Enterprise Declares Quarterly Distribution

Rhea-AI Summary

Enterprise Products Partners L.P. (EPD) announced a quarterly cash distribution of $0.515 per unit for Q1 2024, representing a 5.1% increase from Q1 2023. The partnership repurchased $40 million of its common units and utilized 48% of its $2.0 billion buyback program. Earnings for Q1 2024 will be announced on April 30, 2024, with a conference call scheduled for analysts and investors.

Insights

Financial Analyst

The announcement of Enterprise Products Partners L.P.'s increased quarterly cash distribution to $0.515 per unit, representing a 5.1 percent increase from the previous year, signals a positive cash flow situation and a commitment to returning value to shareholders. This increase is notable as it exceeds the typical inflation rate, suggesting that the company is not only maintaining but also potentially growing its real distribution value over time. The $40 million repurchase of common units also indicates a strategy to enhance shareholder value, as buybacks can lead to earnings per share accretion. The utilization of 48 percent of the authorized $2.0 billion buyback program shows a significant commitment to this strategy.

Investors may interpret these actions as a sign of management's confidence in the company's financial health and future prospects. However, it is essential to consider the potential impact on the company's liquidity and whether the buyback and increased distributions are sustainable in the long run, especially in an industry that requires substantial capital for maintaining and expanding infrastructure. The balance between rewarding unitholders and retaining enough capital to fund operations and growth initiatives is a critical aspect to evaluate.

Energy Sector Analyst

Enterprise Products Partners L.P. operates in the midstream segment of the energy sector, which is typically characterized by stable cash flows derived from fee-based contracts. The partnership's extensive asset base, including pipelines and storage facilities, positions it to benefit from the ongoing demand for energy infrastructure and services. The increase in distribution and the buyback program may reflect underlying strength in the midstream market, possibly driven by stable commodity prices and production levels.

However, the energy sector is subject to regulatory, environmental and market risks that could affect future performance. For example, shifts in regulatory policies or a significant change in energy supply and demand dynamics could impact the company's operations. Investors should consider the long-term sustainability of the partnership's business model in the context of the global energy transition and potential shifts towards renewable energy sources.

Tax Specialist

The qualified notice for non-U.S. unitholder income tax withholding is a compliance measure that affects foreign investors in Enterprise Products Partners L.P. The company's adherence to Treasury Regulation Section 1.1446-4(b)(4) and (d) ensures that distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. This has implications for the net income that foreign investors will receive from their investments.

Brokers and nominees must be vigilant in applying these withholding taxes to prevent any potential tax liabilities for non-U.S. investors. For investors, understanding the tax implications of their investments is crucial, as it can affect the overall return on investment. This is especially relevant for a company like Enterprise, which has a significant distribution increase that could attract more foreign investment, potentially increasing the administrative complexity of tax withholding requirements.

HOUSTON--(BUSINESS WIRE)-- Enterprise Products Partners L.P. (NYSE: EPD) (“Enterprise”) announced today that the board of directors of its general partner declared a quarterly cash distribution to be paid to Enterprise common unitholders with respect to the first quarter of 2024 of $0.515 per unit, or $2.06 per unit on an annualized basis.

The quarterly distribution will be paid Tuesday, May 14, 2024, to common unitholders of record as of the close of business Tuesday, April 30, 2024. This distribution represents a 5.1 percent increase over the distribution declared with respect to the first quarter of 2023.

Enterprise repurchased $40 million of its common units in the open market during the first quarter of 2024. Inclusive of these purchases, the partnership has utilized 48 percent of its authorized $2.0 billion buyback program.

Enterprise will announce its earnings for the first quarter of 2024 on Tuesday, April 30, 2024, before the New York Stock Exchange opens for trading. Following the announcement, the partnership will host a conference call at 9 a.m. CDT with analysts and investors to discuss earnings. The call will be webcast live on the Internet and may be accessed through the “Investors” section of the partnership’s website at www.enterpriseproducts.com. A replay of the webcast will be available following the conference call and may be accessed approximately one hour after completion of the call.

Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. Services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage and marine terminals; crude oil gathering, transportation, storage and marine terminals; petrochemical and refined products transportation, storage and marine terminals; and a marine transportation business that operates on key U.S. inland and intracoastal waterway systems. The partnership’s assets currently include more than 50,000 miles of pipelines; over 300 million barrels of storage capacity for NGLs, crude oil, petrochemicals and refined products; and 14 billion cubic feet of natural gas storage capacity.

Qualified Notice for Non-U.S. Unitholder Income Tax Withholding

This release is intended to serve as qualified notice under Treasury Regulation Section 1.1446-4(b)(4) and (d). Brokers and nominees should treat one hundred percent of Enterprise’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Enterprise’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. For purposes of Treasury Regulation section 1.1446(f)-4(c)(2)(iii), brokers and nominees should treat one hundred percent of the distributions as being in excess of cumulative net income for purposes of determining the amount to withhold. Nominees, and not Enterprise Products Partners L.P., are treated as withholding agents responsible for any necessary withholding on amounts received by them on behalf of foreign investors.

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that Enterprise and its general partner expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Enterprise’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, Enterprise does not intend to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240405910335/en/

Randy Burkhalter, Investor Relations, (713) 381-6812 or (866) 230-0745

Rick Rainey, Media Relations (713) 381-3635

Source: Enterprise Products Partners L.P.

FAQ

What is the quarterly cash distribution announced by Enterprise Products Partners L.P. (EPD) for Q1 2024?

Enterprise Products Partners L.P. (EPD) announced a quarterly cash distribution of $0.515 per unit for the first quarter of 2024.

How much did Enterprise Products Partners L.P. (EPD) repurchase of its common units in Q1 2024?

Enterprise Products Partners L.P. (EPD) repurchased $40 million of its common units in the open market during the first quarter of 2024.

What percentage of its authorized buyback program did Enterprise Products Partners L.P. (EPD) utilize in Q1 2024?

Inclusive of the $40 million repurchase, Enterprise Products Partners L.P. (EPD) utilized 48% of its authorized $2.0 billion buyback program in Q1 2024.

When will Enterprise Products Partners L.P. (EPD) announce its earnings for Q1 2024?

Enterprise Products Partners L.P. (EPD) will announce its earnings for the first quarter of 2024 on Tuesday, April 30, 2024, before the New York Stock Exchange opens for trading.

What is the purpose of the qualified notice for non-U.S. unitholder income tax withholding in the press release?

The qualified notice in the press release states that non-U.S. unitholders should be aware that Enterprise Products Partners L.P.'s (EPD) distributions are subject to federal income tax withholding at the highest applicable effective tax rate.