The ups and downs of Enterprise Products Partners’ 4Q14 results (Part 3 of 13)
Revenues down in 4Q14
In the previous article, we looked at Enterprise Products Partners’ (EPD) earnings versus analysts’ estimates. In this article, we’ll look into the company’s revenues and earnings and why they moved relative to the same period in 2013. EPD saw revenues down but operating profit up in the latest quarter.
Enterprise Products Partners’ (EPD) revenues for 4Q14 decreased 22% to $10.19 billion, from $13.10 billion recorded in the year-ago quarter. This resulted primarily from a 3% decrease in natural gas processing volumes for 4Q14 and a lower crude oil price.
Let’s look at EPD’s peers. Revenues for Kinder Morgan Inc. (KMI) decreased 7.9%. The recent fall in energy prices may also negatively affect other midstream energy companies such as Plains All American (PAA) and Williams Companies (WMB) in 4Q14 over the year-ago quarter. Some of these are components of the Alerian MLP ETF (AMLP).
Operating income and margin up
For 4Q14, Enterprise Products Partners (EPD) recorded $921 million operating income, up 0.6% from $915 million recorded in 4Q13. Operating profit margin increased to 9% from 7% over the previous-year quarter.
In 4Q14, EPD’s operating margin improved primarily from its Onshore Crude Oil Pipelines & Services and Offshore Pipelines & Services segments. Read the following part of this series to know why.
The primary reasons for the company’s improved operating margin are as follows:
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Natural gas liquid (or NGL), crude oil, refined products, and petrochemical pipeline volumes for 4Q14 increased 4% to 5.4 million barrels per day (or bpd).
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There was a $63 million gross operating margin from Oiltanking Partners, which EPD acquired in 4Q14.
What upset Enterprise Product Partners’ operating income?
Poor performance in the NGL Pipelines & Services and Onshore Natural Gas Pipelines & Services segments upset EPD’s 4Q14 operating profit growth. Diluted earnings were $0.34 per unit in 3Q14 compared to $0.37 per unit in 4Q13.
Read the next section to know which segment moved up and which one went down in the latest quarter.
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