Enterprise Products (EPD) Beats On Q4 Earnings, Lags Revenues

Enterprise Products Partners L.P.’s (NYSE:EPD) delivered fourth-quarter 2018 adjusted earnings per limited partner unit of 59 cents that beat the Zacks Consensus Estimate of 50 cents. The bottom line improved from earnings of 37 cents in the year-ago quarter. Higher revenues in all the segments contributed to growth. This was partially offset by higher operating costs.

In 2018, adjusted earnings per limited partner unit were $1.91, up from $1.30 in the prior-year quarter and beat the Zacks Consensus Estimate of $1.82.

Quarterly distribution improved 2.4% year over year to 43.5 cents per common unit or $1.74 per unit on an annualized basis. Adjusted distributable cash flow was at a record level of $1.5 billion, up 19% year over year and provided coverage of 1.5x. The partnership retained $662 million in cash flow and was able to reduce financing.

Revenues in the quarter jumped to $9,182.3 million from $8,426.6 million in the year-ago quarter. However, the top line missed the Zacks Consensus Estimate of $9,458 million.

In 2018, revenues jumped nearly 25% year over year to $36,534.2 million from $29,241.5 million in 2016. However, revenues lagged the Zacks Consensus Estimate of $36,590 million.

Q4 Segmental Performance

Gross operating income in the NGL Pipeline & Services segment increased to $969 million from $872 million in the year-ago quarter. However, the figure lagged the Zacks Consensus Estimate of $1,026 million. The upside can be attributed to contractual increases in committed volumes. Improved contribution from Mid America, Chaparral and Seminole pipelines as well as from associated product storage business supported the segment. Moreover, higher fractionation volumes from Enterprise’s Mont Belvieu fractionators also contributed to growth.

Natural Gas Pipeline and Services’ gross operating income jumped to $263 million from $179 million in the year-ago quarter and beat the Zacks Consensus Estimate of $213 million. The upside was backed by higher transportation volumes and average capacity fees.

Gross operating income in the Crude Oil Pipelines & Services segment was $644 million compared with $296 million in the prior-year quarter. Also, the figure beat the Zacks Consensus Estimate of $401 million. The uptick was propelled by higher volumes from the South Texas and Eagle Ford Crude Oil pipeline systems as well as the Midland-to-ECHO pipeline.

Gross operating income in the Petrochemical & Refined Product Services segment amounted to $255 million compared with the prior-year quarter’s level of $172 million. The figure surpassed the Zacks Consensus Estimate of $250 million.

Financials

During the quarter, the partnership spent $1.2 billion. Outstanding total debt principal as of Dec 31, 2018 was $26.4 billion. Enterprise Products had consolidated liquidity of $6.3 billion, which comprised unrestricted cash on hand and available borrowing capacity.

Zacks Rank

Enterprise Products Partners currently has a Zacks Rank #3 (Hold).

A few better-ranked players in the energy space are Evergy, Inc (NYSE:EVRG) , Sunoco L.P (NYSE:SUN) and Contura Energy (NYSE:CTRA) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Evergy, through its operating subsidiaries Kansas City Power & Light Company (KCP&L) and Westar Energy, Inc, provides clean, safe and reliable energy in Kansas and Missouri. The company delivered average negative earnings surprise of 11.1% in the last four quarters.

Headquartered in Houston, TX, Sunoco operates as a wholesale fuel distributor. The company is expected to witness year-over-year earnings decline of 38.9% in 2018.

Bristol, U.S-based Contura Energy is a mining company. The company generated average negative surprise of 17.9% in the trailing four quarters.

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