Enbridge, Inc. Q1 FY2026 earnings call

• First quarter was a strong start with solid financial performance and continued execution. - Reaffirmed 26 guidance and medium-term outlook, operating in line with 4.5 to 5 times debt to EBITDA target. - High utilization across all businesses, record Q1 mainline volumes, and numerous peak delivery days on U.S. gas transmission and distribution systems. - Completed seventh expansion of tank storage at Ingleside and brought Grey Oak expansion into service. - Announced open seasons on Flanagan South and southern access extension pipelines, and completed successful open season on Spearhead pipeline. - Sanctioned projects in gas transmission, including expansions to Trace Palacios natural gas storage and vector pipeline, and announced expansion of unregulated natural gas storage at Enbridge Gas Ontario and 300-megawatt Cone Power Project. - Liquids pipelines advancing mainline optimization phase two, with record volumes and early construction activities on Line 5 relocation project. - Gas transmission executing well across system, with projects like Trace Palacios expansion, vector pipeline expansion, and Sunrise expansion in Canada. - Gas distribution sanctioning unregulated natural gas storage expansion, filing rate case in Ohio, and utilities expected to grow rate-based by 5% annually through 2029. - Renewables business progressing with disciplined focus on high-quality projects anchored by blue-chip customers.

Liquids pipelines: Record first quarter volumes of 3.2 million barrels per day; absence of litigation settlement, lower contributions from market access pipelines, and lower Line 9 tolls led to decrease compared to Q1 2025. Gas transmission: Favorable contracting on U.S. gas transmission assets and strong storage results drove year-over-year increase in EBITDA. Gas distribution: Increased year-over-year after recent rate cases in Utah and North Carolina took effect, and from rate escalators in Ontario. Renewables: Results lower compared to last year due to absence of investment tax credits relating to the Fox Squirrel solar project, partially offset by strong international wind resources in Q1 2026. Revenue contribution details not explicitly broken down by percentage in the provided text.

• Reaffirmed 2026 guidance shared last December. - On track to achieve midpoints of guidance ranges for EBITDA and DCF per share. - Reaffirming post-2026 growth outlook of 5% average annual growth rate for EBITDA, DCF per share, and EPS. - Q1 and Q4 are strongest quarters due to higher utility demand and higher volumes in liquids pipelines and gas transmission systems during winter months.

• Market volatility and geopolitical uncertainties can impact energy markets and business operations. - Legal challenges related to projects like Line 5, including permitting and tribal engagement, can affect project timelines and costs. - Fluctuations in foreign exchange rates can impact financial performance. - Dependence on regulated and long-term contractual frameworks, and any changes in these frameworks could affect cash flows.

Q: Last quarter, there was a slide highlighting 10 to 20 billion of near-term growth opportunities, with a focus on export optionality at Ingleside and recent acquisition of Flint hills docks. Are you seeing a measurable increase in inbound inquiries for incremental export capacity to Ingleside? And would you expect export growth to pull through additional pipeline to bottlenecking upstream, or is the sequencing the other way around?

A: It's Colin, short answer is yes. Saw some in April, May, June. Expect a lot more business on capital efficient basis. Purchased neighboring docks, got permitting headroom, finished storage expansion at Ingleside.

Q: On the crude oil business, how are you thinking about the competitive positionings of MLO2, MLO3 versus competing options like Prairie Connector and Trans Mountain system?

A: MLO2 is well engineered, relatively advanced on scope, capital costs well understood, actively engaged with customers, permit light, executable. MLO3 still developing with seven pipelines in right of way and amended US presidential permits.

Q: On Line 5, can you add more color on legal challenges on the tunnel and construction in Wisconsin?

A: Line 5 needs to be critical energy. Operating safely. In Wisconsin, advancing 41-mile relocation to discontinue operation across Bad River Reservation, with state and federal permits, easements, and pre-construction activities. Project cost approaching US $900 million. In Michigan, awaiting state and federal permits for tunnel.

Q: On the first quarter performance, how much of it exceeded internal expectations and ability to capture upside volatility for the rest of the year?

A: There are a couple of areas benefiting from weather on the edges of the business model, like in Ontario, Aiken Creek, and interruptible service on gas pipes, totaling a couple of pennies in the quarter. Will monitor in second quarter.

Q: On the Permian, how are you thinking about the need for more egress and Enbridge's potential involvement in more expansions there?

A: Agree with bullishness in Permian, we seem to fill up every pipeline industry-wide when they open valves. Pursuing more opportunities, including in whitewater and gas egress side.

Q: Greg mentioned being constructive on the Permian, and gas coming out of the ground. Thoughts on need for more egress and Enbridge's involvement?

A: There are opportunities, we are pursuing them, with interests in whitewater assets and pipelines coming into service, and focus on storage and LNG crowd.

Q: Greg mentioned best growth opportunities in 10-15 years, and how returns compare today versus past, and incremental value chain additions.

A: Increased need for energy, energy security, tech and power growth, low mid-teen type returns on projects like storage or LNG, and solid growth in rate base on utility side. Enbridge's franchises are sufficient with focus on various businesses.

Q: On gas storage side, thoughts on opportunity set and interest in LNG assets?

A: Gas storage assets and expansion program, fundamentals show need to catch up on storage, with almost 50 BCF under construction in Gulf Coast and 40 BCF in Aitkin Creek. Interest in LNG assets, but with lower risk and toll-based model.

Q: On gas transmission contracting framework, relates to rates, term, end markets, and geographies?

A: On storage side, seeing long-term contracts, like half the capacity at Aiken being 10-year contracts. Customer side not wanting to be caught short in opportunistically rich environment.

Q: On rate case strategy in Ohio, how has regulatory strategy evolved?

A: Filed new rate case in December, seeking to recover revenues to pay operating expenses, service debt, with material changes since last rate case, in discovery stage with staff's report expected in July.

Q: When will you update on guidance beyond 2026?

A: Expect to have another investor day in fall or early spring to update, having added $17 billion to sanctioned backlog since last investor day.

Q: On robust outlook for crude exports over Gulf Coast and political intervention risk, steps to protect franchise and commercial protections?

A: Secretary of Energy has said not looking at banning or capping export levels, well attuned to administration, successfully contracted on Grey Oak.

Q: On balance sheet, still expecting to remain within 4.5 to 5 times debt to EBITDA range?

A: Still comfortable with the range, expecting to be in upper half for next couple of years due to large build in front, but capital coming in 2027 and 2028 will help bring ratios back to midpoint.

Q: On growing partnership with Meta and views on policy changes to expedite projects in Canada?

A: Meta relationship expected to grow, with trust foundation. On Canada, positive words and actions, expecting policy changes to expedite projects to serve the world as energy superpower.