Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the quarter
ended June 30, 2017.
ETE’s net income attributable to partners was $212 million for
the three months ended June 30, 2017 compared to $241 million
for the three months ended June 30, 2016. Distributable Cash
Flow, as adjusted, for the three months ended June 30, 2017
was $240 million compared to $276 million for the three months
ended June 30, 2016. The decreases in net income attributable
to partners and Distributable Cash Flow, as adjusted, were
primarily driven by a reduction in incentive distributions as
previously agreed to between ETE and ETP, as well as the impact of
the ETP and Sunoco Logistics Partners L.P. (“Sunoco Logistics”)
merger in April 2017, as discussed below.
The Partnership’s recent key accomplishments and other
developments include the following:
- In July 2017, ETE announced a $0.285
distribution per ETE common unit for the quarter ended
June 30, 2017, or $1.14 per unit on an annualized basis.
- As of June 30, 2017, ETE’s $1.5
billion revolving credit facility had $1.20 billion of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 3.81x.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Wednesday, August 9, 2017 to discuss its second
quarter 2017 results. The conference call will be broadcast live
via an internet webcast, which can be accessed through www.energytransfer.com and will also be available
for replay on the Partnership’s website for a limited time.
The Partnership’s principal sources of cash flow are derived
from distributions related to its direct and indirect investments
in the limited and general partner interests in Energy Transfer
Partners, L.P. (“Post-Merger ETP”), including 100% of ETP’s
incentive distribution rights, limited and general partner
interests in Sunoco LP, as well as the Partnership’s ownership of
Lake Charles LNG. In connection with the merger of Energy Transfer
Partners, L.P. (“Legacy ETP”) and Sunoco Logistics in April 2017,
the Legacy ETP Class H units were cancelled, and ETE now owns 27.5
million Post-Merger ETP Common Units (representing 2.5% of the
total outstanding Post-Merger ETP common units). The Partnership’s
primary cash requirements are for general and administrative
expenses, debt service requirements and distributions to its
partners.
Energy Transfer Equity, L.P. (NYSE:ETE) is a master
limited partnership that owns the general partner and 100% of the
incentive distribution rights (IDRs) of Energy Transfer
Partners, L.P. (NYSE: ETP) and Sunoco LP (NYSE: SUN). ETE also
owns Lake Charles LNG Company. On a consolidated basis, ETE’s
family of companies owns and operates a diverse portfolio of
natural gas, natural gas liquids, crude oil and refined products
assets, as well as retail and wholesale motor fuel operations and
LNG terminalling. For more information, visit the Energy Transfer
Equity, L.P. website at www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE: ETP) is a
master limited partnership that owns and operates one of the
largest and most diversified portfolios of energy assets in the
United States. Strategically positioned in all of the major U.S.
production basins, ETP owns and operates a geographically diverse
portfolio of complementary natural gas midstream, intrastate and
interstate transportation and storage assets; crude oil, natural
gas liquids (NGL) and refined product transportation and
terminalling assets; NGL fractionation; and various commodity
acquisition and marketing assets. ETP’s general partner is owned by
Energy Transfer Equity, L.P. (NYSE: ETE). For more information,
visit the Energy Transfer Partners, L.P. website at www.energytransfer.com.
Sunoco LP (NYSE: SUN) is a master limited partnership
that operates 1,355 convenience stores and retail fuel sites and
distributes motor fuel to 7,825 convenience stores, independent
dealers, commercial customers and distributors located in 30
states. Our parent — Energy Transfer Equity, L.P. (NYSE: ETE) —
owns SUN’s general partner and incentive distribution rights. For
more information, visit the Sunoco LP website at www.sunocolp.com.
Forward-Looking Statements
This news release may include certain statements concerning
expectations for the future that are forward-looking statements as
defined by federal law. Such forward-looking statements are subject
to a variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond
management’s control. An extensive list of factors that can affect
future results are discussed in the Partnership’s Annual Report on
Form 10-K and other documents filed from time to time with the
Securities and Exchange Commission. The Partnership undertakes no
obligation to update or revise any forward-looking statement to
reflect new information or events.
The information contained in this press release is available on
our website at www.energytransfer.com.
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
June 30, 2017 December 31, 2016
ASSETS
Current assets $ 10,326 $ 6,985 Property, plant and
equipment, net 56,808 53,253 Advances to and investments in
unconsolidated affiliates 3,182 3,040 Other non-current assets, net
852 816 Intangible assets, net 6,267 5,489 Goodwill 5,174 5,170
Non-current assets held for sale — 4,258
Total assets $ 82,609 $ 79,011
LIABILITIES AND
EQUITY
Current liabilities $ 7,765 $ 7,277 Long-term debt,
less current maturities 43,084 42,608 Long-term notes payable –
related companies — 250 Non-current derivative liabilities 201 76
Deferred income taxes 5,170 5,112 Other non-current liabilities
1,178 1,055 Liabilities associated with assets held for sale — 68
Commitments and contingencies Preferred units of
subsidiary — 33 Redeemable noncontrolling interests 22 15
Equity: Total partners’ deficit (1,185 ) (1,694 ) Noncontrolling
interest 26,374 24,211 Total equity
25,189 22,517 Total liabilities and
equity $ 82,609 $ 79,011
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30,
2017 2016 2017
2016 REVENUES $ 8,935 $ 7,415 $ 18,163 $ 13,522 COSTS
AND EXPENSES: Cost of products sold 6,887 5,479 14,178 9,816
Operating expenses 478 444 915 852 Depreciation, depletion and
amortization 604 537 1,208 1,048 Selling, general and
administrative 178 150 342
306 Total costs and expenses 8,147
6,610 16,643 12,022
OPERATING INCOME 788 805 1,520 1,500 OTHER INCOME (EXPENSE):
Interest expense, net (485 ) (443 ) (966 ) (862 ) Equity in
earnings of unconsolidated affiliates 49 95 136 156 Losses on
extinguishments of debt — — (25 ) — Losses on interest rate
derivatives (25 ) (81 ) (20 ) (151 ) Other, net 67
26 92 43 INCOME BEFORE
INCOME TAX EXPENSE (BENEFIT) 394 402 737 686 Income tax expense
(benefit) 21 (7 ) 60 (62
) INCOME FROM CONTINUING OPERATIONS 373 409 677 748 Income (loss)
from discontinued operations, net of income taxes (256 )
15 (270 ) 12 NET INCOME 117 424
407 760 Less: Net income (loss) attributable to noncontrolling
interest (95 ) 183 (44 ) 207
NET INCOME ATTRIBUTABLE TO PARTNERS 212 241 451 553 General
Partner’s interest in net income — 1 1 2 Convertible Unitholders’
interest in income 8 1 14
1 Limited Partners’ interest in net income $ 204
$ 239 $ 436 $ 550 INCOME FROM
CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: Basic $ 0.19
$ 0.23 $ 0.41 $ 0.53 Diluted $ 0.19 $
0.23 $ 0.40 $ 0.52 NET INCOME PER LIMITED
PARTNER UNIT: Basic $ 0.18 $ 0.23 $ 0.40 $
0.53 Diluted $ 0.18 $ 0.23 $ 0.39 $
0.52 WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: Basic
1,075.2 1,048.9 1,077.2
1,046.9 Diluted 1,141.3 1,063.8
1,143.7 1,052.5
ENERGY TRANSFER
EQUITY, L.P.
SUPPLEMENTAL
INFORMATION
(In millions)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30,
2017 2016 2017
2016 Cash distributions from ETP associated with: (1)
Limited partner interest $ 15 $ 2 $ 30 $ 5 Class H Units — 88 — 171
General partner interest 4 8 8 16 Incentive distribution rights 396
335 773 666 IDR relinquishments, net of distributions on Class I
Units (2) (162 ) (110 ) (319 ) (144 )
Total cash distributions from ETP 253 323
492 714 Cash distributions from
Sunoco LP 31 22 54
44 Total cash distributions from investments in subsidiaries
$ 284 $ 345 $ 546 $ 758 Distributable cash flow attributable
to Lake Charles LNG: Revenues $ 50 $ 49 $ 99 98 Operating expenses
(4 ) (5 ) (9 ) (9 ) Selling, general and administrative expenses
(2 ) — (2 ) (1 ) Distributable
cash flow attributable to Lake Charles LNG $ 44 $ 44 $ 88 $ 88
Expenses of the Parent Company on a cash basis: Selling,
general and administrative expenses, excluding certain non-cash
expenses $ 9 $ 24 $ 17 55 Management fee to ETP (3) — 24 5 48
Interest expense, net of amortization of financing costs, interest
income, and realized gains and losses on interest rate swaps
83 79 164 157
Total Parent Company expenses $ 92 $ 127 $ 186 $ 260 Cash
distributions to be paid to the partners of ETE: Distributions to
be paid to limited partners (4) $ 250 $ 240 $ 500 $ 480
Distributions to be paid to general partner 1
— 2 1 Total cash distributions
to be paid to the partners of ETE $ 251 $ 240 $ 502
$ 481 Common units outstanding — end of period
1,079.1 1,044.8 1,079.1
1,044.8
_________________
(1)
Following the merger of Legacy ETP and Sunoco Logistics in
April 2017, the Post-Merger ETP partnership agreement contains
distribution requirements consistent with those of Sunoco Logistics
prior to the merger.
(2)
IDR relinquishments for the three months ended June 30, 2017
include the impact of incentive distribution reductions agreed to
between ETE and Legacy ETP in addition to incentive distribution
reductions previously agreed to between Legacy ETP and Sunoco
Logistics.
(3)
ETE previously paid Legacy ETP certain fees for management services
under agreements expired in the first quarter of 2017.
(4)
Includes distributions of $0.11 per common unit for the three
months ended June 30, 2017, and $0.22 per common unit for the six
months ended June 30, 2017, to unitholders who elected to
participate in a plan to forgo a portion of their future potential
cash distributions on common units for a period of up to nine
fiscal quarters, commencing with the distributions for the quarter
ended March 31, 2016, and reinvest those distributions in ETE
Series A convertible preferred units representing limited partner
interest in the Partnership.
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(Dollars in millions)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30,
2017 2016 2017
2016 Net income attributable to partners $ 212 $ 241
$ 451 $ 553 Equity in earnings related to investments in ETP and
Sunoco LP (273 ) (334 ) (598 ) (732 ) Total cash distributions from
investments in subsidiaries 284 345 546 758 Amortization included
in interest expense (excluding ETP and Sunoco LP) 3 3 5 6 Other
non-cash (excluding ETP and Sunoco LP) 10 7
44 1 Distributable Cash Flow 236
262 448 586 Transaction-related expenses 4 14
7 40 Distributable Cash Flow, as
adjusted $ 240 $ 276 $ 455 $ 626
Distribution coverage ratio(1) 0.96x 1.15x 0.91x 1.30x
(1)
This press release and accompanying schedules include the
non-generally accepted accounting principle (“non-GAAP”) financial
measures of Distributable Cash Flow and Distributable Cash Flow, as
adjusted. The Partnership’s non-GAAP financial measures should not
be considered as alternatives to GAAP financial measures such as
net income, cash flow from operating activities or any other GAAP
measure of liquidity or financial performance.
Distributable Cash
Flow and Distributable Cash Flow, as adjusted. The
Partnership defines Distributable Cash Flow and Distributable Cash
Flow, as adjusted, for a period as cash distributions expected to
be received in respect of such period in connection with the
Partnership’s investments in limited and general partner interests,
net of the Partnership’s cash expenditures for general and
administrative costs and interest expense. The Partnership’s
definitions of Distributable Cash Flow and Distributable Cash Flow,
as adjusted, also include distributable cash flow from Lake Charles
LNG to the Partnership. For Distributable Cash Flow, as adjusted,
certain transaction-related expenses that are included in net
income are excluded.
Distributable Cash Flow is a significant
liquidity measure used by the Partnership’s senior management to
compare net cash flows generated by the Partnership to the
distributions the Partnership expects to pay its unitholders. Due
to cash expenses incurred from time to time in connection with the
Partnership’s merger and acquisition activities and other
transactions, Distributable Cash Flow, as adjusted, is also a
significant liquidity measure used by the Partnership’s senior
management to compare net cash flows generated by the Partnership
to the distributions the Partnership expects to pay its
unitholders. Using these measures, the Partnership’s management can
compute the coverage ratio of estimated cash flows for a period to
planned cash distributions for such period.
Distributable Cash Flow and Distributable
Cash Flow, as adjusted, are also important non-GAAP financial
measures for our limited partners since these indicate to investors
whether the Partnership’s investments are generating cash flows at
a level that can sustain or support an increase in quarterly cash
distribution levels. Financial measures such as Distributable Cash
Flow and Distributable Cash Flow, as adjusted, are quantitative
standards used by the investment community with respect to publicly
traded partnerships because the value of a partnership unit is in
part measured by its yield (which in turn is based on the amount of
cash distributions a partnership can pay to a unitholder). The GAAP
measure most directly comparable to Distributable Cash Flow and
Distributable Cash Flow, as adjusted, is net income attributable to
partners.
Distribution
Coverage Ratio. The Partnership defines Distribution
Coverage Ratio for a period as Distributable Cash Flow, as
adjusted, divided by total cash distributions expected to be paid
to the partners of ETE in respect of such period.
SUPPLEMENTAL
INFORMATION
FINANCIAL
STATEMENTS FOR PARENT COMPANY
Following are condensed balance sheets and statements of
operations of the Parent Company on a stand-alone basis.
BALANCE
SHEETS
(In millions)
(unaudited)
June 30, 2017 December 31, 2016
ASSETS Current assets
$ 68 $ 57 Property, plant and equipment, net 28 36 Advances to and
investments in unconsolidated affiliates 5,980 5,088 Intangible
assets, net — 1 Goodwill 9 9 Other non-current assets, net
18 10 Total assets $ 6,103 $ 5,201
LIABILITIES AND PARTNERS’ CAPITAL Current liabilities
$ 63 $ 92 Long-term debt, less current maturities 6,693 6,358
Long-term notes payable – related companies 530 443 Other
non-current liabilities 2 2 Commitments and contingencies Total
partners’ deficit (1,185 ) (1,694 ) Total liabilities
and partners’ deficit $ 6,103 $ 5,201
STATEMENTS OF
OPERATIONS
(In millions)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30,
2017 2016 2017
2016 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $
(9 ) $ (44 ) $ (22 ) $ (81 ) OTHER INCOME (EXPENSE): Interest
expense, net of interest capitalized (86 ) (82 ) (169 ) (163 )
Equity in earnings of unconsolidated affiliates 308 369 669 799
Losses on extinguishments of debt — — (25 ) — Other, net (1
) (2 ) (2 ) (2 ) NET INCOME 212 241 451 553
General Partner’s interest in net income — 1 1 2 Convertible
Unitholders' interest in income 8 1
14 1 Limited Partners’ interest in net
income $ 204 $ 239 $ 436 $ 550
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Energy TransferInvestor Relations:Lyndsay Hannah, Brent
Ratliff, Helen Ryoo, 214-981-0795orMedia Relations:Vicki
Granado, 214-840-5820
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