Enbridge (ENB) Q4 2025 earnings review
20th Year of Promises Kept, Despite Renewable Headwinds
Enbridge capped 2025 by hitting its financial guidance for the 20th consecutive year, delivering Adjusted EBITDA of $20.0B (+7% YoY) and DCF of $12.5B (+4% YoY). While the core pipeline and utility businesses showed resilience—particularly Gas Distribution which grew 12% in Q4—the Renewable Power segment stumbled, dropping 31% due to the timing of tax equity earnings. Management raised the dividend by 3% and reaffirmed 2026 guidance, signaling confidence in their $39B secured backlog despite a high-interest rate environment.
🐂 Bull Case
The Gas Distribution segment is firing on all cylinders, with Adjusted EBITDA up 12% in Q4 and 44% for the full year. Rate increases in Ontario and full contributions from acquired U.S. utilities are driving this growth, providing a stable, regulated earnings floor.
The secured project backlog swelled to $39 billion (up 35% since Enbridge Day), including high-quality projects like the Mainline Optimization and data center connections. This provides high visibility for the 5% post-2026 growth target.
🐻 Bear Case
Renewable Power Generation Adjusted EBITDA plunged 31% YoY in Q4 ($211M vs $308M). While management cites the absence of specific tax equity earnings (Fox Squirrel Solar), the segment lacks the linear consistency of the pipeline business.
Interest expense remains a significant headwind, rising to $5.0B in FY25 from $4.5B in FY24. With debt-to-EBITDA at 4.8x (upper end of 4.5-5.0x target) and rates staying higher for longer, DCF per share growth (+3% annual target) is lagging EBITDA growth (+7%).
⚖️ Verdict: 🟢
Solid. Enbridge continues to be a boringly reliable compounder. The weakness in Renewables is a blemish, but the massive growth in Gas Distribution and the sanctioning of data-center-linked projects validate the diversification strategy.
Key Themes
Gas Distribution Surging
Gas Distribution and Storage was the star performer, with Q4 Adjusted EBITDA rising 12% to $1.14B. This was driven by higher rates and customer growth in Ontario, plus favorable weather ($18M positive impact). The full-year impact of U.S. gas utility acquisitions is now fully visible, transforming this segment into a primary growth engine.
Renewable Power Drop-off
The Renewables segment saw a sharp reversal, with Adjusted EBITDA falling to $211M in Q4 from $308M a year ago. The decline was primarily due to the absence of equity earnings related to investment tax credits from Fox Squirrel Solar that boosted the prior period. This lumpiness complicates the quarterly growth narrative.
Data Center Strategy Crystallizing
Management moved from talking about data centers to sanctioning specific projects. They sanctioned 'Cowboy Phase 1' (solar + storage) and 'Easter' (wind) specifically to support Meta Platforms. Additionally, the Gas Transmission segment is advancing over 50 data center opportunities requiring up to 10 Bcf/d of capacity.
Mainline Optimization (MLO)
Enbridge sanctioned Mainline Optimization Phase 1 (MLO1), a $1.4B USD project adding 150 kbpd capacity by 2027. This confirms the strategy of squeezing more volume out of existing steel rather than attempting risky greenfield builds. It includes a 100 kbpd expansion of the Flanagan South Pipeline, fully contracted.
Debt Load & Interest Expense
Financing costs are eating into the operational gains. Full-year interest expense jumped ~$500M to roughly $5.0B. While the Debt-to-EBITDA ratio of 4.8x is within the 4.5x-5.0x policy range, it is near the top end, leaving less room for error if EBITDA growth stalls.
Other KPIs
Stable. Up 4% YoY from $12.0B in 2024. Growth was dampened by higher interest expenses and maintenance capital, lagging the 7% growth in Adjusted EBITDA.
Stable. Up slightly from $2.40B in 24Q4. Higher Mainline tolls and volumes were partially offset by lower contributions from the Gulf Coast and Mid-Continent systems due to lower spot volumes on Flanagan South.
Accelerating. Up from $1.27B in 24Q4, driven by the Venice Extension entering service and favorable contracting, despite the sale of Alliance/Aux Sable interests earlier in the year.
Guidance
Decelerating. The midpoint ($20.5B) implies ~2.7% YoY growth vs the 7% achieved in 2025. This reflects the high base effect of 2025 but remains a record target.
Stable. The midpoint ($5.90) implies ~3% growth over 2025 DCF/share (approx. $5.71 based on 2180M shares). This aligns with the medium-term 3% growth target.
Stable. Represents a 3% increase, marking the 31st consecutive year of dividend hikes. Consistent with the DCF growth profile.
Key Questions
Renewable Volatility
Renewable EBITDA dropped 31% this quarter. Beyond the discrete tax equity items, how should investors model the run-rate of this segment given the lumpiness of project completions and tax credit recognition?
Mainline Apportionment
Mainline volumes were strong (3.1 MMbpd) and apportioned for 9 months. With TMX now online, are you seeing any shift in shipper nominations for 2026 that might reduce this apportionment intensity?
Tariff Exposure
Management mentioned 'predictable results despite tariffs.' Can you quantify the direct exposure of cross-border volumes to potential new U.S. tariffs, particularly for the Liquids Mainline?