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ENTERPRISE PRODUCTS PARTNERS L.P. (EPD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered steady growth: EPS $0.74 vs $0.72 YoY, Adjusted EBITDA $2.60B, and DCF $2.16B, powered by record NGL and natural gas volumes across the system .
  • Segment mix improved: NGL Pipelines & Services gross operating margin hit a record $1.55B (+12% YoY), while Natural Gas Pipelines & Services rose to $323MM (+13% YoY); Petrochemical & Refined Products declined due to PDH downtime and weaker octane margins .
  • 2025 capital plan was fine-tuned upward: organic growth capex raised to $4.0–$4.5B and $6B of major projects expected to enter service (Bahia NGL pipeline, Fractionator 14, Neches River NGL export Phase 1, ethane/ethylene terminal expansions) .
  • Distribution increased 3.9% to $0.535 per unit ($2.14 annualized) with 1.8x coverage in Q4 and $985MM DCF retained; buyback flexibility likely increases by 2026 given excess DCF trajectory and leverage at ~3.1x .
  • Near-term catalysts: commissioning of 2025 projects and sustained Permian-driven NGL/gas volume growth; medium-term watch items include PDH utilization improvements and commercialization of SPOT crude export project (permit reform backdrop) .

What Went Well and What Went Wrong

What Went Well

  • Record throughput: NGL pipeline volumes 4.77MMBPD (+12% YoY), NGL marine terminal volumes 1.01MMBPD (+9% YoY), and natural gas pipeline volumes 19.9 TBtus/d (+5% YoY), driving higher cash flow .
  • NGL segment strength: NGL Pipelines & Services gross operating margin reached a record $1.55B, aided by higher Permian processing volumes and improved margins in NGL marketing; management emphasized “volume growth across our system” driven by Permian investments .
  • Clear 2025 execution pipeline: “We currently have approximately $7.6 billion of major growth capital projects under construction...supported by long-term contracts...visibility to continuing net income and cash flow per unit growth” .

What Went Wrong

  • Petrochemicals underperformed: Petrochemical & Refined Products gross operating margin fell to $348MM (from $439MM YoY) due to PDH downtime and weaker octane margins; management noted global oversupply and the need to “run the PDH” plants .
  • Crude segment softness: Crude Oil Pipelines & Services gross operating margin decreased to $417MM (from $456MM YoY), with lower sales margins and reduced marine terminal volumes .
  • Rockies gas processing headwinds: Gross operating margin declined due to higher costs, lower margins (including hedges), and downtime at the Chaco plant (inlet volumes -156 MMcf/d YoY) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenues ($USD Millions)$14,622 $13,775 $14,201
EPS (Fully Diluted, $/unit)$0.72 $0.65 $0.74
Adjusted EBITDA (Non-GAAP, $USD Millions)$2,499 $2,442 $2,599
DCF (Non-GAAP, $USD Millions)$2,059 $1,957 $2,155
Total Gross Operating Margin (Non-GAAP, $USD Millions)$2,548 $2,454 $2,628

Segment gross operating margin (Non-GAAP):

Segment ($USD Millions)Q4 2023Q3 2024Q4 2024
NGL Pipelines & Services$1,380 $1,335 $1,548
Crude Oil Pipelines & Services$456 $401 $417
Natural Gas Pipelines & Services$286 $349 $323
Petrochemical & Refined Products Services$439 $363 $348

Key operating KPIs:

KPIQ4 2023Q3 2024Q4 2024
NGL pipeline transportation volumes (MBPD)4,258 4,223 4,768
NGL marine terminal volumes (MBPD)922 887 1,005
NGL fractionation volumes (MBPD)1,598 1,611 1,637
Natural gas processing inlet volumes (MMcf/d)7,060 7,526 7,579
Fee-based natural gas processing volumes (MMcf/d)6,237 6,804 6,994
Natural gas pipeline transportation (BBtus/d)18,915 19,090 19,925
Crude oil pipeline transportation (MBPD)2,610 2,537 2,595
Crude oil marine terminal volumes (MBPD)1,000 910 841
Equivalent pipeline transportation volumes (MBPD)12,745 12,763 13,553

Non-GAAP notes: Q4 2024 includes $9MM non-cash MTM gains; net income includes ~$6MM non-cash asset impairment; definitions and reconciliations provided in exhibits .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Growth CapexFY2025$3.5–$4.0B (Q3 update) $4.0–$4.5B Raised
Sustaining CapexFY2025n/a~$525MM New detail
Major Projects Entering ServiceFY2025n/a~$6B (Permian plants, Bahia NGL pipeline, Fractionator 14, Neches River NGL export Phase 1, ethane/ethylene terminal expansions) New detail
Quarterly DistributionQ4 2024$0.525 (Q3) $0.535 ($2.14 annualized) Raised
Leverage TargetOngoing3.0x ± 0.25 3.0x ± 0.25 (unchanged) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
PDH reliability/utilizationPDH1 turnaround completed; PDH2 planned; expectation for higher reliability PDH1 mechanical issue being resolved; PDH2 design issue with licensor; target upper-90% utilization long term Improving but still ramping
Waha spreads / gas marketingWider Waha spreads boosted TX intrastate revenues and gas marketing margins in Q3 Expect spread persistence; processing spreads stable; ethane fairly stable; driven by low gas prices Supportive
Permian-driven NGL/gas volumesNew Permian plants and fractionation assets drove NGL and gas volume records Record NGL and gas processing/pipeline/marine volumes in Q4 Continued growth
Ethane/LPG export expansionMorgan’s Point flex expansion completed; export volumes increasing Fully contracted base ethane capacity (540kbpd) with debottlenecks; projecting higher ethane; ~85% contracted LPG expansions; Morgan’s Point flex in service Strong demand/contracting
SPOT crude export project & permittingn/aManagement detailed extensive permitting hurdles; anchor customer opt-out; still promoting, focusing on required volumes/fees/terms Commercial traction uncertain
Data centers/power demandn/a~20 TX data center projects in queue (~2 Bcf/d potential), ~15 power projects (~1.2 Bcf/d); select projects progressing Emerging demand optionality
Sour gas handling (Pinon)Acquisition of Piñon Midstream completed; opportunities in sour gas Permitting additional AGI wells/trains; expanding sour gas capability in Delaware Basin Expanding capacity
Tariffs/macron/aChina tariffs seen not impacting NGLs materially; diversified contracts across Asia/Europe; ethane-only cracker contracts Limited impact currently

Management Commentary

  • “Our record 2024 financial performance was driven by record volumes across our midstream system...largely attributable to...Permian Basin infrastructure and downstream value chain” – Jim Teague, Co-CEO .
  • “We currently have approximately $7.6 billion of major growth capital projects under construction...supported by long-term contracts...visibility to continuing net income and cash flow per unit growth” – Jim Teague .
  • “In 2025, $6 billion of major organic growth projects are expected to be completed and begin generating cash flow...Bahia NGL pipeline, Fractionator 14, Neches River NGL export...expansions of ethane and ethylene marine terminals” – Jim Teague .
  • “Our leverage target remains 3x plus or minus 25...we ended the year with a consolidated leverage ratio of 3.1x” – Randy Fowler, Co-CEO .
  • “We’re not going to give up our LPG export franchise...we will do fees more favorable to our customers than anyone” – Jim Teague .

Q&A Highlights

  • 2025 baseline and growth drivers: Management reiterated potential for mid-single-digit cash flow growth near term; larger projects back-half weighted in 2025 .
  • Buybacks capital return: By 2026, excess DCF after funding growth capex could support ~$1B in buybacks/debt reduction; leverage near target range .
  • PDH operations: PDH1/PDH2 issues being addressed; long-term utilization targeted in upper 90% .
  • Exports: Ethane base capacity fully contracted (540kbpd) with debottlenecks; ~85% contracted LPG expansions; significant Asia/Europe contract coverage .
  • SPOT project: Detailed permitting challenges; seeking required volumes/fees/terms; will reassess if commercialization targets not met .
  • Macro view: Oil prices range-bound; constructive long-term gas demand (LNG, power); Permian rich gas/NGL outlook likely revised up in next forecast .

Estimates Context

  • S&P Global Wall Street consensus estimates could not be retrieved due to an API daily request limit. As a result, we cannot provide “vs. consensus” comparisons for Q4 2024 in this recap. We will update the report with EPS, revenue, and EBITDA consensus comparisons once access is restored. (S&P Global data unavailable)

Key Takeaways for Investors

  • Volume-led cash flow: Record NGL and gas volumes underpinned Q4 EBITDA and DCF; continued Permian-driven growth should support 2025 cash flow trajectory .
  • Capital program escalation: 2025 organic growth capex raised to $4.0–$4.5B and ~$6B of projects entering service—expect step-ups as Bahia, Frac 14, and Neches export Phase 1 come online .
  • Distribution discipline: Q4 distribution raised to $0.535/unit with 1.8x coverage and ~$985MM DCF retained; payout remains well-covered amidst growth investments .
  • Segment mix positive: NGL and Natural Gas segments strengthening offset crude softness and petrochem headwinds; watch PDH utilization normalization through 2025 .
  • Export optionality: Ethane/LPG export platforms are largely contracted with brownfield debottlenecks; management targeting expanded monthly hydrocarbon exports by 2027 .
  • Balance sheet flexibility: Net leverage ~3.1x with target 3x±0.25; improving excess DCF could lift buyback capacity by 2026, supporting total shareholder returns .
  • Watch risks: Petrochemical market oversupply, crude marketing margins/volumes, Rockies processing downtime, and SPOT commercialization pace amid permitting regime .