8-KEarnings & ResultsOther EventsExhibits & Filings

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Financial Results (Apr 30, 2015)

Filed April 30, 2015For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) reported its first quarter 2015 financial and operating results on April 30, 2015. The company's net income attributable to limited partners was $636.1 million, or $0.32 per unit, a decrease from $806.7 million, or $0.43 per unit, in the first quarter of 2014. This year-over-year decline was influenced by lower gains from asset sales and insurance recoveries in the current period, as well as an impairment charge. However, total gross operating margin remained strong and relatively flat year-over-year at $1.33 billion, indicating resilience in core operations. Key strategic developments highlighted include the completion of the second and final step of the Oiltanking acquisition in February 2015, for which the company issued approximately $1.4 billion in non-cash equity consideration. This acquisition, along with expansions in NGL export capacity and the formation of the Panola Pipeline joint venture, positions EPD for future growth. Despite a decrease in net income, the company's diversified asset base and ongoing strategic initiatives suggest a focus on long-term value creation.

Key Highlights

  • 1First quarter 2015 net income attributable to limited partners was $636.1 million ($0.32 per unit), down from $798.8 million ($0.43 per unit) in Q1 2014.
  • 2Total gross operating margin was $1,334.4 million, virtually flat compared to $1,329.8 million in Q1 2014, indicating stable core operational performance.
  • 3The company completed the second step of the Oiltanking acquisition in February 2015, issuing $1.4 billion in non-cash equity consideration, bringing the total acquisition cost to approximately $5.9 billion.
  • 4Significant increases in gross operating margin were observed in the Onshore Crude Oil Pipelines & Services segment (+34%) and Petrochemical & Refined Products Services segment (+34%), driven by higher volumes and contributions from acquired assets.
  • 5The NGL Pipelines & Services segment saw a decrease in gross operating margin, primarily due to lower sales margins in NGL marketing and reduced processing margins, although pipeline and terminal operations showed growth.
  • 6EPD formed the Panola Pipeline joint venture in February 2015 with Anadarko, DCP Midstream, and MarkWest, and announced an expansion project expected to increase capacity by 50 MBPD by Q1 2016.
  • 7The company received Civil Investigative Demands from the FTC and the Texas Attorney General regarding the Oiltanking acquisition and its operations, the outcome of which is currently unpredictable.

Frequently Asked Questions

The decrease in net income attributable to limited partners from $798.8 million in Q1 2014 to $636.1 million in Q1 2015 was primarily due to the absence of significant net gains from asset sales and insurance recoveries ($90 million in Q1 2014) and a higher impairment charge ($33 million in Q1 2015 versus $9 million in Q1 2014). The results also reflect the impact of the Oiltanking acquisition, which was completed in stages.

The Oiltanking acquisition was completed in two steps, with the second step finalized in February 2015. This resulted in the issuance of approximately $1.4 billion in non-cash equity consideration. The acquired assets, particularly in the Onshore Crude Oil Pipelines & Services and Petrochemical & Refined Products Services segments, contributed to the growth in gross operating margin in those areas. However, the noncontrolling interests also increased due to the acquisition.

Gross operating margin is a non-GAAP financial measure that Enterprise Products Partners uses to evaluate segment performance and core profitability. It excludes items like depreciation, amortization, impairment charges, and general and administrative costs, while including equity in income of unconsolidated affiliates and certain deferred revenues. Investors benefit from this metric as it provides management's perspective on operational performance and is used for capital allocation decisions.

Yes, EPD disclosed in this filing that it received Civil Investigative Demands from the Federal Trade Commission (FTC) and the Attorney General of the State of Texas. These demands relate to the Oiltanking acquisition and Enterprise's operations. The company is cooperating with these investigations but cannot predict their outcome at this time.