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Behind Enterprise Products Partners’ 3Q17 Results

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Behind Enterprise Products Partners’ 3Q17 Results PART 1 OF 3

What Happened with Enterprise Products Partners’ 3Q17 Earnings?

EBITDA rose 5%

Enterprise Products Partners (EPD) reported its 3Q17 results on November 2, 2017. The company’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 5% to ~$1.32 billion from ~$1.26 billion in 3Q16.

EPD’s distributable cash flow rose to ~$1.07 billion from $978 million in 3Q16. Enterprise Products’ higher earnings were supported by strong volumes on its pipelines, plants, and terminals.

What Happened with Enterprise Products Partners’ 3Q17 Earnings?

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Enterprise’s general partner CEO (chief executive officer) Jim Teague stated: “Highlights for the quarter included record volumes at our ethane export marine terminal, record volumes on our ATEX ethane pipeline, and near record volumes on our Acadian Gas System as a result of the resurgence of Haynesville shale production. We also had strong year-over-year performance at our octane enhancement facility, and from assets put into service in the Permian basin and NGL storage facility.”

3Q17 distributions

On October 12, 2017, Enterprise Products Partners announced a 0.6% rise in its quarterly distribution for 3Q17. The quarter-over-quarter rise of 0.6% is less than half of the ~1.3% increase that EPD was providing for more than two years. (Learn more in Enterprise Products Partners’ Distribution Growth Slowed Down.) EPD’s coverage ratio for the quarter was 1.2x.

Enterprise Products Partners’ current yield of ~6.7% is higher compared with ~5.6% for ONEOK (OKE), ~2.8% for Kinder Morgan (KMI), and ~5.1% for Magellan Midstream Partners (MMP). The SPDR S&P 500 ETF (SPY) yields ~2%. The energy sector forms nearly 6.0% of the S&P 500 Index (SPX-INDEX).

MPLX (MPLX) posted strong 3Q17 results on October 26. (Learn more in MPLX Posted Strong 3Q17 Results, Distributions Rose 4%.) Energy Transfer Partners (ETP) is scheduled to report 3Q17 results on November 7.

We’ll analyze the performance of Enterprise Products Partners’ segments in 3Q17 in the next part of this series.

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