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EnLink Midstream, LLC (ENLC)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 adjusted EBITDA was $345.0M, up sequentially vs Q2 ($306.0M) and modestly above Q3 2023 ($341.9M), with net income of $43.1M and FCFAD of $122.4M; diluted EPS was -$0.03 as reported on GAAP basis .
  • Louisiana contracted 200,000 MMBtu/d of new long-term gas transport, expected to add ~$15M annual cash flow starting Q4 2024; Permian segment profit rose sharply sequentially on producer activity and the Tiger II plant relocation .
  • 2024 guidance maintained: adjusted EBITDA $1.31–$1.41B (on pace to midpoint), capex/relocation/investment $435–$485M (near midpoint), FCFAD tracking to upper end $265–$315M .
  • Capital structure simplified post quarter (Series C redemption) and credit strengthened: S&P upgraded EnLink to BBB following ONEOK’s closing of a controlling interest; Fitch Credit Watch Positive at BBB- .

What Went Well and What Went Wrong

What Went Well

  • Permian segment profit surged to $142.9M; excluding plant relocation OpEx and unrealized derivatives, profit grew ~28% QoQ and ~26% YoY, supported by stable producer activity and higher volumes .
  • Louisiana secured 200,000 MMBtu/d in new long-term transport contracts, expected to add ~$15M incremental annual cash flows beginning Q4 2024; management expects seasonal NGL strength in Q4 .
  • “EnLink delivered a very strong third quarter due to the consistent execution of our strategy,” said CEO Jesse Arenivas, highlighting growth projects and continued focus on FCFAD and flexibility .

What Went Wrong

  • GAAP diluted EPS was -$0.03 in Q3 vs $0.07 in Q2 and $0.06 in Q3 2023; GAAP results included a $71.0M impairment and other items (e.g., gains on debt extinguishment, unrealized derivatives) .
  • Louisiana NGL fractionation volumes declined 6% QoQ and 9% YoY; Louisiana gas transportation volumes fell 9% QoQ (still +4% YoY) .
  • North Texas and Oklahoma segment profits remained below prior-year levels due to previously disclosed one-time contract resets and volume softness earlier in the year .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Total revenues ($USD Millions)$1,746.2 $1,551.1 $1,608.4
Operating income ($USD Millions)$143.9 $139.6 $119.0
Net income ($USD Millions)$65.8 $67.0 $43.1
Net income attributable to ENLC ($USD Millions)$29.5 $38.1 $14.0
Diluted EPS ($USD)$0.06 $0.07 -$0.03
Adjusted EBITDA, net to ENLC ($USD Millions)$341.9 $306.0 $345.0
Net cash provided by operating activities ($USD Millions)$274.2 $162.6 $260.1
Free Cash Flow After Distributions ($USD Millions)$66.2 $53.3 $122.4
Debt to Adjusted EBITDA (x)3.4x 3.3x 3.3x

Segment profit (reported):

Segment Profit ($USD Millions)Q2 2024Q3 2024
Permian$93.1 $142.9
Louisiana$84.3 $99.7
Oklahoma$103.5 $105.4
North Texas$52.4 $58.8

Operating KPIs:

KPIQ1 2024Q2 2024Q3 2024
Permian Gathering & Transportation (MMBtu/d)1,899,300 2,033,300 2,029,700
Permian Processing (MMBtu/d)1,745,300 1,850,400 1,864,700
Permian Crude Handling (Bbls/d)164,700 191,100 195,500
Louisiana Gathering & Transportation (MMBtu/d)2,753,900 2,819,700 2,561,500
NGL Fractionation (Bbls/d)183,700 175,300 164,400

Non-GAAP reconciliation highlights (Q3 2024): impairment $71.0M, unrealized commodity derivative gain $(18.0)M, gain on extinguishment of debt $(9.5)M, relocation costs $2.1M; adjusted EBITDA net to ENLC $345.0M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($B)FY 2024$1.31–$1.41 $1.31–$1.41; on pace to midpoint Maintained
Capex + Plant Relocation + Investment Contributions ($MM)FY 2024$435–$485 Near midpoint of $435–$485 Maintained
FCFAD ($MM)FY 2024$265–$315 On pace to upper end of $265–$315 Maintained (upper end targeted)
Quarterly Distribution per Unit ($)Q3 2024$0.1325 (Q2) $0.1325 (Q3) Maintained
Earnings CallQ3 2024Webcast/call typicalNo conference call held N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/data center-driven power demandManagement highlighted potential for natural gas to meet rising 24/7 baseload demand; cited forecasts and North Texas positioning .No call; continued to emphasize Louisiana end-user delivery demand in press release .Structural tailwind; commercialization focus in Louisiana.
Louisiana gas market strategy3-phase plan: Phase 1 recontracting uplift; Phase 2 debottlenecking (“Henry Hub to River”); Phase 3 storage expansions (JISH FID ~8 Bcf) .Added 200,000 MMBtu/d LT contracts; ~$15M annual cash flow from Q4 .Executing and monetizing; seasonal NGL strength expected in Q4 .
CCS execution statusCCS slower to develop; pursuing financial agreement for Pecan Island value; ongoing talks with majors .No new CCS specifics in Q3 release .Delayed ramp; focus on base business cash generation.
Permian capacity/relocationsTiger II in service (May); next plant likely Midland and another relocation; robust producer activity .Strong sequential profit; gathering/processing volumes modestly higher QoQ .Positive utilization; potential next-phase capacity decision ahead.
Waha basis exposure~90% fee-based; commodity exposure hedged; limited behavior impact; Matterhorn JV contribution expected in Q4 .No incremental detail in Q3 release; seasonal strength and JV contributions implied .Basis risk contained; new egress supports volumes.
Capital allocationExpanded buyback to $250M; reduced Series B preferred; maintaining IG leverage .Redeemed Series C preferred; S&P upgrade to BBB post ONEOK closing .Ongoing simplification; credit quality improved.

Management Commentary

  • “EnLink delivered a very strong third quarter due to the consistent execution of our strategy… we remain focused on our primary goal of creating unitholder value and financial flexibility by generating solid free cash flow after distributions” — Jesse Arenivas, President & CEO .
  • Commercial update (prior quarter context): “We will expand our JISH working gas storage capacity to approximately 10 Bcf… cost approximately $85 million… begin injecting gas in 2028… low to mid-single-digit EBITDA multiples” — EVP & CCO Dilanka Seimon .
  • Financial posture (prior quarter context): “Leverage ratio of 3.3x… maintained common unit distribution of $0.1325… repurchase authorization expanded to $250M… proactively reduced Series B preferreds” — EVP & CFO Ben Lamb .

Q&A Highlights

  • No Q3 2024 conference call was held, per the company’s scheduling announcement .
  • Context from Q2 Q&A:
    • Permian capacity: Next plant likely Midland via relocation; decision progressing with customers .
    • Waha basis and egress: Commodity exposure hedged; minimal producer behavior impact; Matterhorn expected in service Sept with Q4 contribution .
    • Louisiana projects: Multiple debottlenecking and storage opportunities; Phase 3 storage expansion pipeline under evaluation .

Estimates Context

  • S&P Global consensus estimates for Q3 2024 (EPS, revenue, EBITDA) were unavailable due to a missing Capital IQ mapping for ENLC; as a result, we cannot present vs-consensus comparisons at this time [SpgiEstimatesError].
  • Given the sequential uplift in adjusted EBITDA ($345.0M vs $306.0M) and strong FCFAD, sell-side models may need to reflect: stronger Permian run-rate, incremental Louisiana contracted cash flows (~$15M annualized from Q4), and seasonal NGL tailwinds in Q4 .

Key Takeaways for Investors

  • Sequential acceleration: Adjusted EBITDA rose to $345.0M with broad-based segment strength, particularly Permian; FCFAD of $122.4M supports capital returns .
  • Louisiana monetization: New 200,000 MMBtu/d contracts should add ~$15M annual cash flow from Q4; expect seasonal NGL strength to further support Q4 .
  • GAAP noise vs non-GAAP: Q3 GAAP diluted EPS (-$0.03) reflects non-cash impairment ($71M) and other items; adjusted EBITDA better reflects underlying operations .
  • Capital structure and credit: Series C redemption and S&P upgrade to BBB post ONEOK closing improve flexibility and potentially lower cost of capital over time .
  • Guidance intact with upside to FCFAD: 2024 EBITDA range maintained; FCFAD tracking to upper end — supports distribution sustainability and buybacks .
  • Watch Q4 catalysts: Seasonal NGL uplift, Louisiana contract start, Matterhorn JV contribution, and potential updates on Permian capacity decisions .
  • Strategic overhang: ONEOK’s controlling interest and stated intent to pursue acquisition of remaining units introduces potential corporate action; monitor implications for valuation and liquidity .

Sources: Q3 results press release ; Q2 results press release and transcript ; Q1 results press release and transcript ; Q3 distribution declaration ; Series C redemption ; ONEOK closing controlling interest ; Q3 scheduling (no call) .