Enterprise Products Partners L.P. Q1 FY2026 earnings call

• Business started strong in Q1 2026 with good performance across all areas. Assets brought online over past year continued to ramp. Operationally, set multiple records in gas processing, NGL fractionation, dock loading, and transportation. Market side saw volatile commodity prices with winter storm firm and Middle East conflict driving increased demand for US energy, petrochemicals, and refined products. Upstream had constructive producer activity and assets well positioned for volume growth. Downstream had strong contributions with record product flows, strong margins, and high PDH facility utilization. New assets ramping well with high demand domestically and internationally. - Income statement items: Net income up 6% y-o-y, adjusted cash flow from operations up 10% y-o-y. Declared $0.55 per common unit distribution, 2.8% increase y-o-y. Partnership purchased 3.1 million common units off open market in Q1. Returned ~5.1 billion of capital to equity investors in twelve months ended 03/31/2026. Capital investments in 2026 were 988 million, including 783 million growth capital and $2.005 million sustaining capex. Received final payment from ExxonMobil for Bahia NGL pipeline. Expected growth capital expenditures for 2026 net to 2.3-2.6 billion after proceeds from asset sales, and 2-2.5 billion for 2027. Discretionary free cash flow for 2026 potential still in billion-dollar area. Distribution to partners to grow commensurate with operational distributable cash flow per unit. Debt principal outstanding ~34.2 billion as of 03/31/2026, weighted average life of debt portfolio ~seventeen years, weighted average cost of debt 4.7%, 95% fixed. Consolidated liquidity ~3.3 billion as of March 31. Consolidated leverage ratio decreased to 3.2 times.

In the first quarter, EBITDA was 2.7 billion, up 10% over last year. Net income attributable to common unitholders was 1.5 billion, or $0.68 per common unit on a fully diluted basis, a 6% increase compared to 2025. Adjusted cash flow from operations increased 10% to 2.3 billion for 2026. Distributable cash flow coverage was 1.8 times. Assets like Bahia NGL pipeline, fractionator 14, and Permian natural gas processing plants ramped. Gas processing plant inlet volumes, NGL fractionation, dock loading, and oil equivalent transportation set records. NGL export docks contracted around 90%, LPG contracts through end of decade, ethane contracts ten to twenty years. PDH units operating better after turnarounds.

• 2026 expected to be a much stronger year than initially expected due to commodity prices and spreads. Growth capital expenditures for 2026 net to 2.3-2.6 billion after proceeds from asset sales. 2027 growth capital expenditures expected to be 2-2.5 billion. Discretionary free cash flow for 2026 potential in billion-dollar area, could be higher depending on commodity prices and spreads. Distribution to partners to grow commensurate with operational distributable cash flow per unit growth. Near term, discretionary free cash flow expected to be split ~50%-60% in buybacks. - Previously thought 3% growth for '26 and 10% for 2027, now expects to beat modest for '26. Commercial guys underwrote two more natural gas processing plants in Permian, additive to 2027 outlook. - Expect outsized spreads again, with first quarter having some on natural gas and spreads post Iranian conflict to come in second quarter.

• Potential global supply implications from prolonged closure of Strait of Hormuz, with 12-15 million barrels a day of crude oil, refined products, LPG, and petrochemical supplies constrained. Uncertainty on when Strait could reopen and repair of onshore production and refining facilities damaged in war. Impact on storage levels of crude, refined products, LPG, with potential for years to get back to pre-war levels. - Disruption in Middle East product flows affecting international consumers' energy supply chains and US trade balance.

Q: Following up on the comments about the uptick for US energy demand in general and US export infrastructure demand in particular, can you walk us through the contract duration profile across your export docks today? Specifically, how much capacity is tied to contracts with near-term expirations that could be recontracted at higher rates? And longer term, how much incremental brownfield expansion capability do you have across your export assets?

A: Tyler Cott spoke to NGL exports: docks contracted around 90%, LPG contracts through end of decade, ethane contracts ten to twenty years. 10% near-term open capacity on crude.

Q: Wanted to get back to the growth outlook really quickly. Jim, you sound incrementally more positive than when we last caught up. Obviously, a lot has changed. And then Randy, you seem to indicate that your operating cash flow is going to at least sort of mirror the increase in CapEx to keep that DCF/free cash flow kind of stable. So curious if you could give us an update on the sort of 3% growth you guys were talking about for '26 and the 10% growth you were talking about for 2027 on the last call? And as you answer that question, just curious if these two new processing plants are additive to that '27 outlook.

A: Jim Teague said they'll beat modest for '26. Randy Fowler said 2026 looks much stronger than expected, commercial guys underwrote two more natural gas processing plants in Permian additive to 2027 outlook.

Q: Jim, you also talked about embracing volatility, and I know we go back a few years ago, you used to sort of talk about sort of 500 million or so outsized spread gains you guys would sort of find in any given year; that's been absent for about maybe the last two years or so. Just curious if it sounds like that's back. I don't want to put too fine a number on it, but in the environment you're seeing now, do you think you see a return to that 500 million, and what parts of the market do you see that from, obviously, export being a big one?

A: Jim Teague said expects outsized spreads, Tug added first quarter had some on natural gas, spreads post Iranian conflict to come in second quarter.

Q: We talked about this a little bit at the dinner, Tug, but it seems like international crackers that are running ethane are pretty happy that they do so right now. Has there been any interest in the last couple of months in more international conversions to ethane that could drive the next leg of ethane demand?

A: Tug said interest and demand for ethane and LPG similar pre and post conflict, Jim Teague said conversion not overnight, couple of years.

Q: Good morning. We talked about this a little bit at the dinner, Tug, but it seems like international crackers that are running ethane are pretty happy that they do so right now. Has there been any interest in the last couple of months in more international conversions to ethane that could drive the next leg of ethane demand?

A: Tug said interest and demand for ethane and LPG similar pre and post conflict, Jim Teague said conversion not overnight, couple of years.

Q: Good morning, everyone. You know, at dinner a few weeks ago, you didn't really think you'd see any permanent shifts in where global buyers are gonna source their hydrocarbons. I thought maybe they'd move more to the US, but you seemed to think that that wouldn't happen. Curious just if you've had any change in your thinking there and, in a similar vein, I think at the time you didn't really think we'd see any reaction from US producers, and I'm curious if you still think that's the case.

A: Natalie Gayden said US producers staying disciplined, Jay Bainey said some movement in rig activity, Jim Teague said supply disruption changing things, seeing interest from countries like India.

Q: Okay. Great. Thank you. The second question was just on capital allocation. Randy, appreciate your comments on the 1 billion of discretionary cash. The question is, assuming you're able to realize stronger results this year as a result of the conflict, would you maintain that 50% or 60% allocation to buybacks versus debt paydown, or if that billion dollars turned into 1.5 billion, for example, would the incremental above plan just go to buybacks since your leverage is already within the target?

A: Randy Fowler said would still have 50%-60% split in 2026.

Q: Hey. Good morning. Thanks for taking the questions. I was just thinking about the two new plant announcements in the Permian. And I know it hasn't even really been a month since the update, but just curious what you think the go-forward cadence should be for Permian processing capacity? I believe previously you guys were around one or two a year. With the thought process, do you think we're moving more to a two-plus environment, or just, you know, how should we think about that moving forward?

A: Natalie Gayden said trending closer to two per year.

Q: Yeah, Brandon. This is Jay again. Yeah. We've seen volumes leave our dock. I mean, you go back to first quarter last year, think for fourth quarter we were up 70,000 barrels a day on exports. And then add that to the first quarter, that's another 70. With the SPR barrels now looking for second quarter, I mean, we could be well over 1 million barrels a day.

A: Jay Bainey talked about crude export volumes.

Q: Congrats on the good results. I just wanted to quickly focus on slide 17. It looks like PDH units are operating much better based on that slide. And I think you did do some kind of turnaround on the PDH unit too, and it's been operating better after that. Can you speak to those dynamics, please?

A: Graham said PDH 2 running better after turnaround, PDH 1 improved reliability due to investments.

Q: My quick follow-up is the macro comments you made at the beginning of the call, which were actually very informative. You know, you talked about 15 million barrels of total disruptions, and then Strait probably normally operating maybe only in July. I'm just trying to understand what does this do to the various storage levels of crude, refined products, LPG. Do you think, like, because of this depletion, storage levels could probably take a year or so to get fully replenished here? If you could talk about some of those dynamics, please.

A: Tug said lost supply through Strait could take years to get back to pre-war levels, Jim Teague said uncertainty on damaged infrastructure.

Q: Hey. Good morning, everyone. Thank you for the time. Just wanna go back to the 2027 kinda soft guide from the last call. You talked about it a little bit earlier in this one, but I just wanna put a little finer point on it. When you shared that update, were you thinking of '27 being a kind of what had, at the time, thought to be a kinda softer 2026 macro environment or 2025 macro environment where we weren't gonna have a lot of spreads? Or was 2027 meant to be a more kinda normalized environment maybe closer to what you outlined in the fundamentals update a couple weeks ago? Maybe just kinda walk us through the kind of macro behind the '27 piece.

A: Randy Fowler said 2027 driver was fee-based EBITDA growth from new assets and Occidental acquisition.

Q: You have commented a couple of times on this call about the disconnect between the, let's say, paper market and the physical market. Can you talk a little bit more about that and maybe what you think is driving the divergence or what could drive a convergence in that?

A: Tug said forward market may not accurately reflect physical market, physical premiums high.

Q: Thanks, operator. Good morning, everyone. Thanks for the time. I was hoping maybe to just touch on the gas side just for a second. Maybe Haynesville gathering. Is there—in the shoulder season now and front month at 2.50—we'll see what happens in the summer, but curious if you're seeing any change in behavior. It does seem like privates build productive capacity to turn on at the appropriate price signal, but curious if you're seeing any change in behavior.

A: Natalie Gayden said privates running rigs, expect pop in Haynesville at end of year.

Q: Morning, all. Wondering if我 could just go back to some of the comments on damaged infrastructure in the Middle East. I think we saw from Saudi Aramco this morning they're gonna be halting LPG shipments through May. There's been some published price indexes from third-party sources showing that spot loading rates in the US Gulf Coast have been as high as 55¢. I'm just wondering, given that Phase two of Neches River will be up soon, curious how you would characterize that rate and what maybe you're seeing in terms of spot opportunities and how that could affect, you know, the return profile of your two new export projects.

A: Tyler Cott said seen elevated spot rates, system has more flexibility.

Q: On the CapEx revision and the plan FIDs, I would imagine you'd line of sight to these projects when you issued guidance last quarter. Should we interpret this to mean that incremental FIDs, like a new frac, bias 2026 CapEx higher? And is what you have now actually a pretty firm number? And also, maybe if you could provide an update on those commercial agreements you spoke to with Exxon last quarter.

A: Randy Fowler said CapEx guide includes anticipated projects, long lead items for processing plants in guide, FID earlier due to volume growth. Zach Stray talked about NGL fractionation and Exxon agreements.

Q: Morning, all. Wondering if我 could just go back to some of the comments on damaged infrastructure in the Middle East. I think we saw from Saudi Aramco this morning they're gonna be halting LPG shipments through May. There's been some published price indexes from third-party sources showing that spot loading rates in the US Gulf Coast have been as high as 55¢. I'm just wondering, given that Phase two of Neches River will be up soon, curious how you would characterize that rate and what maybe you're seeing in terms of spot opportunities and how that could affect, you know, the return profile of your two new export projects.

A: Tyler Cott said seen elevated spot rates, system has more flexibility.

Q: This is Rob Mosca on for Julian. On the CapEx revision and the plan FIDs, I would imagine you'd line of sight to these projects when you issued guidance last quarter. Should we interpret this to mean that incremental FIDs, like a new frac, bias 2026 CapEx higher? And is what you have now actually a pretty firm number? And also, maybe if you could provide an update on those commercial agreements you spoke to with Exxon last quarter.

A: Randy Fowler said CapEx guide includes anticipated projects, long lead items for processing plants in guide, FID earlier due to volume growth. Zach Stray talked about NGL fractionation and Exxon agreements.

Q: Hi. Good morning. I wanted to clarify on Neches River Phase 2. Would you have contracted any of the LPG shipments on that since it's only an interim service until你 switch to ethane? Or is that all spot? And then just wanna confirm the timeline you would switch to ethane. You're required to do that at year-end?

A: Tyler Cott said have propane contracts ramping up at NRT, ethane commitments later this year and into next year.

Q: Morning, all. Wondering if我 could just go back to some of the comments on damaged infrastructure in the Middle East. I think we saw from Saudi Aramco this morning they're gonna be halting LPG shipments through May. There's been some published price indexes from third-party sources showing that spot loading rates in the US Gulf Coast have been as high as 55¢. I'm just wondering, given that Phase two of Neches River will be up soon, curious how you would characterize that rate and what maybe你're seeing in terms of spot opportunities and how that could affect, you know, the return profile of your two new export projects.

A: Tyler Cott said seen elevated spot rates, system has more flexibility.

Q: Hi. Good morning. Just wanted to come back to some of the commentary that you provided on the macro level. The industry, as you said, I don't think has really responded with a lot of new rig activity. And wondering what你 think the industry would need to see in the market to pick up activity, and do you expect us to get there?

A: Jim Teague said producers staying disciplined, Natalie Gayden said private companies not adding much, Tug said back of curve needs to be lifted.

Q: Hi. Good morning. I wanted to clarify on Neches River Phase 2. Would you have contracted any of the LPG shipments on that since it's only an interim service until你 switch to ethane? Or is that all spot? And then just wanna confirm the timeline you would switch to ethane. You're required to do that at year-end?

A: Tyler Cott said have propane contracts ramping up at NRT, ethane commitments later this year and into next year.

Q: Bigger picture question as a follow-up. What would you say is the biggest opportunity for Enterprise with the situation in the Middle East and some of the commodity dynamics? Is there any particular business or commodity that你 see as most exciting that你'd call out, or things we might not be thinking about?

A: Jim Teague said ethane has surprised, ethylene exports high, broadening of offerings across docks. Randy Fowler said improvement in fundamentals for petrochemical customers.

Q: Yeah. Hey. Most of my questions have been answered. I want to ask about another commodity exposure you guys have around octane enhancement. You know, I think 2022, that business did, and '23, north of 400 million of gross margin. How are those spreads looking right now? Do you see that repeating this year?

A: Jim Teague said coming out of turnaround on Oleflex unit, expecting strong through the quarter.