CALGARY, AB, May 10, 2024 /CNW/ - Enbridge Inc. (Enbridge or the Company) (TSX:ENB) (NYSE: ENB) today reported first quarter 2024 financial results, reaffirmed its 2024 financial guidance and provided a quarterly business update. Highlights(All financial figures are unaudited and in Canadian dollars unless otherwise noted. * identifies non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices.) First quarter GAAP earnings of $1.4 billion or $0.67 per common share, compared with GAAP earnings of $1.7 billion or $0.86 per common share in 2023 Adjusted earnings* of $2.0 billion or $0.92 per common share*, an increase of 8% per share, compared with $1.7 billion or $0.85 per common share in 2023 Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA)* of $5.0 billion, an increase of 11%, compared with $4.5 billion in 2023 Excluding the contributions from, and the impact of financing, the U.S. Gas Utilities Acquisitions, Adjusted EBITDA* of $4.8 billion, an increase of 8%, compared with $4.5 billion in 2023 Cash provided by operating activities of $3.2 billion, compared with $3.9 billion in 2023 Distributable cash flow (DCF)* of $3.5 billion, an increase of 9%, compared with $3.2 billion in 2023 Excluding the contributions from, and the impact of financing, the U.S. Gas Utilities Acquisitions, DCF of $3.4 billion an increase of 8%, compared with $3.2 billion in 2023 Reaffirmed 2024 full year financial guidance and reaffirmed the Company's medium-term outlook. The gas utilities acquisitions announced on September 5, 2023 (the "Acquisitions") are not included in the 2024 financial guidance Closed the acquisition of The East Ohio Gas Company ("EOG"), now doing business as Enbridge Gas Ohio, from Dominion Energy Inc. on March 6, 2024 for a purchase price of US$6.6 billion (including US$2.3 billion of assumed debt) Received approval of the Mainline Tolling Settlement ("MTS") from the Canada Energy Regulator ("CER") on March 4, 2024, after unanimous industry approval Announced definitive agreement with WhiteWater/I Squared Capital ("WhiteWater/I Squared") and MPLX LP ("MPLX") to form a joint venture (the "Whistler Parent JV") that will develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing Liquefied Natural Gas ("LNG") and other U.S. Gulf Coast demand Sanctioned the previously announced Tennessee Ridgeline Expansion, a US$1.1 billion natural gas pipeline which will deliver natural gas to the Tennessee Valley Authority's recently announced gas-fired generation plant in Kingston, Tennessee Closed the previously announced sale of Enbridge's interests in Alliance Pipeline ("Alliance") and Aux Sable to Pembina Pipeline Corporation on April 1, 2024 for proceeds of $3.1 billion Launched a binding open season on Gray Oak Pipeline for up to 120 kbpd of expanded capacity Sanctioned 2.5 million barrels of additional storage at Enbridge Ingleside Energy Center ("EIEC"), for ~US$0.1 billion Signed an agreement to acquire 2 marine docks and land from Flint Hills Resources, adjacent to the EIEC terminal for ~US$0.2 billion Sanctioned construction of U.S. Gulf Coast offshore pipelines to service Shell and Equinor's Sparta development for ~US$0.2 billion Issued 23rd Sustainability Report, demonstrating the Company's continued commitment to reconciliation, social governance, and environmental stewardship. Exited the quarter with Debt-to-EBITDA of 4.7x, in the middle of the target range of 4.5x to 5.0x; Enbridge expects annualized EBITDA contributions from the US$14 billion of Acquisitions in 2024 to strengthen Enbridge's Debt-to-EBITDA position throughout 2025 CEO COMMENTGreg Ebel, President and CEO commented the following: "We are pleased to announce a very solid start to 2024. The continued need for safe, reliable, and affordable energy drove high utilization across our footprint. Enbridge has a long history of predictable financial and operational performance, and this quarter was no different. We are executing on our strategic priorities and are on track to achieve our full-year EBITDA and DCF per share guidance," said Greg Ebel, President and CEO of Enbridge. "Strong operational performance and execution drove record financial results. During the quarter, we reached a significant milestone by closing the purchase of The East Ohio Gas Company and we are on track to close the remaining Acquisitions in 2024. On April 1, we closed the divestiture of our interests in Alliance and Aux Sable at an attractive valuation and have used the proceeds to fund a portion of the Acquisitions and for debt reduction. "In Liquids, we saw high utilization across our systems including another quarter of strong Mainline performance. The CER approved the Mainline Tolling agreement, a true win-win-win for us, our customers, and the markets we serve. We also advanced our integrated U.S. Gulf Coast infrastructure strategy by sanctioning additional storage at our Ingleside crude export facility, and acquiring two marine docks and nearby land. These strategic investments augment our competitive position in the region and support attractive economics for our customers.  "In Gas Transmission, we entered into a definitive agreement to acquire a meaningful, strategic interest in the Whistler Parent JV, an integrated Permian Basin natural gas pipeline and storage network connecting natural gas supply to growing LNG and other U.S. Gulf Coast demand. Upon closing, this transaction is expected to be immediately accretive to both DCF per share and our credit ratios and has embedded organic growth opportunities. Following the Tennessee Valley Authority's decision to proceed with construction of a new natural gas-fired combined cycle plant, we have progressed to FID on the previously announced Tennessee Ridgeline Expansion. Finally, we sanctioned new pipelines to serve Shell and Equinor's U.S. Gulf Coast offshore Sparta development. "In Gas Distribution, despite significantly warmer weather in Ontario during the quarter, we are expecting continued customer growth. Enbridge Gas submitted a Notice of Motion with the Ontario Energy Board to review its rebasing decision and expect an outcome later this year. We are encouraged that the government of Ontario is preserving customer choice and affordability through the introduction of the 'Keeping Energy Costs Down Act'. "In Renewables, the acquisition of additional interest in German offshore wind farms, the generation of Investment Tax Credits from Fox Squirrel, and strong European wind resources drove a 100% increase in EBITDA compared to the first quarter of 2023. In France, all 71 turbines have been installed at the Fécamp wind farm off the Northern coast of France. This 497 MW project has begun generating electricity, powering the equivalent of more than 400,000 homes. "Today, we published our 23rd annual Sustainability Report which provides an update on our performance across environmental, social, and governance issues versus the targets we set in 2020. Our safety record remains industry-leading, employee diversity is growing, and we're reducing emissions ahead of our 2030 target. "Enbridge remains committed to delivering long-term shareholder returns supported by stable, diversified, utility-like earnings. We have a strong balance sheet and credible track record of returning capital to shareholders with approximately $34 billion paid out through common dividends over the past five years, and more than $40 billion expected to be returned over the next five years. Looking forward, we believe our disciplined approach to capital allocation and low-risk growth profile will support continued strong shareholder returns and position us as a first-choice investment opportunity." FINANCIAL RESULTS SUMMARY Financial results for the three months ended March 31, 2024 and 2023 are summarized in the table below: Three months ended March 31, 2024 2023 (unaudited; millions of Canadian dollars, except per share amounts; number of shares in millions) GAAP Earnings attributable to common shareholders 1,419 1,733 GAAP Earnings per common share 0.67 0.86 Cash provided by operating activities 3,151 3,866 Adjusted EBITDA1 4,954 4,468 Base Business Adjusted EBITDA1,2 4,845 4,468 Adjusted Earnings1 1,955 1,726 Adjusted Earnings per common share1 0.92 0.85 Distributable Cash Flow1 3,463 3,180 Base Business Distributable Cash Flow1,2 3,437 3,180 Weighted average common shares outstanding 2,126 2,025 Base Business weighted average common shares outstanding2 2,023 2,025 1 Non-GAAP financial measures. Please refer to Non-GAAP Reconciliations Appendices. 2 Base Business results are adjusted to exclude the contributions from, and the impact of financing, the Acquisitions. These include associated EBITDA, DCF, capital expenditures, and common share and debt issuances attributable to the Acquisitions. For a full reconciliation, see Appendix D of this news release. GAAP earnings attributable to common shareholders for the first quarter of 2024 decreased by $314 million or $0.19 per share compared with the same period in 2023, primarily explained by the presence of certain non-operating factors including a non-cash, net unrealized derivative fair value loss of $677 million ($518 million after-tax) in 2024 compared to a net unrealized gain of $542 million ($406 million after-tax) in 2023 due to mark-to-market value of derivative financial instruments, the one-time recognition of $105 million ($79 million after-tax) of severance costs relating to workforce reduction in February 2024, and the absence in 2024 of the receipt of a litigation claim settlement of $68 million ($52 million after-tax). These non-operating impacts were partially offset by the absence in 2024 of a net loss of $638 million ($479 million after-tax) due to the termination of Competitive Toll Settlement foreign exchange hedges and operating performance factors discussed in detail below. The period-over-period comparability of GAAP earnings attributable to common shareholders is impacted by certain unusual, infrequent factors or other non-operating factors which are noted in the reconciliation schedule included in Appendix A of this news release. Refer to the Company's Management's Discussion & Analysis for the first quarter of 2024 filed in conjunction with the first quarter financial statements for a detailed discussion of GAAP financial results. Adjusted EBITDA in the first quarter of 2024 increased by $486 million compared with the same period in 2023. This was driven by higher throughput on Flanagan South Pipeline due to PADD III market demand, higher volumes on Express-Platte, contributions from recently acquired assets including EOG, additional Hohe See and Albatros interest, Tres Palacios, Aitken Creek and Tomorrow RNG, favorable fractionation spreads at Aux Sable, contributions from our investment in Fox Squirrel as a result of the generation of investment tax credits, and higher contribution from Southern Lights Pipeline due primarily to the discontinuation of rate-regulated accounting in the fourth quarter of 2023. These impacts were partially offset by significantly warmer weather in Gas Distribution and Storage and a realized foreign exchange loss on hedge settlements compared to a gain for the same period in 2023. Adjusted earnings in the first quarter of 2024 increased by $229 million, or $0.07 per share, compared with the same periods in 2023, primarily due to higher Adjusted EBITDA contributions discussed above, partially offset by higher financing costs due to higher interest rates and long-term debt principal, higher income taxes driven by higher earnings and higher depreciation expense from assets acquired and placed into service last year. DCF for the first quarter of 2024 increased by $283 million compared with the same period in 2023, primarily due to the higher Adjusted EBITDA contributions discussed above, partially offset by higher financing costs from higher interest rates and long-term debt principal, and higher U.S. Corporate Alternative Minimum taxes. Quarterly per share metrics were impacted by the bought deal equity issuance in the third quarter of 2023, as part of the financing plan for the Acquisitions. Detailed financial information and analysis can be found below under First Quarter 2024 Financial Results. FINANCIAL OUTLOOK The Company reaffirms its 2024 Base Business financial guidance for EBITDA and DCF. Results in the first quarter of 2024 are in line with the Company's expectations. Enbridge continues to anticipate strong asset utilization and operating performance in 2024 with normal course  easonality, including Mainline volumes of approximately 3.0 million barrels per day on average for the year. FINANCING UPDATE Financing the Acquisitions  Since the announcement of the Acquisitions on September 5, 2023, Enbridge has pre-financed approximately $10 billion of the $12.8 billion (US$9.4 billion) cash consideration, significantly de-risking the execution of the Company's funding plan for the Acquisitions. The aggregate net proceeds from these financing initiatives have been used to pay down existing indebtedness in the near-term prior to the Acquisitions closing. These financings included the issuance of 102.9 million common shares for gross proceeds of approximately CDN$4.6 billion, as well as US$2.0 billion of hybrid notes in the U.S. and $1.0 billion of hybrid notes in Canada which receive partial equity treatment from rating agencies. In addition, on April 1, 2024, Enbridge closed the sale of its interest in Alliance Pipeline and Aux Sable for proceeds of $3.1 billion, a portion of which was used to fund the Acquisitions, and the remainder to repay debt. The remaining acquisition funding requirements can be readily satisfied through a variety of alternate sources, including the issuance of senior unsecured notes, hybrid subordinated notes, the Company's ongoing capital recycling program, and initiating an At-The-Market ("ATM") common share issuance program. In order for the Company to retain funding flexibility, Enbridge expects to prepare all necessary securities filings. Once funding is complete and the Acquisitions are closed, the Company expects its key leverage ratio, Debt-to-EBITDA, to remain well within its target range of 4.5x to 5.0x after recognizing annualized EBITDA contributions from the Acquisitions. Other Financing On April 5, 2024, Enbridge issued US$3.5 billion of senior notes consisting of US$750 million of 3-year senior notes, US$750 million of 5-year senior notes, US$1.2 billion of 10-year senior notes, and US$800 million of 30-year senior notes. Proceeds from these offerings were used to pay down existing indebtedness, to fund capital expenditures, and for general corporate purposes. SECURED GROWTH PROJECT EXECUTION UPDATE Enbridge placed four 500k bbl crude oil storage tanks ("Ingleside Phase VI Storage") into service and added the previously announced US$1.1 billion Tennessee Ridgeline Expansion project to its secured backlog following the Tennessee Valley Authority's CEO signing the Record of Decision for the Kingston Fossil Plant. Post closing of the Whistler Parent JV transaction with Whitewater/I Squared and MPLX, Enbridge's share of the Rio Bravo Pipeline project capital is expected to be reduced by ~US$0.8 billion. The Company's secured growth backlog sits at $25 billion and is underpinned by commercial frameworks consistent with Enbridge's low-risk model. Funding of the secured growth program is expected to be provided for entirely through the Company's anticipated $8-9 billion of annual investable capacity, comprised of internally generated free cash flow and incremental balance sheet capacity. BUSINESS UPDATES Liquids Pipelines: Mainline Tolling Agreement approved by Canadian Energy Regulator On March 4, 2024, the Canadian Energy Regulator approved the Mainline Tolling negotiated settlement as filed. The settlement sets tariffs for crude oil and liquids shipments originating in Western Canada which are delivered across North America. The MTS covers both the Canadian and U.S. portions of the Mainline and sees the Mainline continuing to operate as a common carrier system available to all shippers on a monthly nomination basis. No changes to the filed agreement were made by CER in its approval. The settlement term is seven and a half years through the end of 2028, and is retroactively effective back to July 1, 2021. Liquids Pipelines: Permian Export Strategy Enbridge is planning to expand its Gray Oak Pipeline which will see the Company add up to 120 kbpd of new capacity from Crane, Texas to Corpus Christi, pending a successful open season.    Related, in addition to sanctioning an additional 2.5 million barrels at the EIEC, for ~US$0.1 billion, Enbridge also signed an agreement to acquire two marine docks and nearby land adjacent to EIEC from Flint Hills Resources for ~US$0.2 billion. Together, these announcements will continue the Company's expansion of its USGC liquids super-system, supporting growing international demand for North American energy exports. Gas Transmission: Extending Offshore Value Chain with Shell Pipeline On March 6, 2024, the Company announced the formation of a joint venture, Oceanus Pipeline Company, LLC, to develop and construct a 60-mile, 18" oil pipeline and a 15-mile, 10" gas pipeline to serve Shell and Equinor's offshore Sparta development. The projects are consistent with Enbridge's low risk business model and are backed by long-term fixed payment contracts. Enbridge's capital contribution is estimated to be approximately US$0.2 billion, and both pipelines are expected to enter service in 2028. Gas Transmission: Alliance and Aux Sable Transaction Closed On April 1, 2024, Enbridge closed the previously announced sale of its interest in Alliance Pipeline and Aux Sable assets to Pembina Pipeline Corporation for $3.1 billion, inclusive of $0.3 billion of non-recourse debt. Gas Transmission: New Permian Basin Natural Gas Joint Venture On March 26, 2024, Enbridge announced it had entered into a definitive agreement with WhiteWater/I Squared and MPLX to form a joint venture that will develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing LNG and other U.S. Gulf Coast demand. Upon closing of the transaction, Enbridge will contribute its wholly-owned Rio Bravo pipeline project and approximately US$350 million in cash to the joint venture. In addition to the 19% equity interest in the joint venture, Enbridge will receive a special equity interest in the joint venture providing for a 25% economic interest in the Rio Bravo pipeline project (which interest is subject to certain redemption rights held by WhiteWater/I Squared and MPLX). After the closing, Enbridge's share of the post-closing capital expenditures to complete the Rio Bravo pipeline project will be 100% of the first approximate US$150 million and, thereafter, proportionate to its aggregate economic interest in that project. The transaction is expected to be immediately accretive to Enbridge's per share metrics and the balance sheet leverage metric and unlock future growth opportunities for Enbridge to connect sustainable natural gas production to export markets as part of its USGC strategy. Closing is expected in the second quarter of 2024, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions. Gas Transmission: Tennessee Ridgeline Expansion reaches Final Investment Decision The Tennessee Ridgeline Expansion project is an expansion of the East Tennessee Natural Gas ("ETNG") system which will provide additional natural gas for the Tennessee Valley Authority (TVA) to support the replacement of an existing coal-fired power plant as it continues to transition its generation mix towards lower-carbon fuels. The proposed scope includes the installation of approximately 125 miles of 30-inch pipeline looping and one electric-powered compressor station and an 8MW, behind the meter, solar array. TVA published a Notice of Intent in the Federal Register on June 15, 2021, to initiate the environmental review process for its proposed action to retire the Kingston Coal-Fired Plant and to replace it with a natural gas plant. On April 2, 2024, TVA issued a Record of Decision (ROD) documenting its decision to adopt TVA's Preferred Alternative to replace the retiring coal generating units at the Kingston Coal-Fired Plant with a natural gas plant. The issuance of the ROD adopting its preferred alternative satisfied a key condition of TVA's Precedent Agreement with ETNG related to the ETNG Ridgeline Expansion project.  All necessary regulatory authorizations from the Federal Energy Regulatory Commission and other federal and state agencies will be obtained before construction of the project commences. Pending the approval and receipt of all necessary permits, construction would begin in 2025 with a target in-service date of late 2026. Gas Distribution and Storage: Enbridge's Acquisition of Gas Utilities from Dominion On March 7, 2024, Enbridge announced the closing of its acquisition of The East Ohio Gas Company (formerly doing business as Dominion Gas Ohio and now doing business as Enbridge Gas Ohio) from Dominion for a purchase price of US$6.6 billion inclusive of US$2.3 billion of assumed debt. Enbridge Gas Ohio serves as a single-state regulated gas distribution utility with service territories covering northeastern and northwestern Ohio, delivering natural gas to approximately 1.2 million customers. The acquisition of The East Ohio Gas Company reinforces Enbridge's position as the first-choice energy delivery company in North America and is complementary to our other operations in Ohio. The closings of the remaining Acquisitions remain on track to occur in 2024, each being subject to the receipt of required regulatory approvals, applicable to each gas utility (neither cross-conditioned to the other). Gas Distribution and Storage: Enbridge Gas Inc. Incentive Regulation Rate Application On December 21, 2023, the Ontario Energy Board ("OEB") issued its Decision and Order on Phase 1 (Phase 1 Decision). Enbridge Gas filed a Notice of Appeal with the courts and a Notice of Motion with the OEB requesting the OEB to review the Phase 1 Decision. Additionally, the Government of Ontario introduced Bill 165, the Keeping Energy Costs Down Act (the Act), in response to the Phase 1 Decision. If passed, the Act would give the Government of Ontario time-limited authority to set the revenue horizon for small volume customers, effectively reversing that aspect of the OEB's Phase 1 Decision. The Act is currently proceeding to a third reading and final vote in the provincial legislature. An updated Draft Interim Rate Order reflecting the Phase 1 Decision was filed on March 15, 2024 and subsequently approved by the OEB on April 11, 2024. The Draft Interim Rate Order has 2024 rates to be implemented on May 1, 2024. The Phase 1 Decision, pending resolution of the Motion to Review and Appeal, is immaterial to Enbridge's 2024 financial guidance. Enbridge Gas filed its Phase 2 evidence on April 26, 2024. Phase 2 will establish and determine the incentive rate mechanism for 2025-2028, and also address unregulated storage cost allocation and new energy transition proposals. Phase 3 will address cost allocation and the harmonization of rates and rate classes between legacy rate zones. FIRST QUARTER 2024 FINANCIAL RESULTS GAAP Segment EBITDA and Cash Flow from Operations Three months ended March 31, 2024 2023 (unaudited; millions of Canadian dollars) Liquids Pipelines 2,404 2,353 Gas Transmission 1,265 1,205 Gas Distribution and Storage 765 716 Renewable Power Generation 257 136 Eliminations and Other (642) 17 EBITDA1  4,049 4,427 Earnings attributable to common shareholders 1,419 1,733 Cash provided by operating activities 3,151 3,866 1  Non-GAAP financial measure. Please refer to Non-GAAP Reconciliations Appendices. For purposes of evaluating performance, the Company makes adjustments to GAAP reported earnings, segment EBITDA and cash flow provided by operating activities for unusual, infrequent or other non-operating factors, which allow Management and investors to more accurately compare the Company's performance across periods, normalizing for factors that are not indicative of underlying business performance. Tables incorporating these adjustments follow below. Schedules reconciling EBITDA, adjusted EBITDA, adjusted EBITDA by segment, adjusted earnings, adjusted earnings per share and DCF to their closest GAAP equivalent are provided in the Appendices to this news release. Adjusted EBITDA By Segment Adjusted EBITDA generated from U.S. dollar denominated businesses was translated to Canadian dollars at similar average exchange rates (C$1.35/US$) in the first quarter of 2024 and 2023. A significant portion of U.S. dollar earnings are hedged under the Company's enterprise-wide financial risk management program. The hedge settlements are reported within Eliminations and Other. Liquids Pipelines Three months ended March 31, 2024 2023 (unaudited; millions of Canadian dollars) Mainline System 1,338 1,337 Regional Oil Sands System 227 231 Gulf Coast and Mid-Continent Systems1 427 384 Other Systems2 468 390 Adjusted EBITDA3 2,460 2,342 Operating Data (average deliveries – thousands of bpd) Mainline System volume4 3,127 3,120 Canadian International Joint Tariff5 ($C) $1.65 $— U.S. International Joint Tariff5 ($US)