A key overview of Enterprise Products Partners’ 2Q14 results

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Quarterly revenues are up

Enterprise Products Partners (EPD) released its 2Q14 earnings on July 31, 2014. Other MLPs that have recently released 2Q14 results include Williams Partners (WPZ), Williams Companies Inc. (WMB), and Plains All American Pipeline (PAA). Some of these companies are components of the Alerian MLP ETF (AMLP).

The company recorded $12.5 billion in total revenues for 2Q14, up 12.3% from the $11.1 billion recorded in 2Q13. The increase was primarily due to higher volumes in the crude oil marketing and NGL marketing businesses, partially offset by lower sales prices.

Revenues from natural gas and petrochemical and refined products marketing also increased in 2Q14 over 2Q13 due to higher sales prices. Revenues from octane additives and high-purity isobutylene decreased due to lower sales volumes. EPD Quarterly revenues - Actual vs Consensus

As the graph above shows, reported revenues fell short of consensus revenues during the first few quarters of the past nine quarters. They have exceeded consensus estimates for most recent quarters. Recorded revenues fell short of consensus by ~3% on average in the past nine quarters.

The 3Q14 consensus sell-side analysts’ revenues estimate for EPD is ~$13.6 billion. This is 5.8% higher than the $12.5 billion the company recorded in 2Q14.

Adjusted earnings per share are up

Between 2Q12 and 2Q14, Enterprise Product Partners’ adjusted earnings per share (or EPS) increased 11%. They increased ~10% from 2Q13 to 2Q14. Net income for 2Q13 was reduced by $27 million in asset impairment charges.Quarterly EPS - Actual vs Consensus

On average, EPD’s adjusted EPS have exceeded consensus EPS by ~4% in the past nine quarters.

The 3Q14 consensus sell-side analysts’ adjusted EPS estimate for EPD is ~$0.38. This is 14% higher than the $0.34 per share the company recorded in 2Q14.

Distributions are up, but coverage is down

In 2Q14, EPD increased its cash distribution to $0.72 per unit ($2.88 annualized). This is a 5.9% increase over the 2Q13 distribution. Distributable cash flows were up 3.2% from $924 million in 2Q13 to $954 million in 2Q14. The distribution coverage in 2Q14 was 1.4x, compared to 1.5x in 2Q13.

The coverage ratio is distributable cash flows divided by distributed cash. A ratio greater than one shows the company has excess cash after paying out distribution. This signals an MLP’s good financial health.

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