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PRNewswire 30-Apr-2019 5:04 PM
DALLAS, April 30, 2019 /PRNewswire/ -- EnLink Midstream, LLC (NYSE:ENLC) (EnLink or ENLC) reported financial results for the first quarter of 2019 and announced accelerated, capital-efficient growth plans in the Permian Basin. EnLink also updated and reaffirmed certain full-year 2019 company-level financial guidance measures.
First Quarter 2019 Highlights
"EnLink continues to execute well on our long-term strategic plan, and we are very pleased with the strong, diversified cash flows generated by our differentiated midstream platform," said Michael J. Garberding, EnLink President and Chief Executive Officer. "We continue to grow our strategic asset positions by putting highly efficient capital to work. Our long-term growth outlook remains robust, with an exciting runway of high-return projects to bring on line, and we remain committed to creating and returning value to our stakeholders with a focus on capital allocation."
First Quarter 2019 Financial Results
Accelerated Growth in the Permian Basin and Related Asset Expansions
Full-Year 2019 Financial and Operational Guidance Update
First Quarter 2019 Segment Updates
Oklahoma:
Permian Basin:
Louisiana:
North Texas:
First Quarter 2019 Earnings Call Details
ENLC will hold a conference call to discuss first quarter 2019 results on Wednesday, May 1, at 8 a.m. Central Time (9 a.m. Eastern Time). The dial-in number for the call is 1-855-656-0924. Callers outside the United States should dial 1-412-542-4172. Participants can also preregister for the conference call by navigating to http://dpregister.com/10129646 where they will receive dial-in information upon completion of preregistration. Interested parties can access an archived replay of the call on the Investors' page of EnLink's website at www.EnLink.com.
About the EnLink Midstream Companies
EnLink Midstream reliably operates a differentiated midstream platform that is built for long-term, sustainable value creation. EnLink's best-in-class services span the midstream value chain, providing natural gas, crude oil, condensate, and NGL capabilities. Our purposely built, integrated asset platforms are in premier production basins and core demand centers, including the Permian Basin, Oklahoma, North Texas, and the Gulf Coast. EnLink's strong financial foundation and commitment to execution excellence drive competitive returns and value for our employees, customers, and investors. Headquartered in Dallas, EnLink is publicly traded through EnLink Midstream, LLC (NYSE:ENLC). Visit www.EnLink.com to learn how EnLink connects energy to life.
Non-GAAP Financial Information and Other Definitions
This press release contains non-generally accepted accounting principles financial measures that we refer to as adjusted EBITDA, and distributable cash flow available to common unitholders (distributable cash flow). We define adjusted EBITDA as net income (loss) plus interest expense, provision (benefit) for income taxes, depreciation and amortization expense, impairments, unit-based compensation, (gain) loss on non-cash derivatives, (gain) loss on disposition of assets, (gain) loss on extinguishment of debt, successful transaction costs (if any), accretion expense associated with asset retirement obligations, non-cash rent, and distributions from unconsolidated affiliate investments less payments under onerous performance obligations, non-controlling interest, income (loss) from unconsolidated affiliate investments and non-cash revenue from contract restructuring. We define distributable cash flow as adjusted EBITDA (defined above, net to ENLC), less interest expense, interest rate swaps, current income taxes and other non-distributable cash flows, accrued cash distributions on EnLink Midstream Partners, LP's (ENLK) Series B Cumulative Convertible Preferred Units (the "ENLK Series B Preferred Units") and ENLK's Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the "ENLK Series C Preferred Units") paid or expected to be paid, and maintenance capital expenditures, excluding maintenance capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities.
Distribution coverage is calculated by dividing distributable cash flow by distributions declared to common unitholders.
Growth capital expenditures generally include capital expenditures made for acquisitions or capital improvements that we expect will increase our asset base, operating income or operating capacity over the long-term. Maintenance capital expenditures generally include capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and to extend their useful lives.
EnLink believes these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and previously-reported results and a meaningful measure of the company's cash flow after it has satisfied the capital and related requirements of its operations. In addition, adjusted EBITDA achievement is a primary metric used in our short-term incentive program for compensating employees.
Segment profit (loss) is defined as operating income (loss) plus general and administrative expenses, depreciation and amortization, (gain) loss on disposition of assets, impairments, and (gain) loss on litigation settlement. Segment profit (loss) includes non-cash compensation expenses reflected in operating expenses. See "Item 8. Financial Statements and Supplementary Data - Note 15 - Segment Information" in ENLC's Annual Report on Form 10-K for the year ended December 31, 2018, and, when available, "Item 1. Financial Statements - Note 14-Segment Information" in ENLC's Quarterly Report on Form 10-Q for the three months ended March 31, 2019, for further information about segment profit (loss).
Adjusted EBITDA and distributable cash flow, as defined above, are not measures of financial performance or liquidity under GAAP. They should not be considered in isolation or as an indicator of EnLink's performance. Furthermore, they should not be seen as a substitute for metrics prepared in accordance with GAAP. Reconciliations of these measures to their most directly comparable GAAP measures are included in the following tables. See ENLC's filings with the Securities and Exchange Commission for more information.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain assumptions, risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially from those indicated herein. Therefore, you should not rely on any of these forward-looking statements. All statements, other than statements of historical fact, included in this press release constitute forward-looking statements, including but not limited to statements identified by the words "forecast," "may," "believe," "will," "should," "plan," "predict," "anticipate," "intend," "estimate," and "expect" and similar expressions. Such forward-looking statements include, but are not limited to, statements about guidance, projected or forecasted financial and operating results, when additional capacity will be operational, timing for completion of construction or expansion projects, expected financial and operational results associated with certain projects or growth capital expenditures, future operational results of our customers, results in certain basins, future rig count information, objectives, strategies, expectations, and intentions, and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect our financial condition, results of operations, or cash flows include, without limitation (a) potential conflicts of interest of Global Infrastructure Partners ("GIP") with us and the potential for GIP to favor GIP's own interests to the detriment of the unitholders, (b) GIP's ability to compete with us and the fact that it is not required to offer us the opportunity to acquire additional assets or businesses, (c) a default under GIP's credit facility could result in a change in control of us, could adversely affect the price of our common units, and could result in a default under our credit facility, (d) the dependence on Devon for a substantial portion of the natural gas and crude that we gather, process, and transport, (e) developments that materially and adversely affect Devon or other customers, (f) adverse developments in the midstream business may reduce our ability to make distributions, (g) continually competing for crude oil, condensate, natural gas, and NGL supplies and any decrease in the availability of such commodities, (h) decreases in the volumes that we gather, process, fractionate, or transport, (i) construction risks in our major development projects, (j) our ability to receive or renew required permits and other approvals, (k) changes in the availability and cost of capital, including as a result of a change in our credit rating, (l) operating hazards, natural disasters, weather-related issues or delays, casualty losses, and other matters beyond our control, (m) impairments to goodwill, long-lived assets and equity method investments, and (n) the effects of existing and future laws and governmental regulations, including environmental and climate change requirements and other uncertainties. These and other applicable uncertainties, factors, and risks are described more fully in EnLink Midstream Partners, LP's and EnLink Midstream, LLC's filings with the Securities and Exchange Commission, including EnLink Midstream Partners, LP's and EnLink Midstream, LLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Neither EnLink Midstream Partners, LP nor EnLink Midstream, LLC assumes any obligation to update any forward-looking statements.
The EnLink management team based the forecasted financial information included herein on certain information and assumptions, including, among others, the producer budgets / forecasts to which EnLink has access as of the date of this press release and the projects / opportunities expected to require growth capital expenditures as of the date of this press release. The assumptions, information, and estimates underlying the forecasted financial information included in the guidance information in this press release are inherently uncertain and, though considered reasonable by the EnLink management team as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the forecasted financial information. Accordingly, there can be no assurance that the forecasted results are indicative of EnLink's future performance or that actual results will not differ materially from those presented in the forecasted financial information. Inclusion of the forecasted financial information in this press release should not be regarded as a representation by any person that the results contained in the forecasted financial information will be achieved.
EnLink Midstream, LLC |
|||||||
Selected Financial Data |
|||||||
(All amounts in millions except per unit amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
2019 |
2018 |
||||||
Total revenues |
$ |
1,779.2 |
$ |
1,761.7 |
|||
Cost of sales |
1,363.4 |
1,381.5 |
|||||
Gross operating margin |
415.8 |
380.2 |
|||||
Operating costs and expenses, excluding cost of sales: |
|||||||
Operating expenses |
114.5 |
109.2 |
|||||
General and administrative |
51.4 |
27.5 |
|||||
Loss on disposition of assets |
— |
0.1 |
|||||
Depreciation and amortization |
152.1 |
138.1 |
|||||
Impairments |
186.5 |
— |
|||||
Total operating costs and expenses, excluding cost of sales |
504.5 |
274.9 |
|||||
Operating income (loss) |
(88.7) |
105.3 |
|||||
Other income (expense): |
|||||||
Interest expense, net of interest income |
(49.6) |
(44.5) |
|||||
Income from unconsolidated affiliates |
5.3 |
3.0 |
|||||
Other income |
— |
0.3 |
|||||
Total other expense |
(44.3) |
(41.2) |
|||||
Income (loss) before non-controlling interest and income taxes |
(133.0) |
64.1 |
|||||
Income tax provision |
(1.8) |
(7.0) |
|||||
Net income (loss) |
(134.8) |
57.1 |
|||||
Net income attributable to non-controlling interest |
41.5 |
44.7 |
|||||
Net income (loss) attributable to ENLC |
$ |
(176.3) |
$ |
12.4 |
|||
Net income (loss) attributable to ENLC per unit: |
|||||||
Basic common unit |
$ |
(0.45) |
$ |
0.07 |
|||
Diluted common unit |
$ |
(0.45) |
$ |
0.07 |
EnLink Midstream, LLC |
|||||||
Reconciliation of Net Income to Adjusted EBITDA |
|||||||
(All amounts in millions except ratios and per unit amounts) (Unaudited) |
|||||||
Three Months Ended |
|||||||
2019 |
2018 |
||||||
Net income (loss) |
$ |
(134.8) |
$ |
57.1 |
|||
Interest expense, net of interest income |
49.6 |
44.5 |
|||||
Depreciation and amortization |
152.1 |
138.1 |
|||||
Impairments |
186.5 |
— |
|||||
Income from unconsolidated affiliates |
(5.3) |
(3.0) |
|||||
Distributions from unconsolidated affiliates |
2.5 |
6.0 |
|||||
Loss on disposition of assets |
— |
0.1 |
|||||
Unit-based compensation |
11.1 |
5.1 |
|||||
Income tax provision |
1.8 |
7.0 |
|||||
Loss on non-cash derivatives |
2.0 |
3.5 |
|||||
Payments under onerous performance obligation offset to other current and long-term liabilities |
(4.5) |
(4.5) |
|||||
Transaction costs (1) |
13.5 |
— |
|||||
Other (2) |
0.3 |
1.0 |
|||||
Adjusted EBITDA before non-controlling interest |
274.8 |
254.9 |
|||||
Non-controlling interest share of adjusted EBITDA from joint ventures (3) |
(6.6) |
(3.6) |
|||||
Adjusted EBITDA, net to ENLC |
$ |
268.2 |
$ |
251.3 |
(1) |
Costs incurred related to the acquisition of all outstanding publicly held ENLK common units. |
(2) |
Includes accretion expense associated with asset retirement obligations and non-cash rent, which relates to lease incentives pro-rated over the lease term. |
(3) |
Non-controlling interest share of adjusted EBITDA includes NGP Natural Resources XI, L.P.'s ("NGP") 49.9% share of adjusted EBITDA from the Delaware Basin JV, Marathon Petroleum Corporation's 50% share of adjusted EBITDA from the Ascension JV, and other minor non-controlling interests. |
EnLink Midstream, LLC |
|||
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA |
|||
and Distributable Cash Flow |
|||
(All amounts in millions) |
|||
(Unaudited) |
|||
Three Months Ended |
|||
2019 |
|||
Net cash provided by operating activities |
$ |
264.0 |
|
Interest expense (1) |
49.5 |
||
Current income tax expense |
1.0 |
||
Transaction costs (2) |
13.5 |
||
Other (3) |
(1.5) |
||
Changes in operating assets and liabilities which (provided) used cash: |
|||
Accounts receivable, accrued revenues, inventories and other |
(97.4) |
||
Accounts payable, accrued product purchases, and other accrued liabilities (4) |
45.7 |
||
Adjusted EBITDA before non-controlling interest |
274.8 |
||
Non-controlling interest share of adjusted EBITDA from joint ventures (5) |
(6.6) |
||
Adjusted EBITDA, net to ENLC |
268.2 |
||
Interest expense, net of interest income |
(49.6) |
||
Current taxes and other |
(2.5) |
||
Maintenance capital expenditures, net to ENLC (6) |
(8.5) |
||
ENLK preferred unit accrued cash distributions (7) |
(22.7) |
||
Distributable cash flow |
$ |
184.9 |
|
Actual declared distribution to common unitholders |
$ |
137.3 |
|
Distribution coverage |
1.35x |
||
Distributions declared per limited partner unit |
$ |
0.279 |
(1) |
Net of amortization of debt issuance costs and discount and premium, which are included in interest expense but not included in net cash provided by operating activities, and non-cash interest income, which is netted against interest expense but not included in adjusted EBITDA. |
(2) |
Costs incurred related to the acquisition of all outstanding publicly held ENLK common units. |
(3) |
Includes accruals for settled commodity swap transactions. |
(4) |
Net of payments under onerous performance obligation offset to other current and long-term liabilities. |
(5) |
Non-controlling interest share of adjusted EBITDA from joint ventures includes NGP's 49.9% share of adjusted EBITDA from the Delaware Basin JV, Marathon Petroleum Corporation's 50% share of adjusted EBITDA from the Ascension JV, and other minor non-controlling interests. |
(6) |
Excludes maintenance capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities. |
(7) |
Represents the cash distributions earned by the ENLK Series B Preferred Units and ENLK Series C Preferred Units of $16.7 million and $6.0 million, respectively, for the three months ended March 31, 2019. Cash distributions to be paid to holders of the ENLK Series B Preferred Units and ENLK Series C Preferred Units are not available to common unitholders. |
Distributable cash flow is not presented for the three months ended March 31, 2018 because distributable cash flow was not used as a supplemental liquidity measure by ENLC during 2018. ENLC began using distributable cash flow as a supplemental liquidity measure in 2019 as a result of the simplification of our corporate structure in the simplification transaction. |
EnLink Midstream, LLC |
|||||
Operating Data |
|||||
(Unaudited) |
|||||
Three Months Ended |
|||||
2019 |
2018 |
||||
Midstream Volumes: |
|||||
Permian Segment |
|||||
Gathering and Transportation (MMBtu/d) |
657,500 |
424,000 |
|||
Processing (MMBtu/d) |
712,000 |
442,000 |
|||
Crude Oil Handling (Bbls/d) |
147,400 |
107,900 |
|||
North Texas Segment |
|||||
Gathering and Transportation (MMBtu/d) |
1,683,100 |
1,766,800 |
|||
Processing (MMBtu/d) |
729,800 |
752,100 |
|||
Oklahoma Segment |
|||||
Gathering and Transportation (MMBtu/d) |
1,244,400 |
1,047,900 |
|||
Processing (MMBtu/d) |
1,231,600 |
1,069,400 |
|||
Crude Oil Handling (Bbls/d) |
29,200 |
8,200 |
|||
Louisiana Segment |
|||||
Gathering and Transportation (MMBtu/d) |
2,070,500 |
2,222,900 |
|||
Processing (MMBtu/d) |
468,000 |
441,900 |
|||
Crude Oil Handling (Bbls/d) |
15,000 |
11,500 |
|||
NGL Fractionation (Gals/d) |
6,973,800 |
6,343,500 |
|||
Brine Disposal (Bbls/d) |
3,500 |
2,800 |
EnLink Midstream, LLC |
||||||||||||
Forward-Looking Reconciliation of Net Income to Full-Year Adjusted EBITDA Guidance (1) |
||||||||||||
(All amounts in millions) |
||||||||||||
(Unaudited) |
||||||||||||
2019 Outlook |
||||||||||||
Low |
Midpoint |
High |
||||||||||
Net income of EnLink Midstream, LLC (2) |
$ |
18 |
$ |
23 |
$ |
28 |
||||||
Interest expense, net of interest income |
211 |
212 |
213 |
|||||||||
Depreciation and amortization |
594 |
624 |
654 |
|||||||||
Impairments |
187 |
187 |
187 |
|||||||||
Income from unconsolidated affiliate investments |
(15) |
(16) |
(17) |
|||||||||
Distributions from unconsolidated affiliate investments |
14 |
15 |
16 |
|||||||||
Unit-based compensation |
44 |
46 |
49 |
|||||||||
Income taxes |
57 |
65 |
73 |
|||||||||
Payments under onerous performance obligation offset to other current and long-term liabilities |
(10) |
(10) |
(10) |
|||||||||
Cash receipts from contract restructuring (3) |
17 |
17 |
17 |
|||||||||
Other (4) |
(1) |
(1) |
(1) |
|||||||||
Adjusted EBITDA before non-controlling interest |
1,116 |
1,162 |
1,209 |
|||||||||
Non-controlling interest share of adjusted EBITDA from joint ventures (5) |
(31) |
(32) |
(34) |
|||||||||
Adjusted EBITDA, net to EnLink Midstream, LLC |
1,085 |
1,130 |
1,175 |
|||||||||
Interest expense, net of interest income |
(211) |
(212) |
(213) |
|||||||||
Current taxes and other |
(12) |
(11) |
(10) |
|||||||||
Maintenance capital expenditures (6) |
(40) |
(50) |
(60) |
|||||||||
Preferred unit accrued distributions (7) |
(92) |
(92) |
(92) |
|||||||||
Distributable cash flow |
$ |
730 |
$ |
765 |
$ |
800 |
(1) |
Represents the forward-looking net income guidance for the year ended December 31, 2019 adjusted to include $187 million of non-cash impairment recognized in the first quarter of 2019. The forward-looking net income guidance excludes the potential impact of gains or losses on derivative activity, gains or losses on disposition of assets, impairment expense (other than the $187 million impairment recognized in the first quarter of 2019), gains or losses as a result of legal settlements, gains or losses on extinguishment of debt, and the financial effects of future acquisitions. The exclusion of these items is due to the uncertainty regarding the occurrence, timing and/or amount of these events. |
EnLink does not provide a reconciliation of forward-looking net cash provided by operating activities to adjusted EBITDA because the company is unable to predict with reasonable certainty changes in working capital, which may impact cash provided or used during the year. Working capital includes accounts receivable, accounts payable and other current assets and liabilities. These items are uncertain and depend on various factors outside the company's control. |
|
(2) |
Net income includes estimated net income attributable to (i) NGP's 49.9% share of net income from the Delaware Basin JV, (ii) Marathon Petroleum Corp.'s 50% share of net income from the Ascension JV., and (iii) other minor non-controlling interests. |
(3) |
Cash receipts from contract restructuring represents the amount due during 2019 under our secured loan receivable assumed with the gathering and processing contract restructured in May 2018. |
(4) |
Includes (i) estimated accretion expense associated with asset retirement obligations and (ii) estimated non-cash rent, which relates to lease incentives pro-rated over the lease term. |
(5) |
Non-controlling interest share of adjusted EBITDA includes estimates for (i) NGP's 49.9% share of adjusted EBITDA from the Delaware Basin JV, (ii) Marathon's 50% share of adjusted EBITDA from the Ascension JV and (iii) other minor non-controlling interests. |
(6) |
Excludes maintenance capital expenditures that are contributed by other entities and relate to the non-controlling interest share of our consolidated entities. |
(7) |
Represents the cash distributions earned by the ENLK Series B Preferred Units and ENLC Series C Preferred Units. Cash distributions to be paid to holders of the ENLK Series B Preferred Units and ENLC Series C Preferred Units are not available to common unitholders. |
Investor Relations: Kate Walsh, Vice President of Investor Relations, 214-721-9696, kate.walsh@enlink.com
Media Relations: Jill McMillan, Vice President of Public & Industry Affairs, 214-721-9271, jill.mcmillan@enlink.com
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SOURCE EnLink Midstream, LLC