10-QPeriod: Q2 FY2017

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 4, 2017For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported strong financial results for the six months ended June 30, 2017, with revenues increasing by 31% to $13.9 billion compared to the same period in the prior year. Net income attributable to limited partners also saw a significant rise of 16% to $1.41 billion. The company highlighted growth across its key segments, particularly in Crude Oil Pipelines & Services, which saw a 32% increase in gross operating margin, and Petrochemical & Refined Products Services, up 12%. These improvements were driven by higher commodity prices and increased volumes across several of its midstream operations, including pipelines, terminals, and processing facilities. EPD also announced several strategic growth projects, including expansions for natural gas processing capacity in the Permian Basin, the development of an ethylene marine export terminal, and the construction of a new NGL fractionator. The company's liquidity remains strong, with substantial available borrowing capacity. Management expressed confidence in the company's ability to fund future capital expenditures and operational needs through a combination of operating cash flows and access to capital markets. The successful appeal in the ETP litigation matter was also a notable positive development during the period.

Financial Highlights

43 data points
Beta

Revenue

$6.61B

28.4% Gross Margin

Net Income

$653.70M

9.9% Net Margin

Total Assets

$51.31B

Cash & Equivalents

$28.60M

Free Cash Flow

$776.60M

Financial Statements
Beta
Revenue$6.61B
Cost of Revenue$4.73B
Gross Profit$1.88B
Operating Expenses$5.78B
Operating Income$938.70M
Interest Expense$245.80M
Net Income$653.70M
Shares Outstanding (Diluted)2.15B

Key Highlights

  • 1Total revenues increased by 31% to $13.9 billion for the first six months of 2017 compared to the prior year.
  • 2Net income attributable to limited partners rose 16% to $1.41 billion for the first six months of 2017.
  • 3Gross operating margin for Crude Oil Pipelines & Services increased by 32%, driven by higher volumes and favorable mark-to-market results.
  • 4The company announced several strategic growth projects, including expansions in the Permian Basin and new infrastructure for ethylene and NGLs.
  • 5EPD secured a favorable outcome in the ETP litigation matter on appeal, reversing a significant prior judgment against the company.
  • 6Consolidated debt decreased slightly to $20.03 billion from $21.12 billion, while liquidity remained strong with $4.07 billion in available borrowing capacity.
  • 7Capital expenditures for growth projects totaled $1.0 billion for the first six months of 2017, with significant investments planned for future projects.

Frequently Asked Questions

Revenue growth was primarily driven by higher sales prices for NGLs and crude oil, as well as increased sales volumes across NGL, crude oil, natural gas, petrochemical, and refined product marketing activities.

Capital spending decreased year-over-year to $1.33 billion from $1.95 billion, primarily due to lower spending on growth projects that were completed or nearing completion in 2016, partially offset by the acquisition of Azure Midstream Partners.

The company successfully appealed a significant jury verdict in the ETP matter. The Court of Appeals reversed the trial court's judgment, which had awarded ETP substantial damages, reaffirming the importance of written contracts. This outcome removes a significant potential liability for EPD.

Key initiatives include expanding natural gas processing capacity in the Permian Basin, developing an ethylene marine export terminal, building a ninth NGL fractionator, constructing the Shin Oak NGL Pipeline, and developing ethylene storage and transportation projects.