Enbridge Inc

Good morning and welcome to the Enbridge Inc. Third Quarter 2025 Financial Results Conference Call. My name is Rebecca Morley and I'm the Vice President of Investor Relations and Insurance. Joining me this morning are Greg Ebel, President and CEO, Pat Murray, Executive Vice President and Chief Financial Officer, and the heads of each of our business units, Colin Grunding, Liquids Pipelines, Cynthia Hansen, Gas Transmission, Michelle Herrodins, Gas Distribution and Storage, and Matthew Ackman, Renewable Power. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session for the investment community. Please note this conference call is being recorded. As per usual, this call is being webcast and I encourage those listening on the phone to follow along with the supporting slides. We will try to keep the call to roughly one hour. And in order to answer as many questions as possible, we will be limiting questions to one plus a single follow up if necessary. We'll be prioritizing questions from the investment community. So if you are a member of the media, please direct your inquiries to our communications team who will be happy to respond. As always, our investor relations team will be available following the call for any follow up questions. On to slide two, where I will remind you that we'll be referring to forward-looking information in today's presentation and in the Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes, which are subject to risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We'll also be referring to non-GET measures summarized below. And with that, I'll turn it over to Greg Ebel.

Well, thanks very much, Rebecca, and good morning, everyone. Thanks for joining us on the call today. Before we start, I'd like to take a moment to congratulate Cynthia, who announced plans to retire at the end of 2026. Her outstanding leadership and dedication to Enbridge over the past 25 years is inspiring, and I'm grateful that she'll be continuing to provide guidance to our executive team through the end of next year. I'd also like to congratulate Matthew, who will transition to president of our GTM business at the end of this year, as well as Alan Capps, who has been appointed to succeed Matthew as the head of our corporate strategy group and president of our power business. As we've said before, and it remains true today, our investment in people creates a deep bench of executive talent to ensure smooth transition and strong leadership as we move forward. Now moving on to our agenda for this morning, I'm excited to share another strong quarter and highlight the significant progress we've made throughout all segments of our business. It has been a busy quarter for us with new projects serving a wide range of customers across our core franchises. We're going to start today with an update on our financial performance execution of our increasing number of secured growth projects and prospects. And I'll also highlight the strong returns and stability our business continues to demonstrate and provide an update on each of our four franchises. Pat will then walk through our financial results and capital allocation priorities. And lastly, I'll close the presentation with a few comments on our first choice value proposition before we open the line for questions from the investment community. We had another strong quarter of results, including record third quarter adjusted EBITDA. That growth was driven by incremental contributions from a full quarter of US gas utilities and organic growth within our gas transmission business. This keeps us on track to finish the year in the upper half of our EBITDA guidance, and we expect to land around the midpoint of our GCF per share metric. Our debt to EBITDA is 4.8 times for the quarter and remains within our leverage range of four and a half to five times. Our assets remained highly utilized during the quarter, with the mainline transporting approximately 3.1 million barrels per day, a third quarter record thanks to strong demand. We reached positive settlements at both Enbridge Gas North Carolina and Enbridge Gas Utah, which we expect to drive growth as rates begin to take effect. We're still on track to sanction mainline optimization phase one this quarter and phase two next year. and we'll get into more details on those projects during the business update. Over the quarter, we added $3 billion of new growth capital to our secured capital program, showcasing continued execution on the commitments we laid out last Enbridge Day. In liquids, we sanctioned the Southern Illinois connector, adding incremental egress out of Western Canada and providing a new long-term contracted service to Nederland, Texas. In gas transmission, we sanctioned expansions of our Eagan and Moss Bluff storage facilities to support the LNG build-out along the U.S. Gulf Coast. And in the Deepwater Gulf, we're expanding our previously approved canyon system to provide transportation services for BP's recently sanctioned Tiber offshore development. And earlier in the quarter, we sanctioned the Algonquin gas transmission enhancement project in the U.S. Northeast. as well as the Iger Express Gas Pipeline out of the Permian. And finally, we have advanced a joint venture with Oxy to develop the Pelican CO2 Hub in Louisiana. These projects demonstrate the competitive edge from our all of the above approach and our ability to meet growing energy demand across all parts of our business. Now let's look at our value proposition and recap our year-to-date execution before diving into the business updates. Enbridge's low-risk model continues to deliver superior risk-adjusted returns in all economic cycles. Our cash flows are diversified from over 200 high-quality asset streams and businesses that are underpinned by regulated or take-or-pay frameworks. Over 95% of our customers have investment-grade credit ratings. We have negligible commodity price exposure, and the majority of our EBITDA has inflation protection. All of this results in Enbridge's industry-leading total shareholder return while maintaining lower volatility compared to peers and broad index constituents. Looking ahead, Enbridge's utility-like business model remains well-positioned, and policy support for new investment in critical projects is improving, creating a business environment that incents coordination, dialogue, and growth. And I'm very pleased with how the team continues to grow the business and excited by the opportunities ahead for Enbridge. With that said, let's jump into the business unit updates, starting with liquid segment. Mainline Volumes had another strong quarter, delivering a record 3.1 million barrels per day on average for Q3. The system was a portion for the entire quarter, reflecting continued strong demand for Canadian crude and the need for reliable egress out of the Western Canadian sedimentary basin. Given the continued strong demand for the mainline this year, we expect to reach the top of the performance color ahead of when we initially anticipated. This is a great sign for us and our shippers. We're achieving the maximum allowable returns under the mainline tolling settlement, delivering competitive value to our shareholders, and our alignment with customers incentivizes us to move the increased volumes and provide them with access to the best markets. This leads in well to mainline optimization projects that I'll discuss shortly here, in addition to the previously announced projects like mainline capital investment. In the U.S., we sanctioned the Southern Illinois Connector Project, which is backed by long-term contracts for full pass service from Western Canada to Nederland, Texas. Once complete, The new pathway will add 100,000 barrels per day of contracted full path capacity to the U.S. Gulf Coast via 30,000 barrel increase per day on express plat system, 56 miles of new pipeline between Wood River and Patoka, and utilization of 70,000 barrels per day of existing capacity on the Spearhead pipeline. Looking ahead at additional egress projects, we are continuing to advance approximately 400,000 barrels per day of incremental capacity to the best refining markets in North America via mainline optimization phase 1 and 2. MLO 1, which will add 150,000 barrels per day of incremental egress, is entering the final stages of customer approvals, and we are still on track to make FID this quarter and place the project into service in 2027. MLO 2 has made significant progress as well, And that project could now add another 250,000 barrels per day of additional capacity in 2028. The second phase of mainline optimization will utilize capacity on the Dakota Access Pipeline, and we're happy to announce that we're teaming up with Energy Transfer to make that happen. So stay tuned for more on MLO2, including an open season announcement early in the new year. Relative to potential greenfield projects that would require significant energy policy change, these brownfield opportunities offer the quickest and most cost-effective way to adding close to 500,000 barrels a day of capacity to satisfy the near-term production increases forecasted out of the basin. Finally, for liquids, we added the Pelican Sequestration Hub to our backlog, a project in Louisiana which will provide transportation and sequestration for 2.3 million tons per year of CO2 and is underpinned by 25-year take or pay offtake agreements. We will partner with Occidental Petroleum to advance the hub with Enbridge managing the pipeline infrastructure while Oxy develops the sequestration facility. Now let's turn to our gas transmission business. This quarter, we've sanctioned an additional capital efficient connection to our Canyon pipeline system to support BP's Tiber development in the Deepwater Gulf. Originally announced last October, the Canyon system will transport both crude oil and natural gas under long-term contracts, with the Tiber system expected to cost $300 million U.S., taking the total Canyon pipeline development to about a billion dollars U.S. and entering service in 2029. In the U.S. Northeast, the AGT enhancement will increase capacity of the Algonquin pipeline, providing additional natural gas to the critically undersupplied U.S. Northeast, serving local utility demand and reducing winter price volatility. That project is expected to cost $300 million U.S. and enter into service in 2029. Switching over to the Permian, the Iger Express pipeline is a 2.5 BCF a day Permian egress development running adjacent to the operating Matterhorn Express system, and is now sanctioned and expected to enter into service in 2028. Since our initial 2024 investment in the Whistler Joint Venture, which holds these pipelines, we have invested $2 billion in operating assets and sanctioned another billion dollars of capital expected to enter service through 2028. Also in the Gulf region, we've sanctioned two natural gas storage expansions to support the market, which continues to tighten due to increased LNG, Mexican exports, and regional power demand. Egan and Moss Bluff storage systems, both salt caverns with exceptional connectivity and withdrawal rates, are being expanded to offer a combined 23 BCF of incremental capacity. We expect to invest approximately $500 million in these facilities at five to six times EBITDA builds and come into service in phases through 2033. It's worth taking a moment to dive a little deeper into the growing North American storage market and how we are positioned to serve our customers. Between Moss Bluff and Eagan, as well as the expansion of Aiken Creek announced last quarter, Enbridge is now set to add over 60 BCFs of new natural gas storage directly adjacent to the major LNG centers in North America. These expansions will come in a timely manner as there is over 17 BCF per day of additional LNG-related natural gas demand expected to enter service by 2030. This demand dramatically shifts supply economics and increases the importance of strategically located storage capacity. We are connected to all operating U.S. Gulf Coast LNG terminals and continue to invest heavily in infrastructure to enable the future growth of North American LNG. To date, we have sanctioned over $10 billion in projects with direct adjacency to operating or planned export facilities. There is a growing storage deficit across the U.S. Gulf and British Columbia coasts. And having existing assets with the opportunity to execute brownfield expansions is incredibly valuable to our customers and investors. Through acquisitions and expansions, we have positioned ourselves as an industry leader in the storage space. With more than 600 BCF of storage across our North American businesses, we can strongly support our customers as they continue to build out North America's LNG capacity and navigate the overall power demand growth we are expecting in the future. Now let's spend a few minutes recapping all the work we've done in gas transmission segment since Enbridge Day earlier this year. At our investor day in March, we shared Enbridge's $23 billion gas transmission opportunity set, noting the potential to FIT up to $5 billion in projects within 18 months. This opportunity set has grown since then, and today, a little over six months later, we've already announced over $3 billion of new projects across our footprint, serving all pillars of natural gas demand growth, including reshoring, LNG, coal-to-gas switching, and data centers. With over 23 BCF a day of new gas demand coming online by 2030, critical investment will be needed to ensure reliable service for customers. And with this list here, you can see we are doing our part deploying capital to meet the significant increase in natural gas demand across North America, regardless of the end use market. Now let's turn to our gas distribution business. The GDS segment is yet another way for us to capitalize on power demand theme. We've seen data center and power gen opportunities continue to be a tailwind for the segment. With over 50 opportunities that could serve up to five BCF a day of demand, including almost one BCF per day of demand for already secured projects. During the quarter, we also reached positive rate settlements with two of our U.S. utility regulators, which are currently being reviewed for final approval. In North Carolina, allowed return on equity increased to 9.65% on an equity thickness of 54%, resulting in a revenue requirement increase of some U.S. $34 million. The settlement also introduces additional rate riders that allows for quick cycle return of capital for our major projects in North Carolina. These rates came into effect on an interim basis on November 1st. In Utah, we filed a settlement for a revenue requirement of $62 million US, which supports continued investment at attractive returns. We were expecting a rate order before the end of the year, with rates to come in effect on January 1st, 2026. Both these rate cases showcase the importance of natural gas as a safe, reliable source of affordable energy. Now we'll continue with the power demand theme with our renewable segment. As you can see from this slide, renewable projects have been a great place to invest in the last few years, driven by strong PPA prices, decreasing supply costs, and the associated tax benefits. The four projects on this slide showcase over two gigawatts of power backed by agreements with some of the largest technology and data center players in the world, including Amazon and Meta. Fox Squirrel and Orange Grove are currently operational. Sequoia Solar will fully enter service in 2026 and Clearfork will follow, entering service in 2027. Looking ahead, we still have a number of projects in the queue that we're advancing, but as always, we'll remain opportunistic and continue to stand by our strict investment criteria. With that, I'll now pass it to Pat to go over our financial performance.

Thanks, Greg, and good morning, everyone. It's been another strong quarter across all four business units, thanks to continued high utilization of our assets, as well as recent acquisitions. Compared to the third quarter of 2024, adjusted EBITDA is up 66 million, DCF per share is relatively flat, and EPS is down from 55 cents to 46 cents per share. The decrease in EPS is primarily due to the profile change associated with our gas utilities, where Q3 tends to be a softer quarter for EPS as EBITDA is seasonally lower, but items such as interest and depreciation remain flat quarter over quarter. In liquids, despite the strong mainline volumes, contributions from the MidCon and U.S. Gulf Coast segment are tracking lower due to tighter differentials and strong Pad 2 refining demand. In gas transmission, we experienced a strong third quarter with favorable contracting and rate case outcomes on our U.S. gas transmission assets and contributions from the Venice extension and the Permian joint ventures we added since last year. The gas distribution segment is up relative to last year thanks to a full quarter contribution from Enbridge Gas North Carolina, as well as the benefit of the quick turn capital we experience within our Ohio utility. In renewables, results were up from last year with higher contributions from our wind assets and from the Orange Grove Solar Facility recently placed into service. Higher financing and maintenance costs from the acquisition of the Enbridge Gas North Carolina assets kept DCF per share relatively flat year over year. I'm pleased to once again reaffirm our 2025 guidance and growth outlook across all metrics. Our resilient business model positions us to deliver strong and predictable results through all cycles. We remain confident we will achieve full year EBITDA in the upper half of our guidance range of $19.4 billion to $20 billion, but don't expect to exceed the top of the band. As we mentioned on previous quarterly calls, due to higher interest rates, particularly in the U.S., we continue to expect DCF per share at the midpoint of our 550 to 590 per share guidance range. Mainline volumes, FX rates, and the acquisition of an interest in the Matterhorn Express pipeline earlier in the year continue to be the tailwinds to the full year guide. This is partially offset by higher interest rates, along with tight differentials and strong PAD2 refining levels, which are expected to continue into the fourth quarter and thus have been reflected as an additional headwind relative to our assumptions heading into the year. Now let's quickly discuss our capital allocation priorities. We remain firmly committed to a thoughtful capital discipline process, remaining within our nine to 10 billion per year annual growth investment capacity as we pursued the wide suite of opportunities ahead. Our highly contracted cash flows support a growing and rateable dividend within our 60 to 70% DCF payout target range, ensuring long-term shareholder returns. We've grown our dividend for 30 consecutive years a real testament to the stability of our business and the fundamentals that underpin it. On the leverage front, our consolidated net debt to adjusted EBITDA remains comfortably within our target range of four and a half to five times. This quarter, we saw three billion of newly sanctioned capital advanced. As I mentioned in the past, I like the fact that we're generating opportunities in all of our businesses, supplementing the next few years with accretive projects while also adding visibility into the back part of the decade with opportunities like our gas storage expansions and our offshore gas transmission projects, which we've announced this quarter. Our capital allocation focus will remain with brownfield, highly strategic and economic projects supported by underlying energy fundamentals. And I'm excited to see this opportunity set materialize into the future. With that, I'll pass it back to Greg to close the presentation.