Enterprise Products Partners L.P. (EPD) Earnings

Management highlights

### Financial Results & Capital Return - Delivered record second quarter 2026 EBITDA of $2.8 billion (+17% YoY) and record adjusted operating cash flow of $2.5 billion (+19% YoY), driven by strong global demand for U.S. energy, particularly in April and May. - Increased the declared common unit distribution to 56 cents per unit, a 2.8% increase YoY, to be paid August 14 to holders of record July 31; distribution coverage hit 1x. - Repurchased $159 million of common units in Q2 2026, $275 million in the first half of 2026, and $404 million in the trailing 12 months; cumulative utilization of the $5 billion buyback program reached 34%. - Total return to limited partners over the trailing 12 months hit $5.2 billion, for a 56% payout ratio of adjusted cash flow from operations. ### Operational Milestones & Project Updates - Handled record pipeline and marine terminal volumes in the quarter, with engineering and operations teams delivering exceptional performance while maintaining safety and reliability standards. - Completed expansion of the Natchez River NGL Marine Terminal ahead of schedule and began commissioning. - Approved three new Permian Basin growth projects: Plant 11 (300 million cubic feet per day natural gas processing plant in Midland Basin), Plant 13 (300 million cubic feet per day plant in Delaware Basin), and Pack 15 (150,000 barrels per day fractionation facility in Mount Bellevue). - The LPG export terminal expansion on the Houston Ship Channel remains on track to enter service by the end of 2026. - Sour gas processing expansion is progressing: the third AGI well is underway, which will bring total processing capacity to 750 million cubic feet per day; train five is under construction and train six is under evaluation due to strong producer demand. - PDH 2 ran at design capacity throughout the second quarter; PDH 1 experienced one minor issue, and both units are operational as of early Q3 after a short July outage for PDH 2. ### Leadership Announcement - Co-CEO Jim Teague announced his upcoming retirement after 28 years at Enterprise Products Partners, during which the company's enterprise value grew from $1.8 billion to over $120 billion. Randy Fowler will transition to lead the firm, with an established deep leadership bench in place. ### Balance Sheet & Liquidity - Total debt principal outstanding was ~$33.5 billion at quarter end; weighted average life of debt is ~17 years, weighted average cost of debt is 4.7%, and 97% of debt is fixed rate. - Added an incremental $1 billion short-term credit facility, bringing total consolidated liquidity to ~$5 billion, to address potential working capital volatility from commodity price swings. - Net leverage ratio fell to the company's 3.0x target (within the 3.0x +/- 0.25x target range) after adjusting for hybrid debt equity treatment and unrestricted cash.

Guidance

- 2026 growth capital expenditure guidance ranges from $2.9 billion to $3.4 billion, after accounting for $600 million in completed asset sale proceeds; this represents an increase of over $700 million from prior guidance due to initial spending on newly approved Permian projects and supporting infrastructure. Sustaining capital expenditures for 2026 are expected to be ~$600 million. - 2027 growth capital expenditures are expected to be ~$3 billion, with ~80% of the $3 billion already allocated to announced and sanctioned projects. Near-term, $3 billion is seen as the new baseline for growth capital expenditure, driven by Permian growth and the need for on-site power for new projects in the Delaware Basin. - Discretionary free cash flow for 2026 is still expected to approach $1 billion, despite the $700+ million increase in planned growth capex, as higher-than-expected EBITDA has broadly offset the increased spending. - Long-term EBITDA growth guidance remains unchanged: 10% EBITDA growth from 2025 to 2027, driven entirely by volume growth across the system, with any additional volatility-driven or optimization upside sitting on top of this baseline. Modest EBITDA growth is still expected for 2026 in line with prior baseline guidance. - Permian new plant in-service dates: Plant 13 (Delaware) expected Q3 2028, Pack 15 expected Q1 2028, Plant 11 (Midland) expected Q1 2029. After the current wave of construction, Permian processing plant cadence is expected to return to ~2 plants per year after 2026.

Segment performance

The transcript does not break out financial performance by separate formal product segments, but provides volume and contribution details for key business lines: 1. Natural Gas Processing: Inlet volumes reached 8.1 billion cubic feet per day, with Permian Basin inlet volumes up 14% year-over-year to 4.3 billion cubic feet per day. 2. Pipeline & Marine Terminals: Total pipeline volumes increased 8% year-over-year to 14.7 million barrels of oil equivalent per day; marine terminal volumes rose 33% year-over-year to 2.8 million barrels per day. 3. Overall company: Second quarter 2026 EBITDA hit a record $2.8 billion, a 17% increase year-over-year; adjusted cash flow from operations (before working capital changes) was a record $2.5 billion, up 19% year-over-year. Approximately $200 million of second quarter EBITDA came from acute global demand pull for U.S. energy, split equally between NGL, crude, and petrochemical/other segments.

Risks & headwinds

- Global energy market volatility and shifting international demand patterns create uncertainty for near-term pricing, margins, and volume levels, particularly amid ongoing geopolitical conflicts such as the conflict in the Middle East. - Commodity price volatility creates working capital requirements that can impact cash flow; the firm added $1 billion in incremental credit capacity to mitigate this risk. - Recent and upcoming LPG export capacity additions across the industry will likely lead to a period of capacity absorption, with lower and less volatile terminal fees than seen over the past two years. - Waha natural gas price volatility can impact producer decisions to bring shut-in volumes online, which affects processing volumes and margins for the firm in the Permian Basin. - Demand and pricing for Haynesville Basin natural gas is highly dependent on overall market pricing, making it a swing production basin that creates variable volume levels for the firm's assets there.

Analyst Q&A

• Q: LPG lifting rates have fallen after the Neches River project came online, and new capacity is still coming online. Is LPG export capacity already overbuilt, and will the upcoming 300 KBD expansion be well utilized? /

  A: Management confirms that a large amount of new export capacity has entered and will enter the market over the next 12-18 months. It will take time for the market to absorb this new capacity, so the industry will likely see a period of lower terminal fees and less volatility than in recent years. Enterprise has intentionally contracted most of its capacity, with ~90% of its EHT expansion and system-wide LPG export capacity already contracted, reducing the firm's exposure to near-term oversupply.

• Q: After new Permian egress pipelines came online, how much of the previously estimated 2 Bcf per day of shut-in/choked back natural gas has returned to market, and what price do producers need to bring full volumes online? /

  A: Management states the shut-in volume is a mix of production that was already drilled but choked back, mostly from higher GOR producers exposed to Waha pricing. Not all producers need a strongly positive Waha price to bring volumes online, just a healthy, stable Waha price. Higher volumes that result from opened egress benefit Enterprise across processing margins, spread value, and equity gas production, even with short-term price volatility. Management expects full pipeline absorption of new capacity as shut-in volumes return and new gasser production comes online over time.

• Q: Why can free cash flow still approach $1 billion in 2026 after you increased 2026 growth capex by over $700 million? Is higher EBITDA driving this, or are there other factors? /

  A: Management's discretionary free cash flow calculation excludes working capital, which swings with commodity prices and contango opportunities. The only two major moving pieces are growth capex and EBITDA. Even with the $700 million increase in growth capex for new attractive project opportunities, year-to-date EBITDA has increased by roughly the same amount, which almost fully offsets the higher capex spending, leaving full-year free cash flow still on track to approach $1 billion.

• Q: VLCC (very large ethane carrier) availability is growing amid global supply disruptions. How is this impacting Enterprise's ethane export growth, and are you seeing new customer interest? /

  A: Management confirms there has been a large uptick in new VLCCs entering the market, with more coming this year and even more next year. Enterprise's ethane export volumes will correlate strongly with this growing capacity, as customers take delivery on existing contracts for Enterprise's export capacity. There is strong unmet demand for U.S. ethane from new global customers, including new markets that previously relied on Middle East supply, and Enterprise is in active discussions with multiple new parties around the world for additional capacity.