Energy Transfer Equity Reports Second Quarter Results
Distributable Cash Flow, as adjusted, for the three months ended
June 30, 2014 was
Distributable Cash Flow, as adjusted, for the six months ended June 30,
2014 was
The Partnership’s key accomplishments during or subsequent to the second quarter include the following:
-
In April, ETE amended its Senior Secured Term Loan Agreement to
increase the aggregate principal amount to
$1.4 billion and used the proceeds from this$400 million increase to repay borrowings under our revolving credit facility and for general partnership purposes. -
From January through May, ETE completed its repurchase of ETE common
units under its
$1 billion common unit buyback program. -
In May, ETE issued
$700 million aggregate principal amount of its 5.875% senior notes due 2024 in a private placement. -
In June, a wholly-owned subsidiary of ETE purchased 14.4 million
Regency Energy Partners LP (“Regency”) common units for approximately$400 million . In July, a wholly-owned subsidiary of ETE purchased an additional 16.5 million Regency common units for approximately$400 million . Subsequent to these purchases, ETE and ETP together own approximately 24% of the limited partner interest in Regency. -
In July, ETE’s Board of Directors approved its seventh consecutive
increase in its quarterly distribution to
$0.38 per unit ($1.52 annualized) on ETE common units for the quarter endedJune 30, 2014 . Based on the increased distribution rate, ETE’s distribution coverage ratio was 1.06x for the quarter.
The Partnership has scheduled a conference call for
The Partnership’s principal sources of cash flow are the distributions
it receives related to its direct and indirect investments in
Forward-Looking Statements
This press 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 Reports on Form 10-K and other
documents filed from time to time with the
The information contained in this press release is available on our web site at www.energytransfer.com.
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In millions) |
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(unaudited) |
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June 30, 2014 | December 31, 2013 | |||||||
ASSETS |
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CURRENT ASSETS | $ | 7,652 | $ | 6,536 | ||||
PROPERTY, PLANT AND EQUIPMENT, net | 35,118 | 30,682 | ||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,686 | 4,014 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | — | 18 | ||||||
GOODWILL | 6,230 | 5,894 | ||||||
INTANGIBLE ASSETS, net | 5,072 | 2,264 | ||||||
OTHER NON-CURRENT ASSETS, net | 857 | 922 | ||||||
Total assets | $ | 58,615 | $ | 50,330 | ||||
LIABILITIES AND EQUITY |
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CURRENT LIABILITIES | $ | 8,222 | $ | 6,500 | ||||
LONG-TERM DEBT, less current maturities | 25,851 | 22,562 | ||||||
DEFERRED INCOME TAXES | 3,712 | 3,865 | ||||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 97 | 73 | ||||||
OTHER NON-CURRENT LIABILITIES | 1,018 | 1,019 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
PREFERRED UNITS OF SUBSIDIARY | 32 | 32 | ||||||
REDEEMABLE NONCONTROLLING INTEREST | 15 | — | ||||||
EQUITY: | ||||||||
Total partners’ capital | 582 | 1,078 | ||||||
Noncontrolling interest | 19,086 | 15,201 | ||||||
Total equity | 19,668 | 16,279 | ||||||
Total liabilities and equity | $ | 58,615 | $ | 50,330 |
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In millions, except per unit data) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended |
Six Months Ended June 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||||||
REVENUES | $ | 14,143 | $ | 12,063 | $ | 27,223 | $ | 23,242 | ||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||
Cost of products sold | 12,351 | 10,565 | 23,793 | 20,372 | ||||||||||||||||
Operating expenses | 412 | 387 | 819 | 759 | ||||||||||||||||
Depreciation, depletion and amortization | 450 | 318 | 823 | 630 | ||||||||||||||||
Selling, general and administrative | 157 | 149 | 305 | 306 | ||||||||||||||||
Total costs and expenses | 13,370 | 11,419 | 25,740 | 22,067 | ||||||||||||||||
OPERATING INCOME | 773 | 644 | 1,483 | 1,175 | ||||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Interest expense, net of interest capitalized | (344 | ) | (305 | ) | (659 | ) | (615 | ) | ||||||||||||
Equity in earnings of unconsolidated affiliates | 77 | 54 | 181 | 144 | ||||||||||||||||
Losses on extinguishments of debt | — | (7 | ) | — | (7 | ) | ||||||||||||||
Gains (losses) on interest rate derivatives | (46 | ) | 46 | (48 | ) | 52 | ||||||||||||||
Gain on sale of AmeriGas common units | 93 | — | 163 | — | ||||||||||||||||
Other, net | (25 | ) | (14 | ) | (23 | ) | (33 | ) | ||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 528 | 418 | 1,097 | 716 | ||||||||||||||||
Income tax expense (benefit) from continuing operations | 70 | 89 | 215 | 87 | ||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 458 | 329 | 882 | 629 | ||||||||||||||||
Income from discontinued operations | 42 | 9 | 66 | 31 | ||||||||||||||||
NET INCOME | 500 | 338 | 948 | 660 | ||||||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | 336 | 211 | 616 | 443 | ||||||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 164 | 127 | 332 | 217 | ||||||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 1 | — | 1 | — | ||||||||||||||||
CLASS D UNITHOLDER INTEREST IN NET INCOME | — | — | 1 | — | ||||||||||||||||
LIMITED PARTNERS’ INTEREST IN NET INCOME | $ | 163 | $ | 127 | $ | 330 | $ | 217 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: | ||||||||||||||||||||
Basic | $ | 0.29 | $ | 0.22 | $ | 0.59 | $ | 0.36 | ||||||||||||
Diluted | $ | 0.29 | $ | 0.22 | $ | 0.59 | $ | 0.36 | ||||||||||||
NET INCOME PER LIMITED PARTNER UNIT: | ||||||||||||||||||||
Basic | $ | 0.30 | $ | 0.23 | $ | 0.60 | $ | 0.39 | ||||||||||||
Diluted | $ | 0.30 | $ | 0.23 | $ | 0.60 | $ | 0.39 | ||||||||||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: | ||||||||||||||||||||
Basic | 543.6 | 560.9 | 550.6 | 560.4 | ||||||||||||||||
Diluted | 544.5 | 560.9 | 551.5 | 560.4 |
ENERGY TRANSFER EQUITY, L.P. |
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DISTRIBUTABLE CASH FLOW |
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(Tabular dollar amounts in millions) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||||||
“Distributable Cash Flow,” “Distributable Cash Flow, as adjusted,” and “Distribution Coverage Ratio” (1): | ||||||||||||||||||||
Cash distributions from ETP associated with: | ||||||||||||||||||||
Limited partner interest | $ | 29 | $ | 89 | $ | 58 | $ | 178 | ||||||||||||
General partner interest | 5 | 5 | 10 | 10 | ||||||||||||||||
Incentive distribution rights | 178 | 183 | 346 | 363 | ||||||||||||||||
IDR relinquishments | (58 | ) | (55 | ) | (115 | ) | (86 | ) | ||||||||||||
Class H Units (50.05% general partner interest and incentive distribution rights distributions from SXL) | 53 | — | 103 | — | ||||||||||||||||
Distributions credited to Holdco consideration (2) | — | — | — | (68 | ) | |||||||||||||||
Total cash distributions from ETP | 207 | 222 | 402 | 397 | ||||||||||||||||
Cash distributions from Regency associated with: | ||||||||||||||||||||
Limited partner interest | 28 | 12 | 41 | 24 | ||||||||||||||||
General partner interest | 1 | 1 | 2 | 2 | ||||||||||||||||
Incentive distribution rights | 8 | 3 | 15 | 5 | ||||||||||||||||
IDR relinquishment | — | (1 | ) | (1 | ) | (1 | ) | |||||||||||||
Total cash distributions from Regency | 37 | 15 | 57 | 30 | ||||||||||||||||
Cash dividends from Holdco | — | — | — | 50 | ||||||||||||||||
Total cash distributions and dividends from ETP, Regency and Holdco | 244 | 237 | 459 | 477 | ||||||||||||||||
Distributable cash flow attributable to Trunkline LNG (3) | 47 | — | 95 | — | ||||||||||||||||
Deduct expenses of the Parent Company on a stand-alone basis: | ||||||||||||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (5 | ) | (24 | ) | (7 | ) | (30 | ) | ||||||||||||
Management fee to ETP (4) | (24 | ) | — | (48 | ) | — | ||||||||||||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps | (47 | ) | (48 | ) | (86 | ) | (106 | ) | ||||||||||||
Distributable Cash Flow | 215 | 165 | 413 | 341 | ||||||||||||||||
Transaction-related expenses | 3 | 15 | 4 | 17 | ||||||||||||||||
Distributable Cash Flow, as adjusted | $ | 218 | $ | 180 | $ | 417 | $ | 358 | ||||||||||||
Cash distributions to be paid to the partners of ETE: | ||||||||||||||||||||
Distributions to be paid to limited partners | $ | 205 | $ | 184 | $ | 400 | $ | 365 | ||||||||||||
Distributions to be paid to general partner | 1 | — | 1 | 1 | ||||||||||||||||
Distributions to be paid to Class D unitholder | — | — | 1 | — | ||||||||||||||||
Total cash distributions to be paid to the partners of ETE | $ | 206 | $ | 184 | $ | 402 | $ | 366 | ||||||||||||
Distribution coverage ratio (5) |
1.06 |
x |
0.98 |
x |
1.04 |
x |
0.98 |
x |
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Reconciliation of Non-GAAP “Distributable Cash Flow” and “Distributable Cash Flow, as adjusted” to GAAP “Net income” (1): | ||||||||||||||||||||
Net income attributable to partners | $ | 164 | $ | 127 | $ | 332 | $ | 217 | ||||||||||||
Equity in income related to investments in ETP, Regency and Holdco | (209 | ) | (198 | ) | (410 | ) | (366 | ) | ||||||||||||
Total cash distributions and dividends from ETP, Regency and Holdco | 244 | 237 | 459 | 477 | ||||||||||||||||
Amortization included in interest expense (excluding ETP and Regency) | 2 | 4 | 4 | 9 | ||||||||||||||||
Fair value adjustment of ETE Preferred Units | — | — | — | 9 | ||||||||||||||||
Other non-cash (excluding ETP, Regency and Holdco) | 14 | (5 | ) | 28 | (5 | ) | ||||||||||||||
Distributable Cash Flow | 215 | 165 | 413 | 341 | ||||||||||||||||
Transaction-related expenses | 3 | 15 | 4 | 17 | ||||||||||||||||
Distributable Cash Flow, as adjusted | $ | 218 | $ | 180 | $ | 417 | $ | 358 | ||||||||||||
(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 from Trunkline LNG to the Partnership beginning January 1, 2014. Distributable Cash Flow for the three and six months ended June 30, 2013 also included Holdco until ETE’s 60% interest in Holdco was contributed to ETP on April 30, 2013. |
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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 six months ended June 30, 2014 and 2013 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 distributable cash flow from Trunkline LNG and dividends 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 incurred from time to time in connection with the Partnership’s merger and acquisition activities and other transactions, Distributable Cash Flow, as adjusted, for the three and six months ended June 30, 2014 and 2013 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 six months ended June 30, 2014 and 2013 for comparative purposes. |
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(2) |
For the six months ended June 30, 2013, cash distributions paid by ETP exclude distributions on 49.5 million ETP common units issued to ETE as a portion of the considerations for ETP’s acquisition of ETE’s interest in Holdco on April 30, 2013. These 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. | ||
(3) |
Distributable cash flow attributable to Trunkline LNG was calculated as follows (unaudited): |
Three Months Ended |
Six Months Ended |
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Revenues | $ | 53 | $ | 107 | ||||||
Operating expenses | (4 | ) | (8 | ) | ||||||
Selling, general and administrative expenses | (2 | ) | (3 | ) | ||||||
Other, net | — | (1 | ) | |||||||
Distributable cash flow attributable to Trunkline LNG | $ | 47 | $ | 95 | ||||||
(4) | In exchange for management services, ETE has agreed to pay to ETP fees totaling $95 million, $95 million and $5 million for the years ending December 31, 2014, 2015 and 2016, respectively. | |
(5) | Distribution coverage ratio for a period is calculated 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 |
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FINANCIAL STATEMENTS FOR PARENT COMPANY |
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Following are condensed balance sheets and statements of operations of the Parent Company on a stand-alone basis. |
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BALANCE SHEETS |
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(In millions) | ||||||||||
(unaudited) | ||||||||||
June 30, |
December 31, |
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ASSETS | ||||||||||
CURRENT ASSETS | $ | 39 | $ | 13 | ||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 4,768 | 3,841 | ||||||||
INTANGIBLE ASSETS, net | 12 | 14 | ||||||||
GOODWILL | 9 | 9 | ||||||||
OTHER NON-CURRENT ASSETS, net | 50 | 41 | ||||||||
Total assets | $ | 4,878 | $ | 3,918 | ||||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||||
CURRENT LIABILITIES | $ | 155 | $ | 38 | ||||||
LONG-TERM DEBT, less current maturities | 4,140 | 2,801 | ||||||||
OTHER NON-CURRENT LIABILITIES | 1 | 1 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
PARTNERS’ CAPITAL: | ||||||||||
General Partner | (1 | ) | (3 | ) | ||||||
Limited Partners: | ||||||||||
Common Unitholders | 563 | 1,066 | ||||||||
Class D Units | 14 | 6 | ||||||||
Accumulated other comprehensive income | 6 | 9 | ||||||||
Total partners’ capital | 582 | 1,078 | ||||||||
Total liabilities and partners’ capital | $ | 4,878 | $ | 3,918 |
STATEMENTS OF OPERATIONS |
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(Amounts in millions) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | $ | (8 | ) | $ | (23 | ) | $ | (15 | ) | $ | (29 | ) | ||||||||
MANAGEMENT FEE TO ETP | (24 | ) | — | (48 | ) | — | ||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Interest expense, net of interest capitalized | (50 | ) | (53 | ) | (90 | ) | (117 | ) | ||||||||||||
Gains (losses) on interest rate derivatives | — | 6 | — | 6 | ||||||||||||||||
Equity in earnings of unconsolidated affiliates | 248 | 198 | 487 | 366 | ||||||||||||||||
Other, net | (2 | ) | (2 | ) | (2 | ) | (10 | ) | ||||||||||||
INCOME BEFORE INCOME TAXES | 164 | 126 | 332 | 216 | ||||||||||||||||
Income tax benefit | — | (1 | ) | — | (1 | ) | ||||||||||||||
NET INCOME | 164 | 127 | 332 | 217 | ||||||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 1 | — | 1 | — | ||||||||||||||||
CLASS D UNITHOLDER’S INTEREST IN NET INCOME | — | — | 1 | — | ||||||||||||||||
LIMITED PARTNERS’ INTEREST IN NET INCOME | $ | 163 | $ | 127 | $ | 330 | $ | 217 |
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