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Enterprise Products (EPD) Beats on Q2 Earnings & Revenues

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Enterprise Products Partners L.P. (EPD - Free Report) reported second-quarter 2018 adjusted earnings per limited partner unit of 46 cents, which beat the Zacks Consensus Estimate of 39 cents. The bottom line also improved from the year-ago quarter’s earnings of 30 cents.
 

Enterprise Products Partners L.P. Price, Consensus and EPS Surprise

 

Enterprise Products Partners L.P. Price, Consensus and EPS Surprise | Enterprise Products Partners L.P. Quote

Quarterly revenues totaled $8,468 million, up from $6,608 million in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $8,379 million.

The year-over-year upside can be attributed to increase in volumes from the three segments of the master limited partnership — NGL Pipeline & Services, Natural Gas Pipeline and Services and Petrochemical & Refined Product Services. However, these were partially offset by increased costs and expenses.

Quarterly distribution at Enterprise Products Partners increased 2.4% year over year to 43 cents per common unit. Adjusted distributable cash flow of $1.4billion provided coverage of 1.5x. The partnership retained $491 million in cash flow, gaining the financial flexibility to fund growth capital projects, reduce debt and lower the possibility of issuing additional equity. The partnership managed to generate strong levels of cash flows and rewarded unitholders with growing distribution amid tough business environment.

Q2 Segmental Performance

The operating income from the different segments increased except Crude Oil Pipelines & Services segment primarily due to increased volumes.

Gross operating income in the NGL Pipeline & Services segment rose to a record $914 million from $760 million in the year-ago quarter. The upside can be attributed to contractual increases in committed volumes. The figure also beat the Zacks Consensus Estimate of $821 million. Improved contribution from Mont Belvieu NGL and associated product storage business supported growth in the segment.

Natural Gas Pipeline and Services segment recorded gross operating income of $213 million compared with $194 million in the prior-year quarter. Also, the figure beat the Zacks Consensus Estimate of $180 million as the gathering system in the Permian Basin transported more volumes compared with the prior-year quarter’s levels. The upside was driven by increased firm capacity in the Texas Interstate system and higher treating revenues along with firm gathering volumes in Haynesville gathering system.

Gross operating income from the Crude Oil Pipelines & Services segment declined 77.6% year over year to $53 million and lagged the Zacks Consensus Estimate of $296 million. The decline was mainly caused by the Midland-to-ECHO pipeline system and from other marketing activities that led to a $211-million loss in the quarter.

Gross operating income in the Petrochemical & Refined Product Services segment grew to $282 million from the year-ago quarter’s level of $188 million and also beat the Zacks Consensus Estimate of $255 million, owing to increase in the gross operating margin in the propylene business.

Cost and Expenses

During the second quarter of 2018, the partnership’s total cost and expenses surged 31.6% to $7,603.4 million due to a 31.8% increase in operating costs and 12.5% increase in general and administrative expenses.

Financials

Outstanding total debt principal as of Jun 30, 2018 was $25.9 billion. Enterprise Products Partners had consolidated liquidity of $3.6 billion, which comprised unrestricted cash on hand and available borrowing capacity. The partnership reported total capital spending of $983 million in the quarter under review.

Price Performance

Units of Enterprise Products gained 13% during the second quarter compared with the industry’s 14.8% rise.



 

Zacks Rank and Other Stocks to Consider

The partnership currently has a Zacks Rank #2 (Buy).    

A few other top-ranked players in the same sector are Canadian Natural Resources Limited (CNQ - Free Report) , China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, and Sunrun Inc (RUN - Free Report) . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian Natural Resources, based in Calgary, Alberta, is an exploration and production (E&P) company. It pulled off an average positive earnings surprise of 4.7% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sunrun is engaged in offering solar services through various channels. The company delivered an average positive earnings surprise of 16.3% in the last four quarters.

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