ENTERPRISE PRODUCTS PARTNERS L.P. 10-Q

ITEM 1. LEGAL PROCEEDINGS. As part of our normal business activities, we may be named as defendants in litigation and legal proceedings, including those arising from regulatory and environmental matters. Although we are insured against various risks to the extent we believe it is prudent, there is no assurance that the nature and amount of such insurance will be adequate, in every case, to indemnify us against liabilities arising from future legal proceedings. We will vigorously defend the Partnership in litigation matters. For additional information regarding our litigation matters, see Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report. On occasion, we are assessed monetary penalties by governmental authorities related to administrative or judicial proceedings involving environmental matters. The following information summarizes matters where the eventual resolution of each of these matters may result in monetary sanctions in excess of $0.3 million. We do not expect that any expenditures related to the following matters will be material to our consolidated financial statements. • In June 2019, we received a Notice of Violation from the U.S. Environmental Protection Agency (“EPA”) in connection with regulatory requirements applicable to facilities that we operate near Baton Rouge, Louisiana. • In August 2022, we received a Notice of Violation from the U.S. EPA alleging that gasoline at two of our refined products terminals in Texas had exceeded certain Clean Air Act-related standards during two past regulatory control periods. • In August 2022, we received two Notices of Enforcement from the Texas Commission on Environmental Quality for alleged exceedances of air permit emission limits at our PDH 1 and iBDH facilities in Texas. • In November 2024 and January 2025, we received notices that the New Mexico Environment Department intended to pursue enforcement for alleged exceedances of emission limits, and alleged associated late emissions reports, at our recently acquired Pinon Midstream treating facility and compressor station on various occasions from 2021 through October 2024 (prior to our acquisition date). 64 Table of Contents ITEM 1A. R ISK FACTORS. An investment in our securities involves certain risks. Security holders and potential investors in our securities should carefully consider the risks described under “ Risk Factors ” set forth in Part I, Item 1A of our 2024 Form 10-K, in addition to other information in such annual report and this quarterly report (including the risk factor set forth below). The risk factors set forth in our 2024 Form 10-K and as set forth below are important factors that could cause our actual results to differ materially from those contained in any written or oral forward-looking statements made by us or on our behalf. Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operations. Our business and results of operations may be adversely affected by uncertainty and changes in U.S. trade policies, including tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments. These actions have caused uncertainty and volatility in financial markets, may result in retaliatory measures on U.S. goods and may adversely impact both the U.S. and global economies. Our business requires access to steel and other materials to construct and maintain our pipelines. While our practice is to source steel through domestic producers in the U.S. in most instances, any imposition of or increase in tariffs on imports of steel or other materials, as well as corresponding price increases for such materials available domestically, could increase our construction costs and our costs to maintain our assets. To the extent that we are unable to pass all or any such cost increases on to our customers, such cost increases could adversely affect our returns on investment. Higher materials costs could also diminish our ability to develop new projects at acceptable returns, particularly during times of economic uncertainty, and limit our ability to pursue growth opportunities. Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global financial and economic conditions and commodity markets, inflation, and reduced demand for our and our customers’ products and services. Such conditions could have a material adverse impact on our business, results of operations and cash flows. Also, disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital. Such adverse changes could increase our costs of capital and limit our access to external financing sources to fund acquisitions, capital projects, or refinancing of debt maturities on similar terms, which could in turn reduce our cash flows and limit our ability to pursue growth opportunities. 65 Table of Contents ITEM 2. UNREGIST ERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. Recent Issuances of Unregistered Securities Holders of our Series A Cumulative Convertible Preferred Units (“preferred units”) are entitled to receive cumulative quarterly distributions at a rate of 7.25% per annum. We may satisfy our obligation to pay distributions to the preferred unitholders through the issuance, in whole or in part, of additional preferred units (referred to as paid-in-kind or “PIK” distributions), with the remainder in cash, subject to certain rights of a holder to elect all cash and other conditions as described in our partnership agreement. The Partnership made quarterly PIK distributions to preferred unitholders in the first quarter of 2025 of 20,965 preferred units. With the exception of 95 preferred units distributed to an unaffiliated third party in the first quarter of 2025, all of the PIK distributions made during 2025 were to OTA Holdings, Inc. (“OTA”), an indirect, wholly owned subsidiary of the Partnership. The preferred units held by OTA are accounted for as treasury units in consolidation. For additional information regarding the preferred units, see Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report. The issuances of preferred units as PIK distributions during the first quarter of 2025 were undertaken in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. Other than as described above, there were no sales of unregistered equity securities during the first quarter of 2025. Issuer Purchases of Equity Securities The following table summarizes our equity repurchase activity during the first quarter of 2025: Period Total Number of Units Purchased Average Price Paid per Unit Total Number Of Units Purchased as Part of 2019 Buyback Program Remaining Dollar Amount of Units That May Be Purchased Under the 2019 Buyback Program ($ thousands) 2019 Buyback Program: (1) January 2025 – $ – – $ 862,646 February 2025 860,198 $ 33.12 860,198 $ 834,153 March 2025 943,017 $ 33.41 943,017 $ 802,646 Vesting of phantom unit awards: February 2025 (2) 2,335,787 $ 33.72 n/a n/a March 2025 (3) 2,790 $ 33.42 n/a n/a (1) In January 2019, we announced the 2019 Buyback Program, which authorized the repurchase of up to $2 billion of the Partnership’s common units. Units repurchased under this program are cancelled immediately upon acquisition. (2) Of the 7,318,493 phantom unit awards that vested in February 2025 and converted to common units, 2,335,787 units were sold back to us by employees to cover related withholding tax requirements. These repurchases are not part of any announced program. We cancelled these units immediately upon acquisition. (3) Of the 9,574 phantom unit awards that vested in March 2025 and converted to common units, 2,790 units were sold back to us by employees to cover related withholding tax requirements. These repurchases are not part of any announced program. We cancelled these units immediately upon acquisition. 66 Table of Contents ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable.