ENTERPRISE-PRODUCTS-PARTNERS Earningcall Transcript Of Q2 of 2024
A. James Teague -- Co-Chief Executive Officer Thank you, Libby. We had another solid quarter, both in terms of volume and cash flow. We reported adjusted EBITDA of 2.4 billion, compared to 2.2 billion in the same quarter of last year. We generated 1.8 billion of distributable cash flow. We had 1.6 times coverage for the quarter. We retained $661 million of DCF in the second quarter, and we're at 1.5 billion year to date. Even though the second quarter can be seasonally our weakest quarter, our company handled a near-record 12.6 million barrels per day of crude oil-equivalent volumes and 2.2 million barrels a day of marine terminal volumes, as well as record natural gas processing and record NGL pipeline and fractionation volumes. Our investments to support growth in the Permian Basin are visible both volumetrically and financially in our NGL pipeline and service segment, which reported a 19% increase in gross operating margin compared to the second quarter of last year, primarily attributable to our four new natural gas processing plants in the Permian and our 12th NGL fractionator at our Mont Belvieu area complex. In addition, we also benefited from improvements in natural gas processing margins compared to last year. Our natural gas pipelines and service segment also reported a 23% increase in gross operating margin compared to the same quarter in 2023. This increase was primarily driven by higher transportation revenues and higher marketing margins associated with the wider spreads between Waha and higher-valued market hubs. We had a very good quarter in spite of the challenges of our PDH plants. They have been somewhat of a headwind throughout the year. We recently completed our turnaround at PDH 1. Planning for the turnaround took over a year and involved a dedicated turnaround team, in addition to field engineering and maintenance personnel. This team documented every issue we've had with this plant and developed solutions for each one. The turnaround took 100 days. A few factoids on turnaround. There was over 1.25 million hours worked. At the peak, we had 1,250 people per shift. We had 590 work packages executed, 17 million pounds of catalyst handled, 1,465 crane lifts, 190 18-wheeler deliveries, 52,800 bricks hand inspected, over 41,000 replaced. Those bricks are the catalyst support and the catalyst reactor. The plan is now up and running and exceed -- and exceeding its nameplate. PDH 2 is currently in turnaround. We expect it to be producing PGP sometime around mid-August. The PDH 2 turnaround is not nearly as involved as PDH 1. I'd like to thank our Mont Belvieu team and our supporting service providers for their long hours and hard work during these back-to-back turnarounds. We're confident that these two plants will be a tailwind the rest of the year. We also completed our diluent open season on the TE Products system. We'll close the open season with 100,000 barrels a day of new and reach contracted commitments, and I think those are five-year deals. We then accommodate -- we can accommodate this incremental demand with a suite of debottlenecks and horsepower additions while ensuring we do not impact our existing customers. Finally, our company has 6.7 billion of projects under construction that provide visibility to future earnings and cash flow growth. These projects include three processing plants, one in the Midland Basin, two in the Delaware and associated gathering; our Bahia NGL Pipeline; Frac 14; and export expansions at the Neches River terminal and the Ship Channel. All of these projects are backed by long-term contracts and significantly enhance what is already a very strong NGL value chain. And as has been the case for several years running, we continue to see even more rich gas volumes coming from the Permian than we have previously forecasted, and Tony may have something on this in the Q&A. And with that, I'll turn it over to Randy. W. Randall Fowler -- Director and Co-Chief Executive Officer All right. Thank you, Jim. Good morning, everyone. Starting with the income statement, net income attributable to common unitholders was $1.4 billion or $0.64 per unit for the second quarter of 2024. This was a 12% increase over the second quarter of 2023. Our adjusted cash flow from operations, which is cash flow from operating activities on the cash flow statement before changes in working capital, this number increased 11% to $2.1 billion for the second quarter of 2024, compared to $1.9 billion for the second quarter of last year. We declared a distribution of 52.5 cents per common unit for the second quarter of 2024. This is a 5% increase over the distribution declared for the second quarter of last year. The distribution will be paid on August 14th to common unitholders of record as of the close of business tomorrow, July 31st. In the second quarter, the partnership purchased approximately 1.4 million common units off the open market for $40 million. Total purchases for the 12 months ending June 30, 2024 were 176 million or approximately 6.5 million Enterprise common units. And this brings total repurchases under our buyback program to approximately $1 billion or about 50% of the total program amount. In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6.3 million common units on the open market for $171 million during the last 12 months, including 1.8 million common units on the open market for $50 million during the second quarter of 2024. For the 12 months ending June 30, 2024, Enterprise paid out $4.4 billion in distributions to limited partners. Combined with the $176 million of common unit purchases over the same period, Enterprise's payout ratio of adjusted cash flow from operations was 55%. Total capital investments in the second quarter of 2024 were 1.3 billion, which included 1 billion for growth capital projects and 245 million for sustaining capital expenditures. While our expected growth capital expenditures for 2024 did not change, as a result of the LPG export announcement we announced this morning, we did refine the bottom of our range. Our current estimate of growth capital expenditures for 2024 is now in the range of 3.5 billion to 3.75 billion. We continue to expect 2025 growth capital investments to be in the range of 3.25 billion to 3.75 billion. 2024 sustaining capital expenditures are elevated due to planned turnarounds for our PDH 1 plant and our iBDH facility and our high-purity isobutylene facility. These turnarounds typically occur every three to four years. We now estimate 2024 sustaining capital expenditures to be approximately 600 million, up from 550 million, primarily due to higher capital costs associated with the turnaround at the PDH 1 facility, which was completed in June. The turnaround at the PDH 2 facility began in late June 2024. And as Jim noted, we anticipate completion in the middle of August. As of June 30, 2024, our total debt principal outstanding was approximately 30.6 billion. Assuming the final maturity date for our hybrids, the weighted average life of our debt portfolio was approximately 18 years, our weighted average cost of debt was 4.7%, and approximately 95% of our debt was fixed rate. Our consolidated liquidity was approximately 3.4 billion at the end of the quarter, including availability under our credit facilities and unrestricted cash. Our adjusted EBITDA was 2.4 billion for the second quarter and 9.7 billion for the 12 months ending June 30, 2024. As of June 2024, our consolidated leverage ratio was 3.0 times on a net basis when adjusted for the partial equity treatment of our hybrids and reduced by the partnership's unrestricted cash on hand. Our leverage target remains 3.0 times, plus or minus 0.25 times. With that, Libby, I think we can open it up for questions. Libby Strait -- Director, Investor Relations Thank you, Randy. And, operator, we are ready to open the call for questions from our participants. Operator Questions & Answers: |
Enterprise-products-partners