and the absence of 2023 discontinued rate-regulated accounting gains; adjusted EPS was roughly flat at C$2.80 versus C$2.79.
Full-year DCF rose 6% to C$12.0 billion; DCF per share guidance for 2025 is C$5.50-5.90 and was reaffirmed.
2025 guidance reaffirmed: adjusted EBITDA of C$19.4-20.0 billion, with a 2023-2026 outlook of 7-9% EBITDA growth, 4-6% adjusted EPS growth and ~3% DCF per share growth.
Quarterly common dividend increased 3.0% to C$0.9425 (C$3.77 annualized), the 30th consecutive annual increase.
Secured growth backlog of approximately C$26 billion after roughly C$8 billion of new sanctions and C$5 billion placed in service in 2024.
Debt-to-EBITDA of 5.0x at year-end, expected to move toward the 4.5-5.0x target midpoint through 2025 as acquisition EBITDA annualizes; the company did not issue public debt in Q4 2024.

03—Questions

Frequently Asked Questions

Why did GAAP earnings decline in 2024 even though adjusted earnings were stable?
GAAP earnings attributable to common shareholders fell to C$5.1 billion (C$2.34/share) from C$5.8 billion (C$2.84/share). The decline was primarily due to non-cash unrealized losses on derivatives used to hedge foreign exchange, interest rate and commodity risks (C$2.2 billion for the year) and the absence of 2023's non-cash gains from discontinuing rate-regulated accounting for Southern Lights. These were partly offset by a C$1.1 billion gain on the sale of the Alliance and Aux Sable interests. Adjusted earnings strip out these items and rose to C$6.0 billion (C$2.80/share).
Is the 2025 guidance still on track despite tariff uncertainty?
Yes. Enbridge reaffirmed 2025 guidance of C$19.4-20.0 billion in adjusted EBITDA and C$5.50-5.90 in DCF per share. Management said proposed U.S. tariffs on energy imports are not expected to be material to this guidance. Growth in 2025 is expected to come mainly from annualized contributions of the acquisitions, projects placed into service in 2024, and the TETLP rate settlement.
How is Enbridge funding its growth program and what is the leverage outlook?
Enbridge is funding its secured growth capital within an equity self-funding model, with financing expected to come from its anticipated C$8-9 billion of annual growth capital investable capacity. Debt-to-EBITDA ended 2024 at 5.0x, but this metric includes only partial-year acquisition EBITDA and was inflated by about 0.2x from U.S. dollar debt translation. Management expects it to move toward the 4.5-5.0x target midpoint during 2025 as annualized acquisition EBITDA flows through.
Is the dividend safe and how much is it growing?
The dividend was raised 3.0% to C$0.9425 per quarter (C$3.77 annualized), payable March 1, 2025 to holders of record on February 14, 2025. This marks the 30th consecutive annual increase. Dividend growth is tied to DCF per share growth, and the company's outlook calls for about 3% DCF per share growth through 2026, consistent with the modest dividend increase. The company also has a stated track record of meeting or exceeding guidance for 19 consecutive years.
What are the key risks or catalysts to watch in 2025?
Key catalysts include the Ontario Energy Board's expected decision in the first half of 2025 on Enbridge Gas Ontario's unresolved Phase 2 rebasing issues, FERC approval of the Algonquin and Maritimes & Northeast Pipeline settlements (filings expected in Q1 2025), and closing of the East-West Tie Line sale (expected 1H 2025, about C$129 million). Ongoing risks include the sensitivity of GAAP earnings to non-cash derivative mark-to-market swings, weather impacts on Enbridge Gas Ontario volumes, and the execution and in-service timing of the roughly C$26 billion secured growth backlog.

04—Continue

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