Dividend Aristocrat Enterprise Products Partners Showcases Strong Earnings Growth in Second Quarter

Image Source: 2Q 2024 Enterprise Products Partners Earnings Slides

By Brian Nelson, CFA

On July 30, Enterprise Products Partners (EPD) reported decent second quarter results. During the quarter, the midstream energy company generated net income attributable to common unitholders of $1.4 billion, or $0.64 per unit on a fully diluted basis, a 12% increase from the same period a year ago. Distributable cash flow [DCF] came in at $1.8 billion, up from $1.7 billion in last year’s quarter and covered its distribution 1.6 times. Enterprise increased its distribution 5% in the second quarter, to $2.10 per common unit on an annualized basis, marking the 26th consecutive year it has raised its payout.

Management commented on the second quarter performance:

Enterprise reported a solid second quarter in terms of both volumes and cash flow generated by our integrated midstream system. Even though the second quarter is typically our seasonally weakest quarter, the partnership handled a near record 12.6 million BPD of equivalent pipeline volumes and 2.2 million BPD of marine terminal volumes, as well as record fee-based natural gas processing, NGL pipeline and NGL fractionation volumes. Our total equivalent pipeline volumes and marine terminal volumes increased by 5 percent and 18 percent, respectively, compared to the second quarter of 2023.

During the quarter, Enterprise Products Partners hauled in $2.1 billion in adjusted cash flow from operations versus $1.9 billion in the same period of 2023. Total capital spending in the period was $1.3 billion, consisting of $1 billion in growth capital projects and $245 million of sustaining capital expenditures. Enterprise is targeting $3.5-$3.75 billion and $3.25-$3.75 billion in organic growth capital investments for 2024 and 2025, respectively. Sustaining capital expenditures are targeted at roughly $600 million in 2024. Total debt was $30.6 billion at the end of the quarter, while consolidated liquidity came in at approximately $3.4 billion. Shares yield 7% at the time of this writing.