Tuesday, May 3, 2022

Enterprise Product Partners L.P. Reports Q1 2022 Earnings ($EPD)

[Previously: Pipeline Earnings ($MMP $EPD) - 2021, Pipeline Earnings - Q3 2021 ($MMP $EPD), Hydrocarbon Royalties and Pipelines]

Enterprise Product Partners reported results for the first quarter yesterday. The current market capitalization of Enterprise (at $26.35) is $57 billion and enterprise value is $83 billion. Highlights:

  • Enterprise reported net income attributable to common unitholders of $1.3 billion, or $0.59 per unit on a fully diluted basis, for the first quarter of 2022, compared to $1.3 billion, or $0.61 per unit on a fully diluted basis, for the first quarter of 2021. 
  • Distributable Cash Flow ("DCF") was a record $1.8 billion for the first quarter of 2022 compared to $1.7 billion for the first quarter of 2021. Distributions declared with respect to the first quarter of 2022 increased 3.3 percent to $0.465 per unit, or $1.86 per unit annualized, compared to distributions declared for the first quarter of last year. DCF provided 1.8 times coverage of the distribution declared with regard to the first quarter of 2022. Enterprise retained $814 million of DCF for the first quarter of 2022.
  • Adjusted cash flow from operations ("Adjusted CFFO"), which is defined as net cash flow provided by operating activities before the net effect of changes in operating accounts, was $2.0 billion for the first quarter of 2022 compared to $1.9 billion for the first quarter of 2021.
  • Our record Adjusted EBITDA of $2.3 billion in the first quarter of 2022 was driven by our petrochemical and refined products services segment, higher natural gas processing margins, and gross operating margin attributable to the Navitas Midstream acquisition, which was completed on February 17, 2022.

So, the first quarter's annualized earnings ($5.2 billion) would be an 9.1% earnings yield on the current market cap. The annualized Adjusted EBITDA ($9.2 billion) gives an aEBITDA/EV yield of 11%.

In the first quarter of 2019, Enterprise reported $1.26 billion of net income, $1.6 billion of distributable cash flow, and $2 billion of Adjusted EBITDA. So, profits have grown slightly in nominal terms over the past years, since pre-covid times. Distributable cash flow, for example, has grown by 12.5%.

Pipelines are a kind of hedge against over-production by E&P firms. If they bump up against the pipeline transport capacity in a given location (like the Permian), the pipelines' profits should increase sharply since they are bidding for an inelastic supply.

No comments: