• Adjusted EBITDA: $2.4 billion for Q3 2024, up from $2.3 billion in Q3 2023.
• Distributable Cash Flow (DCF): $2 billion for Q3 2024, with 1.7 times coverage.
• Net Income: $1.4 billion or $0.65 per unit for Q3 2024, an 8% increase over Q3 2023.
• Adjusted Cash Flow from Operations: $2.1 billion for Q3 2024, a 4% increase from Q3 2023.
• Distribution: $0.525 per common unit for Q3 2024, a 5% increase over the previous year.
• Common Unit Repurchases: Approximately 2.6 million units for $76 million in Q3 2024.
• Total Capital Investments: $1.2 billion in Q3 2024, including $1.1 billion for growth capital projects.
• Total Debt Principal Outstanding: Approximately $32.2 billion as of September 30, 2024.
• Consolidated Liquidity: Approximately $5.6 billion at the end of Q3 2024.
• Consolidated Leverage Ratio: 3.0 times on a net basis as of September 30, 2024.

• Warning! GuruFocus has detected 9 Warning Signs with EPD.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Enterprise Products Partners LP (NYSE:EPD) reported an adjusted EBITDA of $2.4 billion for the third quarter, up from $2.3 billion in the same quarter last year.
• The company achieved five volumetric records, including 7.5 billion cubic feet per day of inlet natural gas processing volumes.
• EPD completed the acquisition of Pinon Midstream, enhancing its Permian processing footprint and NGL value chain.
• The company declared a distribution of $0.525 per common unit for the third quarter, a 5% increase over the previous year.
• EPD's consolidated liquidity was approximately $5.6 billion at the end of the quarter, providing strong financial flexibility.

Negative Points

• Sustaining capital expenditures are expected to be higher than originally estimated, primarily due to costs associated with turnarounds of two PDH facilities.
• The timeline for the Bahia pipeline project has been delayed from the first half into the third quarter due to permitting issues.
• There is uncertainty regarding the ultimate demand and timing for new natural gas projects in Texas, making it difficult to quantify future impacts.
• The company faces challenges from potential new setback rules in New Mexico, which could impact operations.
• The valuation gap between C-Corps and MLPs remains a concern, with no immediate solutions to capitalize on this disparity.

Q & A Highlights

Q: How does Enterprise Products Partners plan to participate in the datacenter and power demand theme? A: Natalie K. Gayden, Senior Vice President, Natural Gas Assets, explained that Enterprise is well-positioned to serve datacenters due to its pipeline infrastructure in Texas. The company has been approached by datacenter infrastructure players, indicating a significant demand increase in the coming years, particularly in the Dallas and San Antonio areas.

Q: Can you provide details on the integration of the Pinon Midstream acquisition and its long-term value? A: Jim Teague, Co-Chief Executive Officer, stated that Pinon will be integrated similarly to other GMP assets, focusing on processing deals that enhance the integrated value chain. This acquisition is expected to lead to more organic growth through processing.

Q: What is the outlook for ethane storage and recovery given current market conditions? A: Tug C. Hanley, Senior Vice President, Hydrocarbon Marketing, noted that ethane recovery and rejection will balance the market. There are opportunities for positive storage outcomes by collecting contango, despite full ethane storage and no new demand until new export facilities come online.

Q: Could you elaborate on the decision to acquire Pinon Midstream instead of building new infrastructure? A: Jim Teague explained that acquiring Pinon was a strategic decision to quickly gain necessary infrastructure and services, which would have taken three years to build from scratch. This acquisition allows Enterprise to capitalize on immediate opportunities in the basin.

Q: How is Enterprise addressing the valuation gap between C-Corps and MLPs? A: W. Randall Fowler, Co-Chief Executive Officer, mentioned that there is no quick solution to the valuation gap. Selling assets at higher valuations could lead to tax events for limited partners, and historically, market forces tend to resolve such valuation differences over time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.