Higher distributable cash flow
Enterprise Products Partners (EPD) reported its 4Q15 results yesterday. The company reported distributable cash flow of $1,089 million, which was 2.4% higher than the $1,063 million it reported in 4Q14. EPD’s adjusted EBITDA[1. Earnings before interest, tax, depreciation, and amortization] for the quarter was $1,335 million. This cash flow is 2.4% lower than the $1,368 million it reported for 4Q14. Enterprise Products’ 4Q15 EBITDA missed consensus estimates by 3%. EPD is 10.5% of the Alerian MLP ETF (AMLP), which invests in the top energy MLPs.
Strong distribution coverage
The graph above shows Enterprise Product’s quarterly EBITDA and distribution per unit over the last year. EPD’s distributable cash flows for the quarter included proceeds from the sales of assets of $71 million. Excluding proceeds from asset sales, EPD reported distributable cash flow of $1 billion for 4Q15, which provided 1.3 times coverage of the cash distributions for the quarter. On January 4, 2016, Enterprise Products increased its 4Q15 distributions by 1.3% to $0.39 per unit—a 5.4% year-over-year increase.
The challenging commodity price environment has forced many MLPs to announce flat distributions. Energy Transfer Partners (ETP) announced a 4Q15 distribution of $1.06 per unit, which is the same as its 3Q15 distribution. Similarly, Plains All American Pipeline (PAA) announced flat distributions for 4Q15 compared to 3Q15. On the other hand, Kinder Morgan (KMI) slashed its 4Q15 dividends by 75%.
2015 full-year results
EPD reported distributable cash flows of $5.6 billion for 2015. These were 37% higher than the $4.1 billion it reported for 2014. The distributable cash flows for 2015 include $1.6 billion in proceeds from asset sales. 2014 distributable cash flows included $145 million in asset sales proceeds. Excluding the proceeds from asset sales, EPD’s distributable cash flows remained relatively flat in 2015 compared to 2014. EPD’s coverage ratio for 2015 was healthy at 1.3x.