Enterprise Reports First Quarter 2021 Earnings
Enterprise Products Partners L.P. (EPD) reported Q1 2021 net income of $1.3 billion, unchanged per unit at $0.61, impacted by $66 million in non-cash impairment charges. Cash flow from operations was $2.0 billion, with distributions rising 1.1% to $0.45 per unit. Free Cash Flow (FCF) decreased to $3.1 billion from $3.4 billion year-over-year. The gross operating margin increased to $2.3 billion, with notable year-over-year growth in the NGL Pipelines & Services segment despite volume declines due to winter storm impacts.
- Net income remained stable at $1.3 billion with earnings per unit at $0.61.
- Distributions increased by 1.1% to $0.45 per unit.
- Gross operating margin improved to $2.3 billion compared to $2.0 billion in Q1 2020.
- Distributable Cash Flow was $1.7 billion, providing 1.7 times coverage for the declared distribution.
- Net income faced a reduction of $66 million from non-cash impairment charges.
- Total Free Cash Flow (CFFO less capital investments) decreased to $3.1 billion from $3.4 billion year-over-year.
- Pipeline volumes decreased across several segments due to winter storms and associated disruptions.
Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD) today announced its financial results for the three months ended March 31, 2021.
Enterprise reported net income attributable to common unitholders of
Net cash flow provided by operating activities, or cash flow from operations (“CFFO”), was
Distributable Cash Flow (“DCF”) was
First Quarter 2021 Highlights
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Three Months Ended March 31, |
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|
2021 |
2020 |
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($ in millions, except per unit amounts) |
|
|
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Operating income |
$ |
1,695 |
$ |
1,508 |
||
Net income (1) |
$ |
1,363 |
$ |
1,375 |
||
Fully diluted earnings per common unit (1) |
$ |
0.61 |
$ |
0.61 |
||
Net cash provided by operating activities (CFFO) (2) |
$ |
2,023 |
$ |
2,012 |
||
Total gross operating margin (3) |
$ |
2,323 |
$ |
2,048 |
||
Adjusted EBITDA (3) Free cash flow (FCF) (3) |
$ $ |
2,246 1,349 |
$ $ |
1,979 916 |
||
Distributable cash flow (DCF) (3) |
$ |
1,737 |
$ |
1,554 |
||
(1) |
Net income and fully diluted earnings per common unit for the first quarter of 2021 includes non-cash asset impairment and related charges of approximately |
|
(2) |
CFFO includes the impact of the timing of cash receipts and payments related to operations. For the first quarters of 2021 and 2020, the net effect of changes in operating accounts, which are a component of CFFO, were net increases of |
|
(3) |
Total gross operating margin, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), FCF and DCF are non-generally accepted accounting principle (“non-GAAP”) financial measures that are defined and reconciled later in this press release. |
-
Gross operating margin, operating income and net income attributable to common unitholders included non-cash, mark-to-market (“MTM”) gains on financial instruments used in our commodity hedging activities of
$16 million for the first quarter of 2021 and$30 million for the first quarter of 2020. -
Capital investments were
$682 million during the first quarter of 2021, including$144 million of sustaining capital expenditures. Sustaining capital expenditures for the first quarter of 2021 included approximately$81 million of expenditures related to the turnaround of the partnership’s Propane Dehydrogenation Unit (“PDH”) and Octane Enhancement facilities.
First Quarter Volume Highlights |
Three Months Ended March 31, |
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|
2021 |
2020 |
||
NGL, crude oil, refined products & petrochemical pipeline volumes (million BPD) |
6.0 |
6.9 |
||
Marine terminal volumes (million BPD) |
1.5 |
2.0 |
||
Natural gas pipeline volumes (TBtus/d) |
13.7 |
13.9 |
||
NGL fractionation volumes (MBPD) |
1,190 |
1,133 |
||
Propylene plant production volumes (MBPD) |
83 |
98 |
||
Fee-based natural gas processing volumes (Bcf/d) |
4.0 |
4.7 |
||
Equity NGL production volumes (MBPD) |
162 |
140 |
||
As used in this press release, “NGL” means natural gas liquids, “LPG” means liquefied petroleum gas, “BPD” means barrels per day, “MBPD” means thousand barrels per day, “MMcf/d” means million cubic feet per day, “Bcf/d” means billion cubic feet per day, “BBtus/d” means billion British thermal units per day and “TBtus/d” means trillion British thermal units per day.
“The value of Enterprise’s diversified and integrated midstream system was exhibited again during a volatile first quarter of 2021,” said A. J. “Jim” Teague, co-chief executive officer on Enterprise’s general partner. “Our propylene, NGL, refined products and natural gas businesses benefited from greater demand associated with the early stages of an economic recovery, winter demand and higher commodity prices. This was offset by plant and pipeline disruptions and lower volumes attributable to the impacts of two back-to-back major winter storms, Uri and Viola, and turnarounds at our PDH and octane enhancement facilities.”
“During the winter storms, from February 15 through February 19, most of our Texas assets went offline at some point either from us voluntarily reducing our power requirements by shutting down certain facilities, our participation in ERCOT’s Load Resources program, which redeploys industrial power supplies to human need, or from power blackouts. In addition, our Texas Intrastate natural gas pipeline, natural gas processing plants and storage facilities were impacted by rolling blackouts. The economic impact of lost revenues from these disruptions, higher power and natural gas costs, as well as losses on natural gas hedges, were mitigated by sales of natural gas to electricity generators, natural gas utilities and industrial customers to assist them in meeting their needs. Our system was also impacted by lower volumes due to many of our producer, petrochemical and refinery customers experiencing disruptions both during and following the storms as repairs were made to freeze-damaged facilities. I want to thank our employees for their tireless, around-the-clock actions to schedule and keep natural gas flowing on our pipeline system and troubleshooting and restarting assets during the historic frigid conditions,” stated Teague.
“We continue to see stronger demand for crude oil, NGLs, primary petrochemicals and refined products as the United States and the rest of the world begin to unevenly emerge from COVID-related lockdowns, restart manufacturing facilities and as excess inventories of crude oil, NGLs and refined products are reduced. On the Texas and Louisiana gulf coast, petrochemical plants and refineries are increasing utilization rates after completing repairs due to damage from the winter storms and in response to better indicative profit margins. This has led to higher commodity prices, which has supported an increase in producer drilling and completion activities, especially in the Permian Basin. At the current level of activities, we are more confident in our most recent forecasts of U.S. crude oil and NGL production,” continued Teague.
“We continue to be ‘on schedule’ to complete the expansion of our Acadian Gas system to Gillis, Louisiana to serve LNG markets, the expansion of our ethylene and propylene pipeline systems and the construction of our natural gasoline hydrotreater during the second half of 2021,” said Teague.
Review of First Quarter 2021 Results
Enterprise reported total gross operating margin of
NGL Pipelines & Services – Gross operating margin from the NGL Pipelines & Services segment increased to
Gross operating margin from Enterprise’s natural gas processing business and related NGL marketing activities increased 17 percent to
Gross operating margin from the partnership’s processing plants for the first quarter of this year decreased
Lower average gas processing margins and decreased fee-based volumes, partially offset by lower operating costs, contributed to a
Our Texas facilities were impacted by well freeze offs and power blackouts during the first quarter of 2021 due to winter storms Uri and Viola. In addition, upstream drilling activity remains below pre-COVID levels at this point in the economic recovery. Total fee-based processing volumes from Enterprise’s gas processing facilities were 4.0 Bcf/d for the first quarter of 2021 compared to 4.7 Bcf/d for the first quarter of 2020. Total equity NGL production increased 22 MBPD to 162 MBPD this quarter compared to the first quarter of last year.
Gross operating margin from the partnership’s NGL pipelines and storage business was
A number of Enterprise’s NGL pipelines, including the Mid-America and Seminole NGL Pipeline Systems, Chaparral NGL Pipeline, Shin Oak NGL Pipeline, Texas Express and the Front Range Pipelines serve the Permian Basin and Rocky Mountain regions. On a combined basis, gross operating margin for the first quarter of 2021 from these pipelines decreased a net
Gross operating margin from Enterprise Hydrocarbons Terminal (“EHT”) and the related Channel pipeline for the first quarter of 2021 decreased a combined
Enterprise’s NGL fractionation business reported a
Crude Oil Pipelines & Services – Gross operating margin from the partnership’s Crude Oil Pipelines & Services segment was
The South Texas Crude Oil Pipeline System had a
Gross operating margin from the partnership’s West Texas Crude Oil Pipeline System for the first quarter of 2021 decreased
Gross operating margin from other crude oil marketing activities for the first quarter of 2021 increased
Natural Gas Pipelines & Services – Gross operating margin for the Natural Gas Pipelines & Services segment for the first quarter of 2021 increased to
Gross operating margin from natural gas marketing activities for the first quarter of 2021 increased
Gross operating margin from the Acadian Gas System for the first quarter of 2021 decreased
Petrochemical & Refined Products Services – Gross operating margin for the Petrochemical & Refined Products Services segment was
Gross operating margin for the first quarter of 2021 from propylene production and related activities increased
Enterprise’s refined products pipelines and related activities reported a
Gross operating margin from the partnership’s octane enhancement and related plant operations decreased
Capitalization
Total debt principal outstanding at March 31, 2021 was
Capital Investments
Total capital investments were
Our current expectation for growth capital investments for 2021 and 2022 continue to be
Conference Call to Discuss First Quarter 2021 Earnings
Enterprise will host a conference call today to discuss first quarter 2021 earnings. The call will be broadcast live over the Internet beginning at 9:00 a.m. CT and may be accessed by visiting the partnership’s website at www.enterpriseproducts.com.
Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-GAAP financial measures of total gross operating margin, FCF, DCF and Adjusted EBITDA. The accompanying schedules provide definitions of these non-GAAP financial measures and reconciliations to their most directly comparable financial measure calculated and presented in accordance with GAAP. Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flow provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as we do.
Company Information and Use of Forward-Looking Statements
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 export and import terminals; crude oil gathering, transportation, storage and export and import terminals; petrochemical and refined products transportation, storage, export and import terminals and related services; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems. The partnership’s assets include approximately 50,000 miles of pipelines; 260 million barrels of storage capacity for NGLs, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity.
This press release includes forward-looking statements. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve certain risks and uncertainties, such as the partnership’s expectations regarding future results, capital expenditures, project completions, liquidity and financial market conditions. These risks and uncertainties include, among other things, direct and indirect effects of the COVID-19 pandemic, insufficient cash from operations, adverse market conditions, governmental regulations and other factors discussed in Enterprise’s filings with the U.S. Securities and Exchange Commission. If any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those expected. The partnership disclaims any intention or obligation to update publicly or reverse such statements, whether as a result of new information, future events or otherwise.
Enterprise Products Partners L.P. |
Exhibit A |
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Condensed Statements of Consolidated Operations – UNAUDITED |
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($ in millions, except per unit amounts) |
|
|
||||||||||
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For the Three Months Ended March 31, |
For the Twelve
March 31, |
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|||
Revenues |
$ |
9,155.3 |
|
$ |
7,482.5 |
|
$ |
28,872.5 |
|
|||
Costs and expenses: |
|
|
|
|||||||||
Operating costs and expenses |
|
7,553.4 |
|
|
6,060.3 |
|
|
23,864.2 |
|
|||
General and administrative costs |
|
56.3 |
|
|
55.5 |
|
|
220.4 |
|
|||
Total costs and expenses |
|
7,609.7 |
|
|
6,115.8 |
|
|
24,084.6 |
|
|||
Equity in income of unconsolidated affiliates |
|
148.9 |
|
|
140.8 |
|
|
434.2 |
|
|||
Operating income |
|
1,694.5 |
|
|
1,507.5 |
|
|
5,222.1 |
|
|||
Other income (expense): |
|
|
|
|||||||||
Interest expense |
|
(322.8 |
) |
|
(317.5 |
) |
|
(1,292.7 |
) |
|||
Other, net |
|
0.9 |
|
|
5.8 |
|
|
8.8 |
|
|||
Total other expense, net |
|
(321.9 |
) |
|
(311.7 |
) |
|
(1,283.9 |
) |
|||
Income before income taxes |
|
1,372.6 |
|
|
1,195.8 |
|
|
3,938.2 |
|
|||
Benefit from (provision for) income taxes |
|
(10.0 |
) |
|
179.2 |
|
|
(64.9 |
) |
|||
Net income |
|
1,362.6 |
|
|
1,375.0 |
|
|
3,873.3 |
|
|||
Net income attributable to noncontrolling interests |
|
(21.3 |
) |
|
(24.9 |
) |
|
(106.5 |
) |
|||
Net income attributable to preferred units |
|
(0.9 |
) |
|
-- |
|
|
(1.8 |
) |
|||
Net income attributable to common unitholders |
$ |
1,340.4 |
|
$ |
1,350.1 |
|
$ |
3,765.0 |
|
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Per common unit data (fully diluted): |
|
|
|
|||||||||
Earnings per common unit |
$ |
0.61 |
|
$ |
0.61 |
|
$ |
1.71 |
|
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Average common units outstanding (in millions) |
|
2,203.3 |
|
|
2,204.0 |
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