ENTERPRISE PRODUCTS PARTNERS L.P. ENTERPRISE PRODUCTS PARTNERS L.P. ALLOCATION OF CAPITAL
November 17, 2021
Forward‐Looking Statements
This presentation contains forward‐looking statements based on the beliefs of the company, as well as assumptions made by, and information currently available to our management team (including information published by third parties). When used in this presentation, words such as "anticipate," "project," "expect," "plan," "seek," "goal," "estimate," "forecast," "intend," "could," "should," "would," "will," "believe," "may," "scheduled," "potential" and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify forward‐looking statements.
Although management believes that the expectations reflected in such forward‐looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. You should not put undue reliance on any forward‐looking statements, which speak only as of their dates. Forward‐looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expected, including insufficient cash from operations, adverse market conditions, governmental regulations, the possibility that tax or other costs or difficulties related thereto will be greater than expected, the impact of competition and other risk factors discussed in our latest filings with the Securities and Exchange Commission.
All forward‐looking statements attributable to Enterprise or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained herein, in such filings and in our future periodic reports filed with the Securities and Exchange Commission. Except as required by law, we do not intend to update or revise our forward‐ looking statements, whether as a result of new information, future events or otherwise.
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Allocation of Capital Priorities and Rationale
"All of the Above" Approach
1st
2nd
Support and grow cash distributions to partners
- For partnerships, distributions are the most direct and tax efficient method to return capital to partners
- Substantially all of the incremental distributions are tax deferred to partners
- Provides cash to partners to pay taxes on allocable share of partnership taxable income
Invest in midstream energy infrastructure with attractive, long‐term returns on investment
- Investments in infrastructure to expand, complement and enhance EPD's existing system
- Criteria: return on investment and economic benefits well exceed cost of capital and cash return on buybacks
- Goal of increasing cash flow per unit
Support strong balance sheet and financial flexibility
- Flexibility to support business activities, investment opportunities and distributions to partners throughout business cycles as well as regulatory and legislative risks
3rd | • Avoid need to raise expensive capital during periods of financial stress in capital markets | |
• Energy evolution / transition expected to be capital intensive and inflationary across the entire energy and | ||
manufacturing value chain from the producer to the end use consumer | ||
• Support investment grade debt rating | ||
Buybacks | ||
• Opportunistic; during periods of unit price dislocation | ||
4th | • For partnerships, less efficient method to return capital directly to partners | |
Generally, each unit repurchased increases taxable income and liability for remaining partners |
- Partners' ability to realize benefit is primarily limited to selling partnership units, which results in tax liability from the recapture of cumulative deferred income over the life of the investment
© All Rights Reserved. Enterprise Products Partners L.P. | enterpriseproducts.com | Page 3 |
History of Deploying Capital at Attractive, Long Term Returns
Return on Invested Capital
EPD's Historical Return on Invested Capital ("ROIC")(1) (2) (3)
16% | |||||||||
14% | 13% | 13% | 13% | 13% | 13% | ||||
13% | |||||||||
12% | 12% | ||||||||
12% | 12% | 12% | |||||||
11% | |||||||||
11% | 11% | 11% | 11% | 11% | |||||
10% | |||||||||
10% |
8%
6%
4%
2%
0%
2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 9 Months |
2021 (4) |
- For a definition, see appendix
- Pre‐2008 is based on EPD reported results (not recast for Mergers)
- 2008 and 2009 reflect recast financial statements of Enterprise giving effect to the TEPPCO and Enterprise GP Holdings mergers
- ROIC for "9 Months 2021" is annualized for comparability purposes
© All Rights Reserved. Enterprise Products Partners L.P. | enterpriseproducts.com | Page 4 |
Consistent History of EPD Returning Capital to Partners
Allocation of Cash Flow from Operations
- of CFFO 100%
90% | |||||||
80% | |||||||
70% | 3% | ||||||
60% | 1% | 1% | |||||
50% | 1% | ||||||
40% | 86% | 83% | |||||
78% | 77% | ||||||
75% | 76% | 77% | |||||
30% | 66% | 61% | 64% | 65% | 61% | 67% | |
61% | 59% | ||||||
50% |
20%
10%
0%
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 TTM 3Q |
Distributions | Buybacks | Reinvested Capital | 2021 | |||||||||||
- Distributions include: GP & LP distributions paid and distribution equivalent rights
- Excess cash flow from operations historically went towards funding growth capital projects
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Enterprise Products Partners LP published this content on 17 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2021 13:27:09 UTC.
