Enterprise Products Partners L.P.(EPD) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was reported at $2.4 billion, with distributable cash flow (DCF) of $1.8 billion, providing a coverage ratio of 1.5 times [10][18] - Net income attributable to common unitholders was $1.3 billion, or $0.61 per common unit on a fully diluted basis [14] - The partnership declared a distribution of $0.545 per common unit, representing a 3.8% increase over the same period in 2024 [14] Business Line Data and Key Metrics Changes - The PDH plants showed improvement, with PDH1 averaging 95% of nameplate capacity, while PDH2 resumed operations after a turnaround [11] - Total capital investments in Q3 2025 were $2 billion, including $1.2 billion for growth capital projects and $583 million for the acquisition of natural gas gathering systems [17] Market Data and Key Metrics Changes - The company expects an inflation inflection point in discretionary free cash flow in 2026, following a four-year period of significant investments [16] - The consolidated leverage ratio was reported at 3.3 times on a net basis, above the target range of 2.75 to 3.25 times due to capital expenditures on large projects [19] Company Strategy and Development Direction - The company announced a $3 billion increase to its buyback program, raising it from $2 billion to $5 billion, indicating a strong commitment to returning capital to unitholders [12] - Strategic investments in pipelines, marine terminals, and key acquisitions are expected to capitalize on long-term growth from the Haynesville and Permian basins [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in upcoming projects, including the Bahia Pipeline and Seminole Pipeline Conversion, which are expected to enhance capacity [10] - The management team highlighted that the Permian Basin remains primarily an oil basin, with the addition of more gas pipelines being beneficial for producers [23] Other Important Information - The company has completed a multi-year capital deployment cycle that began in 2022, positioning itself for future growth [12] - The integration of recently acquired assets from Occidental is expected to unlock significant revenue potential, with an incremental $200 million in revenue anticipated by 2027 [92] Q&A Session Summary Question: Will the new Permian gas pipelines drive more production? - Management indicated that while the Permian Basin is primarily an oil basin, the new gas pipelines will enhance NGL transportation and be beneficial for producers [23] Question: Is there unlimited demand for LPG in Asia? - Management noted that demand is growing internationally, and the U.S. will export what is needed to balance the market, with price adjustments expected based on global demand [25][26] Question: What is the capital allocation outlook for the next few years? - The company expects organic growth capital expenditures in the range of $2 billion to $2.5 billion, with a focus on splitting free cash flow between buybacks and debt paydown [36] Question: How is the integration of Occidental's assets progressing? - The acquisition is strategic, with significant organic growth opportunities identified, including over 1,000 drillable locations [92] Question: What is the outlook for the Permian sour gas opportunity? - Management remains optimistic about the Permian sour gas opportunity, with plans for additional treating capacity coming online in the near future [96]