EPD | Q1 2025

The content provided on this website, including any communications, posts, videos, social media interactions, and other materials, is for informational and educational purposes only. It should not be considered as financial or investment advice. Read our full disclaimer here.

Links

• Link to Transcript

• Link to Presentation

Overview

• GAAP EPU of $0.64 misses by $0.07.

• Revenue of $15.42B (+4.5% Y/Y) beats by $1.42B.

Takeaways

Enterprise Products Partners (EPD) delivered another strong quarter to start 2025, reporting adjusted EBITDA of $2.4 billion and distributable cash flow (DCF) of $2 billion, resulting in a healthy 1.7x coverage ratio.

The company also retained $842 million of DCF after distributions, setting two financial records and five operational records. In total, EPD moved 13.2 million barrels of oil equivalent per day and exported 2 million barrels per day of liquid hydrocarbons.

Co-CEO Jim Teague highlighted that their PDH 1 facility was down for 63 days during the quarter due to unplanned maintenance. However, both PDH plants are now back online, with no major downtime expected for the rest of the year.

Teague emphasized that if both plants had been fully operational, EPD’s EBITDA would have easily topped $2.5 billion. The company continues to benefit from strong production growth in the Permian Basin and steady energy demand both domestically and internationally.

Looking ahead, EPD has several major projects slated for the second half of the year. These include two new gas processing plants in the Delaware and Midland Basins, a new NGL pipeline (Bahia) and a new fractionator (Frac 14) at Mont Belvieu, enhancements to their ethane and ethylene terminal at Morgan's Point, and new NGL export capacity on the Neches River.

A significant number of new wells are expected to connect to their systems later this year as well, helping to feed their downstream NGL network.

On the export front, Teague noted rising global attention on U.S. hydrocarbons. China appears set to exclude ethane and ethylene from tariffs to protect its petrochemical sector, although LPG remains subject to tariffs for now.

Despite these developments, EPD's customer demand has pretty much remained unchanged. Teague stressed that, at the end of the day, global markets rely on U.S. oil, gas, and NGLs to support economic growth. He also reiterated his confidence that, despite political uncertainty, U.S. energy policy will continue to favor oil and gas development over the long term.

Getting back to the financials, Co-CEO Randy Fowler reported first-quarter net income of $1.4 billion, or $0.64 per unit, slightly down from $0.66 per unit a year ago. However, distributions grew by 3.9% year-over-year to $0.535 per unit, with payments scheduled for mid-May.

EPD also repurchased about 1.8 million common units for $60 million during the quarter, contributing to $239 million in buybacks over the past 12 months. Combined with $4.6 billion paid out in distributions, the company returned nearly $4.9 billion to investors over the past year, representing a 56% payout ratio against adjusted cash flow.

During the Q&A, management touched on their approach to buybacks. Randy Fowler explained that excess distributable cash flow—which covers distributions and growth capital—currently stands around $3.3 billion.

As capital spending tapers off in 2026, they anticipate having about $1.5 billion available for debt reduction and buybacks, suggesting that share repurchases could meaningfully step up at that point.

For now, capital spending remained solid, with $1.1 billion invested during the quarter—mostly directed toward growth projects. EPD reaffirmed its full-year growth capital guidance of $4 to $4.5 billion for 2025, and $2 to $2.5 billion for 2026.

Debt levels remained stable, with $31.9 billion in total debt outstanding and a weighted average cost of 4.7%. About 96% of their debt is at fixed rates, and EPD ended the quarter with $3.6 billion in available liquidity. Their consolidated leverage ratio stood at a conservative 3.1x, right in line with management’s long-term target.

---