Enbridge's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Enbridge (ENB)

Q4 2011 Earnings Call

February 17, 2012 9:00 am ET

Executives

J. L. Balko - Vice President of Human Resources & Administration

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Patrick Donald Daniel - Chief Executive Officer, President, Director, Director of Enbridge Gas Distribution, Director of Enbridge Pipelines and Director of Enbridge Energy Company

J. Richard Bird - Chief Financial Officer and Executive Vice President of Corporate Development

Analysts

Paul Lechem - CIBC World Markets Inc., Research Division

Linda Ezergailis - TD Securities Equity Research

Juan Plessis - Canaccord Genuity, Research Division

Theodore Durbin - Goldman Sachs Group Inc., Research Division

Carl L. Kirst - BMO Capital Markets U.S.

Matthew Akman - Scotiabank Global Banking and Market, Research Division

Andrew M. Kuske - Crédit Suisse AG, Research Division

Robert Kwan - RBC Capital Markets, LLC, Research Division

Steven I. Paget - FirstEnergy Capital Corp., Research Division

Curt N. Launer - Deutsche Bank AG, Research Division

Winfried Fruehauf

David Brandt

Presentation

Operator

Good morning, ladies and gentlemen. Welcome to the Enbridge Inc. Fourth Quarter 2011 Financial Results Conference Call. I would now like to turn the meeting over to Jody Balko.

J. L. Balko

Thank you, Diana. Good morning, and welcome to Enbridge Inc.'s Fourth Quarter 2011 Earnings Call.

With me this morning are Pat Daniel, President and Chief Executive Officer; Richard Bird, Executive Vice President, Chief Financial Officer and Corporate Development; and John Whelen, Senior Vice President and Controller.

This call is webcast, and I encourage those listening on the phone lines to view the supporting slide, which are available on our website. A replay and podcast of the call will be available later today, and a transcript will be posted to our website shortly thereafter. The Q&A format will be the same as always. The initial Q&A session is restricted to the analyst community, and once completed, we will invite questions from the media. I will also remind you that Jonathan Gould, and I will be available after the call for any follow-up questions that you may have.

Before I begin, I like to point out that we may refer to forward-looking information during the call. And by its nature, this information applies certain assumptions and expectations about future outcomes, so we remind you, it is subject to the risks and uncertainties affecting every business, including ours. This slide includes a summary of the more significant factors and risks that might affect future outcomes for Enbridge, which are also discussed more fully in our public disclosure filings available on both SEDAR and EDGAR systems.

And with that, I'd like to turn the call over to Pat Daniel.

Patrick Donald Daniel

Well, thank you, Jody, and good morning, everyone. Thank you for joining us for a review of our fourth quarter and our full year results. Most of you are likely wondering why our 2011 results are being released on an unaudited basis, so I'd just explain that upfront before I move on to the more substantive matters.

Those of you who follow Enbridge Energy Partners will know that they announced a few weeks ago that they had identified a misstatement of earnings from their NGL trucking and marketing business accumulating to $17 million over multiple years. That operation, of course, is just a small part of EEP's overall business, which sells and distributes EEP's NGL volumes. It provides less than 2% of EEP's recurring operating income. The misstatement did not affect EEP's cash flow, and it's not expected to have any impact on future earnings, cash flow or distributions to EEP's unitholders and to Enbridge. We've taken a $3 million noncash charge for our share of EEP's estimated prior period adjustment that's expected to book in its fourth quarter. We're comfortable that we've identified the appropriate magnitude in the misstatements and reflected the appropriate correcting entry in Enbridge's consolidated financial statements. Our external auditors are just now finalizing their detailed review. We decided that we should release our results now as originally planned rather than waiting the formal conclusion of the audit, and of course, we will file our complete financial statements and disclosure documents upon receipt of the audit opinion.

So let me move on now to the results themselves. And as I'm sure you're aware, today, we were very pleased to announce that our adjusted earnings for the fourth quarter were $275 million or $0.37 per share. So on a full year basis, that puts us at $1.11 billion of adjusted earnings, our first time over $1 billion or $1.48 per share. And this is an increase of 11% relative to 2010 adjusted earnings per share, so a very strong year. This was, again, in line with our guidance, finishing right at the top end of our original range of $1.38 to $1.48 per share, highlighting not only just the year-over-year growth of 11% but the reliability of the earnings from our business.

From a shareholder's perspective, that was of course a very strong year. Enbridge Inc. was the largest positive point contributor to the TSX comps and index in 2011, on the strength of our 40% total shareholder return and, of course, the sizable market capitalization of the company. We're equally proud, though, of our long-term performance relative to the market as it again highlights the reliability of our business model. We have a 17% total shareholder return over both of a 5- and 10-year period. Continuing to deliver that long-term shareholder return, is going to be driven by our ability to grow our business through the development of attractive new energy infrastructure projects, and 2011 was a banner year in that regard. The table that you're seeing on your screens summarizes our $8-plus billion of new investment opportunities enterprise-wide that were commercially secured during the year, all of which are expected to contribute to earnings by 2015.

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