Enterprise Products Partners L.P. (“Enterprise”) (NYSE: EPD)
today announced its financial results for the three months ended
March 31, 2014.
First Quarter 2014
Highlights
Three months endedMarch 31,
2014 2013 ($ in millions, except per unit amounts)
Gross operating margin (1) $ 1,330 $ 1,231 Net income (2) (3) $ 807
$ 755 Fully diluted earnings per unit (2)(3) $ 0.85 $ 0.83 Adjusted
EBITDA (1) $ 1,359 $ 1,250 Distributable cash flow (1) $ 1,069 $
897 (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 include gains attributable to
asset sales and insurance recoveries for the first quarters of 2014
and 2013 of $90 million, or $0.10 per unit, and $64 million, or
$0.07 per unit, respectively. (3) Net income and fully diluted
earnings per unit include non-cash asset impairment charges for the
first quarters of 2014 and 2013 of $9 million, or $0.01 per unit,
and $11 million, or $0.01 per unit, respectively.
- Enterprise increased its cash
distribution with respect to the first quarter of 2014 to $0.71 per
unit, or $2.84 per unit on an annualized basis, which represents a
6.0 percent increase from the distribution paid with respect to the
first quarter of 2013. This is the 39th consecutive quarterly
increase and the 48th increase since the partnership’s initial
public offering in 1998. The distribution with respect to the first
quarter of 2014 will be paid on May 7, 2014 to unitholders of
record as of the close of business on April 30, 2014;
- Enterprise reported distributable cash
flow of $1.1 billion for the first quarter of 2014, which provided
1.6 times coverage of the $0.71 per unit cash distribution that
will be paid to common unitholders. Enterprise retained
approximately $418 million of distributable cash flow for the first
quarter of 2014. Distributable cash flow for the first quarter of
2014 included $96 million of proceeds from sales of assets and
insurance recoveries;
- Enterprise’s natural gas liquid
(“NGL”), crude oil, refined products and petrochemical pipeline
volumes for the first quarter of 2014 increased 14 percent to 5.1
million barrels per day (“BPD”) compared to the first quarter of
2013. Total natural gas pipeline volumes decreased 5 percent to
13.1 trillion British thermal units per day (“TBtud”) for the first
quarter of 2014 compared to the first quarter of 2013. NGL
fractionation volumes for the first quarter of 2014 increased 12
percent to a record 792 thousand barrels per day (“MBPD”). Equity
NGL production for the first quarter of 2014 increased 12 percent
to 137 MBPD, while fee-based natural gas processing volumes for the
first quarter of 2014 increased 4 percent to a record 4.7 billion
cubic feet per day (“Bcfd”);
- Enterprise made capital investments of
approximately $980 million during the first quarter of 2014,
including $78 million of sustaining capital expenditures; and
- 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 $25 million of common units
from Enterprise through the distribution reinvestment plan for the
distribution to be paid on May 7, 2014. This purchase would bring
total purchases by these affiliates in 2014 to $50 million. EPCO
had previously stated an interest in purchasing up to $100 million
of Enterprise common units in 2014.
Review of First Quarter 2014
Results
Net income for the first quarter of 2014 was a record $807
million versus $755 million for the first quarter of 2013. Net
income attributable to limited partners for the first quarter of
2014 was $0.85 per unit on a fully diluted basis compared to $0.83
per unit on a fully diluted basis for the first quarter of 2013.
Net income for the first quarters of 2014 and 2013 included net
gains attributable to asset sales and insurance recoveries of
approximately $90 million, or $0.10 per unit on a fully diluted
basis, and $64 million, or $0.07 per unit on a fully diluted basis,
respectively. Net income for the first quarters of 2014 and 2013
included non-cash charges for impairments of certain assets of $9
million, or a loss of $0.01 per unit on a fully diluted basis, and
$11 million, or a loss of $0.01 per unit on a fully diluted basis,
respectively.
On April 8, 2014, Enterprise announced an increase in the
partnership’s quarterly cash distribution with respect to the first
quarter of 2014 to $0.71 per unit, representing a 6.0 percent
increase over the $0.67 per unit that was paid with respect to the
first quarter of 2013. Enterprise generated distributable cash flow
of $1.1 billion for the first quarter of 2014 compared to $897
million for the first quarter of 2013. Distributable cash flow for
the first quarters of 2014 and 2013 included proceeds from the
sales of assets and insurance recoveries of $96 million and $131
million, respectively.
Enterprise’s distributable cash flow for the first quarter of
2014 provided 1.6 times coverage of the cash distribution that will
be paid on May 7, 2014 to unitholders of record on April 30, 2014.
Excluding proceeds from the sale of assets and insurance
recoveries, distributable cash flow provided 1.5 times coverage of
the distribution with respect to the first quarter of 2014. The
partnership retained approximately $418 million of distributable
cash flow for the first quarter of 2014, which is available to
reinvest in growth capital projects, reduce debt, and decrease our
need to issue additional equity.
“Enterprise reported a solid first quarter of 2014 with record
gross operating margin of $1.3 billion that was 8 percent higher
than the first quarter of last year,” said Michael A. Creel, chief
executive officer of Enterprise’s general partner. “We benefitted
from cash flow and volume growth associated with $4.8 billion of
new assets that began operations since the beginning of 2013.
Volumes transported on our liquids pipelines increased by 14
percent to 5.1 million barrels per day attributable to volume
growth on our NGL and crude oil pipelines, serving production from
the Eagle Ford shale, Permian, Marcellus shale and the Gulf of
Mexico, as well as our LPG export facility. Our NGL fractionators
handled record volumes of 792,000 barrels per day, while our
fee-based natural gas processing volumes were a record 4.7 billion
cubic feet per day.”
“During the first quarter of 2014, we completed construction and
began operations with respect to $2.5 billion of new infrastructure
projects including, the ATEX ethane pipeline, Front Range NGL
pipeline and the expansion of the Rocky Mountain segment of our
Mid-America NGL pipeline system. Volume commitments on the ATEX and
Front Range systems increase over a multi-year period, while
commitments on the Rocky Mountain expansion went into effect upon
start-up. Our backlog of projects under construction, which
includes the recently announced expansion of the Rancho segment of
our South Texas crude oil pipeline system and new ethane export
facility, is now approximately $6.8 billion and extends through
mid-2016. We continue to evaluate new development opportunities in
fast growing shale areas that need additional infrastructure,”
stated Creel.
Review of First Quarter 2014 Segment
Performance
NGL Pipelines & Services – Gross operating margin for
the NGL Pipelines & Services segment was a record $780 million
for the first quarter of 2014 compared to $593 million for the same
quarter of 2013.
Enterprise’s natural gas processing and related NGL marketing
business generated gross operating margin of $349 million for the
first quarter of 2014 compared to $270 million for the first
quarter of 2013. This business benefitted from the expansion of the
partnership’s liquefied petroleum gas (“LPG”) export terminal and
our Yoakum natural gas processing plant in South Texas, which both
began operations in March 2013; a 12 percent increase in equity NGL
production; and a 4 percent increase in fee-based processing
volumes. Enterprise’s natural gas processing plants reported record
fee-based processing volumes of 4.7 Bcfd in the first quarter of
2014 compared to 4.5 Bcfd in the first quarter of 2013.
Enterprise’s equity NGL production was 137 MBPD for the first
quarter of 2014 compared to 122 MBPD for the first quarter of 2013.
Fee-based natural gas processing volumes and equity NGL production
from the partnership’s processing plants in South Texas increased
by 0.2 Bcfd and 14 MBPD, respectively, in the first quarter of 2014
compared to the first quarter of 2013.
Gross operating margin from the partnership’s NGL pipelines and
storage business increased $58 million, or 25 percent, to $290
million for the first quarter of 2014 from $232 million for the
first quarter of 2013. NGL pipeline volumes increased by 302 MBPD,
or 12 percent, in the first quarter of 2014 to 2.8 million BPD
compared to the first quarter of 2013. The partnership’s ATEX
ethane pipeline began commercial service in January 2014 and
generated gross operating margin of $31 million for the first
quarter of 2014. The South Texas NGL pipeline systems reported a
$12 million increase in gross operating margin on a 137 MBPD
increase in volume, primarily due to Eagle Ford shale production
growth.
The Mid-America and Seminole NGL pipeline systems reported an
$11 million increase in gross operating margin in the first quarter
of 2014 compared to the same quarter of 2013 due to higher revenues
from deficiency fees, an increase in tariffs and an 8 MBPD increase
in volume, which was partially offset by higher operating expenses
due in part to an increase in propane volume. Volumes on the
Mid-America and Seminole pipelines increased by approximately 16
MBPD attributable to greater demand for propane in the first
quarter of 2014 compared to the same quarter in 2013 due to colder
weather than normal, but was offset by lower recoveries of
ethane.
Enterprise’s NGL fractionation business reported gross operating
margin of $141 million for the first quarter of 2014 compared to
$91 million reported for the first quarter of last year. The
partnership’s fractionators at Mont Belvieu generated $45 million
of this increase in gross operating margin primarily attributable
to a 97 MBPD increase in volume as Fractionators VII and VIII began
commercial operations during the fourth quarter of 2013.
Fractionation volumes for the first quarter of 2014 increased 12
percent to a record 792 MBPD compared to the same quarter in
2013.
Onshore Natural Gas Pipelines & Services –
Enterprise’s Onshore Natural Gas Pipelines & Services segment
reported a $29 million increase in gross operating margin to $220
million for the first quarter of 2014 compared to $191 million for
the first quarter of 2013. Total onshore natural gas pipeline
volumes were 12.5 TBtud in the first quarter of 2014 compared to
13.1 TBtud in the first quarter of 2013.
The Texas Intrastate system reported a $20 million increase in
gross operating margin for the first quarter of 2014 compared to
the first quarter of last year primarily due to higher revenues and
volumes. Gross operating margin from natural gas marketing
activities increased $19 million for the first quarter of 2014
compared to the first quarter of 2013 primarily due to higher
natural gas sales margins. Aggregate gross operating margin for the
Haynesville, Jonah and Piceance Basin gathering systems declined by
$10 million and aggregate volume on these systems declined by 0.5
TBtud in the first quarter of 2014 compared to the first 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 $76 million to $160 million for
the first quarter of 2014 from $236 million for the first quarter
of 2013. Total onshore crude oil pipeline volumes increased 28
percent to 1.3 million BPD for the first quarter of 2014 from 981
MBPD for the first quarter of 2013. Enterprise’s South Texas and
West Texas crude oil pipeline systems and Eagle Ford joint venture
pipeline reported an aggregate $42 million increase in gross
operating margin in the first quarter of 2014 compared to the first
quarter of 2013 on a 176 MBPD increase in volume.
Enterprise’s crude oil marketing business reported a $111
million decrease in gross operating margin in the first quarter of
2014 compared to the first 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 $19.56 per barrel for the first
quarter of 2013 compared to $5.75 per barrel for the first quarter
of 2014.
Petrochemical & Refined Products Services – Gross
operating margin for the Petrochemical & Refined Products
Services segment decreased $41 million to $130 million for the
first quarter of 2014 compared to $171 million for the first
quarter of 2013.
Gross operating margin for Enterprise’s octane enhancement and
high-purity isobutylene business decreased $38 million in the first
quarter of 2014 compared to the same quarter in 2013. The octane
enhancement plant was down for 70 days in the first quarter of 2014
due to its annual turnaround and unscheduled maintenance. By
comparison, the octane enhancement plant was only down for 18 days
in the first quarter of 2013 to complete its annual turnaround,
which began in December 2012. Total plant production volumes were 6
MBPD in the first quarter of 2014 compared to 16 MBPD for the first
quarter of 2013.
The partnership’s propylene business reported gross operating
margin of $49 million for the first quarter of 2014 compared to $35
million for the first quarter of 2013 primarily due to higher sales
margins. Propylene fractionation volumes were 73 MBPD for the first
quarter of 2014 compared to 69 MBPD in the first quarter of
2013.
Enterprise’s refined products pipelines and related services
business reported gross operating margin of $43 million for the
first quarter of 2014 compared to $57 million for the first quarter
of 2013. This decrease was primarily due to a $17 million benefit
related to a reduction to a provision for future pipeline capacity
obligations that was recorded in the first quarter of 2013. Total
pipeline volumes for this business were 570 MBPD for the first
quarter of 2014 compared to 545 MBPD for the first quarter of
2013.
Enterprise’s butane isomerization business reported gross
operating margin of $22 million in the first quarter of 2014
compared to $23 million in the first quarter of 2013. Butane
isomerization volumes were 80 MBPD for the first quarter of 2014
compared to 85 MBPD for the first quarter of 2013.
Enterprise’s marine transportation and other services business
reported $16 million of gross operating margin for the first
quarter of 2014 compared to $18 million for the same quarter of
2013.
Offshore Pipelines & Services – Gross operating
margin for the Offshore Pipelines & Services segment was $39
million for the first quarter of 2014 compared to $41 million for
the same quarter of 2013.
Gross operating margin from Enterprise’s offshore crude oil
pipeline business was $26 million for the first quarter of 2014
compared to $21 million for the first quarter of 2013. Total
offshore crude oil pipeline volumes increased 14 percent to 335
MBPD in the first quarter of 2014 from 294 MBPD for the first
quarter of 2013.
The Independence Hub platform and Independence Trail pipeline
reported aggregate gross operating margin of $9 million for the
first quarter of 2014 compared to $14 million for the first quarter
of 2013 attributable to lower volumes. Natural gas volumes on the
Independence Trail pipeline were 213 billion British thermal units
per day (“BBtud”) for the first quarter of 2014 compared to 327
BBtud in the first quarter of 2013. Total offshore natural gas
pipeline volumes (including those for Independence Trail) were 569
BBtud for the first quarter of 2014 compared to 733 BBtud in the
first quarter of 2013.
Capitalization
Total debt principal outstanding at March 31, 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 March 31, 2014,
Enterprise had consolidated liquidity of approximately $5.5
billion, which was comprised of $988 million of unrestricted cash
on hand and approximately $4.5 billion of available borrowing
capacity under our revolving credit facilities. As a result of the
partnership’s liquidity and performance, Enterprise elected to
terminate its $1.0 billion 364-day revolving bank credit facility
in advance of the scheduled maturity date of June 18, 2014. The
effective date of the early termination is May 1, 2014.
Total capital spending in the first quarter of 2014 was $980
million, which includes $78 million of sustaining capital
expenditures.
Conference Call to Discuss First
Quarter 2014 Earnings
Today, Enterprise will host a conference call to discuss first
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 (including LPG); 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 Ended March 31, 2014
2013
Revenues
$ 12,909.9 $ 11,383.1
Costs and
expenses:
Operating costs and expenses 11,880.5 10,420.4 General and
administrative costs 53.2
49.5 Total costs and expenses 11,933.7
10,469.9
Equity in income of
unconsolidated affiliates
56.5 44.5
Operating
income
1,032.7 957.7
Other income
(expense):
Interest expense (220.9 ) (195.9 ) Other, net (0.3 )
(0.1 ) Total other expense (221.2 )
(196.0 )
Income before income
taxes
811.5 761.7 Provision for income taxes (4.8 )
(6.4 )
Net
income
806.7 755.3
Net income
attributable to noncontrolling interests
(7.9 ) (1.8 )
Net income
attributable to limited partners
$ 798.8 $ 753.5
Per unit data (fully
diluted):
Earnings per unit $ 0.85 $ 0.83
Average limited partner units outstanding (in millions)
938.0 911.0
Supplemental
financial data:
Net cash flows provided by operating activities $ 1,404.1
$ 999.9 Cash used in investing
activities $ 861.5 $ 847.2 Cash
provided by financing activities $ 388.9
$ 1,111.5 Depreciation, amortization and accretion $
319.9 $ 292.0 Distributions
received from unconsolidated affiliates $ 71.7
$ 51.3 Total debt principal outstanding at end of
period $ 18,382.7 $ 17,532.7
Non-GAAP gross operating margin by segment: (1) NGL
Pipelines & Services $ 780.0 $ 592.5 Onshore Natural Gas
Pipelines & Services 220.4 190.8 Onshore Crude Oil Pipelines
& Services 159.7 236.4 Offshore Pipelines & Services 39.3
40.5 Petrochemical & Refined Products Services 130.4
170.9 Total gross
operating margin $ 1,329.8 $ 1,231.1
Non-GAAP distributable cash flow (2) $ 1,068.7
$ 897.0 Non-GAAP Adjusted EBITDA
(3) $ 1,358.7 $ 1,250.1
Capital spending: Capital expenditures, net (4) $ 695.4 $ 622.9
Investments in unconsolidated affiliates 284.7
291.4 Total capital spending $ 980.1
$ 914.3 (1) See Exhibit D
for reconciliation to GAAP operating income. (2) See Exhibit E for
reconciliation to net cash flows provided by operating activities.
(3) See Exhibit F for reconciliation to net cash flows provided by
operating activities.
(4) 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 Ended March 31,
2014 2013
Selected operating
data: (1)
NGL Pipelines & Services, net: NGL transportation volumes
(MBPD) 2,838 2,536 NGL fractionation volumes (MBPD) 792 708 Equity
NGL production (MBPD) (2) 137 122 Fee-based natural gas processing
(MMcf/d) (3) 4,715 4,524 Onshore Natural Gas Pipelines &
Services, net: Natural gas transportation volumes (BBtus/d) 12,520
13,071 Onshore Crude Oil Pipelines & Services, net: Crude oil
transportation volumes (MBPD) 1,260 981 Offshore Pipelines &
Services, net: Natural gas transportation volumes (BBtus/d) 569 733
Crude oil transportation volumes (MBPD) 335 294 Platform natural
gas processing (MMcf/d) 147 244 Platform crude oil processing
(MBPD) 17 15 Petrochemical & Refined Products Services, net:
Butane isomerization and deisobutanizer volumes (MBPD) 154 135
Propylene fractionation volumes (MBPD) 73 69 Octane additive and
related plant production volumes (MBPD) 6 16 Transportation
volumes, primarily refined products and petrochemicals (MBPD) 703
681 Total, net: NGL, crude oil, refined products and petrochemical
transportation volumes (MBPD) 5,136 4,492 Natural gas
transportation volumes (BBtus/d) 13,089 13,804 Equivalent
transportation volumes (MBPD) (4) 8,580 8,125
(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
(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 $1.13 per
gallon during the first quarter of 2014 versus $1.02 per gallon for
the first quarter of 2013. While average market prices at Mont
Belvieu for normal butane, isobutane and natural gasoline decreased
quarter-to-quarter, the average market price of ethane and propane
at Mont Belvieu increased.
The market price of natural gas (as measured at the Henry Hub in
Louisiana) averaged $4.95 per MMBtu during the first quarter of
2014 versus $3.34 per MMBtu during the first quarter of 2013 – a 48
percent increase. The increase in prices is generally due to higher
natural gas demand for power generation and as a heating fuel.
The market price of WTI crude oil (as measured on the NYMEX)
averaged $98.68 per barrel during the first quarter of 2014
compared to $94.37 per barrel during the first 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 $104.43 per barrel during the first quarter
of 2014 compared to $113.93 per barrel during the first quarter of
2013.
A decrease in our consolidated marketing revenues due to lower
energy commodity sales prices may not result in a decrease in gross
operating margin or cash available for distribution, since our
consolidated cost of sales amounts would also be lower due to
comparable decreases in the purchase prices of the underlying
energy commodities. The same correlation would be true in the case
of higher energy commodity sales prices and purchase costs.
Enterprise Products Partners
L.P.
Exhibit D
Gross Operating Margin – UNAUDITED ($ in millions)
For
the Three Months Ended March 31, 2014
2013 Total gross operating margin
(non-GAAP) $ 1,329.8 $ 1,231.1
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 (301.4 ) (276.8 ) Subtract
impairment charges not reflected in gross operating margin (8.8 )
(11.0 ) Add gains attributable to asset sales and insurance
recoveries not reflected in gross operating margin 89.6 63.9
Subtract non-refundable deferred revenues attributable to shipper
make-up rights on new pipeline projects included in gross operating
margin (23.3 ) -- Subtract general and administrative costs not
reflected in gross operating margin (53.2 )
(49.5 )
Operating income (GAAP) $ 1,032.7
$ 957.7
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 Ended
March 31, 2014 2013 Net
income attributable to limited partners (GAAP) $ 798.8
$ 753.5 Adjustments to GAAP net income attributable
to limited partners to derive non-GAAP distributable cash flow: Add
depreciation, amortization and accretion expenses 319.9 292.0 Add
distributions received from unconsolidated affiliates 71.7 51.3
Subtract equity in income of unconsolidated affiliates (56.5 )
(44.5 ) Subtract sustaining capital expenditures (1) (78.3 ) (57.3
)
Subtract gains attributable to asset sales
and insurance recoveries
(89.6 ) (63.9 )
Add cash proceeds from asset sales and
insurance recoveries
96.3 130.5
Subtract losses from the monetization of
interest rate derivative instruments
-- (168.8 ) Add deferred income tax expense or subtract benefit, as
applicable 0.2 (6.5 ) Add impairment charges 8.8 11.0
Subtract other miscellaneous adjustments
to derive non-GAAP distributable cash flow
(2.6 ) (0.3 )
Distributable
cash flow (non-GAAP) 1,068.7 897.0 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 78.3 57.3
Subtract cash proceeds from asset sales
and insurance recoveries reflected in distributable cash flow
(96.3 ) (130.5 )
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 342.5 (8.0 ) Add miscellaneous non-cash and
other amounts to reconcile non-GAAP distributable cash flow with
GAAP net cash flows provided by operating activities 10.9
15.3
Net cash flows
provided by operating activities (GAAP) $ 1,404.1
$ 999.9
(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 Twelve Months Ended
March 31,
For the Three Months
Ended March 31,
2014 2013 2014
Net income (GAAP) $ 806.7 $ 755.3 $ 2,658.5 Adjustments to
GAAP net income to derive non-GAAP Adjusted EBITDA: Subtract equity
in income of unconsolidated affiliates (56.5 ) (44.5 ) (179.3 ) Add
distributions received from unconsolidated affiliates 71.7 51.3
272.0 Add interest expense, including related amortization 220.9
195.9 827.5 Add provision for income taxes 4.8 6.4 55.9 Add
depreciation, amortization and accretion in costs and expenses
311.1 285.7
1,210.8
Adjusted EBITDA (non-GAAP) 1,358.7
1,250.1 4,845.4 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
(220.9 ) (195.9 ) (827.5 )
Subtract provision for income taxes
reflected in Adjusted EBITDA
(4.8 ) (6.4 ) (55.9 )
Subtract gains attributable to asset sales
and insurance recoveries
(89.6 ) (63.9 ) (109.0 ) Add deferred income tax expense or
subtract benefit, as applicable 0.2 (6.5 ) 44.6 Add impairment
charges 8.8 11.0 90.4 Add or subtract the net effect of changes in
operating accounts, as applicable 342.5 (8.0 ) 252.9 Add
miscellaneous non-cash and other amounts to reconcile non-GAAP
Adjusted EBITDA with GAAP net cash flows provided by operating
activities 9.2 19.5
28.8
Net cash flows provided by
operating activities (GAAP) $ 1,404.1 $
999.9 $ 4,269.7
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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