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Enterprise (EPD) Q2 Earnings Miss on Low Average Sales Margins
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Enterprise Products Partners LP’s (EPD - Free Report) second-quarter 2023 adjusted earnings per limited partner unit of 57 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line declined from the year-ago quarter’s 64 cents.
Total quarterly revenues of $10,651 million missed the Zacks Consensus Estimate of $12,689 million. The top line also declined from $16,060 million in the prior-year quarter.
Weak quarterly earnings were owing to lower average sales margins and declining sales volumes from the NGL Pipelines & Services business unit.
Enterprise Products Partners L.P. Price, Consensus and EPS Surprise
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were 7.1 million barrels per day (bpd), higher than the year-ago quarter’s 6.6 million bpd. Natural gas pipeline volumes were 18.3 trillion British thermal units per day (TBtus/d), up from 16.8 TBtus/d a year ago. Also, NGL, crude oil, refined products and petrochemical marine terminal volumes increased to 1.9 million bpd from 1.7 million bpd.
Gross operating margin at NGL Pipelines & Services declined from $1,327 million in the year-ago quarter to $1,110 billion. Our estimate of $1,142.1 reflects a year-over-year decline of 13.9%, primarily due to lower average sales margins and declining sales volumes.
Natural Gas Pipelines and Services’ gross operating margin increased to $238 million from $229 million in the year-ago quarter. Our estimate also reflects a year-over-year increase. The upside was due to a rise in natural gas pipeline transportation volumes.
Crude Oil Pipelines & Services recorded a gross operating margin of $422 million, which increased from $407 million in the prior-year quarter, thanks to improved transportation volumes.
Gross operating margin at Petrochemical & Refined Products Services amounted to $383 million compared with $421 million a year ago. Our estimate suggests a year-over-year fall of 20.8%, owing to decline in margin from the partnership’s propylene production.
Cash Flow
The distributable cash flow was $1,735 million, down from $2,018 million a year ago. The same provided coverage of 1.6X. The partnership retained $639 million of distributable cash flow in the June-ended quarter. It generated an adjusted free cash flow of $1,073 million, down from $1,718 million in the year-ago quarter.
Financials
In second-quarter 2023, Enterprise’s total capital investment was $784 million.
As of Jun 30, 2023, its outstanding total debt principal was $28.9 billion. Enterprise’s consolidated liquidity amounted to $4 billion.
Outlook
For 2023, Enterprise expects growth capital investments of $2.4-$2.8 billion. Sustaining capital expenditure is projected to be $400 million.
Zacks Rank & Stocks to Consider
Enterprise currently carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Evolution Petroleum Corporation (EPM - Free Report) , Oceaneering International, Inc. (OII - Free Report) and MPLX LP (MPLX - Free Report) . While Evolution and Oceaneering sport a Zacks Rank #1 (Strong Buy), MPLX carries a Zacks Rank #2 (Buy).
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Oceaneering International is well placed on improving oil prices since it is a leading provider of engineered services and products and robotic solutions to the energy companies working offshore. Higher oil price is supporting increased upstream activities, which, in turn, will improve demand for Oceaneering’s drilling and completions support services.
MPLX has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflow.
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Enterprise (EPD) Q2 Earnings Miss on Low Average Sales Margins
Enterprise Products Partners LP’s (EPD - Free Report) second-quarter 2023 adjusted earnings per limited partner unit of 57 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line declined from the year-ago quarter’s 64 cents.
Total quarterly revenues of $10,651 million missed the Zacks Consensus Estimate of $12,689 million. The top line also declined from $16,060 million in the prior-year quarter.
Weak quarterly earnings were owing to lower average sales margins and declining sales volumes from the NGL Pipelines & Services business unit.
Enterprise Products Partners L.P. Price, Consensus and EPS Surprise
Enterprise Products Partners L.P. price-consensus-eps-surprise-chart | Enterprise Products Partners L.P. Quote
Segmental Performance
Pipeline volumes in NGL, crude oil, refined products and petrochemicals were 7.1 million barrels per day (bpd), higher than the year-ago quarter’s 6.6 million bpd. Natural gas pipeline volumes were 18.3 trillion British thermal units per day (TBtus/d), up from 16.8 TBtus/d a year ago. Also, NGL, crude oil, refined products and petrochemical marine terminal volumes increased to 1.9 million bpd from 1.7 million bpd.
Gross operating margin at NGL Pipelines & Services declined from $1,327 million in the year-ago quarter to $1,110 billion. Our estimate of $1,142.1 reflects a year-over-year decline of 13.9%, primarily due to lower average sales margins and declining sales volumes.
Natural Gas Pipelines and Services’ gross operating margin increased to $238 million from $229 million in the year-ago quarter. Our estimate also reflects a year-over-year increase. The upside was due to a rise in natural gas pipeline transportation volumes.
Crude Oil Pipelines & Services recorded a gross operating margin of $422 million, which increased from $407 million in the prior-year quarter, thanks to improved transportation volumes.
Gross operating margin at Petrochemical & Refined Products Services amounted to $383 million compared with $421 million a year ago. Our estimate suggests a year-over-year fall of 20.8%, owing to decline in margin from the partnership’s propylene production.
Cash Flow
The distributable cash flow was $1,735 million, down from $2,018 million a year ago. The same provided coverage of 1.6X. The partnership retained $639 million of distributable cash flow in the June-ended quarter. It generated an adjusted free cash flow of $1,073 million, down from $1,718 million in the year-ago quarter.
Financials
In second-quarter 2023, Enterprise’s total capital investment was $784 million.
As of Jun 30, 2023, its outstanding total debt principal was $28.9 billion. Enterprise’s consolidated liquidity amounted to $4 billion.
Outlook
For 2023, Enterprise expects growth capital investments of $2.4-$2.8 billion. Sustaining capital expenditure is projected to be $400 million.
Zacks Rank & Stocks to Consider
Enterprise currently carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Evolution Petroleum Corporation (EPM - Free Report) , Oceaneering International, Inc. (OII - Free Report) and MPLX LP (MPLX - Free Report) . While Evolution and Oceaneering sport a Zacks Rank #1 (Strong Buy), MPLX carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Oceaneering International is well placed on improving oil prices since it is a leading provider of engineered services and products and robotic solutions to the energy companies working offshore. Higher oil price is supporting increased upstream activities, which, in turn, will improve demand for Oceaneering’s drilling and completions support services.
MPLX has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflow.