DALLAS, Jan. 15, 2020 /PRNewswire/ -- EnLink
Midstream, LLC (NYSE: ENLC) (EnLink) today announced 2020 financial
guidance, provided an update regarding its financial strategy, and
declared its quarterly common unit distribution for the fourth
quarter of 2019.
Highlights:
- Forecasting 2020 net income of $160
million to $230 million.
- Forecasting adjusted EBITDA growth in 2020 compared to expected
full-year 2019 adjusted EBITDA, which is projected to be in line
with previously announced adjusted EBITDA guidance.
- Resetting quarterly common unit distribution to $0.1875 per unit for the fourth quarter of 2019,
facilitating excess free cash flow generation and enhanced
financial flexibility.
- Expecting to fully self fund current program of 2020 capital
expenditures, supporting modest 2020 adjusted EBITDA growth.
- Planning to allocate excess free cash flow to - in order of
management priority - high-return projects in core areas,
effectively managing leverage, and returning capital to common
unitholders.
- Projecting adjusted EBITDA to continue growing in 2021, as
compared to 2020, contributing to increased excess free cash flow
generation.
"Building on our strong fourth quarter of 2019 adjusted EBITDA
results, today we are taking action to further strengthen EnLink's
financial position over the near and long-term," said Barry E. Davis, EnLink Chairman and Chief
Executive Officer. "Our financial strategy affords us the ability
to use cash flows from the business to self fund our current
program of capital expenditures and distributions and to
effectively manage leverage while enhancing our financial
flexibility going forward.
"Our business generates significant, stable cash flows, with
manageable capital needed to sustain and grow cash flows. Our
diversified, integrated midstream business comprises two growth
platforms, the Permian and Louisiana, and two strong,
free-cash-flow-generating systems, Oklahoma and North
Texas. We are confident our growth and cost-savings
initiatives, supported by our financial strategy, will enhance our
ability to deliver superior returns for investors."
Adjusted EBITDA, distributable cash flow, segment free cash
flow, and excess free cash flow used in this press release are
non-GAAP measures and are explained in greater detail under
"Non-GAAP Financial Information and Other Definitions" below.
2020 Financial
Guidance and Financial Strategy
|
|
|
|
$MM, unless
noted
|
|
2020
Guidance
|
Net income
(1)
|
|
$
|
160
|
|
—
|
$
|
230
|
|
Adjusted EBITDA, net
to EnLink
|
|
$
|
1,070
|
|
—
|
$
|
1,130
|
|
Maintenance Capital,
net to EnLink
|
|
$
|
40
|
|
—
|
$
|
50
|
|
Distributable Cash
Flow
|
|
$
|
715
|
|
—
|
$
|
755
|
|
Distribution
Coverage
|
|
1.95x -
2.05x
|
Growth Capital
Expenditures, net to EnLink
|
|
$275 -
$375
|
Annualized 4Q19
Declared Distribution per Common Unit
|
|
$0.75/
unit
|
Excess Free Cash Flow
(after total capex & distributions)
|
|
$10 - $70
|
Debt to Adjusted
EBITDA, net to EnLink
|
|
4.0x -
4.3x
|
|
____________________________
|
(1)
|
Net income is before
non-controlling interest.
|
- Net income:
-
- Projected to be in the range of $160
million to $230 million in
2020
- Full-year 2019 projected net loss to be below previously
issued guidance as a result of expected fourth quarter impairments
of goodwill in North Texas and
Oklahoma segments.
- Adjusted EBITDA, net to EnLink:
-
- Projected to be in the range of $1.07
billion to $1.13 billion in
2020.
- Expected seasonally strong fourth quarter of 2019 adjusted
EBITDA provides momentum into 2020, with full-year 2019 projected
to be in line with previously announced guidance.
- Adjusted EBITDA expectations for 2020 include approximately
$75 million of expected benefits from
the previously announced plan to enhance profitability of the
existing business and drive organizational efficiency. These
enhancements include new commercial agreements signed across all
segments, optimization of operating expenses and reductions in
general and administrative expenses.
- Excess free cash flow:
-
- Projected to be in the range of $10
million to $70 million in
2020.
- Excess free cash flow is defined as distributable cash flow
less distributions declared on common units and growth capital
expenditures.
- Excess free cash flow for full-year 2020 is expected to
primarily be generated during the second half of 2020, with growth
in excess free cash flow continuing throughout 2021.
- 2020 growth capital expenditures, net to EnLink:
-
- Remains unchanged from the previously announced guidance of
$275 million to $375 million.
- Midpoint of 2020 growth capital expenditures represents an
approximate 50% decrease from expected full-year 2019 growth
capital expenditures.
- EnLink expects to fully self-fund its current program of
capital expenditures (including growth and maintenance capital)
from internally generated cash flows, and does not expect to
require external financing during 2020.
- Fourth quarter of 2019 distribution:
-
- EnLink's Board of Directors declared a fourth quarter of 2019
distribution for EnLink's common units of $0.1875 per common unit.
- The distribution reset is expected to provide financial
flexibility and contributes to excess free cash flow generation
during the second half of 2020 and beyond.
- Debt-to-adjusted EBITDA:
-
- Debt-to-adjusted EBITDA is forecasted to be in the range of
4.0x and 4.3x, as calculated under the terms of EnLink's credit
facility.
- The company's long-term leverage target of below 4.0x remains
unchanged.
2020 Segment
Outlook
|
|
$MM
|
2020 Segment
Profit
|
Permian
|
$
|
200
|
|
—
|
|
$
|
220
|
|
Louisiana
|
$
|
300
|
|
—
|
|
$
|
320
|
|
Oklahoma
|
$
|
435
|
|
—
|
|
$
|
455
|
|
North
Texas
|
$
|
240
|
|
—
|
|
$
|
260
|
|
Permian
- Segment profit is expected to range from $200 million to $220
million, with growth over full-year 2019 expected to be
driven primarily by strong producer activity in both the
Delaware Basin and Midland
Basin.
- The Tiger natural gas processing plant expansion in the
Delaware Basin is progressing
well, and continues to be on track to become operational in the
second half of 2020.
- A series of highly-efficient de-bottlenecking and capacity
enhancement projects are planned for EnLink's Midland Basin natural
gas processing plants.
- With the addition of the Tiger plant and capacity enhancements
in the Midland Basin, total natural gas processing capacity in the
Permian Basin is expected to exceed 1.1 billion cubic feet per day
by the end of 2020.
- The Permian is expected to generate approximately 20% of
EnLink's aggregate segment profit during 2020, with approximately
70% of EnLink's total capital expenditures being allocated to
Permian growth projects. The Permian segment continues to
experience significant growth, and capital spending is expected to
exceed segment profit during 2020, as EnLink continues to invest in
attractive growth opportunities.
Louisiana
- Segment profit is expected to range from $300 million to $320
million, with growth driven primarily by the natural gas
liquids (NGL) business.
- EnLink's NGL system is expected to benefit from full-year
contributions related to the recent Cajun-Sibon expansion, which
became operational during the second quarter of 2019, as well as
further system upgrades and throughput enhancements completed as
part of EnLink's priority to enhance the profitability of its
current business. EnLink expects seasonality trends in 2020 similar
to those in 2019, given the nature of its NGL operations. Results
in the second quarter of 2020 are expected to reflect the seasonal
low, while results in the fourth quarter of 2020 are expected to
reflect the seasonal high.
- Devon Energy Corp. recently announced the sale of its
North Texas position to BKV Oil
and Gas Capital Partners (BKV) in December of 2019. As part of the
transaction, EnLink expects to enter into amendments of existing
commercial arrangements that will enhance EnLink's NGL value chain
in exchange for a modest reduction in processing fees related to
BKV volumes.
- Segment profit contributions from EnLink's natural gas
transport activities in Louisiana
and from its Ohio River Valley operations are forecasted to
decrease slightly as compared to expected full-year 2019
results.
- Louisiana is expected to
represent approximately 25% of EnLink's aggregate segment profit in
2020, with approximately 15% of total capital expenditures expected
to be allocated to Louisiana
operations. Louisiana is expected
to generate significant segment free cash flow during 2020. Segment
free cash flow is defined as segment profit less gross segment
capital expenditures (inclusive of maintenance capital).
Oklahoma
- Segment profit is expected to range from $435 million to $455
million, with results forecasted to be nearly unchanged as
compared to expected full-year 2019 results. Devon's minimum volume commitment related to
EnLink's dedicated acreage in Oklahoma's STACK play will provide cash flow
support through the end of 2020.
- Devon recently announced a
joint venture with Dow Inc. to continue development in the STACK,
with drilling activity on the first 18 wells expected to commence
during mid-2020. Volumes from the joint venture are not forecasted
to begin benefiting EnLink's system until 2021.
- Oklahoma is expected to
represent approximately 35% of EnLink's aggregate segment profit in
2020, with approximately 10% of total capital expenditures expected
to be allocated to Oklahoma.
Oklahoma is expected to generate
significant segment free cash flow in 2020.
North Texas
- Segment profit is expected to range from $240 million to $260
million. The reduction in forecasted segment profit as
compared to expected full-year 2019 results is due to volumetric
decline in this mature basin, along with changes in business mix
and the reduction in processing fees charged to BKV as it
transitions into Devon's ownership
position. The reduction in processing fees is expected to be more
than offset by value chain enhancements to EnLink's Louisiana NGL
business.
- North Texas is expected to
represent 20% of EnLink's aggregate segment profit in 2020, with
less than 5% of total capital expenditures expected to be allocated
to related operations. North Texas
is expected to generate significant segment free cash flow during
2020.
Quarterly Distribution Declared for Fourth Quarter of
2019
The EnLink Board of Directors declared a cash
distribution of $0.1875 per common
unit for the fourth quarter of 2019. The cash distribution for the
fourth quarter of 2019 will be paid on February 13, 2020, to unitholders of record on
January 31, 2020.
2020 Financial Guidance and Financial Strategy Call
Details
EnLink will host a webcast and conference call on
Thursday, January 16, at 8 a.m. Central time to discuss its 2020 financial
guidance and financial strategy. 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/10137557. Here, they will receive their
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.
An accompanying presentation will be posted on the Investors
page at www.EnLink.com after market close Wednesday, January 15.
About EnLink Midstream
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, distributable cash flow available to common
unitholders (distributable cash flow), excess free cash flow, and
segment free cash flow all as defined below:
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, accretion expense associated with asset retirement
obligations, non-cash rent, distributions from unconsolidated
affiliate investments, and loss on secured term loan receivable,
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, litigation settlement
adjustment, loss (gain) on settlement of 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 ("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.
Excess free cash flow is defined as distributable cash flow (as
defined above) less distributions declared on common units and
growth capital expenditures. Segment free cash flow is defined as
segment profit less gross segment capital expenditures (inclusive
of maintenance capital).
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.
Adjusted EBITDA, distributable cash flow, excess free cash flow,
and segment free 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. A reconciliation of these
measures to their most directly comparable GAAP measures is
included in the following table. See ENLC's filings with the
Securities and Exchange Commission for more information.
Other definitions and explanations of terms used in this press
release:
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.
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 loss on
secured term loan receivable. Segment profit (loss) includes
non-cash compensation expenses reflected in operating expenses.
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,
expected financial and operational results associated with certain
projects or growth capital expenditures, results in certain basins,
future cost savings, profitability, financial metrics, operating
efficiencies and other benefits of cost savings or operational
initiatives, our future capital structure and credit ratings,
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 that may reduce our ability to make distributions, (g)
competition 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, LLC's and EnLink Midstream Partners,
LP's filings with the Securities and Exchange Commission, including
EnLink Midstream, LLC's and EnLink Midstream Partners, LP's Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K. Neither EnLink Midstream, LLC nor EnLink
Midstream Partners, LP 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
|
Forward-Looking
Reconciliation of Net Income to Adjusted EBITDA and Excess Free
Cash Flow (1)
|
(All amounts in
millions)
|
(Unaudited)
|
|
|
2020 Outlook
(1)
|
($MM)
|
Low
|
|
Midpoint
|
|
High
|
Net income of
EnLink (2)
|
$
|
160
|
|
|
$
|
195
|
|
|
$
|
230
|
|
Interest expense, net
of interest income
|
220
|
|
|
225
|
|
|
230
|
|
Depreciation and
amortization
|
647
|
|
|
632
|
|
|
618
|
|
Income from
unconsolidated affiliate investments
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
Distribution from
unconsolidated affiliate investments
|
5
|
|
|
7
|
|
|
9
|
|
Unit-based
compensation
|
33
|
|
|
37
|
|
|
40
|
|
Income
taxes
|
52
|
|
|
53
|
|
|
55
|
|
Other (3)
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
Adjusted EBITDA
before non-controlling interest
|
$
|
1,113
|
|
|
$
|
1,144
|
|
|
$
|
1,176
|
|
Non-controlling
interest share of adjusted EBITDA (4)
|
(43)
|
|
|
(44)
|
|
|
(46)
|
|
Adjusted EBITDA,
net to EnLink
|
$
|
1,070
|
|
|
$
|
1,100
|
|
|
$
|
1,130
|
|
Interest expense, net
of interest income
|
(220)
|
|
|
(225)
|
|
|
(230)
|
|
Current taxes and
other
|
(4)
|
|
|
(4)
|
|
|
(4)
|
|
Maintenance capital
expenditures, net to EnLink (5)
|
(40)
|
|
|
(45)
|
|
|
(50)
|
|
Preferred unit
accrued cash distributions (6)
|
(91)
|
|
|
(91)
|
|
|
(91)
|
|
Distributable cash
flow
|
$
|
715
|
|
|
$
|
735
|
|
|
$
|
755
|
|
Common distributions
declared
|
(370)
|
|
|
(370)
|
|
|
(370)
|
|
Growth capital
expenditures, net to EnLink (5)
|
(275)
|
|
|
(325)
|
|
|
(375)
|
|
Excess free cash
flow
|
$
|
70
|
|
|
$
|
40
|
|
|
$
|
10
|
|
____________________________
|
(1)
|
Represents the
forward-looking net income guidance of EnLink Midstream, LLC for
the year ended December 31, 2020. 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, 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.
|
(2)
|
Net income includes
estimated net income attributable to (i) NGP Natural Resources XI,
L.P.'s ("NGP") 49.9% share of net income from the Delaware Basin
JV, (ii) Marathon Petroleum Corp.'s ("Marathon") 50% share of net
income from the Ascension JV., and (iii) other minor
non-controlling interests.
|
(3)
|
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.
|
(4)
|
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.
|
(5)
|
Excludes capital
expenditures that are contributed by other entities and relate to
the non-controlling interest share of our consolidated
entities.
|
(6)
|
Represents the cash
distributions earned by the ENLK Series B Preferred Units and ENLK
Series C Preferred Units. Cash distributions to be paid to holders
of the Series B Preferred Units and Series C Preferred Units are
not available to common unitholders.
|
EnLink Midstream does not provide a reconciliation of
forward-looking Net Cash Provided by Operating Activities to
Adjusted EBITDA and Excess Free Cash Flow because the companies are
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 companies'
control.
Investor Relations: Kate
Walsh, Vice President of Investor Relations & Tax,
214-721-9696, kate.walsh@enlink.com
Media Relations: Jill
McMillan, Vice President of Strategic Relations & Public
Affairs, 214-721-9271, jill.mcmillan@enlink.com
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