I was tempted and took a small position in Enlink (ENLC) a midstream energy services company operating through TX, OK, LA,& crude and condensate segments. Price at $ 1.76 down from around $11 a year ago. The company cut its very generous dividend by 67% a few quarters ago and this saw its price begin its decline, as questions re its credit worthiness may have been at play. It today its dividend is still “generous” at $0.375 per annum or 21.3%.
Highlights from its most recent qtr report this week:
· $260 million net loss reported for first quarter of 2020, which includes non-cash impairment charges of $353 million. Net loss for full-year 2020 projected to range from $123 million to $222 million.
· $260 million of adjusted EBITDA achieved for first quarter of 2020, which includes approximately $6 million of severance expense. Full-year 2020 adjusted EBITDA projected to range from $950 million to $1.025 billion.
· $182 million of net cash provided by operating activities reported for first quarter of 2020.
· $44 million of excess free cash flow generated for first quarter of 2020. Excess free cash flow projected to range from $260 million to $280 million for full-year 2020.
· 14% additional reduction in 2020 capital expenditures (midpoint) to bring 2020 capital expenditures down by approximately 40% relative to original 2020 guidance range. Updated 2020 total capital expenditures guidance range, net to EnLink, is $190 million to $250 million.
· ~67% reduction in common unit distribution payout, as previously announced, since the third quarter of 2019 distribution.
· $50 million of incremental expense savings, announced on March 24, 2020, being targeted across cost structure during 2020. Full-year 2020 cost savings compared to 2019 are projected to be $100 million.
The company has secured good credit terms with no calls on its debt (for five years) but for one in Dec 21, and has reduced costs swiftly and reports that its projected EBITDA for full-yr 2020 will be within the range of 4.4x – 4.7x. It has locked in also good prices for its products, most investor grade companies, for the immediate long term.
Here is its guidance for 2020 ranges for key company-level financial metrics below, $MM unless noted:
Net loss : (123) to (222)
Adjusted EBITDA, net to Enlink 950 to 1,025
Excess free cash flow 260 to 280
Total Capital expenditures, net to Enlink 190 to 250
Annualized 1Q20 declared distribution per common unit $0.375
From their conference call: “With our asset platform generating strong excess free cash flow, we have the ability to effectively manage our leverage and expect to be below our key financial covenant metric which is 5.0 x debt to adjusted EBITDA as calculated by our credit facility.”
It is kinda dicey for energy stocks now, however, I think the company is priced for bankruptcy but will avoid that specter within a year and reward its shareholders well. Appreciate your gander and comments as an investment prospect. |
