EnLink Midstream LLC (ENLC) - Update June 6

[dan_s]

ENLC closed on their "Simplification Plan" with ENLK and it is now a C-Corp. (no K-1 and better suited for an IRA).

ENLC closed on June 6 at $10.18. It raises dividends quarter after quarter. The Q1 dividend was $0.279/unit for an annual yield over 10.9%.

ENLC is a midstream company with a market-cap of approximately $5 Billion.

The Simplification Plan has created some confusion over the forecasting and Q1 included a big non-cash write-off of Goodwill. Based on the company's guidance, they should generate more than enough DCF to reach their goal of 5% to 8% annual dividend growth.

In the last 3 months, 4 ranked analysts set 12-month price targets for ENLC. The average price target among the analysts is $13.33. 13 analysts' reports are included in First Call's price target of $13.61.

We will be sending out an updated profile on it on Friday.

[ChuckGeb]

Why did earnings and cash flow go down so much from 2018 to 2019 and thereafter?
What are the rights of the Preferred B and C units on ENLK’s cash flow?
I am very leery when I see Preferred B and C units lurking still after a “simplification” transaction.

[dan_s]

EnLink:
> Dip in Product Sales on row 9 of $214.9 million was more than offset by the decline of $240.9 million in Cost of Sales on row 17.
> Net Income: Losses in both Q4 and Q1 are result of non-cash impairment charges; writeoff of Goodwill on ENLK's books in Q1.
> Cash flow from operations in Q1 2019 was $216.8 million, which compares to $214.3 million on Q1 2018 and $224.8 million in Q4 2018. < This is my primary focus.
> My valuation of $14.00 perunit is based on Common + Subordinated Units on row 47.

Note that my forecast/valuation is based on the low end of the company's guidance of Net Income of $18 to $28 million. Excluding the non-cash writeoff of Goodwill, EnLink's Net Income in 2019 should be $204 to $214 million. < This should push cash from from operations close to $1 Billion.

First Call's price target is $13.61 per unit.