Enable Midstream Partners, LP
Q1 2021 Earnings Call Transcript

Published: 3 May 2021

[Operator:]

Good morning. My name is Rebecca and I will be your conference operator today. At this time, I would like to welcome everyone to the Enable Midstream First Quarter 2021 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. Thank you. Mr. Matt Beasley, you may begin your conference.

[Matt Beasley:]

Thank you and good morning everyone. Presenting on this morning's call are Rod Sailor, our President and CEO; and John Laws, our Chief Financial Officer. Earlier this morning, we issued our earnings press release and filed our Form 10-Q with the SEC. Our earnings press release, Form 10-Q filing, and the presentation that accompanies this call are all available in the Investor Relations section of our website. We will also be posting a replay of today's call to the site.

[Rod Sailor:]

Thanks Matt. Good morning and thank you for joining us today. I will begin my remarks on slide 4 with an update on our pending merger with Energy Transfer. In early April, the SEC declared effective the Form S-4 registration statement filed in connection with the merger and our two sponsors, CenterPoint and OG&E have delivered written consents to approve the merger. While these consents are sufficient to approve the transaction, all unit holders as of the record date have the opportunity to make their voices heard by returning their written consents before the consent deadline. Teams from both companies have been hard at work planning for a seamless integration and we expect the transaction to close mid-year this year subject to certain conditions, including Hart Scott Rodino Act clearance. We believe the proposed merger with Energy Transfer will provide significant benefits for our unitholders. The combination of complementary assets provide scope and scale with basin, commodity and customer diversity which have been key elements of Enable’s long-term strategic goals. This all equity transaction provides tax efficiency for unitholders and allows our unitholders to participate in the upside potential as the integration opportunities are realized. Turning to the next slide, I would like to cover a few recent highlights. Enable reported strong first quarter 2021 results due to higher commodity prices, asset optimization and increased billings related to winter storm Uri. DCF exceeded declared distributions to comment unitholders by $189 million for the first quarter of 2021 fully funding expansion capital expenditures for the quarter.

[John Laws:]

Thank you, Rod and good morning everyone. I will now cover a few of our key operational and financial metrics for the quarter. As always, you can find a more detailed and comprehensive overview of our financial and operational results in our first quarter earnings release and in our 10-Q, both of which were released earlier this morning. Turning to our operational performance overview slide. Our natural gas gathered, processed, transported and crude oil and condensate gathered volumes saw decreases compared to the first quarter of 2020, primarily as a result of lower producer activity and the weather related volume curtailments and production freeze offs from winter storm Uri. Looking at our financial results on the next slide, Uri certainly brought with it some operational challenges, but as Rod indicated earlier, our integrated platform of gathering and processing and transportation and storage assets performed very well together and drove higher revenues, gross margin, net income, adjusted EBITDA and DCF for the first quarter of 2021 compared to the first quarter of 2020. And of course I'd be remiss if I did not mention that none of these results would have been achieved if it were not for the tireless dedication of our employees in the field and in the office, who worked long hours through inclement weather to maintain our operations. The increases in our revenues and gross margin were primarily a result of higher commodity prices, asset optimization, and increased billings related to winter storm, Uri, offset by the lower gathering and processing volumes I mentioned earlier, and some unfavorable impacts associated with the changes in the fair value of commodity derivatives. Net income benefited from lower O&M expenses, which was driven by our continued focus on cost discipline, including the benefit of actions taken in prior periods and lower interest expense, as well as the absence of non-cash impairments in the first quarter of 2021 when compared to $28 million of impairments for the first quarter of 2020. Adjusted EBITDA and DCF were up 15% and 22%, respectively, and provided strong cash flow to fully cover our distributions and expansion capital program and improve our leverage profile. One item of note is that during the quarter, the calculation for the rate of distribution on Enable’s series A preferred units converted from a fixed annual rate of 10% to an annualized floating rate based on the sum of a three month LIBOR rate, plus 8.5%.

[Rod Sailor:]

Thanks, John. And thanks to everyone for participating in our call today. Let me also thank all of our employees for the tremendous efforts and accomplishments during the storm and the job they continue to do day in and day out to provide safe and reliable services to our customers and communities. Please stay safe and have a good day.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.