Enbridge, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Advocacy and Infrastructure: Actively engaging with policymakers and regulators in Canada and the U.S. to advocate for new infrastructure to meet growing energy demand and exports.
• First Quarter Highlights: Record EBITDA, DCF per share, and earnings per share driven by contributions from acquired U.S. utilities and strong overall volumes. The first quarter was a record for Enbridge.
• Execution and Growth: Secured $3 billion of accretive, low-risk projects year-to-date. Sanctioned projects include the Traverse Pipeline, Birch Grove expansion on the T-North system, and up to $2 billion investment in mainline optimization.
• Business Unit Updates:
  • Liquids: Mainline delivered record volumes, with plans for mainline optimization and expansion to support West Coast LNG.
  • Gas Transmission: Expanding Permian franchise with acquisitions like Matterhorn Pipeline and Ridgeline Expansion, and strong demand for gas storage assets.
  • Gas Utility Business: First year owning U.S. utilities, with rate cases in multiple jurisdictions and growth in regulated markets.
  • Renewable Power: Orange Grove Solar in service, with plans to place over 500 megawatts of solar into service this year and late-stage development projects in renewables.

Segment Performance

• Liquids Pipelines: Delivered record first quarter volumes of almost 3.2 million barrels per day. Plan to invest up to $2 billion in mainline optimization to support operational efficiencies and extend asset life. Revenue contribution from liquids pipelines is driven by high volumes and mainline toll escalators.
• Gas Transmission: Revised rates at Algonquin, Texas Eastern, and Maritime's Northeast contributed to higher results. Gas transmission was up 13% from the previous year, benefiting from new projects like the Ridgeline Expansion and acquisitions like the Whistler JV and DBR system. Revenue contribution from gas transmission comes from various rate adjustments and project contributions.
• Gas Distribution and Storage: Realized full quarter contributions from all three U.S. gas utilities acquired in 2024, driving significant year-over-year growth. In Ontario, customer growth and rate increases alongside colder weather led to a $170 million EBITDA increase. Revenue contribution from gas distribution is boosted by utility acquisitions and customer growth in regulated markets.
• Renewable Power: The 130-megawatt Orange Grove Solar facility entered service on time and on budget. Expect to place over 500 megawatts of solar into service this year, backed by investment-grade customers. Revenue contribution from renewables is influenced by project completions and regulatory environments for renewable projects.

Guidance

• Reaffirmed 2025 financial guidance, stating no material impact from tariffs on financial results. Strong first quarter performance positions Enbridge to hit financial guidance for the 20th consecutive year. Potential upside from recent Matterhorn acquisition and FX rates, but monitoring US interest rates as they are slightly higher than projected. The resilient business model continues to deliver predictable results across cycles.

Risks

• Volatility in financial and commodity prices.
• Impact of trade tensions and tariffs, though expected to have negligible impact on financial results.
• Regulatory and policy uncertainties affecting renewable projects, particularly in the dynamic policy landscape for renewables.

Question and Answer

Q: Aaron MacNeil asked about advocacy efforts and permitting reform in Canada and the U.S.

A: Greg Ebel expressed enthusiasm for permitting reform, noting readiness to act when policies are in place to support energy infrastructure development.

Q: Jeremy Tonet inquired about natural gas pipeline opportunities for power demand and quarterly allocation.

A: Greg Ebel and Cynthia Hansen discussed ongoing natural gas-to-power projects, with 5 gigawatts of secured serving natural gas-to-power plants, and Pat Murray explained that quarterly allocation is illustrative and not formal guidance, with a strong first quarter positioning the company.

Q: Robert Catellier asked about permitting alternative arrangements and Permian production impact.

A: Greg Ebel discussed varied views on permitting alternative arrangements, and Colin Gruending noted Enbridge's resilient business model in the Permian with alignment on capital deployment with joint venture partners.

Q: Theresa Chen asked about WCSB egress working group goals and industry path forward.

A: Greg Ebel outlined engaging with the Canadian government, addressing carbon tax and emission caps, and indigenous loan guarantees as near and medium-term goals, with alignment on industry progress despite geopolitical volatility.

Q: Ben Pham asked about sanctioning projects and human capital constraints.

A: Greg Ebel and Pat Murray stated that sanctioning is across all business units, with no current human capital constraints, and a focus on managing human capital while executing on projects.

Q: Manav Gupta asked about acquisition of U.S. utilities and 2025 guidance.

A: Greg Ebel and Michele Harradence discussed strong performance of acquired U.S. utilities, with integration ongoing and positive growth, and reaffirmed 2025 guidance with a robust first quarter.

Q: Praneeth Satish asked about Texas Eastern and Homer City data center project.

A: Cynthia Hansen noted ongoing discussions with developers for data center projects, with Texas Eastern having underutilized receipt points and opportunities for expansion.

Q: Maurice Choy asked about U.S. crude oil exports and Ontario regulators' position.

A: Colin Gruending and Greg Ebel discussed continued belief in export solutions, with Enbridge adding elements like storage and docks at Ingleside, and Michele Harradence explained Ontario regulators' framework and focus on best risk-adjusted returns for utility capital allocation