10-QPeriod: Q3 FY2018

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 8, 2018For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported strong financial results for the nine months ended September 30, 2018, driven by significant increases in revenues across all business segments, particularly in NGL and Crude Oil Pipelines & Services. The company saw a substantial rise in gross operating margin, largely due to higher commodity prices and increased volumes handled by its midstream assets. EPD continued to invest heavily in growth capital projects, including expansions in NGL fractionation, natural gas processing, and crude oil export capabilities, demonstrating a commitment to expanding its integrated midstream network. The company's financial performance reflects robust operational execution and strategic expansion initiatives. The adoption of ASC 606 for revenue recognition did not materially impact overall revenues or timing. EPD's balance sheet remains strong with significant liquidity, and the company managed its debt effectively. Investors can take comfort in the consistent growth in distributions and the company's strategic investments aimed at capturing future growth opportunities in the North American energy midstream sector.

Financial Highlights

44 data points
Beta

Revenue

$9.59B

28.7% Gross Margin

Net Income

$1.31B

13.7% Net Margin

Total Assets

$57.75B

Cash & Equivalents

$30.20M

Free Cash Flow

$494.40M

Financial Statements
Beta
Revenue$9.59B
Cost of Revenue$6.84B
Gross Profit$2.75B
Operating Expenses$8.05B
Operating Income$1.64B
Interest Expense$279.50M
Net Income$1.31B
Shares Outstanding (Diluted)2.19B

Key Highlights

  • 1Total revenues increased by approximately 31% year-over-year for the nine months ended September 30, 2018, driven by higher marketing revenues and midstream services.
  • 2Gross operating margin for the nine months ended September 30, 2018, increased by approximately 25% year-over-year, reflecting strong performance across all segments.
  • 3EPD continued its aggressive capital investment program, with $3.0 billion spent on growth capital projects and $150.6 million on business combinations during the first nine months of 2018.
  • 4The company announced several expansion projects, including new NGL fractionation capacity, an ethylene export terminal, and an offshore crude oil export terminal, signaling continued strategic growth.
  • 5Net cash provided by operating activities increased by approximately 52% year-over-year for the nine months ended September 30, 2018, demonstrating strong operational cash generation.
  • 6Distributable cash flow increased by approximately 35% year-over-year for the nine months ended September 30, 2018, supporting a consistent increase in cash distributions to limited partners.
  • 7The company maintained strong liquidity with $3.29 billion in available borrowing capacity under its revolving credit facilities as of September 30, 2018.

Frequently Asked Questions

For the nine months ended September 30, 2018, EPD reported total consolidated revenues of $27.35 billion, a significant increase of approximately 31% compared to $20.81 billion in the same period of 2017. This growth was primarily driven by higher revenues in NGL Pipelines & Services and Crude Oil Pipelines & Services, fueled by increased marketing revenues and midstream service fees.

EPD's profitability showed strong improvement. For the nine months ended September 30, 2018, net income attributable to limited partners was $2.89 billion, a substantial increase from $2.03 billion in the prior year's period. This improvement was driven by higher revenues, increased equity in income from unconsolidated affiliates, and effective cost management, leading to a 918.7 million increase in operating income year-over-year.

EPD continues to invest significantly in growth, with approximately $6.0 billion in growth capital projects scheduled for completion by mid-2020. Key projects include expansions in NGL fractionation, natural gas processing in the Delaware Basin, and crude oil export terminals. For 2018, total capital spending was expected to approximate $4.2 billion, reflecting a strong commitment to expanding its midstream asset network and capitalizing on market demand.

EPD demonstrated strong cash flow generation. For the nine months ended September 30, 2018, net cash flows provided by operating activities increased by 52% year-over-year to $4.28 billion. This robust operating cash flow supported a 35% increase in distributable cash flow to $4.40 billion, enabling EPD to consistently increase its quarterly cash distributions to limited partners, with a distribution coverage ratio of 1.6x for the period.