EPD Misses Q2 Earnings Estimates As Natural Gas Liquids Prices Decline 48%

Enterprise Products Partners L.P. EPD reported Q2 2023 sales of $10.65 billion, missing the consensus of $12.69 billion. 

Adjusted EBITDA fell to $2.17 billion from $2.42 billion in the prior year quarter.

EPS of $0.57 missed the consensus of $0.59.

The company benefited from increased volumes across the NGL, natural gas, and crude oil businesses.

However, the positive effect was negated by lower natural gas processing margins (on a 48% decline in NGL prices), a fall in EFS Midstream System revenues, and weak sales margins and volumes in the propylene and octane enhancement businesses.

Gross operating margin stood at $2.18 billion vs. $2.36 billion prior year.

The gross operating margin from the NGL Pipelines & Services segment declined to $1.1 billion (from $1.3 billion a year ago), and the Petrochemical & Refined Products Service decreased to $383 million (from $421 million the prior year). 

Meanwhile, the gross operating margin from Crude Oil Pipelines & Services rose to $422 million (from $407 million a year ago), and Natural Gas Pipelines & Services grew to $238 million (from $229 million the prior year). 

Distributable Cash Flow (DCF) stood at $1.7 billion vs. $2.0 billion a year ago.

Adjusted operating cash flow declined to $1.9 billion from $2.1 billion in the prior year.

In Q2, capital investments came in at $784 million, including growth capital expenditures of $683 million and sustaining capital expenditures of $101 million.

The company bought 2.9 million common shares in the open market for around $75 million.

"During the quarter, we established several operational records, including natural gas pipeline volumes, NGL fractionation volumes and 11.9 million equivalent barrels per day of total pipeline volumes. We completed construction and began operations on $2.5 billion of organic growth projects that will begin generating new sources of cash flow for the partnership. We also increased the partnership's cash distribution by 5.3 percent, to an annualized rate of $2.00 per common unit, compared to the payout a year ago," said A.J. "Jim" Teague, co-chief executive officer of Enterprise's general partner.

2023 Outlook: The company continues to expect organic growth capital investments in the range of $2.4 billion to $2.8 billion and sustaining capital expenditures to be approximately $400 million.

Price Action: EPD shares closed higher by 0.23% at $26.51 on Monday.