10-QPeriod: Q1 FY2022

ENTERPRISE PRODUCTS PARTNERS L.P. Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 10, 2022For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported strong financial results for the first quarter of 2022, driven by significant increases in revenues across most segments, particularly in marketing and midstream services. Total revenues surged by 42% year-over-year to $13.0 billion, with NGL Pipelines & Services and Crude Oil Pipelines & Services showing substantial growth. This top-line expansion was supported by higher commodity prices and increased volumes in several areas. The company also highlighted its strategic acquisition of Navitas Midstream in February 2022 for $3.2 billion, which is expected to enhance its natural gas processing and NGL businesses in the Midland Basin. Despite increased operating costs and a significant increase in cash used for investing activities due to the acquisition, EPD maintained healthy operating income and generated robust distributable cash flow (DCF) of $1.8 billion, supporting its quarterly cash distribution of $0.465 per common unit. The company's liquidity remains strong with $3.9 billion in consolidated liquidity at quarter-end.

Financial Highlights

44 data points
Beta

Revenue

$13.01B

22.4% Gross Margin

Net Income

$1.30B

10.0% Net Margin

Total Assets

$70.32B

Cash & Equivalents

$231.00M

Free Cash Flow

$1.80B

Financial Statements
Beta
Revenue$13.01B
Cost of Revenue$10.10B
Gross Profit$2.91B
Operating Expenses$11.46B
Operating Income$1.67B
Interest Expense$319.00M
Net Income$1.30B
Shares Outstanding (Diluted)2.20B

Key Highlights

  • 1Total revenues increased significantly by 42% to $13.0 billion in Q1 2022, up from $9.16 billion in Q1 2021, driven by strong performance across most segments and higher commodity prices.
  • 2Acquisition of Navitas Midstream for $3.2 billion completed in February 2022, strengthening EPD's position in the Midland Basin's natural gas processing and NGL sectors.
  • 3Operating income remained resilient at $1.70 billion, slightly down from $1.70 billion in Q1 2021, despite higher costs.
  • 4Distributable Cash Flow (DCF) reached $1.84 billion, a 6% increase from $1.74 billion in Q1 2021, indicating strong cash generation capacity.
  • 5The company declared a quarterly cash distribution of $0.465 per common unit, payable in May 2022, maintaining its commitment to returning capital to unitholders.
  • 6Cash used in investing activities significantly increased to $3.53 billion from $0.66 billion, primarily due to the Navitas Midstream acquisition.
  • 7Total assets grew to $70.3 billion from $67.5 billion, reflecting the impact of the acquisition and ongoing capital investments.

Frequently Asked Questions

The primary driver for the significant increase in revenue to $13.0 billion was a $3.9 billion rise compared to the prior year's first quarter. This was mainly attributed to a $3.6 billion increase in marketing revenues, bolstered by higher average sales prices for NGLs, petrochemicals, refined products, and crude oil. Midstream service revenues also saw a healthy increase of $242 million, driven by higher market values for equity NGLs from natural gas processing and increased demand for transportation and terminal services.

The acquisition of Navitas Midstream, completed in February 2022 for $3.2 billion, significantly increased cash used in investing activities to $3.53 billion for the quarter. This strategic move is expected to enhance EPD's natural gas processing and NGL businesses in the Midland Basin. While the acquisition added goodwill of $159 million and increased property, plant, and equipment, its direct contribution to revenues and net income in Q1 2022 was not material. The company funded the acquisition using short-term notes and cash on hand.

Enterprise Products Partners L.P. expressed confidence in its ability to fund its capital investments and working capital needs for the foreseeable future. As of March 31, 2022, the company reported $3.9 billion in consolidated liquidity, comprised of $3.1 billion in available borrowing capacity under revolving credit facilities and $231 million in unrestricted cash on hand. The company also has access to capital markets for debt and equity issuance, and its Distributable Cash Flow (DCF) generation remains strong, supporting distributions and reinvestment.

Total long-term debt decreased slightly from $28.1 billion at December 31, 2021, to $26.9 billion at March 31, 2022. This reduction was primarily due to the repayment of $750 million and $650 million in principal for Senior Notes VV and CC in February 2022, financed through commercial paper and cash on hand. The average maturity of EPO's consolidated debt obligations remained long at approximately 20.7 years.