Enbridge Inc. · TSX:ENB
Enbridge — Q1 2015 Earnings Presentation
27 slides from Enbridge's earnings presentation, 2015
Slide 1: 2015 First Quarter Financial & Strategic Update
BUSINESS UNIT HEADER IMAGE GOES HERE 2015 First Quarter Financial & Strategic Update Al Monaco President & CEO John Whelen Executive Vice President & CFO Guy Jarvis President Liquids Pipelines
Slide 2: Legal Notice
Legal Notice This presentation includes certain forward looking information (FLI) to provide Enbridge shareholders and potential investors with information about Enbridge and management’s assessment of its future plans and operations, which may not be appropriate for other purposes. FLI is typically
Slide 3: Agenda
Agenda • First Quarter Highlights • Financial Review • Business Update - Supporting customers in volatile commodity price environment - Progress on execution of capital program • Outlook 3
Slide 4: Financial Highlights – Adjusted Earnings
Financial Highlights – Adjusted Earnings* (millions) • Q2 - Q4 growth drivers - Liquids throughput $2.35/share - Mainline tolls - $9B in new projects in-service $2.05/share $1.90/share • 2015 Outlook - On track to achieve guidance range - Strong year over year growth $0.60/share $0.56/share $492 $46
Slide 5: Financial Highlights – 2015 Dividend Increase
Financial Highlights – 2015 Dividend Increase 33% DPS increase in 2015; long history of significant dividend growth $2.00 $1.86 $1.50 Dividend per Share $1.00 $0.50 $- 2009 2010 2011 2012 2013 2014 2015 5
Slide 6: Financial Highlights – Optimization Update
Financial Highlights – Optimization Update Optimization value added for ENB and ENF shareholders ENB ENF Accelerate DPS/EPS Canadian growth EIF LP assets Value • Legacy Assets Enhance funding cost • competitiveness Transform EIF/ENF to Revised Adjusted Earnings high growth vehicle Payout Policy 85%
Slide 7: Financial Highlights – Financial Strategy Optimization
Financial Highlights – Financial Strategy Optimization Restructuring on track to close mid-2015 • 10% ENB EPS uplift Reiterated • Revised Payout Policy Expected Timing • 10% ENF DPS CAGR and Benefits Dec 3rd Independent Special March 31st Agreement ENF ENF Mid-2015 Financial Committee Process Formal
Slide 8: 2015 Segmented Adjusted Earnings Variance
2015 Segmented Adjusted Earnings* Variance $ Millions SEGMENT Q1 2014 Adjusted Earnings* $492 Liquids Pipelines (26) Gas Distribution +3 Gas Pipelines, Processing and Energy Services (18) Sponsored Investments +43 Corporate (26) Total Variance (24) 2015 Adjusted Earnings* $468 *Adjusted earnings is
Slide 9: 2015e Adjusted EPS Guidance Outlook
2015e Adjusted EPS* Guidance Outlook Reliable business model intact; Reiterating 2015 guidance Headwinds Line 9 Aux Sable $2.35 Energy Services $2.05 Tailwinds FX Interest Rates Cost Management 2015 Guidance Range *Adjusted earnings is a non-GAAP measure. For more information on non-GAAP measures pl
Slide 10: Enterprise Wide Liquidity
Enterprise Wide Liquidity $ Billions (nominal) 20 $18 Cash Cash 15 Unutilized $8 Billion Capacity Available 10 Facility 5 Facility Usage1 Facility Usage1 Usage1 0 March 31, 2015 1 Includes credit facility draws and undrawn amounts backstopping outstanding commercial paper. 10
Slide 11: Updated Funding Plan (2014-2018)
Updated Funding Plan (2014-2018)* Financing requirements remain very manageable $ Billions Maintenance & Integrity Capital 5.2 Secured Growth Capital 23.5 Risked Growth Capital 9.1 37.8 Cash Flow Net of Dividends (13.7) Net Funding Requirement* 24.1 Debt Equity Total Requirement (2014-2018) 15.7 Tot
Slide 12: Free Cash Flow
Free Cash Flow1 Strong free cash flow1 growth and dividend coverage Free Cash Flow Per Share1,2 Growth 2015e Dividend Coverage4 Peers Enbridge Maintenance and Integrity Capital3 Spending Low High 2 Relative Dividend Coverage $ Billions 0 2011 2012 2013 2014 2018E 1 Free cash flow is a non-GAAP measu
Slide 13: Maximizing Value for Customers
Maximizing Value for Customers Competitive tolls, system optimization and new market access adds value for our customers Stable, Competitive Tolls Market Access Initiatives IJT Benchmark Toll** 2011 $3.85 2012 $3.94 2013 $3.98 2014 $4.02 System Optimization Incremental Market Access by 2017: +1.0MMb
Slide 14: Strong Demand for Mainline Capacity
Strong Demand for Mainline Capacity WCSB fundamentals remain strong and continue to support growth on our Mainline WCSB Crude Oil Production Outlook* Quarterly Throughput ex-Gretna 3.0 7,000 6,000 2.5 5,000 2.0 MMbpd 4,000 Q1 2015 Near Term Oil Sands 1.5 2.2 3,000 Projects in Service MMbpd 2,000 201
Slide 15: Business Update – Project Execution
Business Update – Project Execution Major projects expertise delivers value through on time and on budget execution Major Projects Executed1 • Supply chain management • Value engineering process 2014 – Q1 • Capital competitiveness team $8B 2015 < 3% over budget Enbridge Pipe vs. Market Pricing In Ex
Slide 16: Regional Oilsands Optimization
Regional Oilsands Optimization Improves capital efficiency, mitigates throughput risk and lowers tolls for shippers Before Optimization After Optimization $3.0B* $2.6B Expansion from 30” to 36” Expansion to 800kbpd Wood Buffalo Extension Deferral of south segment Athabasca Pipeline Twin * Includes A
Slide 17: Low Cost System Expansion and Extension Opportunities
Low Cost System Expansion and Extension Opportunities Low cost phased expansions are attractive in a low price environment Market Access Opportunities kbpd 1 Eastern Gulf Coast Access 350+ 2 Flanagan South / Seaway Expansions 200 3 Line 9 Expansion 70 2 3 4 3 Ex-Superior Expansion Opportunities kbpd
Slide 18: Project Execution – Edmonton to Hardisty
Project Execution – Edmonton to Hardisty Balances system upstream of Hardisty; supports expansion and market access programs • 36” – 180 km Pipeline Total Secured Capital = - Edmonton to Hardisty $1.8 B - Initial capacity 570 kbpd, expandable to 800 kbpd - $0.25/bbl surcharge - In service April 9, 2
Slide 19: Project Execution – Sandpiper
Project Execution – Sandpiper Stakeholder support for Sandpiper Project in Minnesota • North Dakota approval Total Secured Capital = received June 2014 $2.6 B • ALJ recommends Certificate of Need permit for approval by Minnesota Public Utility Commission (MPUC) • MPUC decision expected in June • Rev
Slide 20: Project Execution – Line 3 Replacement Project
Project Execution – Line 3 Replacement Project • Increases system reliability and flexibility • Status: - NEB application deemed complete - CAEPLA support - Minnesota application filed April 2015 - Land acquisition is at 97% in Canada and 91% in US Total Secured Capital = • In service = 2017 $7.5B 2
Slide 21: Project Execution – Line 9B
Project Execution – Line 9B Total Cost = • Reversal and expansion to $0.7B 300kbpd • Status: - Mechanically complete Oct 15, 2014 - NEB approved condition filings Feb 6, 2015 - Leave to Open filed Feb 6, 2015 • Expected in service Q2 2015 21
Slide 22: Project Execution – GTA Project
Project Execution – GTA Project • Increases capacity and reliability in the GTA and downtown Toronto • Provides additional supply and basin optionality • Construction underway • In service = Q4 2015 Total Cost = $0.8B 22
Slide 23: Growth Capital Program
Growth Capital Program* $ Billions $34B commercially secured by in service date $44 2014 $9.8 Risked unsecured $10 2015 $8.7 2016 $0.9 2017 $14.2 In service 2018 $0.4 In execution 20% Illustrative Return Profiles Commercially “ tilted ” secured $34 15% Equivalent full life DCFROE 10% “ flat ” 5% 0%
Slide 24: Adjusted EPS Growth Outlook
Adjusted EPS* Growth Outlook • Drop down accretion adds ~10% to EPS from 2015 through 2018 - Highly transparent outlook • Extending ENF funding beyond 2018 reinforces other sources of post 2018 growth • Tilted Return Projects • Natural Gas • New Growth Platforms • Liquids Pipelines • Liquids Pipelin
Slide 25: DPS Growth Outlook
DPS Growth Outlook • Drop down accretion and revised payout policy provide 33% increase in 2015, 14%-16% expected growth for 2015 through 2018 • Extended ENF funding beyond 2018 reinforces other sources of post 2018 growth $1.86 • Enhanced EPS growth $1.26 • Surplus cash flow • Extended ENF Funding
Slide 26: Summary
Summary • Q1 adjusted earnings in line with expectations ($0.56/share) • On track to be within 2015 guidance range ($2.05 – 2.35/share) • Robust mainline volume outlook • Execution of capital program progressing well • Industry leading EPS and DPS growth intact through 2018 • Financial strategy opti
Slide 27: Question & Answer Period
BUSINESS UNIT HEADER IMAGE GOES HERE Question & Answer Period