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EPD Reports Record Results

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

One can see the improvement (and where it came) in the gross margin numbers:

Enterprise Products Partners (NYSE:EPD) Operating Margin

Q2-2019 Q1-2019 Q4-2018 Q3-2018 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
NGL Pipelines & Services 966.3 959.2 969.0 1,063.1 913.7 884.9 871.5 770.9 759.9 856.0 784.3 703.5 719.1 783.7 730.3 695.5 650.6 695.2
Crude Oil Pipelines & Services 513.2 662.3 644.3 594.2 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
Natural Gas Pipelines & Services 301.8 264.3 263.0 216.9 213.4 197.9 178.5 170.7 194.4 170.9 201.3 178.5 177.4 177.7 194.3 192.4 191.4 204.5
Petrochemical & Refined Products 304.9 242.6 254.7 249.4 218.9 271.9 172.0 172.4 188.4 181.8 148.7 171.6 175.5 154.8 171.1 191.5 181.3 174.6
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 0.0 0.0 0.0 0.0 7.1 44.3 46.1
Total gross operating margin 2,086.2 2,133.7 2,138.1 2,123.3 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

2086.2 - 1476.1 divided by 1476.1 = 41.33% improvement.

Lots of new stuff was placed into service - with more to come in the second half

“We completed construction and brought into service $900 million of major growth projects in the second quarter of 2019, including the third Orla gas plant and the Midland-to-Echo 2 crude oil pipeline. We are on schedule to complete construction of $3.2 billion of major growth projects in the second half of this year.

My spreadsheets (which still needs the EPD earnings presentation to be complete)

Enterprise Products Partners metrics: 46% NGLs; 25% Crude; 14% Natural Gas; 15% Refined Product

Q2-2019 Q1-2019 Q4-2018 Q3-2018 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
Revenues 8,276.3 8,543.5 9,182.3 9,585.9 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
Costs 6,853.4 7,071.9 7,671.9 8,054.6 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
EBITDA 2.089.0 1,974.8 1,866.7 1,902.3 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
Unadjusted DCF dollars 1,722.4 1,628.4 1,617.0 1,580.7 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
DCF from one time gains 14.4 1.7 -157.7 -21.5 -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
Normalized DCF dollars 1,708.0 1,626.7 1,459.3 1,559.2 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
Units 2,202.6 2,199.5 2,195.0 2,190.5 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
Unadjusted DCF/unit 0.7820 0.7404 0.7367 0.7216 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
Normalized DCF/unit 0.7754 0.7396 0.6648 0.7118 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
Upcoming Distribution 0.4400 0.4375 0.4350 0.4325 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
Unadjusted Coverage 1.78x 1.69x 1.69x 1.67x 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
Adjusted Coverage 1.76x 1.69x 1.53x 1.65x 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
Normalized DCF subtracts "cash proceeds from asset sales and insurance recoveries" - derivative gains do not appear to be included with DCF
LTM EBITDA 7,843.8 7,522.1 7,222.9 6,898.2 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
Total Debt 27,1 27,115.6 26,420.6 26,128.2 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
Total Debt/EBITDA 3.45x 3.60x 3.66x 3.79x 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
Interest Expense 290.1 277.2 290.5 279.5 274.6 252.1 245.6 243.9 245.8 234.9 247.0 250.9 244.1 240.6 238.6 243.7 240.4 239.1
Interest_Coverage 7.20x 7.12x 6.43x 6.81x 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

While the distribution is increasing is slow motion - DCF growth is relatively on fire.

I may be the case that there is a lot of DRIPing going on - which increases the "share count" (or unit count). EPD wants to do something to correct that growth. Thus "In the second quarter of 2019, Enterprise purchased approximately 1.1 million of its common units in the open market for approximately $30 million, or approximately $27.95 per unit. For the first six months of 2019, Enterprise purchases of common units on the open market totaled approximately 2.9 million units for approximately $81 million."

There still is some unit count growth. Once that growth stops - EPD could be said to be totally self funding its cap ex.And the cap ex is HUGE.

At a near 6% yield - IMHO EPD is priced in line with the slow growth of the distribution - and "not at all" priced in line with the fast growth in DCF and operating margin. A day will come when that changes.

Disclosure: I am/we are long EPD.