Analyzing EnLink Midstream Partners’ 3Q17 Earnings

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Analyzing EnLink Midstream Partners’ 3Q17 Earnings PART 1 OF 4

What Drove EnLink Midstream Partners’ 3Q17 Earnings Growth?

3Q17 adjusted EBITDA

EnLink Midstream Partners (ENLK) and its GP (general partner) EnLink Midstream LLC (ENLC) reported their 3Q17 earnings on October 31, 2017. ENLK’s peer Energy Transfer Partners (ETP) is scheduled to report its earnings on November 7, 2017. For a pre-earnings review on Energy Transfer Partners, read What to Expect from ETP and ETE in 3Q17.

What Drove EnLink Midstream Partners’ 3Q17 Earnings Growth?

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EnLink Midstream Partners’ adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose to $216.8 million in 3Q17 from $197.5 million in 3Q16, a YoY (year-over-year) rise of 9.8%. It also beat its 3Q17 EBITDA estimate by 2.0%. The YoY growth was mainly driven by strong throughput volume growth for its Texas and Oklahoma segments. It was partially offset by declines for its Crude and Condensate segment. We’ll look at the segmental performance drivers in the next part of this series.

3Q17 distributable cash flows

EnLink Midstream Partners’ distributable cash flow fell 2.8% YoY in the third quarter despite EBITDA growth and flat distribution. That’s due to a rise in preferred distribution related to preference shares issued during the recent quarters. The fall in distributable cash flow resulted in a fall in its distribution coverage below one. Earlier, ENLK expected to resume distribution beginning in 2018. However, that seems unlikely due to the decline in distribution coverage.

On distribution growth resumption, Barry Davis, ENLK’s CEO (chief executive officer), said, “We’ve consistently said that the three metrics that we would look at would be first of all distribution coverage at 1.1 times or better. Secondly leverage at 3.5 to 4 times or better and then also the sustainability or the projection of the business going forward to continue to increase the distribution once we restart the growth of the distribution.”

The company’s management expects to resume distribution growth at ENLC ahead of ENLK due to its better coverage position (1.17x by the end of 3Q17).


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