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EPD Reports Good Q2-18

|About: Enterprise Products Partners L.P. (EPD)

Enterprise Products Partners L.P. (EPD) had its 'operating margin' for the crude pipelines fall - big . . . but for a good reason:

Gross operating margin from the partnership’s Crude Oil Pipelines & Services segment was $53 million for the second quarter of 2018, which included mark-to-market losses on financial instruments of $338 million primarily related to the widening crude oil commodity price differentials (basis spreads) between Midland and Houston and Midland and Cushing. This compares to gross operating margin of $237 million for the second quarter of 2017, which included $15.0 million of mark-to-market gains on financial instruments.

Observation - The combination of (1) superior distribution coverage (2) superior to average Debt to EBITDA and (3) superior to average interest coverage hints at a return to half a cent per quarter distribution increases.

My spreadsheet:

Enterprise Products Partners Operating Margin

Q2-2018 Q1-2018 Q4-2017 Q3-2017 Q2-2017 Q1-2017 Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015 Q2-2015 Q1-2015 Q4-2014 Q3-2014 Q2-2014 Q1-2014
NGL Pipelines & Services 913.7 884.9 871.5 770.9 759.9 856.0 784.3 703.5 719.1 783.7 730.3 695.5 650.6 695.2 705.3 711.5 680.9 780.0
Crude Oil Pipelines & Services 52.8 220.0 295.5 190.4 236.7 264.6 220.9 254.0 177.4 202.3 257.7 254.6 235.6 214.0 228.0 190.8 184.0 159.7
Natural Gas Pipelines & Services 213.4 197.9 178.5 170.7 194.4 170.9 201.3 178.5 177.4 177.7 194.3 192.4 191.4 204.5 184.5 195.4 203.0 220.4
Petrochemical & Refined Products 218.9 271.9 172.0 172.4 188.4 181.8 148.7 171.6 175.5 154.8 171.1 191.5 181.3 174.6 198.6 190.3 161.7 130.4
Offshore Pipelines & Services 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.1 44.3 46.1 42.0 47.1 33.6 39.3
Total gross operating margin 1,476.1 1,586.2 1,520.1 1,313.3 1,337.9 1,469.1 1,357.3 1,312.0 1,254.2 1,318.5 1,354.5 1,341.1 1,303.2 1,334.4 1,358.4 1,335.1 1,263.2 1,329.8

On 2-1-18 EPD priced $2.7 billion of Notes: $750 million @ 2.8% due February 15, 2021, $1,250 million @ 4.25% due February 15, 2048 and $700 million at 5.375% due February 15, 2078.On 8-7-17 EPD priced a public offering of $1.7 billion of junior notes comprised of $700 million at 4.875% due August 16, 2077, and $1 billion at 5.25% till 2027, and LIBOR + 303.3 after.On 4-4-16 EPD priced a public offering of $1.25 billion of senior unsecured notes comprised of $575 million at 2.85% due April 15, 2021, $575 million at 3.95% due February 15, 2027, and $100 million at 4.90% due May 15, 2046.On 5-4-15 EPD priced a public offering of $2.5 billion of senior unsecured notes comprised of $750 million at 1.65% due May 7, 2018, $875 million at 3.70% due February 15, 2026, and $875 million at 4.90% due May 15, 2046.On 10-01-14 EPD paid approximately $4.41 billion to Oiltanking Holding comprised of $2.21 billion in cash and 54,807,352 Enterprise common units. Enterprise also paid $228 million to assume notes receivable issued by Oiltanking Partners. On 2-05-14 EPD priced a public offering of $2 billion of senior unsecured notes comprised of $850 million at 3.90% due on February 15, 2024 and $1.15 billion at 5.10% due on February 15, 2045.On 11-05-13 EPD offered 8,000,000 common units representing limited partner interests in the partnership at a public offering price of $62.05 (31.025 after stock split) per common unit.On 3-11-13 EPD priced a public offering of $2.25 billion of senior unsecured notes comprised of $1.25 billion at 3.35% due on March 15, 2023 and $1 billion at 4.85% due on March 15, 2044.

Enterprise Products Partners 'long term' metrics: 57% NGLs; 19% Crude; 12% Natural Gas; 11% Refined Product

Q2-2018 Q1-2018 Q4-2017 Q3-2017 Q2-2017 Q1-2017 Q4-2016  Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015 Q2-2015 Q1-2015 Q4-2014 Q3-2014 Q2-2014 Q1-2014
Revenues 8,467.5 9,298.5 8,426.6 6,886.9 6,607.6 7,320.4 6,478.8 5,920.4 5,617.8 5,005.3 6,115.0 6,307.9 7,092.5 7,472.5 10,190.3 12,330.2 12,520.8 12,909.9
Costs 7,603.4 8,275.7 7,458.0 6,121.1 5,775.9 6,383.6 5,647.8 5,107.7 4,857.3 4,190.8 5,291.6 5,501.6 6,402.4 6,665.7 9,349.7 11,464.8 11,686.8 11,933.7
EBITDA 1,767.3 1,686.6 1,542.0 1,320.7 1,338.2 1,414.4 1,355.1 1,258.9 1,314.7 1,327.2 1,335.1 1,309.9 1,296.3 1,326.0 1,316.0 1,300.7 1,248.2 1,365.8
Unadjusted DCF dollars 1,430.8 1,390.6 1,256.9 1,064.9 1,051.9 1,128.6 1,031.1 978.4 1,039.7 1,053.6 1,088.8 2,501.3 987.5 1,029.7 1,063.0 974.8 953.8 1,087.0
DCF from one time gains -1.5 -29.1 -9.6 -1.1 -1.2 1.7 2.6 16.0 -14.5 -6.6 71.3 1,531.4 5.4 0.1 23.8 8.3 16.9 89.6
Normalized DCF dollars 1,429.3 1,361.5 1,247.3 1,063.8 1,050.7 1,126.9 1,028.9 962.4 1025.2 1060.2 1,017.5 969.9 982.1 1,029.6 1,039.2 966.5 936.9 997.4
Units 2,185.4 2,177.2 2,167.0 2,160.6 2,154.3 2,134.9 2,116.6 2,105.5 2,093.2 2,040.5 2,014.4 2,010.5 2,002.1 1,966.7 1,940.5 1,883.4 1,880.4 1,875.9
Unadjusted DCF/unit $0.6547 $0.6387 $0.5800 $0.4924 $0.4883 $0.5286 $0.4871 $0.4647 $0.4967 $0.5163 $0.5405 $1.2441 $0.4932 $0.5236 $0.5478 $0.5176 $0.5072 $0.5794
Normalized DCF/unit $0.6540 $0.6253 $0.5756 $0.4929 $0.4877 $0.5278 $0.4859 $0.4571 $0.4898 $0.5196 $0.5051 $0.4824 $0.4905 $0.5235 $0.5335 $0.5131 $0.4982 $0.5317
Upcoming Distribution $0.4300 $0.4275 $0.4250 $0.4225 $0.4200 $0.4150 $0.4100 $0.405 $0.400 $0.395 $0.390 $0.385 $0.380 $0.375 $0.370 $0.365 $0.360 $0.355
Unadjusted Coverage 1.52x 1.49x 1.36x 1.17x 1.16x 1.274x 1.188x 1.147x 1.242x 1.307x 1.386x 3.232x 1.298x 1.396x 1.481x 1.418x 1.409x 1.632x
Adjusted Coverage 1.52x 1.46x 1.35x 1.17x 1.16x 1.272x 1.185x 1.129x 1.225x 1.315x 1.295x 1.250x 1.291x 1.396x 1.447x 1.406x 1.384x 1.498x
Normalized DCF subtracts "cash proceeds from asset sales and insurance recoveries" - derivative gains do not appear to be included with DCF
LTM EBITDA 6,316.6 5,887.5 5,615.3 5,428.4 5,366.6 5,343.1 5,255.9 5,235.9 5,286.9 5,268.5 5,267.3 5,232.9 5,239.0 5,190.9 5,230.7 5,138.9 4,976.9 4,832.5
Long Term Debt 20,026.5 21,123.0 21,120.9 21,121.2 21,922.1 21,919.8 20,826.7 20,840.7 20,892.9 20,192.2 19,157.4 17,706.5 17,062.9 17,467.8
Long Term Debt/EBITDA 3.73x 3.95x 4.02x 4.03x 4.15x 4.16x 3.95x 3.98x 3.99x 3.89x 3.66x 3.44x 3.43x 3.61x
Short Term Debt 3,354.8 2,300.0 x 2,838.1 875.4 835.9 1,863.9 1,619.4 1,400.1 1,399.8 2,206.4 1,939.9 1,300.0 900.0
Total Debt 25,911.7 25,618.5 24,780.1 24,934.4 23,381.3 23,423.0 23,901.6 24,163 22,999.9 22,946.4 22,690.6 22,460.1 22,293.0 21,592.0 21,363.8 19,646.4 18,362.9 18,367.8
Total Debt/EBITDA 4.10x 4.35x 4.41x 4.59x 4.36x 4.38x 4.55x 4.61x 4.35x 4.35x 4.31x 4.29x 4.26x 4.16x 4.08x 3.82x 3.69x 3.80x
Interest Expense 274.6 252.1 245.6 243.9 245.8 234.9 247.0 250.9 244.1 240.6 238.6 243.7 240.4 239.1 241.4 229.8 228.9 220.9
Interest Coverage 6.44x 6.69x 6.28x 5.41x 5.44x 6.02x 5.49x 5.02x 5.39x 5.52x 5.60 5.37 5.39 5.55 5.45 5.66 5.45 6.18
Historical Debt/EBITDA: 2010 3.9x; 2011 3.5x; 2012 3.6x; 2013 3.5x; 2014 3.8x (Oiltanking acquisition); 2015 4.2x (EFS Midstream acquisition)

Disclosure: I am/we are long EPD.