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TheStreet Open House

Enterprise Reports Record Results For 2012

Stocks in this article: EPD

“Over the past three years, we have simplified our partnership structure to capture organizational and operational efficiencies while eliminating inherent conflicts of interest. We also lowered our cost of capital by eliminating our general partner’s incentive distribution rights. These actions improve the cash accretion associated with our growth capital projects for the benefit of our limited partners. We believe we are well capitalized and have good access to the capital markets to fund our capital program. We want to thank our debt and equity investors again for their continued support in 2012. Our activities are creating U.S. jobs and building infrastructure to support the development of North American energy resources that will reduce our nation’s reliance on imports. These investments also enhance the role and value of our partnership,” concluded Creel.

Fourth Quarter 2012 Highlights

  • Enterprise reported record gross operating margin of $1.2 billion, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $1.1 billion, net income of $617 million and earnings per unit of $0.68 on a fully diluted basis. Adjusted EBITDA and net income for the fourth quarter of 2012 included non-cash charges totaling $27 million, or a loss of $0.03 per unit on a fully diluted basis, for asset impairments and similar charges. This compares to gross operating margin of $1.1 billion, Adjusted EBITDA of $1.2 billion, net income of $726 million and earnings per unit of $0.82 on a fully diluted basis for the fourth quarter of 2011. Adjusted EBITDA and net income for the fourth quarter of 2011 included a net benefit of $108 million, or $0.12 per unit on a fully diluted basis, primarily due to gains from the sales of assets.
                       
Three months ended Year ended
December 31,       December 31,
2012       2011       2012       2011
($ in millions, except per unit amounts)            
Gross operating margin (1) $ 1,162 $ 1,101 $ 4,387 $ 3,872
Net income (2) $ 617 $ 726 $ 2,428 $ 2,088
Fully diluted earnings per unit (2) $ 0.68 $ 0.82 $ 2.71 $ 2.38
Adjusted EBITDA (1)(2) $ 1,132 $ 1,198 $ 4,330 $ 3,960
Distributable cash flow (1)(3) $ 886 $ 1,429 $ 4,133 $ 3,757
 
               
(1) Gross operating margin, 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) Adjusted EBITDA and net income for the three months ended December 31, 2012 included non-cash charges totaling $27 million, or a loss of $0.03 per unit on a fully diluted basis, for asset impairments and similar charges. Adjusted EBITDA and net income for the three months ended December 31, 2011 included a net benefit of $108 million, or $0.12 per unit on a fully diluted basis, primarily due to gains from the sale of assets.
 
For the year ended December 31, 2012, Adjusted EBITDA and net income included a net benefit of $18 million, or $0.02 per unit on a fully diluted basis, attributable to net gains from the sales of assets and insurance recoveries partially offset by non-cash asset impairment and similar charges. For the year ended December 31, 2011, Adjusted EBITDA and net income included a net benefit of $128 million, or $0.15 per unit on a fully diluted basis, primarily attributable to net gains from the sale of assets.
 
(3) Distributable cash flow for the three months ended December 31, 2012 and 2011 included proceeds from sales of assets of $31 million and $593 million, respectively. Distributable cash flow for the year ended December 31, 2012 and 2011 included proceeds from sales of assets of $1.2 billion and $1.0 billion, respectively.
 
  • Enterprise increased its cash distribution with respect to the fourth quarter of 2012 to $0.66 per unit, or $2.64 per unit on an annualized basis, which represents a 6.5 percent increase from the distribution rate paid with respect to the fourth quarter of 2011. This is the 34th consecutive quarterly increase and the 43rd increase since the partnership’s initial public offering in 1998. The distribution with respect to the fourth quarter of 2012 will be paid on February 7, 2013 to unitholders of record as of the close of business on January 31, 2013;
  • Enterprise reported distributable cash flow of $886 million for the fourth quarter of 2012, which provided 1.5 times coverage of the $0.66 per unit cash distribution that will be paid to common unitholders. Enterprise retained approximately $308 million of distributable cash flow for the fourth quarter of 2012. Distributable cash flow for the fourth quarter of 2012 included $31 million of net proceeds from sales of assets;
  • Enterprise’s NGL, crude oil, refined products and petrochemical pipeline volumes for the fourth quarter of 2012 increased 13 percent to a record 4.5 million barrels per day (“BPD”) compared to the fourth quarter of 2011. Total natural gas pipeline volumes were 14.2 trillion British thermal units per day (“TBtud”) for both the fourth quarters of 2012 and 2011. NGL fractionation volumes for the fourth quarter of 2012 increased 15 percent to a record 707 thousand barrels per day (“MBPD”). Equity NGL production for the fourth quarter of 2012 decreased 14 percent to 96 MBPD, while fee-based natural gas processing volumes for the fourth quarter of 2012 increased 15 percent to a record 4.7 billion cubic feet per day (“Bcfd”);
  • Enterprise made capital investments of approximately $1.2 billion during the fourth quarter of 2012, including $84 million of sustaining capital expenditures;
  • Enterprise had consolidated liquidity (defined as unrestricted cash on hand and available borrowing capacity under its revolving credit facility) at December 31, 2012 of approximately $3.2 billion; and
  • Affiliates of privately-held Enterprise Products Company, which collectively own our general partner and approximately 38 percent of our outstanding limited partner interests, have expressed their willingness to consider investing at least $100 million during 2013 to purchase additional common units from Enterprise Products Partners L.P. The first such purchase is expected to be $25 million through the partnership’s distribution reinvestment plan for the distribution to be paid on February 7, 2013.

Review of Fourth Quarter 2012 Results

Net income for the fourth quarter of 2012 was $617 million versus $726 million for the fourth quarter of 2011. Net income attributable to limited partners for the fourth quarter of 2012 was $0.68 per unit on a fully diluted basis compared to $0.82 per unit on a fully diluted basis for the fourth quarter of 2011. Net income for the fourth quarter of 2012 included losses aggregating $27 million, or a loss of $0.03 per unit on a fully diluted basis, for non-cash asset impairments and similar charges. Net income for the fourth quarter of 2011 included a net benefit of $108 million, or $0.12 per unit on a fully diluted basis, primarily due to gains from the sales of assets.

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