Energy Transfer Equity Reports Fourth Quarter and Annual Results
Distributable Cash Flow, as adjusted, was
Distributable Cash Flow, as adjusted, for the year ended December 31,
2013 was
ETE’s net income attributable to partners for the three months and year
ended
The Partnership’s key accomplishments during or subsequent to the quarter include the following:
-
In December, ETE completed comprehensive debt refinancings and expects
to reduce its interest expense by
$16 million annually. In addition, the refinancing transactions also extended the maturity of a significant portion of ETE’s long-term debt. -
In December, ETE also entered into a revolving credit facility
agreement which matures in 2018, provides advances up to
$600 million and with lower interest rates than the prior facility. The new facility provides ETE with an option to request increases in its size of up to$1 billion (in total) and extend the maturity until 2020. -
In December, ETE launched a
$1 billion common unit buyback program, which is intended to be used opportunistically and will be utilized and sequenced from time to time depending on the trading price activity and performance of ETE’s common units. Through today, ETE has acquired approximately 1.7 million ETE common units in the market. -
In December, ETE agreed to purchase
$400 million of Regency’s common units as part of the consideration for Regency’s acquisition of the midstream business ofEagle Rock Energy Partners effective as of, and conditioned on, the closing of that transaction. In order to fund this purchase of Regency common units, ETE increased the capacity on its revolving credit agreement to$800 million in February. - In January, ETE completed a two-for-one split of its outstanding common units. All unit and per-unit amounts reported herein have been adjusted to give effect to the split.
-
In January, ETE’s Board of Directors approved its fifth consecutive
increase in its quarterly distribution to
$0.34625 per unit (on a post-split basis) on ETE Common Units for the quarter endedDecember 31, 2013 .
In addition, earlier today, ETE closed on its previously announced
acquisition of TLNG from ETP in exchange for the redemption by ETP of
18.71 million ETP units held by ETE. The transaction was effective as of
The Partnership has scheduled a conference call for
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 ETP and Regency, including 100% of ETP’s and Regency’s incentive distribution rights, ETP common units, Regency common units, ETP Class H Units, and going forward the Partnership’s ownership of TLNG. 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. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Dollars in millions) |
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(unaudited) |
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December 31, | ||||||||
2013 | 2012 | |||||||
ASSETS |
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CURRENT ASSETS | $ | 6,536 | $ | 5,597 | ||||
PROPERTY, PLANT AND EQUIPMENT, net | 30,682 | 28,284 | ||||||
NON-CURRENT ASSETS HELD FOR SALE | — | 985 | ||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 4,014 | 4,737 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | 18 | 43 | ||||||
GOODWILL | 5,894 | 6,434 | ||||||
INTANGIBLES ASSETS, net | 2,264 | 2,291 | ||||||
OTHER NON-CURRENT ASSETS, net | 922 | 533 | ||||||
Total assets | $ | 50,330 | $ | 48,904 | ||||
LIABILITIES AND EQUITY |
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CURRENT LIABILITIES | $ | 6,500 | $ | 5,845 | ||||
NON-CURRENT LIABILITIES HELD FOR SALE | — | 142 | ||||||
LONG-TERM DEBT, less current maturities | 22,562 | 21,440 | ||||||
DEFERRED INCOME TAXES | 3,865 | 3,566 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 73 | 162 | ||||||
SERIES A CONVERTIBLE PREFERRED UNITS | — | 331 | ||||||
OTHER NON-CURRENT LIABILITIES | 1,019 | 995 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
PREFERRED UNITS OF SUBSIDIARY | 32 | 73 | ||||||
EQUITY: | ||||||||
Total partners’ capital | 1,078 | 2,113 | ||||||
Noncontrolling interest | 15,201 | 14,237 | ||||||
Total equity | 16,279 | 16,350 | ||||||
Total liabilities and equity | $ | 50,330 | $ | 48,904 |
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Dollars in millions, except per unit data) |
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(unaudited) |
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Three Months Ended |
Years Ended |
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2013 | 2012 | 2013 | 2012 | ||||||||||||||
REVENUES: | $ | 12,607 | $ | 11,313 | $ | 48,335 | $ | 16,964 | |||||||||
COSTS AND EXPENSES: | |||||||||||||||||
Cost of products sold | 11,118 | 9,883 | 42,554 | 13,088 | |||||||||||||
Operating expenses | 515 | 463 | 1,642 | 1,116 | |||||||||||||
Depreciation and amortization | 351 | 300 | 1,313 | 871 | |||||||||||||
Selling, general and administrative | 87 | 215 | 586 | 529 | |||||||||||||
Goodwill impairment | 689 | — | 689 | — | |||||||||||||
Total costs and expenses | 12,760 | 10,861 | 46,784 | 15,604 | |||||||||||||
OPERATING INCOME (LOSS) | (153 | ) | 452 | 1,551 | 1,360 | ||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||
Interest expense, net of interest capitalized | (308 | ) | (286 | ) | (1,221 | ) | (1,018 | ) | |||||||||
Bridge loan related fees | — | — | — | (62 | ) | ||||||||||||
Equity in earnings of unconsolidated affiliates | 54 | 94 | 236 | 212 | |||||||||||||
Gain on deconsolidation of Propane Business | — | — | — | 1,057 | |||||||||||||
Gain on sale of AmeriGas common units | — | — | 87 | — | |||||||||||||
Losses on extinguishments of debt | (155 | ) | — | (162 | ) | (123 | ) | ||||||||||
Gains (losses) on interest rate derivatives | (2 | ) | 4 | 53 | (19 | ) | |||||||||||
Non-operating environmental remediation | (168 | ) | — | (168 | ) | — | |||||||||||
Other, net | (1 | ) | 2 | (1 | ) | 30 | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | (733 | ) | 266 | 375 | 1,437 | ||||||||||||
Income tax expense (benefit) | (43 | ) | 21 | 93 | 54 | ||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | (690 | ) | 245 | 282 | 1,383 | ||||||||||||
Income (loss) from discontinued operations | (11 | ) | 27 | 33 | (109 | ) | |||||||||||
NET INCOME (LOSS) | (701 | ) | 272 | 315 | 1,274 | ||||||||||||
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST | (529 | ) | 223 | 119 | 970 | ||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO PARTNERS | (172 | ) | 49 | 196 | 304 | ||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME (LOSS) | (1 | ) | 1 | — | 2 | ||||||||||||
LIMITED PARTNERS’ INTEREST IN NET INCOME (LOSS) | $ | (171 | ) | $ | 48 | $ | 196 | $ | 302 | ||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: | |||||||||||||||||
Basic | $ | (0.31 | ) | $ | 0.07 | $ | 0.33 | $ | 0.59 | ||||||||
Diluted | $ | (0.31 | ) | $ | 0.07 | $ | 0.33 | $ | 0.59 | ||||||||
NET INCOME (LOSS) PER LIMITED PARTNER UNIT: | |||||||||||||||||
Basic | $ | (0.31 | ) | $ | 0.09 | $ | 0.35 | $ |
0.57 |
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Diluted | $ | (0.31 | ) | $ | 0.09 | $ | 0.35 | $ |
0.57 |
ENERGY TRANSFER EQUITY, L.P. |
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DISTRIBUTABLE CASH FLOW |
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(Dollars in millions) |
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(unaudited) |
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Three Months Ended |
Years Ended |
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2013 | 2012 | 2013 | 2012 | ||||||||||||||
“Distributable Cash Flow,” “Distributable Cash Flow, as adjusted,” and “Distribution Coverage Ratio” (1): | |||||||||||||||||
Cash distributions from ETP associated with: (2) | |||||||||||||||||
Limited partner interest | $ | 45 | $ | 45 | $ | 268 | $ | 180 | |||||||||
Class H Units | 54 | — | 105 | — | |||||||||||||
General partner interest | 5 | 5 | 20 | 20 | |||||||||||||
Incentive distribution rights | 173 | 148 | 701 | 529 | |||||||||||||
IDR relinquishments | (57 | ) | (31 | ) | (199 | ) | (90 | ) | |||||||||
Distributions credited to Holdco consideration (3) | — | — | (68 | ) | — | ||||||||||||
Total cash distributions from ETP | 220 | 167 | 827 | 639 | |||||||||||||
Cash distributions from Regency associated with: (4) | |||||||||||||||||
Limited partner interest | 12 | 12 | 48 | 48 | |||||||||||||
General partner interest | 2 | 1 | 5 | 5 | |||||||||||||
Incentive distribution rights | 4 | 2 | 12 | 8 | |||||||||||||
IDR relinquishment | (1 | ) | — | (3 | ) | — | |||||||||||
Total cash distributions from Regency | 17 | 15 | 62 | 61 | |||||||||||||
Cash dividends from Holdco (5) | — | 75 | 50 | 75 | |||||||||||||
Total cash distributions from ETP, Regency and Holdco | 237 | 257 | 939 | 775 | |||||||||||||
Distributable cash flow attributable to Southern Union (including acquisition-related expenses) from March 26, 2012 through September 30, 2012 (6) | — | — | — | 82 | |||||||||||||
Deduct expenses of the Parent Company on a stand-alone basis: | |||||||||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (11 | ) | (4 | ) | (49 | ) | (52 | ) | |||||||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps | (41 | ) | (60 | ) | (190 | ) | (232 | ) | |||||||||
Bridge financing costs | — | — | — | (62 | ) | ||||||||||||
Distributable Cash Flow | 185 | 193 | 700 | 511 | |||||||||||||
Transaction-related expenses (7) | — | — | 19 | 157 | |||||||||||||
Distributable Cash Flow, as adjusted | $ | 185 | $ | 193 | $ | 719 | $ | 668 | |||||||||
Cash distributions to be paid to the partners of ETE: | |||||||||||||||||
Distributions to be paid to limited partners | $ | 194 | $ | 178 | $ | 748 | $ | 703 | |||||||||
Distributions to be paid to general partner | 1 | — | 2 | 1 | |||||||||||||
Total cash distributions to be paid to the partners of ETE (8) | $ | 195 | $ | 178 | $ | 750 | $ | 704 | |||||||||
Distribution Coverage Ratio (9) |
0.95 |
x |
1.08 |
x |
0.96 |
x |
0.95 |
x |
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Reconciliation of Non-GAAP “Distributable Cash Flow” and “Distributable Cash Flow, as adjusted” to GAAP “Net income attributable to partners” (1): | |||||||||||||||||
Net income (loss) attributable to partners | $ | (172 | ) | $ | 49 | $ | 196 | $ | 304 | ||||||||
Equity in earnings related to investments in ETP, Regency and Holdco | (44 | ) | (114 | ) | (617 | ) | (676 | ) | |||||||||
Total cash distributions from ETP, Regency and Holdco | 237 | 257 | 939 | 775 | |||||||||||||
Amortization included in interest expense (excluding ETP and Regency) | 4 | 3 | 18 | 13 | |||||||||||||
Fair value adjustment of ETE Preferred Units | — | 3 | 9 | 8 | |||||||||||||
Loss on debt tender offering | 156 | — | 156 | — | |||||||||||||
Other non-cash (excluding ETP, Regency and Holdco) | 4 | (5 | ) | (1 | ) | 87 | |||||||||||
Distributable Cash Flow | 185 | 193 | 700 | 511 | |||||||||||||
Transaction-related expenses (7) | — | — | 19 | 157 | |||||||||||||
Distributable Cash Flow, as adjusted | $ | 185 | $ | 193 | $ | 719 | $ | 668 |
(1) | This press release and accompanying schedules include the non-generally accepted accounting principle (“non-GAAP”) financial measure of Distributable Cash Flow. The schedule above provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with GAAP. The Partnership’s Distributable Cash Flow should not be considered as an alternative 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. The Partnership defines Distributable Cash Flow for a period as cash distributions expected to be received from ETP and Regency in respect of such period in connection with the Partnership’s investments in limited and general partner interests of ETP and Regency, net of the Partnership’s cash expenditures for general and administrative costs and interest expense. The Partnership’s definition of Distributable Cash Flow also includes distributable cash flow related to Southern Union for the period from March 26, 2012 (Southern Union acquisition date) until Southern Union was contributed to Holdco on October 5, 2012. From October 5, 2012 until ETE’s 60% interest in Holdco was contributed to ETP on April 30, 2013, Distributable Cash Flow reflects dividends expected to be received from Holdco. The Partnership defines distributable cash flow for Southern Union as net income, adjusted for certain non-cash items, less maintenance capital expenditures. Non-cash items include depreciation and amortization, deferred income taxes, non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, and non-cash impairment charges. |
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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. Using this measure, 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 is also an important non-GAAP financial measure for our limited partners since it indicates 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 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 is net income for ETE on a stand-alone basis (“Parent Company”). The accompanying analysis of Distributable Cash Flow is presented for the three and twelve months ended December 31, 2013 and 2012 for comparative purposes. | ||
Distributable Cash Flow, as adjusted. The Partnership defines Distributable Cash Flow, as adjusted, for a period as cash distributions expected to be received from ETP and Regency in respect of such period in connection with the Partnership’s investments in limited and general partner interests of ETP and Regency, plus the distributable cash flow related to Southern Union (as described in the definition of Distributable Cash Flow above), dividends expected to be received from Holdco (as described in the definition of Distributable Cash Flow above), net of the Partnership’s cash expenditures for general and administrative costs and interest expense, excluding certain items, such as transaction-related expenses. Due to the cash expenses that were incurred during the three and twelve months ended December 31, 2013 and 2012 in connection with the Partnership’s merger and acquisition activities and other transactions, Distributable Cash Flow, as adjusted, for the three and twelve months ended December 31, 2013 and 2012 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. Using this measure, the Partnership’s management can compute the coverage ratio of estimated cash flows for a period to planned cash distributions for such period. The GAAP measure most directly comparable to Distributable Cash Flow, as adjusted, is net income for the Parent Company on a stand-alone basis. The accompanying analysis of Distributable Cash Flow, as adjusted, is presented for the three and twelve months ended December 31, 2013 and 2012 for comparative purposes. |
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(2) | For the three months ended December 31, 2013, cash distributions received from ETP consist of cash distributions paid on February 14, 2014 in respect of the quarter ended December 31, 2013. For the three months ended December 31, 2012, cash distributions received from ETP consist of cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. | |
For the year ended December 31, 2013, cash distributions received from ETP consist of cash distributions paid on May 15, 2013 in respect of the quarter ended March 31, 2013, cash distributions paid on August 14, 2013 in respect of the quarter ended June 30, 2013, cash distributions paid on November 14, 2013 in respect of the quarter ended September 30, 2013 and cash distributions paid on February 14, 2014 in respect of the quarter ended December 31, 2013. For the year ended December 31, 2012, cash distributions received from ETP consist of cash distributions paid on May 15, 2012 in respect of the quarter ended March 31, 2012, cash distributions paid on August 14, 2012 in respect of the quarter ended June 30, 2012, cash distributions paid on November 14, 2012 in respect of the quarter ended September 30, 2012 and cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. | ||
(3) | For the year ended December 31, 2013, cash distributions paid by ETP exclude distributions paid in respect of the quarter ended March 31, 2013 on 49.5 million ETP common units issued to ETE as a portion of the consideration for ETP’s acquisition of ETE’s interest in Holdco on April 30, 2013. These newly acquired ETP common units received cash distributions on May 15, 2013; however, such distributions were reduced from the total cash portion of the consideration paid to ETE in connection with the April 30, 2013 Holdco transaction pursuant to the contribution agreement. | |
(4) | For the three months ended December 31, 2013, cash distributions received from Regency consist of cash distributions paid on February 14, 2014 in respect of the quarter ended December 31, 2013. For the three months ended December 31, 2012, cash distributions received from Regency consist of cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. | |
For the year ended December 31, 2013, cash distributions received from Regency consist of cash distributions paid on May 13, 2013 in respect of the quarter ended March 31, 2013, cash distributions paid on August 14, 2013 in respect of the quarter ended June 30, 2013, cash distributions paid on November 14, 2013 in respect of the quarter ended September 30, 2013 and cash distributions paid on February 14, 2014 in respect of the quarter ended December 31, 2013. For the year ended December 31, 2012, cash distributions received from Regency consist of cash distributions paid on May 14, 2012 in respect of the quarter ended March 31, 2012, cash distributions paid on August 14, 2012 in respect of the quarter ended June 30, 2012, cash distributions paid on November 14, 2012 in respect of the quarter ended September 30, 2012 and cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012. | ||
(5) | For the three months ended December 31, 2013, cash dividends received from Holdco consist of cash dividends paid on February 14, 2013 in respect of the quarter ended December 31, 2012. | |
(6) | Distributable cash flow attributable to Southern Union relates to the period while Southern Union was our wholly-owned subsidiary, from our acquisition on March 26, 2012 to our contribution of Southern Union in connection with the Holdco Transaction on October 5, 2012. Distributable cash flow attributable to Southern Union was calculated as follows (in millions): |
Period from Acquisition |
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Net income | $ | 5 | |||
Amortization of finance costs charged to interest | (21 | ) | |||
Depreciation and amortization | 137 | ||||
Deferred income taxes | 18 | ||||
Non-cash equity-based compensation, accretion expense and amortization of regulatory assets | 5 | ||||
Other, net | 28 | ||||
Maintenance capital expenditures | (90 | ) | |||
Distributable cash flow attributable to Southern Union | 82 | ||||
Acquisition-related expenses recognized by Southern Union | 57 | ||||
Distributable cash flow, as adjusted, attributable to Southern Union | $ | 139 |
Distributable cash flow attributable to Southern Union for the period from our acquisition to December 31, 2012 reflected above included change in control payments and legal and other outside service costs totaling $72 million offset by benefit plan curtailment gains of $15 million. The net amount of $57 million was included in merger-related expenses that were added back to calculate ETE’s Distributable Cash Flow, as adjusted. | ||
(7) | Transaction-related expenses for the year ended December 31, 2012 related to ETE’s acquisition of Southern Union consisted of $62 million bridge financing costs, $38 million of selling, general and administrative expenses incurred by ETE and $57 million of merger-related expenses that were incurred directly by Southern Union. Transaction-related expenses for the year ended December 31, 2013 primarily related to costs related the Holdco Transaction in April 2013. | |
(8) | For the three months ended December 31, 2013, cash distributions to be paid by ETE consist of cash distributions paid on February 19, 2014 in respect of the quarter ended December 31, 2013. For the three months ended December 31, 2012, cash distributions paid by ETE consist of cash distributions paid on February 19, 2013 in respect of the quarter ended December 31, 2012. | |
For the year ended December 31, 2013, cash distributions paid or expected to be paid by ETE consist of cash distributions paid on May 17, 2013 in respect of the quarter ended March 31, 2013, cash distributions paid on August 19, 2013 in respect of the quarter ended June 30, 2013, cash distributions paid on November 19, 2013 in respect of the quarter ended September 30, 2013 and cash distributions paid on February 19, 2014 in respect of the quarter ended December 31, 2013. For the year ended December 31, 2012, cash distributions paid by ETE consist of cash distributions paid on May 18, 2012 in respect of the quarter ended March 31, 2012, cash distributions paid on August 17, 2012 in respect of the quarter ended June 30, 2012, cash distributions paid on November 16, 2012 in respect of the quarter ended September 30, 2012 and cash distributions paid on February 19, 2013 in respect of the quarter ended December 31, 2012. | ||
(9) | Distribution Coverage Ratio is calculated as Distributable Cash Flow, as adjusted, divided by total cash distributions to be paid to the partners of ETE. |
Source:
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
or
Media Relations:
Granado
Communications Group
Vicki Granado, 214-599-8785
Cell:
214-498-9272