Enbridge Income Fund Holdings Inc.

TSX : ENF


Enbridge Income Fund Holdings Inc.

February 11, 2014 09:00 ET

Enbridge Income Fund Holdings Inc. Reports 2013 Results; Declares Monthly Dividend

CALGARY, ALBERTA--(Marketwired - Feb. 11, 2014) -

HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars)

  • Earnings for the fourth quarter and year ended December 31, 2013 totaled $22.1 million ($0.39 per common share) and $86.6 million ($1.55 per common share), respectively.
  • The Fund's cash available for distribution (CAFD) increased 35% in 2013 primarily as a result of a full year contribution from the crude oil storage and renewable power generation assets acquired in December 2012.
  • In early 2013, Enbridge Income Fund completed the Bakken Expansion on time and under budget.
  • Perry Schuldhaus was appointed President of Enbridge Income Fund Holdings Inc. effective January 1, 2014.
  • The Company announced a 3% dividend increase in November 2013.
  • A monthly dividend of $0.1146 per common share was declared by the Company's Board of Directors to be paid on March 17, 2014.

Enbridge Income Fund Holdings Inc. (TSX:ENF) (ENF or the Company) announced today earnings of $86.6 million or $1.55 per common share for the year ended December 31, 2013, compared to earnings of $59.8 million or $1.48 per common share for the year ended December 31, 2012.

The Company's financial performance is a direct reflection of the Fund's ability to generate cash for distribution to its unitholders. The Fund's cash available for distribution (CAFD) totaled $263.2 million for the year ended December 31, 2013 compared with $195.6 million in the prior year. The improvement in CAFD was primarily due to positive cash flow generated by the Hardisty Crude Oil Storage Assets, Greenwich Wind Project and the Amherstburg and Tilbury Solar Projects following their acquisition in December 2012 (the 2012 Acquisition). CAFD also reflects incremental cash flow from the Bakken Expansion which commenced service on March 1, 2013.

"The Company and the Fund experienced another strong year in 2013," said Perry Schuldhaus, President of Enbridge Income Fund Holdings Inc. "Performance of the underlying base business has remained solid and when combined with the crude oil storage and renewable power generation assets acquired in December 2012, the Fund generated a significant increase in distributable cash. The Fund remains well positioned to respond to additional acquisition opportunities and is encouraged that Enbridge's announced funding strategy contemplates further asset drop downs to us."

Mr. Schuldhaus became President on January 1, 2014, succeeding John Whelen who remains the Senior Vice-President and Controller of Enbridge Inc. Mr. Schuldhaus has extensive experience with the Fund's Liquids Transportation and Storage assets and was instrumental in the negotiation and resolution of the settlement agreement made with shippers on the Westspur System.

"I would like to thank John Whelen for his dedication to the Company and the Fund. John's contributions are reflected in the growth in the Fund's asset base as well as its capital raising capacity," concluded Mr. Schuldhaus.

On February 10, 2014, the Company's Board of Directors approved a monthly cash dividend of $0.1146 per common share to be paid on March 17, 2014 to shareholders of record at the close of business on February 28, 2014. The dividend is designated an eligible dividend for Canadian tax purposes which qualifies for the enhanced dividend tax credit.

FOURTH QUARTER 2013 REVIEW AND RECENT DEVELOPMENTS

The audited financial statements and Management's Discussion and Analysis (MD&A) of both the Company and the Fund, which contain additional notes and disclosures, are available on the Company's website at www.enbridgeincomefund.com. We further draw your attention to Note 4, Revision of Prior Period Financial Statements to the Consolidated Financial Statements as at and for the year ended December 31, 2013, which discusses a non-cash revision to comparative financial statements. These revisions were not material to the Fund's earnings in prior periods and did not impact the Fund's cash available for distribution.

  • The Company's earnings for the fourth quarter and year ended December 31, 2013 were $22.1 million ($0.39 per common share) and $86.6 million ($1.55 per common share), respectively, compared with $16.6 million ($0.39 per common share) and $59.8 million ($1.48 per common share) for the fourth quarter and year ended December 31, 2012. The increase in earnings reflected 11% and 1% per unit increases in the Fund's distribution in December 2012 and November 2013, respectively. The increase also reflected the Company's increased ownership in the Fund which grew as a result of an investment in 11,982,000 trust units in connection with the financing of the December 2012 acquisition and a further investment of 4,768,000 trust units in February 2013 in connection with an equity financing undertaken to further strengthen the Fund's balance sheet and financing flexibility. Earnings for the 2013 periods reflected higher current income tax expense than 2012 periods as a portion of distributions received by the Company in 2013 were taxable, whereas distributions received in 2012 were non-taxable.
  • The Fund generated CAFD for the three months and year ended December 31, 2013 of $65.0 million and $263.2 million, respectively, compared with $43.8 million and $195.6 million for the fourth quarter and year ended December 31, 2012. CAFD for the 2013 periods reflected a full year contribution from the portfolio of crude oil storage and renewable power generation assets acquired in December 2012. CAFD for the 2013 periods also reflected contributions from the Bakken Expansion which commenced service on March 1, 2013.
  • On December 20, 2013, Enbridge Income Fund Holdings Inc. announced that Perry Schuldhaus had been appointed President of the Company effective January 1, 2014. Mr. Schuldhaus will dedicate his time to oversight and management of the Company and the Fund. Prior to his appointment, Mr. Schuldhaus held the position of Vice-President, Upstream Business Development and Acquisitions within the Liquid Pipelines division of Enbridge.
  • On January 29, 2014, Enbridge Income Fund announced plans to construct a pipeline interconnection that will connect the Westspur System and Bakken Expansion to a crude oil rail terminal near Cromer, Manitoba. The estimated cost of the project is $25 million and is expected to be in-service in the fourth quarter of 2014. The project is fully backstopped by the operator of the crude oil rail terminal pursuant to a five-year Financial Support Agreement. In addition, the Fund has an option to acquire 50% of the rail terminal which is currently capable of handling 30,000 barrels per day (bpd) and expandable to 60,000 bpd.
  • On February 6, 2014, the National Energy Board ordered historical and new tolls final in respect of a settlement agreement made with shippers on the Westspur System, which forms part of the Fund's Saskatchewan Crude Oil Transportation system.
  • The Company's Board of Directors approved monthly dividends of $0.11125 per common share for October and $0.1146 per common share for each of November and December. In addition, monthly dividends of $0.1146 per common share were declared on January 15, 2014 and February 10, 2014 for payment to shareholders on February 18, 2014 and March 17, 2014, respectively.

ABOUT ENBRIDGE INCOME FUND HOLDINGS INC.

Enbridge Income Fund Holdings Inc. (the Company) is a publicly traded corporation. Through its ownership in Enbridge Income Fund (the Fund), the Company has interests in a diversified portfolio of high quality, low risk energy infrastructure assets in Canada. The Fund, with an enterprise value of approximately $5 billion, owns assets that include crude oil gathering pipelines in Saskatchewan and Manitoba and crude oil storage terminals and caverns in Hardisty, Alberta, as well as interests in more than 500 megawatts of renewable and alternative power generation capacity in Alberta, Saskatchewan and Ontario. The Fund also holds a 50% interest in the Canadian segment of the Alliance Pipeline that transports high-energy, rich natural gas from northeastern British Columbia and northwestern Alberta to delivery points near Chicago, Illinois. Information about Enbridge Income Fund Holdings Inc. is available on the Company's website at www.enbridgeincomefund.com.

FORWARD LOOKING INFORMATION

In the interest of providing the Company's shareholders and potential investors with information about the Company and its investee, the Fund, and the Fund's subsidiaries and joint ventures, including management's assessment of the Company's and the Fund's future plans and operations, certain information provided in this News Release constitutes forward-looking statements or information (collectively, "forward-looking statements"). This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. In particular, forward-looking statements include:

  • expected earnings or earnings per share;
  • expected costs related to projects under construction;
  • expected scope and in-service dates for projects under construction;
  • expected timing and amount of recovery of capital costs of assets;
  • expected capital expenditures;
  • expected future dividends, Fund distributions and taxability thereof;
  • the Fund's expected cash available for distribution; and
  • expected future actions of regulators.

Although the Company believes that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes are used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about: the expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil, natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; customer project approvals; maintenance of support and regulatory approval for the Fund's projects; anticipated in-service dates and weather. Assumptions regarding the expected supply and demand of crude oil, natural gas and natural gas liquids, and the prices of these commodities, are material to and underlay all forward-looking statements. These factors are relevant to all forward-looking statements as they may impact current and future levels of demand for the Fund's services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company and the Fund operates, may impact levels of demand for the Fund's services and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to expected earnings and associated per unit or per share amounts, or estimated future distributions or dividends. The most relevant assumptions associated with forward-looking statements on projects under construction, including estimated in-service dates and expected capital expenditures, include: the availability and price of labour and pipeline construction materials; the effects of inflation on labour and material costs; the effects of interest rates on borrowing costs; and the impact of weather, customer and regulatory approvals on construction schedules.

The Company's forward-looking statements, and forward looking statements with respect to the Fund, are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic conditions, changes in tax law, tax rates, exchange rates, interest rates and commodity prices, including but not limited to those risks and uncertainties discussed in this News Release and in the Company's and the Fund's other filings with Canadian securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and the Company's and the Fund's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, the Company and the Fund assume no obligation to publicly update or revise any forward-looking statements made in this News Release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements whether written or oral, attributable to the Company or the Fund or persons acting on the Company's or the Fund's behalf, are expressly qualified in their entirety by these cautionary statements.

NON-GAAP MEASURES

This News Release contains references to the Fund's cash available for distribution. Cash available for distribution represents the Fund's cash available to fund distributions on trust units and ECT preferred units as well as for debt repayments and reserves. This measure is important to shareholders as the Company's objective is to provide a predictable flow of dividends to shareholders and the Company's cash flows are derived from its investment in the Fund. Cash available for distribution is not a measure that has standardized meaning prescribed by United States Generally Accepted Accounting Principles (U.S.GAAP) and is not considered a GAAP measure. Therefore, this measure may not be comparable with similar measures presented by other issuers. The Fund's Cash Available for Distribution reconciliation is as follows:

Three months ended
December 31,
Year ended
December 31,
2013 2012 2013 2012
(millions of Canadian dollars)
Cash provided by operating activities1 70.2 58.3 260.1 266.7
Add/(deduct):
Retrospective pre-Acquisition cash flows1 - (13.2 ) - (82.4 )
Green Power maintenance capital expenditures (0.7 ) - (1.6 ) (0.2 )
Green Power joint ventures cash distributed/(retained) - (1.1 ) 0.8 0.2
Liquids Transportation and Storage maintenance capital expenditures (1.8 ) (5.1 ) (9.9 ) (12.1 )
Change in operating assets and liabilities in the period (2.7 ) 4.9 13.8 23.4
Cash available for distribution 65.0 43.8 263.2 195.6

(1) In accordance with U.S. GAAP, cash provided by operating activities for all 2012 periods has been retrospectively adjusted to furnish comparative information related to the 2012 Acquisition. The impact of the retrospective adjustments has been eliminated from CAFD as these cash flows were not available to distribute to unitholders.

SELECTED FINANCIAL AND OPERATING HIGHLIGHTS

ENBRIDGE INCOME FUND HOLDINGS INC. Three months ended December 31, Year ended
December 31,
2013 2012 2013 2012
(millions of Canadian dollars, except share and per share amounts)
Earnings 22.1 16.6 86.6 59.8
Earnings per common share, basic and diluted $ 0.39 $ 0.39 $ 1.55 $ 1.48
Cash provided by operating activities 22.8 14.0 92.2 53.1
Dividends declared 19.2 15.9 75.3 52.8
Dividends per common share $ 0.340 $ 0.317 $ 1.342 $ 1.244
Number of common shares outstanding 56,491,000 51,723,000
ENBRIDGE INCOME FUND1 Three months ended
December 31,
Year ended
December 31,
2013 20122,3 2013 20122,3
(millions of Canadian dollars, except unit and per unit amounts)
Earnings
Green Power 23.6 13.8 94.2 70.7
Liquids Transportation and Storage 16.5 13.6 50.7 50.3
Alliance Canada 12.8 13.8 54.1 53.2
Corporate (30.8 ) (30.2 ) (119.2 ) (116.4 )
Retrospective Adjustments3 - 5.6 - 31.9
22.1 16.6 79.8 89.7
Cash available for distribution4
Green Power 38.5 26.5 155.8 121.4
Liquids Transportation and Storage 33.1 18.5 130.2 74.2
Alliance Canada 16.8 16.5 68.4 70.9
Corporate (23.4 ) (17.7 ) (91.2 ) (70.9 )
65.0 43.8 263.2 195.6
Cash provided by operating activities3 70.2 58.3 260.1 266.7
Cash distributions declared 56.1 42.2 221.9 154.4
Distributions per trust unit and ECT preferred unit $ 0.405 $ 0.376 $ 1.612 $ 1.462
Number of units outstanding
ECT preferred units 72,465,750 67,233,750
Trust units 65,991,000 61,223,000
Operating Highlights
Green Power (thousands of megawatt hours produced)
Wind 350.8 265.2 1,149.0 877.1
Solar 23.3 15.8 147.8 128.0
Waste Heat 19.7 18.2 70.7 70.6
Liquids Transportation and Storage (thousands of barrels per day)
Westspur System 170.6 173.6 164.3 182.4
Saskatchewan Gathering System 130.1 123.4 119.5 129.8
Weyburn System 31.6 30.8 31.5 31.5
Virden System 26.4 22.3 24.5 23.2
Bakken Expansion 4.1 - 9.8 -
Alliance Canada (millions of cubic feet per day) 1,552.0 1,474.0 1,565.0 1,534.0

(1) Financial Highlights for Enbridge Income Fund have been extracted from financial statements prepared in accordance with U.S. GAAP.

(2) Earnings for the three months and year ended December 31, 2012 have been revised. See Note 4 of the consolidated financial statements of Enbridge Income Fund for the year ended December 31, 2013.

(3) In accordance with U.S. GAAP, earnings and cash provided by operating activities for all 2012 periods have been retrospectively adjusted to furnish comparative information related to the 2012 Acquisition. Financing charges have not been retrospectively adjusted. The impact of the retrospective adjustments has been eliminated from CAFD as these cash flows were not available to distribute to unitholders.

(4) See Non-GAAP Measures.

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