Enbridge Announces 2024 Financial Guidance and 3% Dividend Increase

Source Press Release
Company Enbridge Inc. 
Tags Capital Spending, Guidance, Strategy - Corporate, Financial & Operating Data
Date November 29, 2023

Enbridge Inc. (Enbridge or the Company) (TSX: ENB) (NYSE: ENB) announced today its 2024 financial guidance and an annualized common share dividend increase from $3.55 to $3.66 per share effective March 1, 2024.

HIGHLIGHTS

(All financial figures are unaudited and in Canadian dollars unless otherwise noted. * identifies non-GAAP financial measures. See the Non-GAAP and Other Financial Measures section of this news release)

  • Announced 2024 adjusted earnings before interest, income taxes and depreciation (EBITDA)* guidance on base business1 of $16.6 billion to $17.2 billion and distributable cash flow (DCF)* per share of $5.40 to $5.80. This excludes EBITDA and DCF contributions from the gas utilities acquisitions announced on September 5, 2023 (the "Acquisitions"), which are expected to close during 2024 
  • The Company expects its 2024 base business1 EBITDA to grow by more than 4% and its DCF to increase by approximately 3% compared to the midpoint of its 2023 guidance 
  • Declared 29th consecutive annual common share dividend increase, raising it by 3.1% to $0.915 per quarter ($3.66 annualized), effective March 1, 2024
  • Reaffirmed 2023 full year guidance for EBITDA and DCF, inclusive of the recent share offering dilution

2024 FINANCIAL GUIDANCE PARAMETERS

All figures, including EBITDA, DCF, capital expenditures, share counts, debt issuances and financial derivative figures, unless specified otherwise, in this news release are presented excluding the impact of the Acquisitions1.

CEO COMMENT

Commenting on the Company's outlook, Greg Ebel, President and CEO of Enbridge, noted the following:

"As the world's demand for energy continues to grow, Enbridge remains committed to meeting these needs by delivering safe, affordable, reliable, and sustainable energy. We understand the critical role we play in powering communities and economies, and we are dedicated to expanding our infrastructure to ensure energy accessibility for all. Enbridge will continue to innovate and invest in the infrastructure required to strengthen our position as the first-choice energy delivery provider in North America and beyond.""

We're excited to provide details on the visible growth across each of our core business units. Given that we expect to realize only partial year contributions from the Acquisitions, we are issuing our guidance on the base business and excluding the impact of any contributions related to them. As indicated previously, we anticipate closing all three gas utility acquisitions by the end of 2024.

"Our 2024 guidance showcases the predictability and strength of our four core businesses. The growth is attributable to the capital we've placed into service in 2023, over $3 billion of tuck-in acquisitions, embedded revenue escalators and optimization of the base business. In 2024, we expect our base business to generate EBITDA between $16.6 and $17.2 billion. This range reflects over 4% growth relative to the midpoint of our 2023 guidance range and is right in line with what we presented at our annual investor day earlier this year.

"Growing our dividend remains an important component of our investor value proposition. We are pleased to announce that Enbridge is increasing its dividend by 3% marking our 29th consecutive annual increase. We remain committed to annual dividend growth consistent with our medium-term distributable cash flow outlook and keeping our dividend payout ratio within 60-70% of DCF."

Enbridge remains well positioned to continue delivering predictable growth well into the future. Since the start of this year, we have secured an additional $7 billion of attractive, organic projects, which increased our secured backlog to $25 billion and added over $3 billion of highly strategic, accretive tuck-in acquisitions.

"Finally, we continue to make great progress towards closing the Acquisitions next year. We have secured funding for over 75% of the aggregate purchase price and will finance the remainder using a combination of tools at our disposal while keeping our debt-to-EBITDA ratio within our stated 4.5x to 5.0x target range. This could include our ongoing capital recycling program, senior and subordinated debt issuances, reinstatement of our DRIP program, and at-the-market equity issuances."

2024 FINANCIAL OUTLOOK

Enbridge is providing 2024 guidance on its base business of EBITDA of $16.6 billion to $17.2 billion and DCF per share of between $5.40 to $5.80. In addition to the information provided below, the Company has posted supporting materials to the Investor Relations section of the Enbridge Inc. website (link).    

EBITDA Guidance on base business1,2

($ millions)3  2024e  Key Growth Drivers vs. 2023 
Liquids Pipelines  ~$9,300  •     Strong system utilization; partially offset by a lower Mainline toll 
Gas Transmission & Midstream  ~$4,700  •     Morrow Renewables, Aitken Creek, Tres Palacios •     Venice Extension partial year contributions •     Lower O&A and favorable re-contracting 
Gas Distribution & Storage  ~$2,100  •     Customer additions & rate rebasing 
Renewable Power Generation  ~$600  •     Hohe See/Albatros; Fécamp & PGL in service 
Energy Services  ~$-   
Eliminations & Other  ~$200  •     Impact of foreign exchange hedge program 
Adjusted EBITDA4  $16,600-$17,200   

(1) Sensitivities included within supporting materials (2) Guidance excludes impact of pre-funding of the Acquisitions, which includes the $4.6 billion equity issuance on September 5, 2023, and the US$2.0 billion and C$1.0 billion of hybrid bond issuances in September 2023. In addition to funding requirements, all DCF/EBITDA contributions from the related Acquisitions have been excluded along-side any maintenance and growth capital requirements. (3) Assumes CAD/USD of $1.35 in 2024 (4) Non-GAAP financial measures. See the Non-GAAP and Other Financial Measures section of this news release. 

2024 EBITDA guidance is underpinned by expected strong utilization across the base businesses' annualized contributions from $3 billion of investments anticipated to be placed into service in 2023, partial year contributions from $4 billion of investments expected to be placed into service in 2024 and contributions from the more than $3 billion of tuck-in acquisitions announced in 2023.

DCF Guidance on base business1

($ millions) 2  2024e 
Adjusted EBITDA3  $16,600-$17,200 
   Maintenance Capital  ~$(1,000) 
   Financing Costs  ~$(4,100) 
   Current Income Taxes  ~$(750) 
   Distributions to Non-Controlling Interests  ~$(350) 
   Cash Distributions in Excess of Equity Earnings  ~$600 
   Other Non-Cash Adjustments  ~$100 
Distributable Cash Flow (DCF) 3  $11,000-$11,800 
DCF/Share Guidance3,4  $5.40-$5.80 

(1) Sensitivities included within supporting materials (2) Assumes CAD/USD of $1.35 in 2024 (3) Non-GAAP financial measures. See the Non-GAAP and Other Financial Measures section of this news release (4) On approximately 2,025 million shares outstanding. 

To mitigate against cash flow volatility, the Company has substantially hedged its budgeted 2024 USD DCF exposure.

DCF per share guidance reflects higher interest rates on planned new fixed-rate financings and outstanding floating-rate debt. Enbridge will continue to actively manage this exposure through its hedging program and expects to enter 2024 with less than 10% of the debt portfolio exposed to interest rate variability.

All three Acquisitions are expected to close in 2024 and provide partial year EBITDA contributions which have been excluded from guidance ranges. The Acquisitions are expected to be accretive to per share metrics in their first full year of ownership in 2025.

Dividend Increase

Enbridge announces that the quarterly common share dividend for 2024 will be increased by 3.1% from $0.8875 to $0.915 per common share, commencing with the dividend payable on March 1, 2024, to shareholders of record on February 15, 2024.

Capital Investments and Financing Plan

Enbridge expects to deploy approximately $6 billion of capital in 2024, inclusive of maintenance capital. The balance sheet will remain strong with the Debt-to-EBITDA ratio* at the end of 2024 expected to be in the middle of the Company's 4.5-5.0x target range. The financing plan includes approximately $8 billion of debt issuances in 2024 which is substantially earmarked for the refinancing of $7 billion of debt maturities. The Company has hedged a portion of its anticipated fixed-rate term-debt issuances for 2024.

Enbridge Day and Outlook

At Enbridge's annual investor day conference planned for March 6, 2024, in New York, Management will discuss energy fundamentals, the Company's competitive position, its strategic priorities, its capital allocation priorities and the longer-term outlook.

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd