01—Abstract
Summary
Summary of the 8-K filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Enterprise Products Partners L.P.
(NYSE: EPD) reported second-quarter 2024 results on July 30, 2024, showing continued growth in its core earnings. Net income attributable to common unitholders rose 12% year over year to $1.4 billiona, or $0.64 per fully diluted unit, versus $0.57 in Q2 2023. Total non-GAAP gross operating margin increased 11% to $2.4 billion, led by the NGL Pipelines & Services segment (up 19% to $1.3 billion) on new Permian natural gas processing plants and the 12th Mont Belvieu NGL fractionator, and the Natural Gas Pipelines & Services segment (up 23% to $293 million) on wider Waha price spreads.
Distributable Cash Flow was $1.8 billionb, providing 1.6x coverage of the $0.525 per-unit quarterly distribution, which rose 5%. Enterprise retained $661 million of DCF. Balance sheet and capital allocation remain central to the story.
Total debt principal rose to $30.6 billionc (including $2.3 billion of junior subordinated notes with partial equity credit), and consolidated liquidity was about $3.4 billion. Q2 total capital investments were $1.3 billion, and management guided 2024 growth capex to $3.5-$3.75 billion and 2025 growth capex to $3.25-$3.75 billion, with sustaining capex of about $600 million for 2024. The partnership has $6.7 billion of fee-based growth projects under construction and has used 50% of its $2.0 billion unit buyback authorization.
Item 8.01 notes that the Q2 figures were unaudited and subject to revision before the formal 10-Q. Key watch items include the seasonally weaker second quarter, the planned PDH 2 turnaround expected to return in August, the EHT Ref 4 expansion (about 300 MBPD of added LPG export capacity by end of 2026), and the still-pending final investment decision on the SPOT crude terminal, which is excluded from the capex guidance. Overall, the filing points to volume-driven growth and steady distribution coverage, with leverage and growth-capex funding as the main considerations for investors.
02—Key points
Key Highlights
- Net income attributable to common unitholders of $1.4 billion ($0.64 per fully diluted unit), up 12% from $0.57 in Q2 2023
- Total non-GAAP gross operating margin of $2.4 billion, up 11% year over year; NGL Pipelines & Services up 19% to $1.3 billion and Natural Gas Pipelines & Services up 23% to $293 million
- Distributable Cash Flow of $1.8 billion covered the $0.525 quarterly distribution 1.6x; the distribution rose 5% and Enterprise retained $661 million of DCF
- Record fee-based natural gas processing volumes of 6.5 Bcf/d and record NGL pipeline (4.3 MMBPD) and fractionation (1.6 MMBPD) volumes, driven by new Permian plants and the 12th Mont Belvieu fractionator
- Total debt principal rose to $30.6 billion; consolidated liquidity was about $3.4 billion at June 30, 2024
- 2024 growth capex guidance of $3.5-$3.75 billion and 2025 guidance of $3.25-$3.75 billion; $6.7 billion of fee-based growth projects under construction
- Results are unaudited and subject to revision; the $2.0 billion unit buyback program is 50% utilized after roughly $40 million of Q2 repurchases
03—Questions
Frequently Asked Questions
How did Enterprise Products Partners perform in Q2 2024 compared with Q2 2023?
Net income attributable to common unitholders was $1.4 billion, or $0.64 per fully diluted unit, up 12% from $0.57 in Q2 2023. Total non-GAAP gross operating margin rose 11% to $2.4 billion, and Adjusted EBITDA increased to $2.389 billion from $2.171 billion.
Is the distribution covered by cash flow, and is it growing?
Yes. Distributable Cash Flow was $1.8 billion, giving 1.6x coverage of the $0.525 per-unit distribution declared for Q2 2024. The distribution increased 5%, and management noted 2024 will mark the 26th consecutive year of distribution growth. Enterprise retained $661 million of DCF in the quarter.
What is driving the growth in the NGL and natural gas segments?
NGL Pipelines & Services benefited from four new Permian natural gas processing plants, higher fee-based processing volumes, the 12th Mont Belvieu NGL fractionator placed in service in July 2023, and higher LPG export volumes at EHT. Natural Gas Pipelines & Services benefited from higher transportation revenues on the Texas Intrastate System and wider price spreads between the Waha hub and other markets, which boosted marketing margins.
How much debt does the partnership carry and what are its capital plans?
Total debt principal was $30.6 billion at June 30, 2024, including $2.3 billion of junior subordinated notes with partial equity credit from rating agencies. Liquidity was about $3.4 billion. Growth capex is guided to $3.5-$3.75 billion for 2024 and $3.25-$3.75 billion for 2025, excluding the SPOT crude terminal, which remains subject to a final investment decision. Sustaining capex is expected to be about $600 million in 2024.
Why should investors treat these numbers as preliminary?
Item 8.01 states that the information has not been reviewed by the independent auditors and is subject to revision as the company completes its financial closing process and final adjustments for the three and six months ended June 30, 2024. Actual results may differ materially from these figures until the formal quarterly filing is finalized.
04—Continue