Energy Transfer Equity Reports First Quarter Results
Distributable Cash Flow, as adjusted, for the three months ended
March 31, 2015 was
In
The Partnership’s recent key accomplishments and other developments include the following:
-
In
March 2015 , ETE transferred 30.8 millionEnergy Transfer Partners, L.P. (“ETP”) Common Units, ETE’s 45% interest in the Bakken Pipeline project, and $879 million in cash in exchange for 30.8 million newly issued Class H Units of ETP that, when combined with the 50.2 million previously issued Class H Units, generally entitle ETE to receive 90.05% of the cash distributions and other economic attributes of the general partner interest and incentive distribution rights ofSunoco Logistics Partners L.P. (“SXL”) (the “Bakken Pipeline Transaction”). In connection with this transaction, ETP also issued 100 Class I Units that provide distributions to ETE to offset IDR subsidies previously provided to ETP. The IDR subsidies from ETE to ETP, including the impact from distributions on Class I Units, will be reduced by $55 million in 2015 and $30 million in 2016. -
In
March 2015 , ETE issued$850 million of debt under its Senior Secured Term Loan C Agreement to fund the Bakken Pipeline Transaction. - In addition, ETP and SXL agreed to transfer 30% of the Bakken Pipeline to SXL.
-
In
April 2015 , ETP completed its previously announced acquisition ofRegency Energy Partners LP (“Regency”) with Regency surviving as a wholly-owned subsidiary of ETP. Each Regency Common Unit and Class F unit was converted into 0.4124 ETP Common Units. The total consideration paid in equity was approximately 172.2 million ETP Common Units to Regency unitholders, including 15.5 million units issued to ETP subsidiaries. The approximately 1.9 million outstanding Regency Series A Preferred Units were converted into new ETP Series A Preferred Units. As a result of the merger, ETE’s 57.2 million Regency Common Units were exchanged into approximately 23.6 million ETP Common Units. -
Regarding our Lake Charles LNG project, on
April 10, 2015 , the draft Environmental Impact Statement for Lake Charles LNG and the expansion of the Trunkline interstate pipeline was issued by theFederal Energy Regulatory Commission (“FERC”).ETE/ETP andBG Group plc (“BG”) were pleased with the findings and recommendations by the FERC. It moves the Lake Charles LNG project one step closer to our goal of achieving a final investment decision (“FID”) in 2016.
OnApril 7, 2015 ,BG andRoyal Dutch Shell plc (“Shell”) announced a proposed takeover of BG by Shell. We understand that the closing of the BG/Shell merger is expected to occur in early 2016. In the interim, BG and ETE/ETP remain focused on completing the development milestones for the project as the parties move toward FID.
-
As of
March 31, 2015 , ETE’s$1.5 billion revolving credit facility had$925 million of outstanding borrowings and its leverage ratio, as defined by the credit agreement, was 3.23x.
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, including 100% of ETP’s incentive distribution rights, ETP Common Units, and 90% of the underlying economics of the general partner interest and IDRs of SXL, through ETP Class H Units and the Partnership’s ownership of Lake Charles LNG. Prior to ETP’s acquisition of Regency, the Partnership’s sources of cash flow were also derived from its direct and indirect investments in the limited and general partner of Regency. The Partnership’s primary cash requirements are for general and administrative expenses, debt service requirements and distributions to its partners.
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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March 31, 2015 | December 31, 2014 | |||||
ASSETS |
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CURRENT ASSETS | $ | 6,789 | $ | 6,153 | ||
PROPERTY, PLANT AND EQUIPMENT, net | 42,342 | 40,292 | ||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,656 | 3,659 | ||||
NON-CURRENT PRICE RISK MANAGEMENT ASSETS | 9 | 10 | ||||
GOODWILL | 7,702 | 7,865 | ||||
INTANGIBLE ASSETS, net | 5,553 | 5,582 | ||||
OTHER NON-CURRENT ASSETS, net | 953 | 908 | ||||
Total assets | $ | 67,004 | $ | 64,469 | ||
LIABILITIES AND EQUITY |
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CURRENT LIABILITIES | $ | 5,327 | $ | 6,782 | ||
LONG-TERM DEBT, less current maturities | 33,158 | 29,653 | ||||
DEFERRED INCOME TAXES | 4,139 | 4,325 | ||||
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES | 228 | 154 | ||||
OTHER NON-CURRENT LIABILITIES | 1,313 | 1,193 | ||||
COMMITMENTS AND CONTINGENCIES | ||||||
PREFERRED UNITS OF SUBSIDIARY | 33 | 33 | ||||
REDEEMABLE NONCONTROLLING INTEREST | 15 | 15 | ||||
EQUITY: | ||||||
Total partners’ capital | 707 | 664 | ||||
Noncontrolling interest | 22,084 | 21,650 | ||||
Total equity | 22,791 | 22,314 | ||||
Total liabilities and equity | $ | 67,004 | $ | 64,469 |
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 March 31, |
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2015 | 2014 | |||||||
REVENUES | $ | 10,380 | $ | 13,080 | ||||
COSTS AND EXPENSES: | ||||||||
Cost of products sold | 8,487 | 11,442 | ||||||
Operating expenses | 628 | 424 | ||||||
Depreciation, depletion and amortization | 493 | 373 | ||||||
Selling, general and administrative | 155 | 131 | ||||||
Total costs and expenses | 9,763 | 12,370 | ||||||
OPERATING INCOME | 617 | 710 | ||||||
OTHER INCOME (EXPENSE): | ||||||||
Interest expense, net of interest capitalized | (371 | ) | (315 | ) | ||||
Equity in earnings of unconsolidated affiliates | 57 | 104 | ||||||
Losses on interest rate derivatives | (77 | ) | (2 | ) | ||||
Gain on sale of AmeriGas common units | — | 70 | ||||||
Other, net | 7 | 2 | ||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 233 | 569 | ||||||
Income tax expense from continuing operations | 12 | 145 | ||||||
INCOME FROM CONTINUING OPERATIONS | 221 | 424 | ||||||
Income from discontinued operations | — | 24 | ||||||
NET INCOME | 221 | 448 | ||||||
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST | (63 | ) | 280 | |||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 284 | 168 | ||||||
General Partner’s interest in net income | 1 | — | ||||||
Class D Unitholder’s interest in net income | 1 | 1 | ||||||
Limited Partners’ interest in net income | $ | 282 | $ | 167 | ||||
INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: | ||||||||
Basic | $ | 0.52 | $ | 0.30 | ||||
Diluted | $ | 0.52 | $ | 0.30 | ||||
NET INCOME PER LIMITED PARTNER UNIT: | ||||||||
Basic | $ | 0.52 | $ | 0.30 | ||||
Diluted | $ | 0.52 | $ | 0.30 | ||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: | ||||||||
Basic | 538.8 | 557.7 | ||||||
Diluted | 539.5 | 558.4 |
ENERGY TRANSFER EQUITY, L.P. |
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DISTRIBUTABLE CASH FLOW(1) |
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(Dollars in millions, except per unit amounts) | ||||||||
(unaudited) | ||||||||
Three Months Ended March 31, |
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2015 | 2014 | |||||||
Cash distributions from ETP associated with: | ||||||||
Limited partner interest | $ | 24 | $ | 29 | ||||
Class H Units | 56 | 50 | ||||||
General partner interest | 8 | 5 | ||||||
Incentive distribution rights | 300 | 168 | ||||||
IDR relinquishments, net of distributions on Class I Units (2) | (27 | ) | (57 | ) | ||||
Total cash distributions from ETP | 361 | 195 | ||||||
Cash distributions from Regency associated with (3): | ||||||||
Limited partner interest | — | 13 | ||||||
General partner interest | — | 1 | ||||||
Incentive distribution rights | — | 7 | ||||||
IDR relinquishment | — | (1 | ) | |||||
Total cash distributions from Regency | — | 20 | ||||||
Total cash distributions and dividends from ETP and Regency | 361 | 215 | ||||||
Distributable cash flow attributable to Lake Charles LNG: | ||||||||
Revenues | 54 | 54 | ||||||
Operating expenses | (4 | ) | (4 | ) | ||||
Selling, general and administrative expenses | (1 | ) | (2 | ) | ||||
Distributable cash flow attributable to Lake Charles LNG | 49 | 48 | ||||||
Deduct expenses of the Parent Company on a stand-alone basis: | ||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (2 | ) | (2 | ) | ||||
Management fee to ETP (4) | (24 | ) | (24 | ) | ||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps | (58 | ) | (39 | ) | ||||
Distributable Cash Flow | 326 | 198 | ||||||
Transaction-related expenses | 1 | 1 | ||||||
Bakken Pipeline Transaction — pro forma interest expense (5) | (6 | ) | — | |||||
Distributable Cash Flow, as adjusted | $ | 321 | $ | 199 | ||||
Distributable Cash Flow, as adjusted, per Unit | $ | 0.59 | $ | 0.35 | ||||
Cash distributions to be paid to the partners of ETE: | ||||||||
Distributions to be paid to limited partners | $ | 264 | $ | 195 | ||||
Distributions to be paid to general partner | 1 | — | ||||||
Distributions to be paid to Class D unitholder | 1 | 1 | ||||||
Total cash distributions to be paid to the partners of ETE | $ | 266 | $ | 196 | ||||
Distribution coverage ratio (6) | 1.21x | 1.02x |
_________________
(1) |
This press release and accompanying schedules include the non-generally accepted accounting principle (“non-GAAP”) financial measures of Distributable Cash Flow, Distributable Cash Flow, as adjusted, and Distributable Cash Flow, as adjusted, per Unit. See supplemental information below for a reconciliation of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP. 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. |
(2) | The Class I Units provide distributions to ETE for the purpose of offsetting a portion of the IDR subsidies previously provided to ETP. |
(3) | ETP’s acquisition of Regency closed on April 30, 2015; therefore, no distributions in relation to the quarter ending March 31, 2015 will be paid by Regency. Instead, distributions from ETP include distributions on the limited partner interests received by ETE as consideration in ETP’s acquisition of Regency. |
(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) | Pro forma interest expense adjustment for $879 million cash payment to ETP related to the Bakken Pipeline Transaction to adjust for the effective date of the transaction of January 1, 2015. |
(6) | 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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RECONCILIATION OF DISTRIBUTABLE CASH FLOW |
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(In millions, except per unit amounts) | ||||||||
(unaudited) | ||||||||
Three Months Ended March 31, |
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2015 | 2014 | |||||||
Net income attributable to partners | $ | 284 | $ | 168 | ||||
Equity in earnings related to investments in ETP and Regency | (328 | ) | (201 | ) | ||||
Total cash distributions from ETP and Regency | 361 | 215 | ||||||
Amortization included in interest expense (excluding ETP and Regency) | 2 | 2 | ||||||
Other non-cash (excluding ETP and Regency) | 7 | 14 | ||||||
Distributable Cash Flow | 326 | 198 | ||||||
Transaction-related expenses | 1 | 1 | ||||||
Bakken Pipeline Transaction — pro forma interest expense | (6 | ) | — | |||||
Distributable Cash Flow, as adjusted | $ | 321 | $ | 199 | ||||
Weighted average units outstanding (common, Class D and General Partner) | 541.7 | 560.6 | ||||||
Distributable Cash Flow, as adjusted, per Unit | $ | 0.59 | $ | 0.35 | ||||
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 from ETP and Regency in respect of
such period in connection with the Partnership’s investments in limited
and general partner interests of ETP (including the ETP Class H units
which track the general partner and IDRs in SXL) and Regency, 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
beginning
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 for ETE on a stand-alone basis (the “Parent Company”).
Distributable Cash Flow, as adjusted, per Unit. The Partnership defines Distributable Cash Flow, as adjusted, per Unit for a period as the quotient of Distributable Cash Flow, as adjusted, divided by the weighted average number of units outstanding. For purposes of this calculation, the number of units outstanding represents the Partnership’s basic average common units outstanding plus Class D units outstanding and the general partner common unit equivalent.
Similar to Distributable Cash Flow, as adjusted, as described above, Distributable Cash Flow, as adjusted, per Unit 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 to its unitholders.
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 |
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(In millions) | ||||||||
(unaudited) | ||||||||
March 31, 2015 |
December 31, 2014 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | $ | 22 | $ | 17 | ||||
PLANT, PROPERTY AND EQUIPMENT | 5 | — | ||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 6,304 | 5,390 | ||||||
INTANGIBLE ASSETS, net | 9 | 10 | ||||||
GOODWILL | 9 | 9 | ||||||
OTHER NON-CURRENT ASSETS, net | 55 | 46 | ||||||
Total assets | $ | 6,404 | $ | 5,472 | ||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
CURRENT LIABILITIES | $ | 92 | $ | 72 | ||||
LONG-TERM DEBT, less current maturities | 5,507 | 4,680 | ||||||
NOTE PAYABLE TO AFFILIATE | 95 | 54 | ||||||
OTHER NON-CURRENT LIABILITIES | 3 | 2 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
PARTNERS’ CAPITAL: | ||||||||
General Partner | (1 | ) | (1 | ) | ||||
Limited Partners: | ||||||||
Common Unitholders | 695 | 648 | ||||||
Class D Units | 18 | 22 | ||||||
Accumulated other comprehensive loss | (5 | ) | (5 | ) | ||||
Total partners’ capital | 707 | 664 | ||||||
Total liabilities and partners’ capital | $ | 6,404 | $ | 5,472 |
STATEMENTS OF OPERATIONS |
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(In millions) | ||||
(unaudited) | ||||
Three Months Ended March 31, |
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2015 | 2014 | |||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | $(28) | $(31) | ||
OTHER INCOME (EXPENSE): | ||||
Interest expense, net of interest capitalized | (61) | (40) | ||
Equity in earnings of unconsolidated affiliates | 373 | 239 | ||
Other, net | 1 | — | ||
INCOME BEFORE INCOME TAXES | 285 | 168 | ||
Income tax expense | 1 | — | ||
NET INCOME | 284 | 168 | ||
GENERAL PARTNER’S INTEREST IN NET INCOME | 1 | — | ||
CLASS D UNITHOLDER’S INTEREST IN NET INCOME | 1 | 1 | ||
LIMITED PARTNERS’ INTEREST IN NET INCOME | $282 | $167 |
Source:
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
or
Lyndsay Hannah, 214-840-5477
or
Media
Relations:
Granado Communications Group
Vicki Granado,
214-599-8785
214-498-9272 (cell)