Enterprise Products Partners L.P. (NYSE:EPD) Q3 2018 Earnings Conference Call Transcript

Oct 31, 2018 • 10:00 am ET

Previous

Enterprise Products Partners L.P. (NYSE:EPD) Q3 2018 Earnings Conference Call Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Operator
Operator

Good morning, and welcome to the Enterprise Products Earnings Call. All lines have been placed on mute to prevent any background noise. (Operator Instructions)

It is now my pleasure to hand the conference over to Mr. Randy Burkhalter.

Executive
Randy Burkhalter

Welcome to the Enterprise Products Partners third quarter earnings call. Our speakers today will be Jim Teague, Chief Executive Officer; and Randy Fowler, President and Chief Financial Officer of Enterprise's General Partner. Other members of our senior management team are also in attendance today.

(Forward-Looking Cautionary Statements)

With that, I'll turn the call over to Jim.

Executive
James Teague

Before we jump into the third quarter, Randy Fowler and I wanted to take a step back in time. A lot of you may not realize, but the third quarter of 2018 marked our 20th anniversary as a public company. This year, we're on track for our 20th consecutive year of increasing our cash distributions to partners, and, to our knowledge, no other U.S. midstream company has accomplished that.

A $1,000 investment in Enterprise at the IPO, with reinvested distributions, would be worth approximately $17,000 today. We've accomplished this through 2 commodity price cycles, a petrochemical cycle, and 1 of the worst financial crises in U.S. history. We are proud of these accomplishments and our team of 7,000 employees that drive this performance, and we're thankful to our long-term debt and equity investors and to our customers, who make this performance possible.

It's been a quick 20 years, don't you think, Randy?

Executive
Randy Fowler

It has.

Executive
James Teague

Now on to our results. Supported by a robust supply growth and strong demand, both domestic and global, our businesses continued to perform exceptionally well in the third quarter. Gross operating margin, excluding non-cash mark-to-market, was $1.9 billion, a $576 million increase versus third quarter of last year.

These increases are largely attributed to a combination of new assets put in service, volume growth and operational leverage associated with our legacy assets, and increases in gas processing margins. Long-term fundamentals are strong across our entire value chain, and we're working hard to make this kind of performance the norm.

Our results provided distributable cash flow of $1.6 billion, which provided 1.7x coverage. Our DCF for the first nine months of 2018 was $4.4 billion, providing 1.6x coverage and $1.6 billion of retained distributable cash flow. This kind of performance for the quarter and year-to-date puts us far ahead of our self-funding goals we communicated in the fourth quarter of last year.

Moving to our operating results, increased volumes and margins across all our businesses led to 16 operational and financial records for the third quarter, building on the 14 from last quarter. Our NGL and natural gas business segments reported seven operational records relative to volumes for our pipelines, marine terminals, fractionation and fee-based processing, and our crude oil and propylene businesses reported near-record volumes. We also set nine new financial records in the third quarter, which was covered in our press release.

Total capital spending for the first nine months of this