Enterprise Products Partners DCF Coverage of Its Distribution Remains Solid

Image: Enterprise Products Partners’ units have done well of late.

By Brian Nelson, CFA

On April 29, Enterprise Products Partners (EPD) reported financial results for the three months ended March 31, 2025. The pipeline giant reported net income of $1.4 billion, or $0.64 per common unit on a diluted basis. Distributable cash flow (DCF) was $2 billion for the first quarter of 2025, a 5% increase compared to $1.9 billion in the first quarter of last year. DCF covered distributions declared for the first quarter by 1.7 times, with Enterprise retaining $842 million of DCF.

Management had the following to say in the press release:

During the first quarter of 2025, Enterprise continued to benefit from Permian driven volume growth and consistent domestic and international energy demand pull across our midstream infrastructure system. We reported record inlet natural gas processing volumes of 7.7 billion cubic feet per day and record natural gas pipeline volumes of 20.3 trillion Btus per day. Gross operating margin growth in our NGL Pipeline & Services segment and Natural Gas Pipeline & Services segment substantially offset lower earnings in our Petrochemical & Refined Products Services segment due to lower margins and deficiency revenues in our octane enhancement related businesses and lower gross operating margin in our propylene business.

Distributable cash flow for the first quarter of 2025 increased to $2.0 billion, a 5 percent increase compared to the same quarter in 2024. Enterprise increased its cash distribution to partners with respect to the first quarter by 3.9 percent to $0.535 per unit compared to the first quarter of 2024. Distributable cash flow for the quarter provided 1.7 times coverage of this distribution that is scheduled to be paid on May 14, 2025 and enabled the partnership to retain $842 million to reinvest in the growth of the partnership.

We have $6 billion of major organic growth projects scheduled to be completed and begin generating cash flow in 2025. These include two natural gas processing plants in the Permian Basin in the third quarter, Mont Belvieu area NGL fractionator 14 in the third quarter, the first phase of our NGL export facility on the Neches River in the third quarter, our Bahia NGL pipeline in the fourth quarter, and enhancements at our Morgan’s Point marine terminal on the Houston Ship Channel in the fourth quarter.

In the first quarter of 2025, Enterprise Products Partners repurchased $60 million of its common units, with the partnership having utilized about 60% of its authorized $2 billion buyback program. Adjusted cash flow from operations was $2.1 billion for both the first quarter of 2025 and 2024. Total capital expenditures were $1.1 billion in the first quarter of 2025, consisting of $960 million in growth capital and $102 million in sustaining capital expenditures. Total debt outstanding was $31.9 billion, and Enterprise had total liquidity of $3.6 billion. We continue to like Enterprise’s DCF coverage of the distribution, and the company remains an idea in the High Yield Dividend Newsletter portfolio.

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