An anonymous director reports
ENBRIDGE INCOME FUND HOLDINGS INC. REPORTS 2018 THIRD QUARTER RESULTS
Enbridge Income Fund Holdings Inc. has provided its third quarter 2018 financial results and has provided a quarterly business update.
Third quarter highlights
-
Loss of $30-million or 17 cents per common share for the third quarter and earnings of $544-million or $3.10 per common share for the nine-month period, materially impacted by a non-operating factor as a result of the adoption of a new international financial reporting standards (IFRS) accounting policy in 2018;
-
Adjusted earnings of $113-million or 64 cents per common share for the third quarter and $337-million or $1.93 per common share for the nine months ended Sept. 30, 2018;
-
Fund group distributable cash flow (DCF) of $716-million for the third quarter, up 47 per cent compared with the third quarter of 2017;
-
Line 3 replacement construction continues to progress in Canada; permitting process advancing in Minnesota and construction complete in Wisconsin;
-
Entered into a definitive arrangement agreement under which Enbridge Inc. will acquire all of the issued and outstanding public common shares of the company, subject to the approval of Enbridge Income shareholders and other conditions precedent.
Financial results
The company reported financial results for the three and nine months ended Sept. 30, 2018, compared with the same periods in 2017, as summarized in the attached table.
(millions of Canadian dollars)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2018 2017 2018 2017
Earnings/(loss) $(30) $68 $544 $(77)
Earnings/(loss) per common share (0.17) 0.46 3.10 (0.56)
Adjusted earnings 113 77 337 221
Adjusted earnings per common share 0.64 0.52 1.93 1.60
EIPLP adjusted EBITDA 923 658 2,741 1,917
Fund group DCF 716 488 2,085 1,411
Fund group payout ratio 72% 86%
GAAP earnings for the third quarter of 2018 decreased by $98-million relative to the same period in 2017 due to a non-operating factor, specifically the adoption of a new IFRS (international financial reporting standards) accounting policy on Jan. 1, 2018, resulting in gains and losses arising from changes in the fair value of the company's investment in Enbridge Income Fund being recognized in earnings, rather than in other comprehensive income. Excluding this non-operating factor, adjusted earnings for the third quarter increased by $36-million compared with the same period in 2017 as a result of a higher number of ordinary trust units of the fund held by the company and an increase in the fund unit distribution in January, 2018.
EIPLP adjusted EBITDA was up by $265-million in the third quarter of 2018 relative to the prior year. Period-over-period growth was driven largely by increased tolls, higher throughput, more favourable realized foreign exchange hedge settlements on the Canadian Mainline and by incremental earnings from new projects within the regional oil sands system that were brought into service in the fourth quarter 2017. Alliance pipeline and the fund group's portfolio of green power assets also contributed to EBITDA growth.
Fund group DCF increased as a result of the same factors noted above. The fund group, which collectively refers to EIPLP and its subsidiaries and investees, the fund and Enbridge Commercial Trust, continues to expect that full-year results are trending toward the upper end of the DCF guidance range of $2.45-billion to $2.65-billion.
The company holds a 70.9-per-cent fund unit interest in the fund and an approximate 21.8-per-cent overall economic interest in the fund group.
Project update
The Canadian Line 3 replacement program involves the replacement of the existing Line 3 crude oil pipeline between Hardisty, Alta., and Gretna, Man. It is currently under construction with over 60 per cent of the pipeline now laid. The U.S. Line 3 replacement program is being executed by Enbridge Energy Partners LP (EEP) and will replace the existing Line 3 replacement program between Neche, N.D., and Superior, Wis. Construction in Wisconsin is now complete, and EEP is in the process of obtaining the appropriate permits for construction in Minnesota. EEP anticipates the receipt of such permits in time to begin construction activities in Minnesota during the first quarter of 2019. The anticipated in-service date for the project is the second half of 2019.
Proposed arrangement to acquire publicly owned Enbridge Income common shares
On Sept. 18, 2018, the company entered into an arrangement agreement under which Enbridge will acquire all of Enbridge Income's outstanding common shares not currently owned by Enbridge. Under the terms of the agreement, each Enbridge Income common share will be exchanged for 0.7350 of an Enbridge common share and cash of not less than 45 cents per Enbridge Income common share. The agreed exchange ratio represents an increase of 9.8 per cent relative to the unaffected Enbridge Income exchange ratio on May 16, 2018, and 11.3 per cent inclusive of the cash component. This proposed arrangement is part of Enbridge's sponsored vehicle restructuring initiative to simplify its corporate structure.
The completion of the proposed arrangement is subject to certain closing conditions, including (i) the approval by 66-2/3rds per cent of the votes cast by Enbridge Income's shareholders present in person or by proxy at a special shareholders meeting called to consider the proposed arrangement, and (ii) by a majority of the votes cast by Enbridge Income's shareholders, present in person or by proxy at the meeting, after excluding the votes cast by Enbridge, its affiliates and certain other related parties. The meeting to vote on the proposed arrangement has been scheduled on Nov. 6, 2018. If the proposed arrangement closes, as expected, before the record date for Enbridge's fourth quarter dividend, expected to be Nov. 15, 2018, to be paid in early December, an Enbridge Income shareholder will receive, as an ENB shareholder, the ENB December dividend and the Enbridge Income dividend to be paid in November to Enbridge Income shareholders of record on Oct. 31, 2018.
EIPLP OPERATING RESULTS
Three months ended Nine months ended
Sept. 30, Sept. 30,
2018 2017 2018 2017
Liquids pipelines -- Average deliveries (thousands of barrels per day)
Canadian Mainline (1) 2,578 2,492 2,613 2,511
Regional oil sands system (2) 1,863 1,329 1,789 1,262
Canadian Mainline international joint tariff (IJT) residual toll (3) $1.92 $1.64 $1.82 $1.58
Canadian Mainline effective FX rate $1.26 $1.07 $1.26 $1.05
Gas pipelines -- average throughput (millions of cubic feet per day)
Alliance Pipeline Canada 1,545 1,530 1,589 1,559
Alliance Pipeline U.S. 1,708 1,643 1,721 1,663
Green power (thousands of megawatt-hours produced)
Wind facilities 484 471 1,911 1,829
Solar facilities 46 51 123 126
Waste heat facilities 23 22 75 72
(1) Canadian Mainline average throughput volume represents deliveries ex-Gretna, Man., which is made up of
United States and Eastern Canada deliveries originating from Western Canada.
(2) Volumes are for the Athabasca mainline, Athabasca Twin, Waupisoo pipeline and Woodland pipeline and
exclude laterals on the regional oil sands system.
(3) U.S. dollars per barrel.
Conference call
The company will hold a joint conference call and webcast on Nov. 2, 2018, at 9 a.m. Eastern Time (7 a.m. Mountain Time) with Enbridge Inc., Enbridge Energy Partners LP and Spectra Energy Partners LP to provide an enterprise wide business update and review 2018 third quarter financial results. Analysts, members of the media and other interested parties can access the call toll-free at 877-930-8043 or within and outside North America at 253-336-7522 using the access code of 6465399 (pound sign). The call will be audio webcast live at the Media-Server website. A webcast replay and podcast will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within 24 hours. The replay will be available for seven days after the call toll-free 855-859-2056 or within and outside North America at 404-537-3406 (access code 6465399 (pound sign)).
The conference call format will include prepared remarks from the executive team followed by a question-and-answer session for the analyst and investor community only. The company's media and investor relations teams will be available after the call for any additional questions.
About Enbridge Income Fund Holdings Inc.
Enbridge Income Fund Holdings, through its investment in the fund, indirectly holds high-quality, low-risk energy infrastructure assets. The fund's assets consist of a portfolio of Canadian liquids transportation and storage businesses, including the Canadian Mainline, the regional oil sands system, the Canadian segment of the Southern Lights pipeline, Class A units entitling the holder to receive defined cash flows from the United States segment of the Southern Lights pipeline, a 50-per-cent interest in the Alliance pipeline, which transports natural gas from Canada to the United States, and interests in more than 1,400 megawatts of renewable and alternative power generation assets.
© 2024 Canjex Publishing Ltd. All rights reserved.