Enterprise Products Misses Q2 Estimates, Plans Houston Ship Channel Expansion

Enterprise Products Partners L.P. EPD reported second-quarter fiscal 2024 sales growth of 26.6% year over year to $13.48 billion, missing the consensus of $14.27 billion.

Adjusted EBITDA rose to $2.39 billion from $2.17 billion a year ago, and the margin contracted by 266 bps to 17.7%.

EPS was 64 cents, up from 57 cents in the second quarter of 2023, missing the consensus of 65 cents.

Distributable Cash Flow was $1.812 billion for the quarters compared to $1.735 billion a year ago. Adjusted cash flow provided by operating activities was $2.065 billion compared to $1.886 billion in the second quarter of 2023.

Adjusted total gross operating margin contracted by 260 bps to 17.9%.

The gross operating margin from the NGL Pipelines & Services segment was $1.3 billion compared to $1.1 billion a year ago.

Natural Gas Pipelines & Services gross operating was $293 million versus $238 million YoY; Petrochemical & Refined Products Services gross operating margin was $392 million versus $383 million a year ago.

In the quarter, capital investments came in at $1.3 billion, including sustaining capital expenditures of $245 million.

Total debt principal outstanding at June-end was $30.6 billion; consolidated liquidity was ~$3.4 billion, comprised of available borrowing capacity under its revolving credit facilities and unrestricted cash on hand.

“Even though the second quarter is typically our seasonally weakest quarter, the partnership handled a near record 12.6 million BPD of equivalent pipeline volumes and 2.2 million BPD of marine terminal volumes, as well as record fee-based natural gas processing, NGL pipeline and NGL fractionation volumes,” commented A. J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner.

“The partnership has $6.7 billion of fee-based growth projects under construction that provide visibility to future earnings and cash flow growth,” stated Teague.

The company repurchased ~$40 million of its common units for the quarter, utilizing 50% of its authorized $2 billion common unit buyback program.

The company expects organic growth capital investments of $3.5 billion to $3.75 billion in 2024 and $3.25 billion to $3.75 billion in 2025. It sees sustaining capital expenditures of $600 million in 2024.

Additionally, Enterprise Products Partners announced an expansion of the Houston Ship Channel facility, increasing propane and butane export capacity by 300,000 BPD. The expanded service is expected to begin by the end of 2026.

The need for increased LPG capacity at EHT is driven by Enterprise’s success at Neches River Terminal.

Price Action: EPD shares are trading lower by 1.36% at $29.30 at the last check Tuesday.