10-QPeriod: Q1 FY2017

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 8, 2017For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported a strong first quarter in 2017, driven by higher commodity prices and increased volumes across its midstream energy infrastructure segments. Total revenues surged by over 45% year-over-year, indicating robust demand for its services. The company also continued to invest in its extensive network of pipelines and facilities, signaling confidence in future growth. Distributable cash flow remained strong, supporting distributions to unitholders and providing ample coverage. Financially, EPD demonstrated improved profitability with a significant increase in net income attributable to limited partners, driven by higher gross operating margins in key segments, particularly NGL Pipelines & Services and Crude Oil Pipelines & Services. The company's proactive management of its debt obligations and its strong liquidity position, evidenced by substantial available borrowing capacity and cash on hand, provide a solid foundation for ongoing operations and strategic growth initiatives. The completion of the Azure acquisition in April 2017 further expands EPD's asset base and market reach.

Financial Highlights

43 data points
Beta

Revenue

$7.32B

27.1% Gross Margin

Net Income

$760.70M

10.4% Net Margin

Total Assets

$51.53B

Cash & Equivalents

$62.40M

Free Cash Flow

$445.20M

Financial Statements
Beta
Revenue$7.32B
Cost of Revenue$5.34B
Gross Profit$1.98B
Operating Expenses$6.38B
Operating Income$1.03B
Interest Expense$249.30M
Net Income$760.70M
Shares Outstanding (Diluted)2.13B

Key Highlights

  • 1Total revenues increased by approximately 45% to $7.32 billion for the three months ended March 31, 2017, compared to $5.01 billion for the same period in 2016.
  • 2Net income attributable to limited partners rose by over 15% to $760.7 million, or $0.36 per diluted unit, reflecting improved operational performance.
  • 3Gross operating margin increased by approximately 12% to $1.47 billion, driven by strong performance in NGL Pipelines & Services and Crude Oil Pipelines & Services segments.
  • 4The company's distributable cash flow was $1.13 billion for the quarter, resulting in a distribution coverage ratio of 1.3x, demonstrating its ability to cover distributions to limited partners.
  • 5Capital expenditures were $460.1 million, primarily focused on growth projects, indicating continued investment in expanding its midstream infrastructure.
  • 6The company announced plans to build the Shin Oak NGL Pipeline and expand its ethylene infrastructure, signaling strategic growth initiatives.
  • 7EPD completed the acquisition of Azure Midstream Partners, L.P. in April 2017, further enhancing its natural gas gathering and processing capabilities.

Frequently Asked Questions

The primary driver of revenue growth was a combination of higher sales prices and increased sales volumes across its various segments, particularly in NGLs, natural gas, petrochemicals, refined products, and crude oil marketing.

The company maintained a strong liquidity position with $4.06 billion in consolidated liquidity, including $4.0 billion of available borrowing capacity and $62.4 million in unrestricted cash. Debt management included timely repayment of certain notes and continued access to capital markets for funding future needs.

EPD expects to invest between $2.7 billion and $3.0 billion in growth capital projects for 2017, including the Azure acquisition. Significant ongoing projects include the PDH and iBDH facilities, the Midland-to-Sealy pipeline segment, and the ninth NGL fractionator, indicating a strong commitment to expanding its midstream asset base.

All segments showed improved gross operating margin compared to the prior year. NGL Pipelines & Services led with $856.0 million, followed by Crude Oil Pipelines & Services with $264.6 million, Natural Gas Pipelines & Services with $170.9 million, and Petrochemical & Refined Products Services with $181.8 million.