EnLink Midstream Reports Third Quarter 2024 Results
Highlights
- Reported net income of
$43.1 million and net cash provided by operating activities of$260.1 million for the third quarter of 2024. - Generated adjusted EBITDA, net to EnLink, of
$345.0 million for the third quarter of 2024. - Delivered
$122.4 million of free cash flow after distributions (FCFAD) for the third quarter of 2024. - Repurchased approximately
$45.4 million [1] of common units in the third quarter of 2024. EnLink has repurchased approximately$145 million of common units through the first nine months of 2024. - Contracted an additional 200,000 million British thermal units per day (MMBtu/d) of long-term transportation capacity delivering natural gas to end users in
Louisiana . - Subsequent to the quarter, EnLink continued to simplify its capital structure with the redemption of all remaining Series C preferred units.
- Subsequent to the
ONEOK transaction closing,S&P Global Ratings upgraded EnLink's credit rating to "BBB" from "BBB-." EnLink remains on "Credit Watch Positive" atFitch Ratings Inc. with a "BBB-" credit rating.
"EnLink delivered a very strong third quarter due to the consistent execution of our strategy," EnLink President and Chief Executive Officer
Adjusted EBITDA and FCFAD used in this press release are non-GAAP measures and are explained in greater detail under "Non-GAAP Financial Information" below.
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1 Includes |
Third Quarter 2024 Financial Results and Highlights
$MM, unless noted |
Third Quarter 2024 |
Second Quarter 2024 |
Third Quarter 2023 |
Net Income (1) |
43 |
67 |
66 |
Adjusted EBITDA, net to EnLink |
345 |
306 |
342 |
Net Cash Provided by Operating |
260 |
163 |
274 |
Capex, Plant Relocation Costs, net to |
78 |
103 |
126 |
Free Cash Flow After Distributions |
122 |
53 |
66 |
Debt to Adjusted EBITDA, net to EnLink (2) |
3.3x |
3.3x |
3.4x |
Common Units Outstanding (3) |
457,073,081 |
461,449,461 |
456,851,424 |
(1) Net income is before non-controlling interest. |
(2) Calculated according to credit facility leverage covenant. |
(3) Outstanding common units as of |
2024 Financial Guidance Update
EnLink remains on pace to achieve the midpoint of its previously announced 2024 adjusted EBITDA guidance range of
Third Quarter 2024 Segment Updates
- Segment profit for the third quarter of 2024 was
$142.9 million , including operating expenses related to plant relocation of$2.1 million and unrealized derivative gains of$2.6 million . Excluding plant relocation operating expenses and unrealized derivative activity, segment profit in the third quarter of 2024 grew approximately 28% sequentially and grew approximately 26% over the third quarter of 2023. - Average natural gas gathering volumes for the third quarter of 2024 were flat compared to the second quarter of 2024 but were approximately 10% higher compared to the third quarter of 2023.
- Average natural gas processing volumes for the third quarter of 2024 were approximately 1% higher compared to the second quarter of 2024 and approximately 10% higher compared to the third quarter of 2023. EnLink continues to benefit from consistent producer drilling and completion activity from its diversified customer mix of more than 15 producers.
- Average crude gathering volumes for the third quarter of 2024 were approximately 2% higher compared to the second quarter of 2024 and approximately 11% higher compared to the third quarter of 2023.
- Segment profit for the third quarter of 2024 was
$99.7 million , including unrealized derivative gains of$11.3 million . Excluding unrealized derivative activity, segment profit in the third quarter of 2024 grew approximately 12% sequentially but decreased 5% compared to the third quarter of 2023. - Average natural gas transportation volumes for the third quarter of 2024 were approximately 9% lower compared to the second quarter of 2024 but were approximately 4% higher compared to the third quarter of 2023.
- Natural gas liquids (NGL) fractionation volumes for the third quarter of 2024 were approximately 6% lower compared to the second quarter of 2024 and 9% lower compared to the third quarter of 2023.
- EnLink continues to experience robust demand for last mile delivery of natural gas to end users in southeast
Louisiana . EnLink successfully executed 200,000 MMBtu/d of long-term transportation contracts, and the new contracted capacity is expected to generate approximately$15 million of incremental annual cash flows beginning in the fourth quarter of 2024. - EnLink expects to benefit from normal seasonal strength in the NGL business in the fourth quarter of 2024.
- Segment profit for the third quarter of 2024 was
$105.4 million , including unrealized derivative gains of$3.0 million . Excluding unrealized derivative activity, segment profit in the third quarter of 2024 was flat sequentially but decreased approximately 6% over the third quarter of 2023. The prior-year quarter comparison reflects the impact of the previously disclosed one-time contract reset in the first quarter of 2024. - Average natural gas gathering volumes for the third quarter of 2024 were approximately 2% higher compared to the second quarter of 2024 and approximately 2% higher compared to the third quarter of 2023.
- Average natural gas processing volumes for the third quarter of 2024 were approximately 2% higher compared to the second quarter of 2024 and approximately 1% higher compared to the third quarter of 2023.
- Average crude gathering volumes during the third quarter of 2024 were approximately 1% lower compared to the second quarter of 2024 and approximately 19% lower compared to the third quarter of 2023.
- Segment profit for the third quarter of 2024 was
$58.8 million , including unrealized derivative gains of$1.1 million . Excluding unrealized derivative activity, segment profit in the third quarter of 2024 grew approximately 8% sequentially but decreased approximately 17% compared to the third quarter of 2023. The prior-year quarter comparison reflects the impact from the previously disclosed one-time contract reset in the first quarter of 2024. - Average natural gas gathering and transportation volumes for the third quarter of 2024 were approximately 3% higher compared to the second quarter of 2024 but were approximately 3% lower compared to the third quarter of 2023.
- Average natural gas processing volumes for the third quarter of 2024 were approximately 4% higher compared to the second quarter of 2024 but were approximately 3% lower compared to the third quarter of 2023.
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Non-GAAP Financial Information
This press release contains non-generally accepted accounting principles financial measures that we refer to as adjusted EBITDA and free cash flow after distributions (FCFAD).
We define adjusted EBITDA as net income (loss) plus (less) interest expense, net of interest income; depreciation and amortization; impairments; (income) loss from unconsolidated affiliate investments; distributions from unconsolidated affiliate investments; (gain) loss on disposition of assets; (gain) loss on extinguishment of debt; (gain) loss on litigation settlement; unit-based compensation; income tax expense (benefit); unrealized (gain) loss on commodity derivatives; costs associated with the relocation of processing facilities; accretion expense associated with asset retirement obligations; transaction costs; non-cash expense related to changes in the fair value of contingent consideration; (non-cash rent); and (non-controlling interest share of adjusted EBITDA from joint ventures).
We define free cash flow after distributions as adjusted EBITDA, net to ENLC, plus (less) (growth and maintenance capital expenditures, excluding capital expenditures that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities); (interest expense, net of interest income); (distributions declared on common units); (cash distributions earned by the Series B Preferred Units and the Series C Preferred Units); (payment to redeem mandatorily redeemable non-controlling interest); (costs associated with the relocation of processing facilities, excluding costs that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities); non-cash interest (income)/expense; (contributions to investment in unconsolidated affiliates); (payments to terminate interest rate swaps); (current income taxes); (earnout payments related to the Amarillo Rattler Acquisition and the Central Oklahoma Acquisition); (non-cash gain associated with a lease modification); and proceeds from the sale of equipment and land.
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 is used as a metric in our short-term incentive program for compensating employees and in our performance awards for executives.
Adjusted EBITDA and free cash flow after distributions, 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 EnLink's filings with the
Other definitions and explanations of terms used in this press release:
Segment profit (loss) is defined as revenues, less cost of sales (exclusive of operating expenses and depreciation and amortization), less operating expenses. Segment profit (loss) includes non-cash compensation expenses reflected in operating expenses. See "Item 8. Financial Statements and Supplementary Data - Note 16 - Segment Information" in ENLC's Annual Report on Form 10-K for the year ended
The Ascension JV is a joint venture between a subsidiary of EnLink and a subsidiary of Marathon Petroleum Corporation in which EnLink owns a 50% interest and Marathon Petroleum Corporation owns a 50% interest. The Ascension JV, which began operations in
The
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," "shall," "should," "plan," "predict," "anticipate," "intend," "estimate," "expect," "continue," and similar expressions. Such forward-looking statements include, but are not limited to, statements about
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 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.
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Selected Financial Data |
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(All amounts in millions except per unit amounts) |
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(Unaudited) |
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Three Months Ended
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Nine Months Ended
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2024 |
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2023 |
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2024 |
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2023 |
Total revenues |
$ 1,608.4 |
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$ 1,746.2 |
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$ 4,807.4 |
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$ 5,043.8 |
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Operating costs and expenses: |
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Cost of sales, exclusive of operating expenses and depreciation |
1,067.6 |
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1,244.7 |
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3,280.6 |
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3,535.6 |
Operating expenses |
134.0 |
|
143.3 |
|
441.8 |
|
412.5 |
Depreciation and amortization |
186.1 |
|
163.8 |
|
514.0 |
|
489.5 |
Impairments |
71.0 |
|
20.7 |
|
85.2 |
|
20.7 |
(Gain) loss on disposition of assets |
0.7 |
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(0.6) |
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(0.1) |
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(1.8) |
General and administrative |
30.0 |
|
30.4 |
|
115.4 |
|
87.8 |
Total operating costs and expenses |
1,489.4 |
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1,602.3 |
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4,436.9 |
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4,544.3 |
Operating income |
119.0 |
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143.9 |
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370.5 |
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499.5 |
Other income (expense): |
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Interest expense, net of interest income |
(67.7) |
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(67.9) |
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(199.8) |
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(205.2) |
Gain on extinguishment of debt |
9.5 |
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— |
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9.5 |
|
— |
Income (loss) from unconsolidated affiliate investments |
(11.6) |
|
1.0 |
|
(12.1) |
|
(3.7) |
Other income (expense) |
0.9 |
|
(0.6) |
|
5.2 |
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(0.2) |
Total other expense |
(68.9) |
|
(67.5) |
|
(197.2) |
|
(209.1) |
Income before non-controlling interest and income taxes |
50.1 |
|
76.4 |
|
173.3 |
|
290.4 |
Income tax expense |
(7.0) |
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(10.6) |
|
(13.2) |
|
(40.5) |
Net income |
43.1 |
|
65.8 |
|
160.1 |
|
249.9 |
Net income attributable to non-controlling interest |
29.1 |
|
36.3 |
|
93.5 |
|
107.9 |
Net income attributable to ENLC |
$ 14.0 |
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$ 29.5 |
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$ 66.6 |
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$ 142.0 |
Net income attributable to ENLC per unit: |
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Basic common unit |
$ (0.03) |
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$ 0.06 |
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$ 0.08 |
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$ 0.31 |
Diluted common unit |
$ (0.03) |
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$ 0.06 |
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$ 0.08 |
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$ 0.30 |
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Weighted average common units outstanding (basic) |
458.6 |
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459.3 |
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453.8 |
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464.1 |
Weighted average common units outstanding (diluted) |
458.6 |
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463.9 |
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456.4 |
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468.4 |
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Reconciliation of Net Income to Adjusted EBITDA |
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(All amounts in millions) |
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(Unaudited) |
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Three Months Ended
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Nine Months Ended
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2024 |
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2023 |
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2024 |
|
2023 |
Net income |
$ 43.1 |
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$ 65.8 |
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$ 160.1 |
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$ 249.9 |
Interest expense, net of interest income |
67.7 |
|
67.9 |
|
199.8 |
|
205.2 |
Depreciation and amortization |
186.1 |
|
163.8 |
|
514.0 |
|
489.5 |
Impairments |
71.0 |
|
20.7 |
|
85.2 |
|
20.7 |
(Income) loss from unconsolidated affiliate investments |
11.6 |
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(1.0) |
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12.1 |
|
3.7 |
Distributions from unconsolidated affiliate investments |
— |
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0.1 |
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— |
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2.4 |
(Gain) loss on disposition of assets |
0.7 |
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(0.6) |
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(0.1) |
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(1.8) |
Gain on extinguishment of debt |
(9.5) |
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— |
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(9.5) |
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— |
Loss on litigation settlement (1) |
— |
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— |
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23.0 |
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— |
Unit-based compensation |
5.7 |
|
5.7 |
|
16.5 |
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14.2 |
Income tax expense |
7.0 |
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10.6 |
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13.2 |
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40.5 |
Unrealized (gain) loss on commodity derivatives |
(18.0) |
|
22.9 |
|
4.1 |
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19.0 |
Costs associated with the relocation of processing facilities (2) |
2.1 |
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2.9 |
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28.3 |
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5.0 |
Other (3) |
0.1 |
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0.1 |
|
1.6 |
|
0.6 |
Adjusted EBITDA before non-controlling interest |
367.6 |
|
358.9 |
|
1,048.3 |
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1,048.9 |
Non-controlling interest share of adjusted EBITDA from joint |
(22.6) |
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(17.0) |
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(59.6) |
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(49.7) |
Adjusted EBITDA, net to ENLC |
$ 345.0 |
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$ 341.9 |
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$ 988.7 |
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$ 999.2 |
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(1) |
Relates to the loss incurred to settle litigation that arose from Winter Storm Uri and is not part of our ongoing operations. |
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(2) |
Represents cost incurred to execute discrete, project-based strategic initiatives aimed at realigning available processing capacity from our |
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(3) |
Includes transaction costs, non-cash expense related to changes in the fair value of contingent consideration, accretion expense associated with asset retirement obligations, and non-cash rent, which relates to lease incentives pro-rated over the lease term. |
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(4) |
Non-controlling interest share of adjusted EBITDA from joint ventures includes NGP Natural Resources XI, L.P. ("NGP")'s 49.9% share of adjusted EBITDA from the |
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Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA |
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and Free Cash Flow After Distributions |
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(All amounts in millions except ratios and per unit amounts) |
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(Unaudited) |
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Three Months Ended
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
Net cash provided by operating activities |
$ 260.1 |
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$ 274.2 |
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$ 716.0 |
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$ 862.0 |
Interest expense (1) |
66.1 |
|
66.3 |
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195.2 |
|
200.3 |
Costs associated with the relocation of processing facilities (2) |
2.1 |
|
2.9 |
|
28.3 |
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5.0 |
Loss on litigation settlement (3) |
— |
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— |
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23.0 |
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— |
Other (4) |
1.3 |
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0.9 |
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5.3 |
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1.7 |
Changes in operating assets and liabilities which (provided) used |
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Accounts receivable, accrued revenues, inventories, and other |
(63.5) |
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156.9 |
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(52.0) |
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(92.8) |
Accounts payable, accrued product purchases, and other |
101.5 |
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(142.3) |
|
132.5 |
|
72.7 |
Adjusted EBITDA before non-controlling interest |
367.6 |
|
358.9 |
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1,048.3 |
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1,048.9 |
Non-controlling interest share of adjusted EBITDA from joint |
(22.6) |
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(17.0) |
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(59.6) |
|
(49.7) |
Adjusted EBITDA, net to ENLC |
345.0 |
|
341.9 |
|
988.7 |
|
999.2 |
Growth capital expenditures, net to ENLC (6) |
(48.9) |
|
(97.4) |
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(192.3) |
|
(264.7) |
Maintenance capital expenditures, net to ENLC (6) |
(21.6) |
|
(18.3) |
|
(55.9) |
|
(52.5) |
Interest expense, net of interest income |
(67.7) |
|
(67.9) |
|
(199.8) |
|
(205.2) |
Distributions declared on common units |
(62.4) |
|
(57.5) |
|
(183.0) |
|
(174.3) |
ENLK preferred unit cash distributions earned (7) |
(13.7) |
|
(24.6) |
|
(61.9) |
|
(72.2) |
Payment to redeem mandatorily redeemable non-controlling |
— |
|
— |
|
— |
|
(10.5) |
Costs associated with the relocation of processing facilities, net |
(1.9) |
|
(1.7) |
|
(17.7) |
|
5.0 |
Contributions to investment in unconsolidated affiliates |
(5.3) |
|
(8.7) |
|
(25.4) |
|
(58.4) |
Other (9) |
(1.1) |
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0.4 |
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(3.0) |
|
1.2 |
Free cash flow after distributions |
$ 122.4 |
|
$ 66.2 |
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$ 249.7 |
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$ 167.6 |
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Actual declared distribution to common unitholders |
$ 62.4 |
|
$ 57.5 |
|
$ 183.0 |
|
$ 174.3 |
Distribution coverage |
3.94 x |
|
3.98 x |
|
3.64 x |
|
3.75 x |
Distributions declared per ENLC unit |
$ 0.1325 |
|
$ 0.1250 |
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$ 0.3975 |
|
$ 0.3750 |
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(1) |
Net of amortization of debt issuance costs, net discount of senior unsecured notes, and designated cash flow hedge, 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. |
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(2) |
Represents cost incurred to execute discrete, project-based strategic initiatives aimed at realigning available processing capacity from our |
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(3) |
Relates to the loss incurred to settle litigation that arose from Winter Storm Uri and is not part of our ongoing operations. |
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(4) |
Includes utility credits redeemed, distributions from unconsolidated affiliate investments in excess of earnings, transaction costs, current income tax expense, and non-cash rent, which relates to lease incentives pro-rated over the lease term. |
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(5) |
Non-controlling interest share of adjusted EBITDA from joint ventures includes NGP's 49.9% share of adjusted EBITDA from the |
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(6) |
Excludes capital expenditures and costs associated with the relocation of processing facilities that were contributed by other entities and relate to the non-controlling interest share of our consolidated entities. |
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(7) |
Represents the cash distributions earned by the Series B Preferred Units and Series C Preferred Units, which are not available to common unitholders. |
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(8) |
In |
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(9) |
Includes current income tax expense, earnout payments related to the Amarillo Rattler Acquisition and the Central Oklahoma Acquisition, a reduction for non-cash gain associated with a lease modification, and proceeds from the sale of surplus or unused equipment and land, which occurred in the normal operation of our business. |
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Operating Data |
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(Unaudited) |
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Three Months Ended
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Nine Months Ended
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2024 |
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2023 |
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2024 |
|
2023 |
Midstream Volumes: |
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Permian Segment |
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Gathering and Transportation (MMBtu/d) |
2,029,700 |
|
1,840,800 |
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1,987,600 |
|
1,752,800 |
Processing (MMBtu/d) |
1,864,700 |
|
1,699,700 |
|
1,820,300 |
|
1,626,500 |
Crude Oil Handling (Bbls/d) |
195,500 |
|
176,100 |
|
183,800 |
|
158,100 |
Louisiana Segment |
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Gathering and Transportation (MMBtu/d) |
2,561,500 |
|
2,468,900 |
|
2,711,100 |
|
2,501,900 |
Crude Oil Handling (Bbls/d) |
— |
|
18,600 |
|
— |
|
17,800 |
NGL Fractionation (Bbls/d) |
164,400 |
|
180,800 |
|
174,400 |
|
181,000 |
Brine Disposal (Bbls/d) |
— |
|
3,400 |
|
— |
|
3,000 |
Oklahoma Segment |
|
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|
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Gathering and Transportation (MMBtu/d) |
1,242,900 |
|
1,223,000 |
|
1,202,200 |
|
1,218,600 |
Processing (MMBtu/d) |
1,192,700 |
|
1,178,200 |
|
1,152,400 |
|
1,182,400 |
Crude Oil Handling (Bbls/d) |
17,700 |
|
21,900 |
|
18,700 |
|
25,300 |
North Texas Segment |
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Gathering and Transportation (MMBtu/d) |
1,516,400 |
|
1,563,100 |
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1,479,900 |
|
1,591,100 |
Processing (MMBtu/d) |
705,300 |
|
729,000 |
|
683,900 |
|
737,800 |
Investor Relations:
Media Relations:
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