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Enterprise Products (EPD) Beats on Earnings & Revenues in Q4

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Enterprise Products Partners L.P.’s (EPD - Free Report) fourth-quarter 2017 adjusted earnings per limited partner unit of 37 cents beat the Zacks Consensus Estimate of 35 cents. The bottom line improved from earnings of 31 cents in the year-ago quarter. Higher revenues from all the segments except Natural Gas Pipeline and Services contributed to the growth.

In 2017, adjusted earnings per limited partner unit were $1.33, which increased from $1.20 in the prior-year quarter and beat the Zacks Consensus Estimate of $1.30.

Quarterly distribution at Enterprise Products improved 3.7% year over year to 425 cents per common unit, or $1.70 per unit on an annualized basis. Adjusted distributable cash flow was at a record level of $1.2 billion, up 19% year-over-year and provided coverage of 1.3x. The partnership retained $335 million in cash flow, thereby reducing financing.

Revenues in the quarter jumped to $8,426.6 million from $6,478.8 million in the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $7,680 million.

In 2017, revenues jumped 27% year over year to $29,241.5 million from $23,022.3 million in 2016. Also, revenues surpassed the Zacks Consensus Estimate of $28,138.0 million.

Q4 Segmental Performance

Gross operating income in the NGL Pipeline & Services segment increased to $872 million from $784 million in the year-ago quarter, beating the Zacks Consensus Estimate of $836 million. The upside can be attributed to contractual increases in committed volumes. Improved contribution from Mid America and Seminole pipelines as well as from associated product storage business supported the segment. Moreover, higher fractionation volumes from Enterprise’s Mont Belvieu and Hobbs NGL fractionators also contributed to growth.

Natural Gas Pipeline and Services’ gross operating income declined to $179 million from $201 million in the year-ago quarter and lagged the Zacks Consensus Estimate of $196 million. The downside was caused by lower average capacity fees as well as higher operating costs.

Gross operating income from the Crude Oil Pipelines & Services segment was $296 million compared with $221 million in the prior-year quarter and came above the Zacks Consensus Estimate of $248 million. The increase was mainly due to higher volumes on its South Texas and Eagle Ford Crude Oil Pipeline Systems as well as its Midland-to-ECHO pipeline.

Petrochemical & Refined Product Services segment reported gross operating income of $172 million compared with the year-earlier level of $149 million and missed the Zacks Consensus Estimate of $193 million.

Financials

During the quarter, the partnership spent $1 billion. Outstanding total debt principal as of Dec 31, 2017 was $24.8 billion. Enterprise consolidated liquidity of $3.7 billion, which comprised unrestricted cash on hand and available borrowing capacity.

Guidance

For 2018, the partnership estimates capital spending of $3.3 billion. Of which, $3 billion will be allocated for growth capital projects and about $325 million for sustaining capital expenditures.

Price Performance

The partnership’s shares have gained 1.7% in the last three months against the industry’s decline of 4%.



 

Zacks Rank & Key Picks

Enterprise Products has a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include Statoil ASA , Pioneer Natural Resources Company (PXD - Free Report) and Cabot Oil & Gas . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Statoil, based in Norway, is a major international integrated oil and gas company. It witnessed an average negative earnings surprise of 8.44% in the last four quarters.

Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 67.62% over the preceding four quarters.

Headquartered in Houston, TX, Cabot Oil & Gas, an independent oil and gas exploration company with producing properties mainly in the continental United States, delivered an average negative earnings surprise of 0.11% over the trailing four quarters.

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