ENTERPRISE-PRODUCTS-PARTNERS Earningcall Transcript Of Q2 of 2024


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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:



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