As expected, EnLink (ENLC) outperformed in Q4, riding seasonal tailwinds to reach a net EBITDA of $1039MM for the year which exceeding the top of their revised guidance by $14MM. Although the 2021 guidance disappointed with projects and recovery being delayed into 2022, the overall value of EnLink fundamentally hasn’t changed. At these depressed values, EnLink remains a compelling buy for long-term investors willing to ride out the short-term weakness. For swing traders, they can use the indecisiveness to trade the range.
EnLink came in at $1039MM in net EBITA for the year, exceeding the top end of the revised guidance by $14MM – revised because the guidance at the beginning of 2020 was pegged at $1070-$1130MM in net EBITDA before being revised lower after COVID broke out in Q1 of 2020 to $950-$1025MM. This revised guidance turned out to be too dour.
Segment Profit
In “EnLink to outperform in Q4”, we spoke almost entirely about Gross Operating Margin (GOM), which excludes operating costs and G&A expenses. (Note: EnLink changed the term "gross operating margin" to "adjusted gross margin" but for the purposes of this article and to remain consistent, we will continue to use GOM). We kept the discussion at this level to gauge their performance without the substantial benefit of operating cost and G&A savings that EnLink achieved in 2020. We’ll review things once more at the GOM level later but first, let’s look at their Segment Profit.
EnLink defines GOM as revenues less cost of sales and defines Segment Profit as GOM minus operating costs. It is important to note that Segment Profit still includes profits attributable to joint ventures (which show up almost exclusively in the Permian segment) and it still excludes things like G&A expenses.
Like GOM it can also show important trends in the
