Enbridge Inc

Good morning, and welcome to the Enbridge Inc. First Quarter 2026 Conference Call. My name is Marlon Samuel, and I am the Vice President of Investor Relations and Insurance. Joining me this morning are Greg Evil, President and CEO, Pat Murray, EVP and Chief Financial Officer, and the heads of each of our business units, Colin Grunding, Liquid Pipelines, Matthew Ackman, Gas Transmission, Michel Heritage, Gas Distribution and Storage, and Alan Capps, 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 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 will 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 after the call for any follow-up questions. Onto slide two, where I will remind you that we will be referring to forward-looking information on today's presentation and Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure of violence. We will also be referring to non-GAAP measures summarized below. With that, I'll turn it over to Grey Diebel.

Thanks very much, Marlon, and good morning, everyone. We appreciate you joining us once again today. The first quarter was a strong start to the year, reflecting solid financial performance and continued execution across our businesses. We reaffirmed our 26 guidance and medium term outlook and continue to operate in line with our four and a half to five times debt to EBITDA target. From an operational standpoint, utilization was high across all businesses. with record Q1 mainline volumes and numerous peak delivery days on our U.S. gas transmission and distribution systems. In April, we completed our seventh expansion of tank storage at Ingleside and have now increased storage capacity to approximately 20 million barrels, and we brought the 120,000-barrel-per-day Grey Oak expansion into service. On the execution and growth front, we announced open seasons on the Flanagan South, and southern access extension pipelines, which support mainline optimization phase two. We also completed a successful open season on the Spearhead pipeline. During the quarter, we sanctioned a number of exciting projects in gas transmission, including expansions to our Trace Palacios natural gas storage and our 60% owned vector pipeline. We also announced an expansion of unregulated natural gas storage at Enbridge Gas Ontario and the 300-megawatt Cone Power Project. We'll dive in a little deeper into these projects in the business update slides. But first, let's take a look at how Enbridge continues to connect supply with rising energy demand. The importance of energy security has become even more evident since the start of the conflict with Iran, and Enbridge is well-positioned to deliver North America's abundant energy resources, both domestically and globally. LNG exports remain a critical component of energy security. North American liquefaction capacity is expected to require over 30 BCF per day of natural gas by 2030, and Enbridge is poised to support the global demand through serving 100% of the operating LNG facilities along the U.S. Gulf Coast. We continue to deepen our integration with LNG markets as well via storage expansions of Aiken Creek, Trace Palacios, Egan, and Moss Bluff, new Permian gas egress projects, and the advancement of wood fiber LNG. Natural gas demand in North America is expected to increase by 28 BCF per day by 2030, and we have already begun capturing that growth through sanctioned projects, with more new projects to come in the quarters ahead. Tennessee Ridgeline connecting to a power generation facility converting from coal to gas. Algonquin gas transmission expansion, providing additional capacity to the underserved U.S. Northeast, and the vector expansion serving utilities in the Midwest are just a few examples of infrastructure we're currently building to support local demand. On the liquid side, we are in the midst of advancing 430,000 barrels per day of incremental mainline and express capacity by 2028, adding timely and efficient egress for our WCSB customers. Our Permian super system remains a cornerstone of the export story, and it continues to grow. Projects like the Grey Oak expansion and the new storage tanks at Ingleside support the export facility, which delivers roughly 25% of all U.S. crude exports today. We expect all this to lead to North America moving more than 5 million barrels per day of crude on an ongoing basis to key international markets, including Europe, Asia, and Latin America. We all know energy markets have been disrupted since the conflict in Iran, and Enbridge will be ready to play its part in providing reliable, secure, and affordable energy to customers domestically and overseas. Now let's take a look at how Enbridge's business model is designed to succeed regardless of the macro environment. Despite market volatility since the start of 2026, Enbridge continues to deliver consistent and growing shareholder returns. Our cash flows remain of the highest quality and predictability, diversified across more than 200 asset streams, and are largely protected by regulated and long-term take-or-pay contractual frameworks. We have unmatched market access, serving more than 75% of North America refineries. moving roughly 20% of all natural gas consumed in North America and directly serving over 7 million gas utility customers. Our diversified platform allows us to provide end-to-end energy solutions across liquids, natural gas transmission, gas distribution, and power. Longstanding relationships with customers and our continuously growing partnership with Meta remain a key competitive advantage and underpin our creative project backlog. We continue to grow through our $40 billion capital backlog, which supports visible growth through the end of the decade. And we can finance that growth using our $10 to $11 billion of equity self-funded annual investment capacity and the strong balance sheet. Now let's dive into the business unit updates, starting with liquids pipelines. Our liquids pipelines business continue to deliver strong performance as we advance efficient egress and storage expansions to meet rising demand. On the mainline, we achieved record first quarter volumes of 3.2 million barrels per day, reflecting strong utilization and the critical role of the system. We're advancing mainline optimization phase two. or MLO2, which is expected to add 250,000 barrels per day of incremental WCSB egress capacity by the end of 2028. In support of MLO2, we launched a binding open season for 200,000 barrels per day of incremental FSP capacity and 50,000 barrels per day of incremental capacity on the southern axis extension pipeline. Early construction activities, including clearing of the right-of-way, have now begun on Line 5 relocation project in Wisconsin, supporting the continued flow of vital energy supply in the region. We also completed a successful open season on the Spearhead pipeline, recontracting volumes into the next decade. And in April, we received a number of presidential permits for our liquids pipelines. These permits provide operational flexibility for day-to-day operations as well as future expansions. Along the Gulf Coast, our Ingleside storage expansion has entered service, increasing site capacity to approximately 20 million barrels. And finally, the Gray Oak expansion is now complete and the pipe operating capacity is now over 1 million barrels per day, further strengthening our export connectivity. So now let's take a look into our gas transmission business. We continue to benefit from diversified demand drivers creating attractive and highly visible capital opportunities across our gas transmission footprint. In the U.S., we are executing well across our system to support rising demand from power generation, local gas utilities, LNG facilities, and new data centers. And we are advancing over $10 billion of near-term growth opportunities with several projects reaching FID this quarter, with more to come this year and next. Those projects include the Trace Palacios expansion, adding 25 BCF of natural gas storage along the Gulf Coast. The project capex is expected to be $400 million and enter service in stages from 2028 to 2030. We have also sanctioned an expansion of the vector pipeline for just over $100 million, adding 400 million cubic feet per day of westbound capacity to serve growing local utility demand, and targeted for in-service in 2028. We continued to evaluate additional expansion opportunities on Vector and recently closed a non-binding open season in April for another 300 to 500 MMCF per day on that pipeline. This open season was highly successful, with customer interest exceeding the offered capacity. Our East Tennessee pipeline reached a settlement in principle on the rate case filed last year, and we expect to file the agreement with the FERC in the second quarter. In Canada, expansions to our gas transmission network are also advancing. Recently, we received all of our required approvals on the $4 billion Sunrise expansion, with construction expected to begin by early summer. At Wood Fiber LNG, the delivery of the liquefaction module this quarter represents another important execution milestone. Altogether, we have approximately $10 billion of projects under construction in British Columbia to support both domestic energy needs and Canada's growing LNG export market. Let's move over to gas distribution. In Ontario, we sanctioned approximately 8 BCF of unregulated natural gas storage expansion at the Dawn Hub, with an in-service date of 2029. This project strengthens the critical energy platform for Ontario and surrounding regions. At Enbridge Gas Ohio, we filed a new rate case on December 31st, 2025, with rates expected to go into service effective in 2027. And as a reminder, Utah and North Carolina saw new rates go into effect on January 1, 2026, and November 125, respectively. Our gas distribution and storage business continues to deliver steady, regulated growth through disciplined rate-based investment. The T15 project is progressing, supporting the Roxborough Power Plant's conversion from coal to gas and expected to have a phased-in in-service from 2027 to 2028. At the Mariah Energy Center, the $600 million US LNG storage facility will strengthen system resiliency by adding 2 BCF capacity in 2027. Collectively, we expect our utilities to grow rate-based by 5% annually through 2029. And while Ontario's growth is slowing, our diversity of assets allows us to redirect capital to the U.S., which very likely will exceed their 8% growth CAGR through 2029. Now we'll move on to the renewables segment. Our renewable power business continues to progress with disciplined focus on high-quality projects anchored by blue-chip customers and long-term contracted cash flows. At Sequoia, we will have 815 megawatts of generation capacity, about half of which is already in service, and the remaining capacity is expected to come online later this year. We are also happy to announce we are extending our partnership with Meta once again. by sanctioning Cone, an onshore wind project in Texas, which we expect to invest $700 million U.S. and have the project enter service by the end of 2027. Our partnership with Meta has grown to over one gigawatt of power generation between Clear Fork, Easter, and now Cone, and we expect the partnership to grow further. Beyond our sanctioned projects, we have approximately 1.5 gigawatts of additional safe Harvard renewable projects, providing meaningful capital optionality. With all that, I'll pass it on to Pat to go over our financial performance through the start of the year.

Thank you, Greg, and thanks to everyone for joining the call today. I'm happy to say we're off to another strong start in 2026. Compared to the first quarter of 2025, adjusted EBITDA remained consistent, DCF per share is up 3 cents, and EPS is down about 5. In liquids, as expected, the absence of a litigation settlement, lower contributions from our market access pipelines, and lower Line 9 tolls resulted in a decrease compared to Q1 2025. In gas transmission, favorable contracting on our U.S. gas transmission assets and strong storage results drove the year-over-year increase in EBITDA. Gas distribution increased year-over-year after the recent rate cases in Utah and North Carolina took effect, as Craig mentioned earlier, and from rate escalators in Ontario. In renewables, results were lower compared to last year due to the absence of investment tax credits relating to the Fox Squirrel solar project. partially offset by strong international wind resources in the first quarter of 2026. A $0.07 decrease in the average CAD to US FX rates year over year impacted all four business units, resulting in lower EBITDA in 2026. This was, however, partially offset in eliminations and other due to our realized hedge rate being higher and closer to the actual FX rate we saw in the quarter. Cash distributions in excess of equity earnings was higher in 2026 due to the absence of a legal settlement recognized in Q1 2025 earnings, but primarily received in cash in subsequent periods. Higher depreciation from assets placed into service and higher income taxes from the absence of investment tax credits in 2026 drove the decrease in EPS. I'm pleased to reaffirm the 2026 guidance that we shared last December. Our resilient business model supports strong and predictable performance across all market cycles and conditions, something that is evident in our results given the volatile periods we've seen recently. We're on track to achieve the midpoints of our guidance ranges for both EBITDA and DCF per share and are also reaffirming our post-2026 growth outlook of 5% average annual growth rate for EBITDA, DCF per share, and EPS. As a reminder, Q1 and Q4 reflect our strongest quarters as a result of higher utility demand and higher volumes in our liquids pipelines and gas transmission systems during winter months. Moving on to our capital allocation priorities, our approach remains unchanged in 2026, supported by continued equity self-funding and the stability of our regulated and predictable cash flows. Returning capital through dividends remains core to our value proposition. We returned 38 billion to shareholders over the past five years and expect to return 40 to 45 billion over the next five years. Our $40 billion backlog extends through 2033, providing strong long-term growth visibility as we prioritize accretive brownfield opportunities. And with that, I'll pass it back to Greg to close out the presentation. Thanks, Pat.