Enterprise Products Partners Q1 Earnings Call Highlights

Key Points

• Enterprise delivered an "exceptional quarter" with $2.7 billion of EBITDA (up 10%), $1.5 billion net income to common unitholders ($0.68/unit, +6%), $2.3 billion adjusted cash flow from operations (up 10%), and declared a $0.55 per unit distribution (+2.8%) with 1.8x coverage, keeping it on track for 28 consecutive years of distribution growth.
• The partnership set multiple operating records—including 8.3 Bcf/d of gas processed, 1.9 MMbpd of NGLs fractionated and 2.3 MMbpd of dock loadings—driven by ramping projects like Fractionator 14, the Bahia NGL pipeline and three Permian gas plants.
• Geopolitical-driven export demand boosted throughput (about 70 million barrels/month loaded in Q1, >88M scheduled in April) and improved petrochemical margins; Enterprise expects continued strength into 2026–27, plans $2.3–2.6 billion net growth capex in 2026, sees discretionary FCF in the billion-dollar area, and intends to allocate 50–60% of excess cash to buybacks.

Enterprise Products Partners NYSE: EPD reported what management described as “an exceptional quarter” to start 2026, posting higher earnings and record operating volumes as recently commissioned assets ramped and global market disruptions boosted demand for U.S. energy exports.

First-quarter results and distribution

Co-CEO Jim Teague said the partnership generated $2.7 billion of EBITDA in the first quarter, up 10% from the prior year, while delivering 1.8x coverage of distributable cash flow in what he noted was a “short quarter.”

Co-CEO Randall Fowler reported net income attributable to common unitholders of $1.5 billion, or $0.68 per unit on a fully diluted basis, a 6% increase compared with the first quarter of 2025. Adjusted cash flow from operations (cash flow from operating activities before working capital changes) increased 10% to $2.3 billion.

Enterprise declared a $0.55 per unit quarterly distribution, a 2.8% increase from the year-ago quarter. Fowler said the distribution is scheduled to be paid May 14 to unitholders of record as of April 30, and added the company is “on track for 28 consecutive years of distribution growth in 2026.”

Record volumes and new assets ramping

Teague highlighted strong operating performance across the system, emphasizing contributions from major projects brought online over the past year, including the Bahia NGL Pipeline, Fractionator 14, and three Permian natural gas processing plants. He said Fractionator 14 “was full on day one,” and the gas plants were “essentially full by mid-quarter.”

He also noted that Bahia and Chinook, viewed “as a system,” were running at 80% utilization of a combined 1.2 million barrels per day of capacity.

Enterprise set multiple first-quarter records, including:

• 8.3 Bcf/d of natural gas processed, up 7% year over year
• 1.9 MMbpd of NGLs fractionated, up 16%
• 2.3 MMbpd of hydrocarbons loaded at docks, up 15%
• 14.2 million boe/d transported, up 7%

Teague said the partnership set 12 new volumetric records for the first quarter, citing both the scale of its footprint and customer demand.

Export demand and geopolitical-driven volatility

Management repeatedly pointed to market volatility and geopolitical disruptions as meaningful drivers of demand. Teague said Winter Storm Finn created early-quarter dislocations that Enterprise could navigate with its “trucks, pipelines, and storage facilities,” while the partnership’s marketing capabilities and asset flexibility helped “capture incremental value.”

Teague also tied increased demand to the ongoing conflict in the Middle East and restricted flows through a key maritime chokepoint, saying it had driven “a substantial increase in demand for all forms of U.S. energy, petrochemicals, and refined products.” He argued the financial markets were “underestimating the potential global supply implications” if the Strait of Hormuz remains constrained, citing estimates that 12 MMbpd to 15 MMbpd of crude, refined products, LPG, and petrochemical supplies could be affected—“almost 500 million barrels of hydrocarbon supplies off the market every month.”

In response to an analyst question about inventory replenishment, SVP Jay Bany said that using a 12 MMbpd disruption example over 60 days would imply 720 million barrels of lost supply through the strait, adding, “It could take years to get back to where we were before the war.” Teague added the extent of infrastructure damage remains unclear.

On the export front, Teague said Enterprise averaged about 70 million barrels per month loaded across its docks in the first quarter and expected strength to continue, with more than 88 million barrels scheduled to load in April.

Senior executives also described improved petrochemical economics. Teague said ethane-to-ethylene cracking margins improved from about $0.07 per pound prior to the conflict to $0.23, while the ethylene-to-polyethylene spread widened from $0.20 to more than $0.45 per pound, prompting domestic customers to “run their units full out.”

Capital program, buybacks, and balance sheet

Fowler said Enterprise invested $988 million in the quarter, including $783 million of growth capital and $205 million of sustaining capital. He also noted the partnership received a $596 million final payment from ExxonMobil related to the purchase of a 40% interest in the Bahia NGL Pipeline.

With major projects completed, Enterprise expects 2026 growth capital expenditures to net to $2.3 billion to $2.6 billion after applying roughly $600 million in asset-sale proceeds already received. For 2027, management expects growth capital in the range of $2.0 billion to $2.5 billion, and sustaining capital of about $580 million in 2026.

Fowler reaffirmed expectations that discretionary free cash flow for 2026 “has the potential to be in the billion-dollar area,” despite a $300 million increase in the 2026 growth capital outlook tied to investments in two new natural gas processing plants in the Permian. He said discretionary free cash flow could be higher “depending on commodity prices and spreads.”

On capital allocation, Fowler reiterated that distributions are expected to grow “commensurate with operational distributable cash flow per unit growth.” In the near term, he said discretionary free cash flow is still expected to be split between buybacks and debt retirement, with 50% to 60% allocated to buybacks in 2026. When asked whether the split would change if excess cash flow rose above current expectations, Fowler said he would “probably still maintain that 50%-60% split” for 2026, while noting 2027 “could be a different story.”

Enterprise repurchased 3.1 million common units in the first quarter for approximately $116 million. Fowler also said the distribution reinvestment plan and employee unit purchase plan bought a combined 1 million units for $37 million. Over the 12 months ended March 31, 2026, the partnership returned about $5.1 billion to equity investors, primarily through distributions.

On leverage and liquidity, Fowler reported total debt principal outstanding of about $34.2 billion at quarter-end, with a weighted average cost of debt of 4.7% and about 95% fixed-rate. Consolidated liquidity was approximately $3.3 billion. He said the consolidated leverage ratio declined to 3.2x on a net basis, within the company’s stated target of 3x ± 0.25x.

Commercial outlook: exports, processing, and downstream reliability

Executives indicated the global disruption could extend demand into future periods. Teague said Enterprise sees strong demand continuing “through the remainder of 2026 and maybe into 2027.”

SVP Tyler Cott said Enterprise’s NGL export docks are contracted around 90%, with LPG contracts running through the end of the decade and ethane contracts extending 10 to 20 years, leaving roughly 10% available for spot capacity in the near term.

Cott also provided an update on the Neches River Terminal, saying commissioning began in the second half of April and Enterprise expects to complete commissioning for both ethane and propane “sometime in May.”

Operationally, EVP and COO Graham Bacon said PDH Unit 2 has been running “much better and much consistently” since a turnaround last year, and that PDH Unit 1 has also seen “much improved reliability” due to investments and ongoing projects.

On Permian processing buildout, SVP Natalie Gayden said Enterprise is “trending closer to two” plants per year, depending on how gas-oil ratios develop. Fowler added that the two newly announced plants will come online during 2027 and “were not…baked into our 2027 numbers” previously, making them additive to the outlook.

About Enterprise Products Partners NYSE: EPD

Enterprise Products Partners L.P. NYSE: EPD is a Houston-based master limited partnership that provides midstream energy services across North America. The company owns and operates an extensive network of pipelines, storage facilities, processing plants and export terminals that transport and handle natural gas, natural gas liquids (NGLs), crude oil and refined and petrochemical products. Its core activities include gathering and transportation, fractionation of NGLs, natural gas processing, crude oil and condensate pipelines, and marine and terminal services that enable domestic distribution and exports.

Enterprise serves a diverse set of customers including producers, refiners, petrochemical companies, marketers and end users.

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