10-QPeriod: Q1 FY2019

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 8, 2019For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported solid financial results for the first quarter of 2019, demonstrating resilience and growth across its diverse midstream energy operations. Total revenues for the quarter were $8.54 billion, a decrease from the prior year's $9.30 billion, primarily driven by lower marketing revenues, particularly in crude oil. However, the company's core midstream services segment showed robust performance, with an increase in gross operating margin by $547.2 million year-over-year to $2.13 billion. This growth was fueled by strong contributions from NGL Pipelines & Services and Crude Oil Pipelines & Services, supported by new infrastructure coming online. The company also highlighted its commitment to returning capital to unitholders with the announcement of a $2.0 billion unit buyback program and a planned increase in quarterly distributions.

Financial Highlights

44 data points
Beta

Revenue

$8.54B

31.7% Gross Margin

Net Income

$1.26B

14.8% Net Margin

Total Assets

$58.40B

Cash & Equivalents

$99.30M

Free Cash Flow

$11.50M

Financial Statements
Beta
Revenue$8.54B
Cost of Revenue$5.84B
Gross Profit$2.71B
Operating Expenses$7.07B
Operating Income$1.63B
Interest Expense$277.20M
Net Income$1.26B
Shares Outstanding (Diluted)2.20B

Key Highlights

  • 1Total revenues decreased by 8.1% to $8.54 billion, primarily due to lower crude oil marketing revenues.
  • 2Gross operating margin increased by 35.2% to $2.13 billion, driven by growth in NGL and Crude Oil Pipelines & Services segments.
  • 3Capital expenditures were $1.15 billion, an increase from $946.5 million in the prior year, reflecting significant investments in growth projects like the Shin Oak NGL Pipeline and Midland-to-ECHO 2 Pipeline System.
  • 4The company announced a $2.0 billion unit buyback program in January 2019, repurchasing $51.6 million of units in Q1 2019.
  • 5Distributable Cash Flow (DCF) increased by 17.5% to $1.63 billion, leading to a distribution coverage ratio of 1.7x.
  • 6The company declared a Q1 2019 cash distribution of $0.4375 per common unit, a 2.3% increase year-over-year.

Frequently Asked Questions

Total revenues for the first quarter of 2019 decreased by 8.1% to $8.54 billion from $9.30 billion in the prior year's first quarter. This decrease was primarily attributable to a $870.5 million reduction in marketing revenues, particularly within crude oil marketing, which saw lower sales volumes.

The company's gross operating margin saw a significant increase of 35.2% to $2.13 billion. This growth was driven by strong performance in the NGL Pipelines & Services segment, which increased by $74.3 million, and the Crude Oil Pipelines & Services segment, which saw a substantial rise of $442.3 million. These increases were supported by higher transportation volumes, new infrastructure coming online (like the Midland-to-ECHO 2 Pipeline System and Shin Oak NGL Pipeline), and favorable mark-to-market adjustments in the crude oil segment.

Enterprise Products Partners invested $1.15 billion in capital expenditures during Q1 2019, primarily focused on growth projects. The company also demonstrated its commitment to returning capital to shareholders by announcing a $2.0 billion unit buyback program in January 2019, under which it repurchased $51.6 million of its common units during the quarter. Additionally, the company declared a Q1 2019 cash distribution of $0.4375 per common unit, representing a 2.3% increase over the prior year's comparable quarter.

Enterprise Products Partners believes it has sufficient liquidity and access to capital markets to fund its foreseeable needs. As of March 31, 2019, the company had $4.70 billion in consolidated liquidity, comprising $4.60 billion in available borrowing capacity and $99.3 million in unrestricted cash. The company plans to fund its expected capital investments of $3.8 billion to $4.2 billion for 2019 through operating cash flows, debt, equity issuances, and potential divestitures.