Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three and six months
ended June 30, 2014.
Second Quarter 2014
Highlights
Three months ended Six
months ended June 30, June 30, 2014 2013 2014
2013 ($ in millions, except per unit amounts)
Gross operating margin (1) $ 1,263 $ 1,142 $ 2,593 $ 2,373 Net
income (2) (3) $ 647 $ 553 $ 1,453 $ 1,309 Fully diluted earnings
per unit (2) (3) $ 0.68 $ 0.60 $ 1.53 $ 1.43 Adjusted EBITDA (1) $
1,243 $ 1,104 $ 2,602 $ 2,354 Distributable cash flow (1) $ 954 $
925 $ 2,041 $ 1,822
(1) Gross operating margin, adjusted earnings
before interest, taxes, depreciation and amortization (“Adjusted
EBITDA”) and distributable cash flow are non-generally accepted
accounting principle (“non-GAAP”) financial measures that are
defined and reconciled later in this press release.
(2) Net income and fully diluted earnings per
unit for the second quarter of 2014 include net gains of $7
million, or $0.01 per unit, attributable to asset sales, whereas
net income and fully diluted earnings per unit for the second
quarter of 2013 include net losses of $6 million, or $0.01 per
unit, attributable to asset sales. For the six months ended June
30, 2014 and 2013, net income and fully diluted earnings per unit
include net gains of $96 million, or $0.10 per unit, and $58
million, or $0.06 per unit, respectively, attributable to asset
sales and insurance recoveries.
(3) Net income and fully diluted earnings per
unit include non-cash asset impairment charges for the second
quarters of 2014 and 2013 of $4 million, or less than $0.01 per
unit, and $27 million, or $0.03 per unit, respectively. Non-cash
asset impairment charges for the six months ended June 30, 2014 and
2013 were $13 million, or $0.01 per unit, and $38 million, or $0.04
per unit, respectively, with both amounts on a fully diluted
basis.
- Enterprise increased its cash
distribution with respect to the second quarter of 2014 to $0.72
per unit, or $2.88 per unit on an annualized basis, which
represents a 5.9 percent increase from the distribution paid with
respect to the second quarter of 2013. This is the 40th consecutive
quarterly increase and the 49th increase since the partnership’s
initial public offering in 1998. The distribution with respect to
the second quarter of 2014 will be paid on August 7, 2014 to
unitholders of record as of the close of business on July 31,
2014;
- Enterprise reported distributable cash
flow of $954 million for the second quarter of 2014, which provided
1.4 times coverage of the $0.72 per unit cash distribution that
will be paid to common unitholders. Enterprise retained
approximately $293 million of distributable cash flow for the
second quarter of 2014;
- Enterprise’s natural gas liquid
(“NGL”), crude oil, refined products and petrochemical pipeline
volumes for the second quarter of 2014 increased 7 percent to a
record 5.2 million barrels per day (“BPD”) compared to the second
quarter of 2013. Total natural gas pipeline volumes decreased 6
percent to 13.2 trillion British thermal units per day (“TBtud”)
for the second quarter of 2014 compared to the second quarter of
2013. NGL fractionation volumes for the second quarter of 2014
increased 25 percent to a record 845 thousand barrels per day
(“MBPD”). Fee-based natural gas processing volumes for the second
quarter of 2014 increased 8 percent to a record 4.9 billion cubic
feet per day (“Bcfd”), while equity NGL production for the second
quarter of 2014 increased 15 percent to 136 MBPD;
- Enterprise made capital investments of
approximately $697 million during the second quarter of 2014,
including $77 million of sustaining capital expenditures;
- Affiliates of privately-held Enterprise
Products Company (“EPCO”), which collectively own our general
partner and approximately 36 percent of our outstanding limited
partner interests, expect to purchase an additional $25 million of
common units from Enterprise in August 2014 through the
distribution reinvestment plan. This purchase would bring total
purchases by these affiliates in 2014 to $75 million. EPCO had
previously stated an interest in purchasing up to $100 million of
Enterprise common units in 2014; and
- On July 15, 2014, Enterprise announced
a two-for-one split of its common units. The split will be
accomplished by distributing one additional common unit for each
common unit outstanding. The additional common units will be
distributed on August 21, 2014 to holders of record as of the close
of business on August 14, 2014. All earnings per unit and other
unit-related information contained in this press release are on a
pre-split basis.
Review of Second Quarter 2014
Results
Net income for the second quarter of 2014 was $647 million
versus $553 million for the second quarter of 2013. On a fully
diluted basis, net income attributable to limited partners for the
second quarter of 2014 was $0.68 per unit compared to $0.60 per
unit for the second quarter of 2013. Net income for the second
quarter of 2013 was reduced by a non-cash charge of $27 million, or
$0.03 per unit on a fully diluted basis, associated with the
impairment of certain assets.
On July 10, 2014, Enterprise announced an increase in the
partnership’s quarterly cash distribution with respect to the
second quarter of 2014 to $0.72 per unit, representing a 5.9
percent increase over the $0.68 per unit that was paid with respect
to the second quarter of 2013. Enterprise generated distributable
cash flow of $954 million for the second quarter of 2014 compared
to $925 million for the second quarter of 2013. Distributable cash
flow for the second quarters of 2014 and 2013 included proceeds
from the sales of assets of $17 million and $69 million,
respectively.
Enterprise’s distributable cash flow for the second quarter of
2014 provided 1.4 times coverage of the cash distribution that will
be paid on August 7, 2014 to unitholders of record on July 31,
2014. The partnership retained approximately $293 million of
distributable cash flow for the second quarter of 2014, which is
available to reinvest in growth capital projects, reduce debt, and
decrease the need to issue additional equity. For the first six
months of 2014, Enterprise has retained approximately $730 million
of distributable cash flow.
“Enterprise reported another solid quarter driven by record
volumes transported on our liquid pipelines, fee-based natural gas
processing volumes and NGL fractionation volumes in a quarter that
is typically a seasonally weaker quarter,” said Michael A. Creel,
chief executive officer of Enterprise’s general partner. “This
volume growth and strong demand for NGLs, natural gas, crude oil
and petrochemicals led to an 11 percent increase in gross operating
margin and a 9 percent increase in distributable cash flow,
excluding proceeds from asset sales, in the second quarter of 2014
compared to the second quarter of last year.”
“We benefitted from cash flow and volume growth associated with
$5.7 billion of new assets that have begun operations since the
beginning of 2013. Volumes transported on our liquids pipelines
increased by 7 percent attributable to volume growth on our NGL and
crude oil pipelines serving production from the Eagle Ford,
Rockies, Permian, and Marcellus regions and the Gulf of Mexico. NGL
fractionation volumes increased 25 percent due to new facilities
that began service in the second half of 2013. Some of our projects
that were recently completed, such as the ATEX ethane pipeline and
Front Range NGL pipeline, have volume commitments that increase
over a multi-year period,” added Creel.
“During the second quarter of 2014, we completed construction on
three new infrastructure projects totaling almost $1 billion of
capital investment - the loop of the Seaway crude oil pipeline, our
refined products marine terminal in Beaumont, Texas and three
additional tanks at our ECHO crude oil storage facility. Our
backlog of projects still under construction is approximately $6
billion with expected completion dates extending through 2016. Our
large integrated system continues to create new business
opportunities. We are working hard to further our success in
turning these opportunities into capital projects that will provide
new streams of cash flow to support future distribution growth,”
stated Creel.
Review of Second Quarter 2014 Segment
Performance
NGL Pipelines & Services – Gross operating margin for
the NGL Pipelines & Services segment increased 25 percent to
$681 million for the second quarter of 2014 compared to $545
million for the same quarter of 2013.
Enterprise’s natural gas processing and related NGL marketing
business generated gross operating margin of $266 million for the
second quarter of 2014 compared to $264 million for the second
quarter of 2013. Gross operating margin from the partnership’s
natural gas processing plants increased by $26 million primarily
due to higher fee-based processing volumes and equity NGL
production. Enterprise’s natural gas processing plants reported
record fee-based processing volumes of 4.9 Bcfd in the second
quarter of 2014 compared to 4.6 Bcfd in the second quarter of 2013.
Enterprise’s equity NGL production was 136 MBPD for the second
quarter of 2014 compared to 118 MBPD for the second quarter of
2013. Gross operating margin from Enterprise’s NGL marketing
activities decreased $24 million primarily due to lower margins and
the effects of downtime associated with maintenance and activities
preparing for the 2015 expansion of the LPG export terminal on the
Houston Ship Channel. The LPG export terminal resumed operations on
July 7, 2014 after a 10-day outage.
Gross operating margin from the partnership’s NGL pipelines and
storage business increased $73 million, or 39 percent, to $261
million for the second quarter of 2014 from $188 million for the
second quarter of 2013. NGL pipeline volumes increased by 122 MBPD
in the second quarter of 2014 to 2.9 million BPD compared to the
second quarter of 2013. The partnership’s ATEX ethane pipeline,
which began commercial service in January 2014, generated gross
operating margin of $35 million for the second quarter of 2014.
ATEX transported approximately 44 MBPD of ethane during the second
quarter of 2014.
The Mid-America and Seminole NGL pipeline systems reported a $19
million increase in gross operating margin in the second quarter of
2014 compared to the same quarter of 2013 due to higher revenues
from deficiency fees and an increase in tariffs, which was
partially offset by higher operating expenses. Volumes on the
Mid-America and Seminole pipelines were 983 MBPD in the second
quarter of 2014 compared to 982 MBPD in the second quarter of last
year. The South Texas NGL pipeline systems reported an $11 million
increase in gross operating margin compared to the second quarter
of 2013 primarily due to a 78 MBPD increase in volume attributable
to production growth from the Eagle Ford shale.
Enterprise’s NGL fractionation business reported record gross
operating margin of $154 million for the second quarter of 2014, a
$61 million increase compared to $93 million reported for the
second quarter of last year. Gross operating margin for the
partnership’s fractionators at Mont Belvieu increased $63 million
to $126 million for the second quarter of 2014 compared to the
second quarter of 2013. This increase in gross operating margin was
primarily attributable to a 179 MBPD increase in volume as
Fractionators VII and VIII began commercial operations during the
second half of 2013. Fractionation volumes for the second quarter
of 2014 increased 25 percent to a record 845 MBPD compared to the
same quarter in 2013.
Onshore Natural Gas Pipelines & Services –
Enterprise’s Onshore Natural Gas Pipelines & Services segment
reported gross operating margin of $203 million for the second
quarter of 2014 compared to $198 million for the second quarter of
2013. Total onshore natural gas pipeline volumes were 12.6 TBtud in
the second quarter of 2014 compared to 13.3 TBtud in the second
quarter of 2013.
The Texas Intrastate system reported a $3 million increase in
gross operating margin for the second quarter of 2014 compared to
the second quarter of last year primarily due to higher fees. Our
natural gas marketing activities reported a $2 million increase in
gross operating margin for the second quarter of 2014 compared to
the second quarter of 2013 primarily due to higher sales margins.
Aggregate gross operating margin for the Haynesville, Jonah and
Piceance Basin gathering systems declined by $5 million and
aggregate volume on these systems declined by 0.5 TBtud in the
second quarter of 2014 compared to the second quarter of 2013 due
to the effects of reduced drilling activities and production
declines in the regions served by these systems.
Onshore Crude Oil Pipelines & Services – Gross
operating margin from the partnership’s Onshore Crude Oil Pipelines
& Services segment decreased by $13 million to $184 million for
the second quarter of 2014 from $197 million for the second quarter
of 2013. Total onshore crude oil pipeline volumes increased 13
percent to 1.3 million BPD for the second quarter of 2014 from 1.1
million BPD for the second quarter of 2013. Enterprise’s South
Texas and West Texas crude oil pipeline systems and Eagle Ford
joint venture pipeline reported an aggregate $34 million increase
in gross operating margin in the second quarter of 2014 compared to
the second quarter of 2013 on a 177 MBPD increase in volume.
Enterprise’s crude oil marketing business reported a $55 million
decrease in gross operating margin in the second quarter of 2014
compared to the second quarter of 2013 due to lower margins that
were primarily caused by the substantial decrease in regional price
spreads for crude oil. For example, the average indicative price
spread between the benchmark Louisiana Light Sweet and West Texas
Intermediate crude oil was $10.41 per barrel for the second quarter
of 2013 compared to $2.56 per barrel for the second quarter of
2014.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment was $162 million for the second quarter of 2014
compared to $163 million for the second quarter of 2013.
The partnership’s propylene business reported gross operating
margin of $42 million for the second quarter of 2014 compared to
$26 million for the second quarter of 2013 primarily due to higher
sales margins. Propylene fractionation volumes were 71 MBPD for the
second quarters of both 2014 and 2013.
Gross operating margin for Enterprise’s octane enhancement and
high-purity isobutylene business was $46 million in the second
quarter of 2014 compared to $43 million for the same quarter in
2013. Total plant production volumes were 20 MBPD for the second
quarters of both 2014 and 2013.
Enterprise’s refined products pipelines and related services
business reported gross operating margin of $24 million for the
second quarter of 2014 compared to $49 million for the second
quarter of 2013. Gross operating margin for the second quarter of
2013 included a $24 million benefit from a rate case settlement.
Total pipeline volumes for this business were 616 MBPD for the
second quarter of 2014 compared to 555 MBPD for the second quarter
of 2013.
Enterprise’s butane isomerization business reported gross
operating margin of $32 million in the second quarter of 2014
compared to $27 million in the second quarter of 2013. Butane
isomerization volumes were 105 MBPD for the second quarter of 2014
compared to 97 MBPD for the second quarter of 2013.
Enterprise’s marine transportation and other services business
reported $18 million of gross operating margin for the second
quarter of 2014 compared to $17 million for the same quarter of
2013.
Offshore Pipelines & Services – Gross operating
margin for the Offshore Pipelines & Services segment was $34
million for the second quarter of 2014 compared to $40 million for
the same quarter of 2013.
Gross operating margin from Enterprise’s offshore crude oil
pipeline business was $22 million for the second quarter of 2014
compared to $23 million for the second quarter of 2013. Total
offshore crude oil pipeline volumes were 318 MBPD in the second
quarter of 2014 compared to 311 MBPD for the second quarter of
2013.
The Independence Hub platform and Independence Trail pipeline
reported aggregate gross operating margin of $8 million for the
second quarter of 2014 compared to $13 million for the second
quarter of 2013 attributable to lower volumes. Natural gas volumes
on the Independence Trail pipeline were 198 billion British thermal
units per day (“BBtud”) for the second quarter of 2014 compared to
296 BBtud in the second quarter of 2013. Total offshore natural gas
pipeline volumes (including those for Independence Trail) were 609
BBtud for the second quarter of 2014 compared to 720 BBtud in the
second quarter of 2013.
Capitalization
Total debt principal outstanding at June 30, 2014 was
approximately $18.4 billion, including $1.5 billion of junior
subordinated notes to which the nationally recognized debt rating
agencies ascribe partial equity content. At June 30, 2014,
Enterprise had consolidated liquidity of approximately $3.7
billion, which was comprised of $242 million of unrestricted cash
on hand and approximately $3.5 billion of available borrowing
capacity under our revolving credit facility.
Total capital spending in the second quarter of 2014 was $697
million, which includes $77 million of sustaining capital
expenditures.
Conference Call to Discuss Second
Quarter 2014 Earnings
Today, Enterprise will host a conference call to discuss second
quarter 2014 earnings. The call will be broadcast live over the
Internet beginning at 9:00 a.m. CT and may be accessed by visiting
the company’s website at www.enterpriseproducts.com.
Use of Non-GAAP Financial
Measures
This press release and accompanying schedules include the
non-GAAP financial measures of gross operating margin,
distributable cash flow and Adjusted EBITDA. The accompanying
schedules provide definitions of these non-GAAP financial measures
and reconciliations to their most directly comparable financial
measure calculated and presented in accordance with GAAP. Our
non-GAAP financial measures should not be considered as
alternatives to GAAP measures such as net income, operating income,
net cash flows provided by operating activities or any other
measure of financial performance calculated and presented in
accordance with GAAP. Our non-GAAP financial measures may not be
comparable to similarly-titled measures of other companies because
they may not calculate such measures in the same manner as we
do.
Company Information and Use of
Forward-Looking Statements
Enterprise Products Partners L.P. is one of the largest publicly
traded partnerships and a leading North American provider of
midstream energy services to producers and consumers of natural
gas, NGLs, crude oil, refined products and petrochemicals. Our
midstream energy operations include: natural gas gathering,
treating, processing, transportation and storage; NGL
transportation, fractionation, storage and import and export
terminals; crude oil gathering, transportation, storage and
terminals; offshore production platforms; petrochemical and refined
products transportation and services; and a marine transportation
business that operates primarily on the U.S. inland and
Intracoastal Waterway systems and in the Gulf of Mexico. The
partnership’s assets include approximately 51,000 miles of onshore
and offshore pipelines; 200 million barrels of storage capacity for
NGLs, crude oil, refined products and petrochemicals; and 14
billion cubic feet of natural gas storage capacity. Additional
information regarding Enterprise can be found on its website,
www.enterpriseproducts.com.
This press release includes forward-looking statements. Except
for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve certain risks and uncertainties, such as the partnership’s
expectations regarding future results, capital expenditures,
project completions, liquidity and financial market conditions.
These risks and uncertainties include, among other things,
insufficient cash from operations, adverse market conditions,
governmental regulations and other factors discussed in
Enterprise’s filings with the U.S. Securities and Exchange
Commission. If any of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those expected. The partnership
disclaims any intention or obligation to update publicly or reverse
such statements, whether as a result of new information, future
events or otherwise.
Enterprise Products Partners L.P.
Exhibit A Condensed Statements of Consolidated Operations
– UNAUDITED ($ in millions, except per unit amounts)
For the Three Months For the Six
Months Ended June 30, Ended June
30, 2014 2013
2014 2013
Revenues
$ 12,520.8 $ 11,149.3 $ 25,430.7
$ 22,532.4
Costs and
expenses:
Operating costs and expenses 11,639.1 10,367.2 23,519.6 20,787.6
General and administrative costs 47.7
45.5 100.9
95.0 Total costs and expenses
11,686.8 10,412.7
23,620.5
20,882.6
Equity in income of
unconsolidated affiliates
50.3 37.6
106.8 82.1
Operating
income
884.3 774.2 1,917.0 1,731.9
Other income
(expense):
Interest expense (228.9 ) (200.2 ) (449.8 ) (396.1 ) Other, net
1.1 (0.3 )
0.8 (0.4 ) Total
other expense (227.8 ) (200.5 )
(449.0 )
(396.5 )
Income before income
taxes
656.5 573.7 1,468.0 1,335.4 Provision for income taxes (10.0
) (20.4 )
(14.8 ) (26.8 )
Net
income
646.5 553.3 1,453.2 1,308.6
Net income
attributable to noncontrolling interests
(8.8 ) (0.8 )
(16.7 ) (2.6 )
Net income
attributable to limited partners
$ 637.7 $ 552.5
$ 1,436.5 $ 1,306.0
Per unit data (fully
diluted): (1)
Earnings per unit $ 0.68 $ 0.60
$ 1.53 $ 1.43
Average limited partner units outstanding (in millions)
940.2 918.5
939.1 914.8
Supplemental
financial data:
Net cash flows provided by operating activities $ 467.8
$ 531.0 $ 1,871.9
$ 1,530.9 Cash used in investing
activities $ 693.4 $ 955.4
$ 1,554.9 $
1,802.6 Cash provided by (used in) financing activities $
(520.8 ) $ (810.6 ) $
(131.9 ) $ 300.9 Depreciation,
amortization and accretion $ 331.1 $
307.8 $ 651.0
$ 599.8 Distributions received from unconsolidated
affiliates $ 85.4 $ 68.0
$ 157.1 $ 119.3
Total debt principal outstanding at end of period $ 18,382.7
$ 16,967.7 $
18,382.7 $ 16,967.7
Non-GAAP gross operating margin by segment: (2) NGL Pipelines &
Services $ 680.9 $ 544.9 $ 1,460.9 $ 1,137.4 Onshore Natural Gas
Pipelines & Services 203.0 197.7 423.4 388.5 Onshore Crude Oil
Pipelines & Services 184.0 197.2 343.7 433.6 Offshore Pipelines
& Services 33.6 39.7 72.9 80.2 Petrochemical & Refined
Products Services 161.7 162.7
292.1 333.6 Total gross operating margin $
1,263.2 $ 1,142.2
$ 2,593.0 $ 2,373.3
Non-GAAP distributable cash flow (3) $ 953.8
$ 924.7 $ 2,040.8
$ 1,821.7 Non-GAAP Adjusted
EBITDA (4) $ 1,242.9 $ 1,103.8
$ 2,601.6 $
2,353.9 Capital spending: Capital expenditures, net
(5) $ 477.1 $ 809.5 $ 1,172.5 $ 1,432.4 Investments in
unconsolidated affiliates 214.1 256.5 498.8 547.9 Other investing
activities 6.0 --
6.0
-- Total capital spending $ 697.2
$ 1,066.0 $ 1,677.3
$ 1,980.3
(1)
On July 15, 2014, the Partnership announced that its general
partner had approved a two-for-one unit split. The additional
common units will be distributed on August 21, 2014. All per unit
amounts and number of units outstanding presented on this Exhibit A
are on a pre-split basis. (2) See Exhibit D for reconciliation to
GAAP operating income. (3) See Exhibit E for reconciliation to net
cash flows provided by operating activities. (4) See Exhibit F for
reconciliation to net cash flows provided by operating activities.
(5) Capital expenditures for property, plant and equipment are
presented net of contributions in aid of construction cost.
Enterprise Products Partners
L.P.
Exhibit B Selected Operating Data – UNAUDITED
For the Three Months For the Six Months Ended June
30, Ended June 30, 2014
2013 2014
2013
Selected operating
data: (1)
NGL Pipelines & Services, net: NGL transportation volumes
(MBPD) 2,866 2,744 2,855 2,641 NGL fractionation volumes (MBPD) 845
678 819 693 Equity NGL production (MBPD) (2) 136 118 136 120
Fee-based natural gas processing (MMcf/d) (3) 4,941 4,581 4,829
4,553 Onshore Natural Gas Pipelines & Services, net: Natural
gas transportation volumes (BBtus/d) 12,617 13,307 12,569 13,189
Onshore Crude Oil Pipelines & Services, net: Crude oil
transportation volumes (MBPD) 1,297 1,145 1,279 1,073 Offshore
Pipelines & Services, net: Natural gas transportation volumes
(BBtus/d) 609 720 589 726 Crude oil transportation volumes (MBPD)
318 311 326 303 Platform natural gas processing (MMcf/d) 152 224
150 234 Platform crude oil processing (MBPD) 9 14 13 14
Petrochemical & Refined Products Services, net: Butane
isomerization and deisobutanizer volumes (MBPD) 188 165 171 150
Propylene fractionation volumes (MBPD) 71 71 72 70 Octane additive
and related plant production volumes (MBPD) 20 20 13 18
Transportation volumes, primarily refined products and
petrochemicals (MBPD) 756 688 730 684 Total, net: NGL, crude oil,
refined products and petrochemical transportation volumes (MBPD)
5,237 4,888 5,190 4,701 Natural gas transportation volumes
(BBtus/d) 13,226 14,027 13,158 13,915 Equivalent transportation
volumes (MBPD) (4) 8,718 8,579 8,653 8,363
(1) Operating rates are
reported on a net basis, which takes into account our ownership
interests in certain joint ventures, and include volumes for newly
constructed assets from the related in-service dates and for
recently purchased assets from the related acquisition dates. (2)
Represents the NGL volumes we earn and take title to in connection
with our processing activities. (3) Volumes reported correspond to
the revenue streams earned by our gas plants. (4) Represents total
NGL, crude oil, refined products and petrochemical transportation
volumes plus equivalent energy volumes where 3.8 MMBtus of natural
gas transportation volumes are equivalent to one barrel of NGLs
transported.
Enterprise Products Partners
L.P. Exhibit C Selected Commodity Price
Information
Polymer
Refinery Natural Normal
Natural Grade Grade WTI LLS
Gas, Ethane, Propane, Butane,
Isobutane, Gasoline, Propylene,
Propylene, Crude Oil, Crude Oil,
$/MMBtu $/gallon
$/gallon $/gallon
$/gallon $/gallon
$/pound $/pound
$/barrel $/barrel (1) (2) (2) (2) (2)
(2) (3) (3) (4) (4)
2013 by quarter: 1st Quarter $ 3.34 $
0.26 $ 0.86 $ 1.58 $ 1.65 $ 2.23 $ 0.75 $ 0.65 $ 94.37 $ 113.93 2nd
Quarter $ 4.10 $ 0.27 $ 0.91 $ 1.24 $ 1.27 $ 2.04 $ 0.63 $ 0.53 $
94.22 $ 104.63 3rd Quarter $ 3.58 $ 0.25 $ 1.03 $ 1.33 $ 1.35 $
2.15 $ 0.68 $ 0.58 $ 105.82 $ 109.89 4th Quarter $ 3.60
$ 0.26 $ 1.20
$ 1.43 $ 1.45 $
2.10 $ 0.68 $ 0.56
$ 97.46 $ 100.94
YTD
2013 Averages $ 3.65 $ 0.26
$ 1.00 $ 1.39 $
1.43 $ 2.13 $ 0.69
$ 0.58 $ 97.97
$ 107.34
2014 by quarter: 1st Quarter $ 4.95 $
0.34 $ 1.30 $ 1.39 $ 1.42 $ 2.12 $ 0.73 $ 0.61 $ 98.68 $ 104.43 2nd
Quarter $ 4.68 $ 0.29 $
1.06 $ 1.25 $ 1.30
$ 2.21 $ 0.70
$ 0.57 $ 102.99 $
105.55
YTD 2014 Averages $ 4.81
$ 0.31 $ 1.18 $ 1.32
$ 1.36 $ 2.17
$ 0.72 $ 0.59
$ 100.84 $ 104.99
(1) Natural
gas prices are based on Henry-Hub Inside FERC commercial index
prices as reported by Platts, which is a division of McGraw Hill
Financial, Inc. (2) NGL prices for ethane, propane, normal butane,
isobutane and natural gasoline are based on Mont Belvieu Non-TET
commercial index prices as reported by Oil Price Information
Service. (3) Polymer-grade propylene prices represent average
contract pricing for such product as reported by Chemical Market
Associates, Inc. (“CMAI”). Refinery grade propylene prices
represent weighted-average spot prices for such product as reported
by CMAI. (4) Crude oil prices are based on commercial index prices
for West Texas Intermediate (“WTI”) as measured on the New York
Mercantile Exchange (“NYMEX”) and for Louisiana Light Sweet (“LLS”)
as reported by Platts.
Period-to-period fluctuations in our consolidated revenues and
cost of sales amounts are explained in large part by changes in
energy commodity prices. Energy commodity prices fluctuate for a
variety of reasons, including supply and demand imbalances and
geopolitical tensions.
The weighted-average indicative market price for NGLs (based on
prices for such products at Mont Belvieu, Texas, which is the
primary industry hub for domestic NGL production) was $1.03 per
gallon during the second quarter of 2014 versus $0.95 per gallon
for the second quarter of 2013.
The market price of natural gas (as measured at the Henry Hub in
Louisiana) averaged $4.68 per MMBtu during the second quarter of
2014 versus $4.10 per MMBtu during the second quarter of 2013 – a
14 percent increase. The increase in prices is generally due to
higher natural gas demand for power generation.
The market price of WTI crude oil (as measured on the NYMEX)
averaged $102.99 per barrel during the second quarter of 2014
compared to $94.22 per barrel during the second quarter of 2013. As
a result of our recent crude oil pipeline infrastructure
improvements, we have greater access to U.S. Gulf Coast refiners.
Typically, these refining customers purchase crude oil based on LLS
prices, which averaged $105.55 per barrel during the second quarter
of 2014 compared to $104.63 per barrel during the second quarter of
2013.
A decrease in our consolidated marketing revenues due to lower
energy commodity sales prices may not result in a decrease in gross
operating margin or cash available for distribution, since our
consolidated cost of sales amounts would also be lower due to
comparable decreases in the purchase prices of the underlying
energy commodities. The same correlation would be true in the case
of higher energy commodity sales prices and purchase costs.
Enterprise Products Partners
L.P.
Exhibit D Gross Operating Margin – UNAUDITED
($ in millions)
For the Three Months For the Six
Months Ended June 30, Ended June
30, 2014 2013
2014 2013 Total gross operating margin
(non-GAAP) $ 1,263.2 $ 1,142.2 $ 2,593.0 $ 2,373.3 Adjustments
to reconcile non-GAAP gross operating margin to GAAP operating
income: Subtract depreciation, amortization and accretion expense
amounts not reflected in gross operating margin (312.4 ) (289.7 )
(613.8 ) (566.5 ) Subtract impairment charges not reflected in
gross operating margin (3.7 ) (27.1 ) (12.5 ) (38.1 ) Add gains or
subtract losses attributable to asset sales and insurance
recoveries not reflected in gross operating margin 6.8 (5.7 ) 96.4
58.2 Subtract non-refundable deferred revenues attributable to
shipper make-up rights on new pipeline projects included in gross
operating margin (21.9 ) -- (45.2 ) -- Subtract general and
administrative costs not reflected in gross operating margin
(47.7 ) (45.5 ) (100.9 )
(95.0 )
Operating income (GAAP) $ 884.3
$ 774.2 $ 1,917.0
$ 1,731.9 We evaluate segment performance based on
the non-GAAP financial measure of gross operating margin. Gross
operating margin (either in total or by individual segment) is an
important performance measure of the core profitability of our
operations. This measure forms the basis of our internal financial
reporting and is used by our executive management in deciding how
to allocate capital resources among business segments. We believe
that investors benefit from having access to the same financial
measures that our management uses in evaluating segment results.
The GAAP financial measure most directly comparable to total
segment gross operating margin is operating income. In
total, gross operating margin represents operating income exclusive
of (1) depreciation, amortization and accretion expenses, (2)
impairment charges, (3) gains and losses attributable to asset
sales and insurance recoveries and (4) general and administrative
costs. In addition, gross operating margin includes equity in
income of unconsolidated affiliates and non-refundable deferred
transportation revenues relating to the make-up rights of committed
shippers associated with certain pipelines. Gross operating margin
by segment is calculated by subtracting segment operating costs and
expenses (net of the adjustments noted above) from segment
revenues, with both segment totals before the elimination of
intercompany transactions. In accordance with GAAP, intercompany
accounts and transactions are eliminated in consolidation. Gross
operating margin is exclusive of other income and expense
transactions, income taxes, the cumulative effect of changes in
accounting principles and extraordinary charges. Gross operating
margin is presented on a 100 percent basis before any allocation of
earnings to noncontrolling interests.
Enterprise Products Partners L.P. Exhibit
E Distributable Cash Flow - UNAUDITED
($ in millions)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2014 2013
2014 2013 Net income
attributable to limited partners (GAAP) $ 637.7 $ 552.5 $
1,436.5 $ 1,306.0 Adjustments to GAAP net income attributable to
limited partners to derive non- GAAP distributable cash flow: Add
depreciation, amortization and accretion expenses 331.1 307.8 651.0
599.8 Add distributions received from unconsolidated affiliates
85.4 68.0 157.1 119.3 Subtract equity in income of unconsolidated
affiliates (50.3 ) (37.6 ) (106.8 ) (82.1 ) Sustaining capital
expenditures (76.9 ) (74.8 ) (155.2 ) (132.1 ) Add losses or
subtract gains attributable to asset sales and insurance recoveries
(6.8 ) 5.7 (96.4 ) (58.2 ) Add cash proceeds from asset sales and
insurance recoveries 16.9 68.7 113.2 199.2 Subtract losses from the
monetization of interest rate derivative instruments -- -- --
(168.8 ) Add deferred income tax expense or subtract benefit, as
applicable 0.4 21.3 0.6 14.8 Add impairment charges 3.7 27.1 12.5
38.1 Subtract other miscellaneous adjustments to derive non-GAAP
distributable cash flow 12.6
(14.0 ) 28.3
(14.3 )
Distributable cash flow
(non-GAAP) 953.8 924.7 2,040.8 1,821.7 Adjustments to non-GAAP
distributable cash flow to derive GAAP net cash flows provided by
operating activities: Add sustaining capital expenditures reflected
in distributable cash flow 76.9 74.8 155.2 132.1 Subtract cash
proceeds from asset sales and insurance recoveries reflected in
distributable cash flow (16.9 ) (68.7 ) (113.2 ) (199.2 ) Add
losses from the monetization of interest rate derivative
instruments -- -- -- 168.8 Add or subtract the net effect of
changes in operating accounts, as applicable (541.1 ) (401.2 )
(198.6 ) (409.2 ) Add miscellaneous non-cash and other amounts to
reconcile non-GAAP distributable cash flow with GAAP net cash flows
provided by operating activities (4.9 )
1.4 (12.3 )
16.7
Net cash flows provided by operating
activities (GAAP) $ 467.8 $ 531.0
$ 1,871.9 $
1,530.9
(1) Sustaining capital expenditures are capital
expenditures (as defined by GAAP) resulting from improvements to
and major renewals of existing assets. Such expenditures serve to
maintain existing operations but do not generate additional
revenues. Our management compares the distributable cash
flow we generate to the cash distributions we expect to pay our
partners. Using this metric, management computes our distribution
coverage ratio. Distributable cash flow is an important non-GAAP
financial measure for our limited partners since it serves as an
indicator of our success in providing a cash return on investment.
Specifically, this financial measure indicates to investors whether
or not we are generating cash flows at a level that can sustain or
support an increase in our quarterly cash distributions.
Distributable cash flow is also a quantitative standard used by the
investment community with respect to publicly traded partnerships
because the value of a partnership unit is, in part, measured by
its yield, which is based on the amount of cash distributions a
partnership can pay to a unitholder. The GAAP measure most directly
comparable to distributable cash flow is net cash flows provided by
operating activities.
Enterprise Products Partners
L.P.
Exhibit F Adjusted EBITDA - UNAUDITED
($ in millions)
For the
TwelveMonthsEndedJune 30,
For the Three Months Ended June
30,
For the Six Months Ended June
30,
2014 2013
2014 2013
2014 Net income (GAAP) $ 646.5 $
553.3 $ 1,453.2 $ 1,308.6 $ 2,751.7 Adjustments to GAAP net income
to derive non-GAAP Adjusted EBITDA: Subtract equity in income of
unconsolidated affiliates (50.3 ) (37.6 ) (106.8 ) (82.1 ) (192.0 )
Add distributions received from unconsolidated affiliates 85.4 68.0
157.1 119.3 289.4 Add interest expense, including related
amortization 228.9 200.2 449.8 396.1 856.2 Add provision for income
taxes 10.0 20.4 14.8 26.8 45.5 Add depreciation, amortization and
accretion in costs and expenses 322.4
299.5 633.5
585.2
1,233.7
Adjusted EBITDA (non-GAAP) 1,242.9
1,103.8 2,601.6 2,353.9 4,984.5 Adjustments to non-GAAP Adjusted
EBITDA to derive GAAP net cash flows provided by operating
activities: Subtract interest expense, including related
amortization, reflected in Adjusted EBITDA (228.9 ) (200.2 ) (449.8
) (396.1 ) (856.2 ) Subtract provision for income taxes reflected
in Adjusted EBITDA (10.0 ) (20.4 ) (14.8 ) (26.8 ) (45.5 ) Add
losses or subtract gains attributable to asset sales and insurance
recoveries (6.8 ) 5.7 (96.4 ) (58.2 ) (121.5 ) Add deferred income
tax expense or subtract benefit, as applicable 0.4 21.3 0.6 14.8
23.7 Add impairment charges 3.7 27.1 12.5 38.1 67.0 Add or subtract
the net effect of changes in operating accounts, as applicable
(541.1 ) (401.2 ) (198.6 ) (409.2 ) 113.0 Add miscellaneous
non-cash and other amounts to reconcile non-GAAP Adjusted EBITDA
with GAAP net cash flows provided by operating activities
7.6 (5.1 )
16.8 14.4
41.5
Net cash flows provided by
operating activities (GAAP) $ 467.8
$ 531.0 $ 1,871.9
$ 1,530.9 $ 4,206.5
Adjusted EBITDA is commonly used as a supplemental financial
measure by our management and external users of our financial
statements, such as investors, commercial banks, research analysts
and rating agencies, to assess the financial performance of our
assets without regard to financing methods, capital structures or
historical cost basis; the ability of our assets to generate cash
sufficient to pay interest and support our indebtedness; and the
viability of projects and the overall rates of return on
alternative investment opportunities. Since adjusted EBITDA
excludes some, but not all, items that affect net income or loss
and because these measures may vary among other companies, the
adjusted EBITDA data presented in this press release may not be
comparable to similarly titled measures of other companies. The
GAAP measure most directly comparable to adjusted EBITDA is net
cash flows provided by operating activities.
Enterprise Products Partners L.P.Randy Burkhalter, (713)
381-6812Vice President, Investor RelationsorRick Rainey, (713)
381-3635Vice President, Media Relations
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