EPP Q3 Results Record Sales Decline, Misses Consensus Estimates

Enterprise Products Partners L.P. EPD reported a third-quarter (Q3) FY23 sales decline of 22.4% year-over-year to $11.99 billion, missing the consensus of $12.02 billion. 

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

EPS was 60 cents, down from 61 cents in 3Q22, missing the consensus of 64 cents.

Distributable Cash Flow was $1.9 billion for the third quarters of 2023 and 2022

Adjusted cash flow provided by operating activities was $2.02 billion in 3Q23, compared to $1.95 billion in third quarter of 2022.

Operating margin expanded by 306 bps to 14.1%, and total gross operating margin was 19.4%, up 442 bps.

Adjusted EBITDA was $2.33 billion (+3.1% Y/Y), with margin expansion of 480 bps to 19.4%.

The gross operating margin from the NGL Pipelines & Services segment was $1.2 billion compared to $1.3 billion in 3Q22; For the Crude Oil Pipelines & Services segment increased to $432 million from $415 million.

Natural Gas Pipelines & Services gross operating was $239 million versus $278 million for 3Q22; Petrochemical & Refined Products Services increased 28% Y/Y to record $453.

In Q3, capital investments came in at $826 million, including sustaining capital expenditures of $99 million.

For the first nine months of 2023, the company repurchased ~3.6 million common units on the open market for ~$92 million.

"Enterprise reported solid financial results for the third quarter of 2023," said A.J. "Jim" Teague, co-CEO of Enterprise's general partner.

"We handled record volumes across our midstream system, including our liquids pipelines, natural gas pipelines, NGL fractionators, and marine terminals," Teague said. "In total, our pipelines transported 12.2 million equivalent BPD, and our marine terminals handled 2.1 million BPD of NGLs, crude oil, refined products, and petrochemicals."

The company also announced four new capital projects to support continuing production growth in the Permian Basin. The four projects include two natural gas processing plants, the Bahia NGL pipeline, NGL fractionator 14, and an associated deisobutanizer at Enterprise's Chambers County, Texas complex.

EPD has begun initial steps to return the Seminole Pipeline, which has a capacity of 210,000 barrels per day of crude oil, to natural gas liquid transportation service in December. 

FY23 Outlook: The company expects growth capital investments of $3 billion and sustaining capital expenditures of $400 million in FY23.

Sees growth capital investments for 2024 to be $3 billion to $3.5 billion.

Price Action: EPD shares closed higher by 0.15% at $26.48 premarket on Tuesday.