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EnLink Midstream, LLC. (ENLC) CEO Barry Davis on Q1 2021 Results - Earnings Call Transcript

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Dynex Capital, Inc. (DX) Q1 2021 Earnings Conference Call May 5, 2021 9:00 AM ET

Company Participants

Brian Braungart - Director, Investor Relations

Barry Davis - Chairman & Chief Executive Officer

Ben Lamb - Executive Vice President & Chief Operating Officer

Pablo Mercado - Executive Vice President & Chief Financial Officer

Conference Call Participants

Shneur Gershuni - UBS

Michael Cusumano - Hiking and Energy.

T.J. Schultz - RBC Capital Markets

Chris Jeffery - Mizuho

Chris Tillett - Barclays


Good day and Welcome to EnLink Midstream's First Quarter 2021 Earnings Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Brian Braungart Director of Investor Relations. Please go ahead.

Brian Braungart

Thank you and good morning, everyone. Welcome to EnLink's First Quarter of 2021 Earnings Call. Participating on the call today are Barry Davis, Chairman and Chief Executive Officer; Ben Lamb, Executive Vice President and Chief Operating Officer; and Pablo Mercado, Executive Vice President and Chief Financial Officer.

We issued our earnings release and presentation after market closed yesterday and those materials are on our website. A replay of today's call will also be made available on our website at www.enlink.com. Today's discussion will include forward-looking statements, including expectations and predictions within the meaning of the federal securities laws. The forward-looking statements speak only as of the date of this call and we undertake no obligation to update or revise. Actual results may differ materially from our projections and a discussion of factors that could cause actual results to differ can be found in our press release, presentation and SEC filings.

This call also includes discussion pertaining to certain non-GAAP financial measures. Definitions of these measures as well as reconciliations of comparable GAAP measures are available in our press release

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Comments (5)

Tom850870 profile picture
One thing you might take away from these comments is the implications of this one:

" . . . reducing leverage below four times continues to be our objective, and we will likely set a lower objective over time."

To me, that says, don't count on us bumping the distribution anytime soon, because once we reach the leverage goal, we're going to push it farther. I can't argue with that, but we're not likely to see much capital appreciation until they start growing the distribution, and that might be . . . 2023? They might be looking at a $300-400 FCF target in 2022 and think, let's just push that to debt and buybacks, maybe 3 to 1. Some day I think we'll see some clawback of the 2019-2020 cuts, but not soon.
If this is how they intend to go about using FCF, unit price will stay range bound, as it has for quite sometime. It will keep trading in a channel intra-quarter. I have written calls from time to time and generated income. Even this month, I am short a small $5 call position against a higher cost tranche of units. At $5 price point, this name only yields 7.5%. Not shabby, but that price is acting as a ceiling for now. At least, the tax efficiency of distribution is welcome in the interim.
Tom850870 profile picture
@nkvbradenton Yeah, that could be. I looked at selling calls for all my holdings, but only CEQP was compelling, around a buck for Oct $35's. But I'll monitor it.
LifeScienceInvesting profile picture
I have a different view. Reducing leverage reduces uncertainty and may lead to a higher multiple. I like the direction of the company and will continue to hold (unless valuation gets significantly ahead of fundamentals or company execution begins to lag guidance).
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