EnLink Midstream, LLC

Good day and welcome to NLINK Midstream's third quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Brungardt, Director of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to EndLink's third 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 the markets 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.inly.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 and the appendix of our presentation. We encourage you to review the cautionary statements and other disclosures made in our press release and our SEC filings, including those under the heading risk factors. We'll start today's call with a set of brief prepared remarks by Barry, Ben, and Pablo, and then leave the remainder of the call open for questions and answers. With that, I would now like to turn the call over to Barry Davis.

Thank you, Brian, and good morning, everyone. Thank you for joining us today to discuss our third quarter 2021 results. On the call today, we will discuss our strong financial results, the improving operating environment, and Enlink's active role in the energy transition that is transforming our industry and positioning companies like Enlink for a sustainable future. As I sit here today, I'm inspired by the people at Enlink and what we have achieved over the past 18 months or so since the pandemic changed the world. The Enlink team knows what it takes to show up, fire on all cylinders, and execute with excellence. and I believe it's our focus that has empowered InLink to navigate this season to where we are today. We are strongly positioned to achieve our vision to become the future of midstream by leading in innovation and creating sustainable value. We entered 2021 with a focus on improving our financial flexibility. In addition to that focus, the significantly improved commodity price environment has allowed us to accelerate those plans and make meaningful progress on our company's execution plan. With this backdrop, I will now discuss four key focus areas that are helping us achieve our vision. The first is our relentless focus on operational excellence. By implementing technology, process improvements, and innovations, we have transformed the way we operate and created a lower and sustainable cross structure. We have an intense company-wide focus on improvement and innovation. Every single employee has been empowered to look at how they do things and think, how can this be better? We call this the N-Link way. And while there are more examples than we have time for on this call, a few recent ones include utilizing technology to de-bottleneck our purity product pipelines to accommodate incremental volumes, leveraging real-time data and expertise from a cross-functional team to optimize plant recoveries, and implementing robotic process automation to save hours and hours of spreadsheet manipulation, giving us valuable time to think and make improvements. These are just a few examples of projects that are driving current results higher and creating real long-term value while reducing inefficiencies and transforming our business. The second is taking full advantage of NLINC's large-scale positions in key basins, which strategically provide us with scale and access to strong customers and demand markets. In the Permian, we are well aligned with solid operators, and we're growing with them through capital-efficient, high-return projects like Project Warhorse and now Project Phantom. In Louisiana, we have over 4,000 miles of pipeline in the ground connecting to that diversified and growing demand markets. This positions us well to unlock additional growth through attractive downstream projects we are working on, which are similar to our Venture Global project last year. In addition, our unique position along the Mississippi River corridor gives us the capability to utilize existing pipelines for CO2 transportation in one of the highest emitting areas in the United States, while meeting existing commercial arrangements, continuing the services we provide today. And lastly, Our substantial positions in Oklahoma and North Texas, which are generating significant cash flow, are well positioned to benefit from increased activity given the strength in natural gas and NGO prices. The third area is our active role in the energy transition. Enlink is committed to seeking out innovative projects that create value for our unit holders while reducing the impact of carbon emissions. Earlier this year, we set a meaningful path to net zero by 2050, and yesterday we announced a 15-year agreement to sell 100,000 metric tons per year of CO2 emitted from our Bridgeport plant to be purified for use in food, beverage, and similar applications. This agreement advances us down our decarbonization path while making a modest profit. Our carbon solution group continues to build our vision for providing customers a complete capture, transportation, and sequestration offering, and we continue to make solid progress on opportunities with potential customers. Our unique ability to utilize existing pipeline in the ground to transport CO2 to potential sequestration locations nearby allow us to offer a cost-efficient transportation solution for all parties involved. and of equal importance, significantly reduce the environmental impact when compared to new pipeline construction in environmentally sensitive areas. We remain very excited about the prospects for this new business opportunity and will continue to provide updates as the team executes on our vision. And lastly, the financial discipline that has enabled us to have best in class free cash flow yield while growing the business. Entering this year, our initial guidance implied flat adjusted EBITDA year over year at the midpoint of the range, excluding the impact of the expiring MVC. We then increased guidance by approximately 7% at the midpoint in June, and now we expect to end the year in the upper end of the new range of 1.02 to 1.06 billion, delivering growth over 2020. We also entered this year forecasting leverage to be 4.3 times at the midpoint of our guidance. while today we are within arm's reach of our near-term leverage goal of under four times, which will enable us to take a more balanced approach to our use of free cash flow. Moving to our third quarter results, we exceeded our internal forecast, excluding the modest impact of Hurricane Ida, and achieved adjusted EBITDA of $256 million in the third quarter of 2021. The robust EBITDA coupled with our capital-light approach allowed us to continue to generate free cash flow after distributions of $81 million for the quarter. Importantly, the solid results were not only driven by continued focus on efficiencies and cost containment, but also by throughput volume momentum across our operating systems. Producers have only recently begun to take advantage of the more supportive commodity price environment, and we view the recent commodity strength as a game changer for operations in 2022 and beyond. The clear takeaway for our investors should be that there is a modest uplift in activity for the remainder of 2021, and we anticipate meaningful upside potential in 2022 and beyond. In summary, Our business showed solid results during the third quarter, and our outlook continues to improve. With that, I'll turn it over to Ben to discuss our operational update.