Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the quarter
ended September 30, 2017.
ETE’s net income attributable to partners was $252 million for
the three months ended September 30, 2017 compared to $209
million for the three months ended September 30, 2016.
Distributable Cash Flow, as adjusted, for the three months ended
September 30, 2017 was $271 million compared to $281 million
for the three months ended September 30, 2016. The decrease in
Distributable Cash Flow, as adjusted, is primarily driven by a
reduction in incentive distributions as previously agreed to
between ETE and Energy Transfer Partners, L.P. (“ETP”). These
incentive distribution waivers, the majority of which were
originally provided to support ETP’s funding of its growth capital
projects, are scheduled to reduce significantly as ETP’s projects
are completed and ramp up in the near term.
The Partnership’s recent key accomplishments and other
developments include the following:
- In October 2017, ETE issued
$1 billion aggregate principal amount of 4.25% senior notes
due 2023. The $990 million net proceeds from the offering are
intended to be used to repay a portion of the outstanding
indebtedness under its term loan facility and for general
partnership purposes.
- In October 2017, ETE amended its
existing senior secured term loan agreement to reduce the
applicable margin for LIBOR rate loans from 2.75% to 2.0% and for
base rate loans 1.75% to 1.0%.
- In October 2017, ETE announced a $0.295
distribution per ETE common unit for the quarter ended
September 30, 2017, or $1.18 per unit on an annualized
basis.
- As of September 30, 2017, ETE’s
$1.5 billion revolving credit facility had $1.19 billion of
outstanding borrowings and its leverage ratio, as defined by the
credit agreement, was 3.45x.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Wednesday, November 8, 2017 to discuss its third
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 assets; and various
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 1,346 convenience stores and retail fuel sites and
distributes motor fuel to 7,898 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)
September 30, 2017 December 31, 2016
ASSETS
Current assets $ 10,689 $ 6,985 Property, plant and
equipment, net 59,267 53,253 Advances to and investments in
unconsolidated affiliates 3,177 3,040 Other non-current assets, net
891 816 Intangible assets, net 6,195 5,489 Goodwill 5,161 5,170
Non-current assets held for sale — 4,258
Total assets $ 85,380 $ 79,011
LIABILITIES AND
EQUITY
Current liabilities $ 7,847 $ 7,277 Long-term debt,
less current maturities 44,495 42,608 Long-term notes payable –
related company — 250 Non-current derivative liabilities 132 76
Deferred income taxes 5,027 5,112 Other non-current liabilities
1,218 1,055 Liabilities associated with assets held for sale — 68
Commitments and contingencies Preferred units of
subsidiary — 33 Redeemable noncontrolling interests 21 15
Equity: Total partners’ deficit (1,192 ) (1,694 ) Noncontrolling
interest 27,832 24,211 Total equity
26,640 22,517 Total liabilities and
equity $ 85,380 $ 79,011
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2017 2016 2017 2016 REVENUES $
9,474 $ 7,705 $ 27,637 $ 21,227 COSTS AND EXPENSES: Cost of
products sold 7,078 5,776 21,028 15,430 Operating expenses 636 526
1,779 1,540 Depreciation, depletion and amortization 632 548 1,840
1,596 Selling, general and administrative 142
209 484 515 Total costs and
expenses 8,488 7,059 25,131
19,081 OPERATING INCOME 986 646 2,506 2,146
OTHER INCOME (EXPENSE): Interest expense, net (505 ) (474 ) (1,471
) (1,336 ) Equity in earnings of unconsolidated affiliates 92 49
228 205 Losses on extinguishments of debt — — (25 ) — Impairment of
investment in an unconsolidated affiliate — (308 ) — (308 ) Losses
on interest rate derivatives (8 ) (28 ) (28 ) (179 ) Other, net
76 55 168 98
INCOME (LOSS) BEFORE INCOME TAX BENEFIT 641 (60 ) 1,378 626
Income tax benefit (157 ) (89 ) (97 )
(151 ) INCOME FROM CONTINUING OPERATIONS 798 29 1,475 777 Income
(loss) from discontinued operations, net of income taxes 6
12 (264 ) 24 NET INCOME
804 41 1,211 801 Less: Net income (loss) attributable to
noncontrolling interest 552 (168 ) 508
39 NET INCOME ATTRIBUTABLE TO PARTNERS 252 209
703 762 General Partner’s interest in net income 1 — 2 2
Convertible Unitholders’ interest in income 11
2 25 3 Limited Partners’
interest in net income $ 240 $ 207 $ 676 $ 757
INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT:
Basic $ 0.22 $ 0.20 $ 0.64 $ 0.72
Diluted $ 0.22 $ 0.19 $ 0.62 $ 0.71 NET
INCOME PER LIMITED PARTNER UNIT: Basic $ 0.22 $ 0.20
$ 0.63 $ 0.72 Diluted $ 0.22 $ 0.19 $
0.61 $ 0.71 WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING: Basic 1,079.1 1,045.5
1,077.9 1,045.0 Diluted 1,148.3
1,100.7 1,147.3 1,071.3
ENERGY TRANSFER
EQUITY, L.P.
SUPPLEMENTAL
INFORMATION
(In millions)
(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2017 2016 2017 2016 Cash
distributions from ETP associated with: (1) Limited partner
interest $ 15 $ 3 $ 45 $ 8 Class H Units — 92 — 263 General partner
interest 4 8 12 24 Incentive distribution rights 431 346 1,204
1,012 IDR relinquishments, net of distributions on Class I Units
(2) (163 ) (127 ) (482 ) (271 ) Total
cash distributions from ETP 287 322
779 1,036 Cash distributions from
Sunoco LP 30 22 84
66 Total cash distributions from investments in subsidiaries
$ 317 $ 344 $ 863 $ 1,102 Distributable cash flow
attributable to Lake Charles LNG: Revenues $ 49 $ 50 $ 148 148
Operating expenses (6 ) (4 ) (15 ) (13 ) Maintenance capital
expenditures (1 ) — (1 ) — Selling, general and administrative
expenses — (1 ) (2 ) (2 )
Distributable cash flow attributable to Lake Charles LNG $ 42 $ 45
$ 130 $ 133 Expenses of the Parent Company on a cash basis:
Selling, general and administrative expenses, excluding certain
non-cash expenses $ 2 $ 17 $ 19 72 Management fee to ETP (3) — 24 5
72 Interest expense, net of amortization of financing costs,
interest income, and realized gains and losses on interest rate
swaps 87 78 251
235 Total Parent Company expenses $ 89 $ 119 $ 275 $ 379
Cash distributions to be paid to the partners of ETE:
Distributions to be paid to limited partners (4) $ 257 $ 241 $ 757
$ 721 Distributions to be paid to general partner —
1 2 2 Total cash
distributions to be paid to the partners of ETE $ 257 $ 242
$ 759 $ 723 Common units outstanding —
end of period 1,079.1 1,047.0
1,079.1 1,047.0
_________________
(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
September 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 September 30, 2017 and 2016, and $0.33 per
common unit for the nine months ended September 30, 2017 and 2016,
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 interests in the
Partnership.
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(Dollars in millions)
(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2017 2016 2017 2016 Net income
attributable to partners $ 252 $ 209 $ 703 $ 762 Equity in earnings
related to investments in ETP and Sunoco LP (310 ) (333 ) (908 )
(1,065 ) Total cash distributions from investments in subsidiaries
317 344 863 1,102 Amortization included in interest expense
(excluding ETP and Sunoco LP) 2 3 7 9 Lake Charles LNG maintenance
capital expenditures (1 ) — (1 ) — Other non-cash (excluding ETP
and Sunoco LP) 10 47 54
48 Distributable Cash Flow 270 270 718 856
Transaction-related expenses 1 11
8 51 Distributable Cash Flow, as
adjusted $ 271 $ 281 $ 726 $ 907
Distribution coverage ratio(1) 1.05x 1.16x 0.96x 1.25x
(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)
September 30, 2017 December 31, 2016
ASSETS Current
assets $ 66 $ 57 Property, plant and equipment, net 27 36 Advances
to and investments in unconsolidated affiliates 6,031 5,088
Intangible assets, net — 1 Goodwill 9 9 Other non-current assets,
net 17 10 Total assets $ 6,150 $
5,201
LIABILITIES AND PARTNERS’ CAPITAL Current
liabilities $ 82 $ 92 Long-term debt, less current maturities 6,684
6,358 Long-term notes payable – related companies 574 443 Other
non-current liabilities 2 2 Commitments and contingencies Total
partners’ deficit (1,192 ) (1,694 ) Total liabilities
and partners’ deficit $ 6,150 $ 5,201
STATEMENTS OF
OPERATIONS
(In millions)
(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2017 2016 2017 2016 SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES $ (3 ) $ (75 ) $ (25 ) $ (156 )
OTHER INCOME (EXPENSE): Interest expense, net of interest
capitalized (88 ) (81 ) (257 ) (244 ) Equity in earnings of
unconsolidated affiliates 343 367 1,012 1,166 Losses on
extinguishments of debt — — (25 ) — Other, net —
(2 ) (2 ) (4 ) NET INCOME 252 209 703 762
General Partner’s interest in net income 1 — 2 2 Convertible
Unitholders' interest in income 11 2
25 3 Limited Partners’ interest in net
income $ 240 $ 207 $ 676 $ 757
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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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