On July 30, 2024, Enterprise Products Partners LP (EPD, Financial) released its 8-K filing detailing its financial results for the second quarter of 2024. Enterprise Products Partners is a master limited partnership that transports and processes natural gas, natural gas liquids, crude oil, refined products, and petrochemicals. It is one of the largest midstream companies, with operations servicing most producing regions in the Lower 48 states. Enterprise is particularly dominant in the NGL market and is one of the few MLPs that provide midstream services across the full hydrocarbon value chain.
Quarterly Performance and Challenges
Enterprise Products Partners LP reported net income attributable to common unitholders of $1.4 billion, or $0.64 per unit on a fully diluted basis, for the second quarter of 2024. This represents a 12% increase compared to $1.3 billion, or $0.57 per unit, for the same period in 2023. However, the reported earnings per share (EPS) of $0.64 fell slightly short of the analyst estimate of $0.65.
Revenue for the quarter was $13.48 billion, which also missed the analyst estimate of $14.27 billion. Despite these misses, the company showed strong operational performance, handling near-record volumes across its integrated midstream system.
Financial Achievements and Industry Impact
Distributable Cash Flow (DCF) was $1.8 billion for Q2 2024, up from $1.7 billion in Q2 2023. The company declared distributions of $0.525 per common unit, a 5% increase from the previous year, providing 1.6 times coverage of the declared distribution. This is significant as it demonstrates the company's ability to generate sufficient cash flow to support its distributions, a key metric for value investors.
Adjusted cash flow from operations (CFFO) was $2.1 billion, compared to $1.9 billion in the same quarter last year. The payout ratio for the twelve months ended June 30, 2024, was 55% of Adjusted CFFO, indicating a healthy balance between reinvestment and returns to unitholders.
Income Statement, Balance Sheet, and Cash Flow Highlights
Key financial metrics from the income statement include:
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Operating Income | $1.77 billion | $1.58 billion |
| Net Income | $1.42 billion | $1.28 billion |
| Adjusted EBITDA | $2.39 billion | $2.17 billion |
| Adjusted CFFO | $2.07 billion | $1.87 billion |
Enterprise Products Partners LP reported total debt principal outstanding of $30.6 billion as of June 30, 2024, with consolidated liquidity of approximately $3.4 billion. This includes available borrowing capacity under its revolving credit facilities and unrestricted cash on hand.
Operational Highlights and Commentary
Enterprise handled 12.6 million BPD of equivalent pipeline volumes and 2.2 million BPD of marine terminal volumes, both near-record levels. The company also reported record fee-based natural gas processing, NGL pipeline, and NGL fractionation volumes.
“Enterprise reported a solid second quarter in terms of both volumes and cash flow generated by our integrated midstream system,” said A. J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner.
Gross operating margin from the NGL Pipelines & Services segment was $1.3 billion, a 19% increase compared to the same quarter last year. This was driven by new natural gas processing plants in the Permian Basin and improved natural gas processing margins.
Analysis and Conclusion
Despite missing analyst estimates for EPS and revenue, Enterprise Products Partners LP demonstrated strong operational performance and financial stability. The company's ability to increase distributions and maintain a healthy payout ratio is a positive sign for value investors. The ongoing investments in infrastructure, particularly in the Permian Basin, are expected to support future growth.
For more detailed insights and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Enterprise Products Partners LP for further details.
