Energy Transfer Equity Reports First Quarter Results
Distributable Cash Flow, as adjusted, for the three months ended
March 31, 2016 was
The Partnership’s recent key accomplishments and other developments include the following:
-
In
March 2016 , the Partnership completed a private offering of 329.3 million Series A Convertible Preferred Units representing limited partner interests in the Partnership to certain common unitholders (“Electing Unitholders”) who elected to participate in a plan to forgo a portion of their future potential cash distributions on common units participating in the plan for a period of up to nine fiscal quarters, commencing with distributions for the fiscal quarter ending March 31, 2016, and reinvest those distributions in Series A Convertible Preferred Units. At the end of the plan period, which is expected to beMay 18, 2018 , the Series A Convertible Preferred Units are expected to automatically convert into 79 million ETE common units. -
In
April 2016 , ETE announced a$0.285 distribution per ETE common unit for the quarter endedMarch 31, 2016 , or$1.14 per unit on an annualized basis. -
As of
March 31, 2016 , ETE’s$1.5 billion revolving credit facility had$965 million of outstanding borrowings and its leverage ratio, as defined by the credit agreement, was 2.87x.
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, SUN Common Units, ETP
Class I Units, and, through ETP Class H Units, which track 90% of the
underlying economics of the general partner interest and IDRs of
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) | ||||||||
(unaudited) | ||||||||
March 31, 2016 | December 31, 2015 | |||||||
ASSETS |
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Current assets | $ | 5,584 | $ | 5,410 | ||||
Property, plant and equipment, net | 50,125 | 48,683 | ||||||
Advances to and investments in unconsolidated affiliates | 3,442 | 3,462 | ||||||
Non-current derivative assets | 16 | — | ||||||
Other non-current assets, net | 7,471 | 730 | ||||||
Intangible assets, net | 5,396 | 5,431 | ||||||
Goodwill | 731 | 7,473 | ||||||
Total assets | $ | 72,765 | $ | 71,189 | ||||
LIABILITIES AND EQUITY |
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Current liabilities | $ | 5,691 | $ | 4,910 | ||||
Long-term debt, less current maturities | 37,401 | 36,837 | ||||||
Non-current derivative liabilities | 213 | 137 | ||||||
Deferred income taxes | 5,256 | 4,590 | ||||||
Other non-current liabilities | 1,117 | 1,069 | ||||||
Commitments and contingencies | ||||||||
Preferred units of subsidiary | 33 | 33 | ||||||
Redeemable noncontrolling interests | 15 | 15 | ||||||
Equity: | ||||||||
Total partners’ capital | (1,686 | ) | (932 | ) | ||||
Noncontrolling interest | 24,725 | 24,530 | ||||||
Total equity | 23,039 | 23,598 | ||||||
Total liabilities and equity | $ | 72,765 | $ | 71,189 |
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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2016 | 2015 | |||||||
REVENUES | $ | 7,977 | $ | 10,380 | ||||
COSTS AND EXPENSES: | ||||||||
Cost of products sold | 5,917 | 8,487 | ||||||
Operating expenses | 641 | 628 | ||||||
Depreciation, depletion and amortization | 562 | 493 | ||||||
Selling, general and administrative | 156 | 155 | ||||||
Total costs and expenses | 7,276 | 9,763 | ||||||
OPERATING INCOME | 701 | 617 | ||||||
OTHER INCOME (EXPENSE): | ||||||||
Interest expense, net of interest capitalized | (427 | ) | (371 | ) | ||||
Equity in earnings of unconsolidated affiliates | 61 | 57 | ||||||
Losses on interest rate derivatives | (70 | ) | (77 | ) | ||||
Other, net | 16 | 7 | ||||||
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) | 281 | 233 | ||||||
Income tax expense (benefit) | (55 | ) | 12 | |||||
NET INCOME | 336 | 221 | ||||||
Less: Net income (loss) attributable to noncontrolling interest | 24 | (63 | ) | |||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 312 | 284 | ||||||
General Partner’s interest in net income | 1 | 1 | ||||||
Class D Unitholder’s interest in net income | — | 1 | ||||||
Limited Partners’ interest in net income | $ | 311 | $ | 282 | ||||
NET INCOME PER LIMITED PARTNER UNIT: | ||||||||
Basic | $ | 0.30 | $ | 0.26 | ||||
Diluted | $ | 0.30 | $ | 0.26 | ||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: | ||||||||
Basic | 1,044.8 | 1,077.6 | ||||||
Diluted | 1,044.8 | 1,079.0 |
ENERGY TRANSFER EQUITY, L.P. |
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DISTRIBUTABLE CASH FLOW(1) |
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(Dollars and units in millions, except per unit amounts) |
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(unaudited) |
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Three Months Ended March 31, |
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2016 | 2015 | |||||||
Cash distributions from ETP associated with: | ||||||||
Limited partner interest | $ | 3 | $ | 24 | ||||
Class H Units | 83 | 56 | ||||||
General partner interest | 8 | 8 | ||||||
Incentive distribution rights | 331 | 300 | ||||||
IDR relinquishments, net of distributions on Class I Units (2) | (34 | ) | (27 | ) | ||||
Total cash distributions from ETP | 391 | 361 | ||||||
Cash distributions from Sunoco LP (3) | 21 | — | ||||||
Total cash distributions from investments in subsidiaries | 412 | 361 | ||||||
Distributable cash flow attributable to Lake Charles LNG: | ||||||||
Revenues | 49 | 54 | ||||||
Operating expenses | (4 | ) | (4 | ) | ||||
Selling, general and administrative expenses | (1 | ) | (1 | ) | ||||
Distributable cash flow attributable to Lake Charles LNG | 44 | 49 | ||||||
Deduct expenses of the Parent Company on a stand-alone basis: | ||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (31 | ) | (2 | ) | ||||
Management fee to ETP (on a cash basis) (4) | (24 | ) | (24 | ) | ||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps | (78 | ) | (58 | ) | ||||
Distributable Cash Flow | 323 | 326 | ||||||
Transaction-related expenses | 26 | 1 | ||||||
Bakken Pipeline Transaction — pro forma interest expense (5) | — | (6 | ) | |||||
Distributable Cash Flow, as adjusted | $ | 349 | $ | 321 | ||||
Distributable Cash Flow, as adjusted, per Unit | $ | 0.33 | $ | 0.30 | ||||
Cash distributions to be paid to the partners of ETE: | ||||||||
Distributions to be paid to limited partners (6) | $ | 240 | $ | 264 | ||||
Distributions to be paid to general partner | 1 | 1 | ||||||
Distributions to be paid to Class D unitholder | — | 1 | ||||||
Total cash distributions to be paid to the partners of ETE | $ | 241 | $ | 266 | ||||
Common units outstanding — end of period | 1,044.8 | 1,078.6 | ||||||
Distribution coverage ratio (7) | 1.45x | 1.21x |
_________________
(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) | Effective July 1, 2015, ETE acquired 100% of the membership interests of Sunoco GP LLC, the general partner of Sunoco LP, and all of the IDRs of Sunoco LP from ETP. | |
(4) | In exchange for management services, ETE has agreed to pay to ETP fees totaling $95 million per year. For GAAP purposes, ETE has capitalized fees totaling $3 million for the three months ended March 31, 2016 and 2015. | |
(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) |
Includes distributions of $0.11 per common unit 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 with distributions for the quarter ending March 31, 2016, and reinvest those distributions in the Convertible Units representing limited partner interest in the Partnership. |
|
(7) | 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) |
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Three Months Ended March 31, |
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2016 | 2015 | |||||||
Net income attributable to partners | $ | 312 | $ | 284 | ||||
Equity in earnings related to investments in ETP and Sunoco LP | (398 | ) | (328 | ) | ||||
Total cash distributions from investments in subsidiaries | 412 | 361 | ||||||
Amortization included in interest expense (excluding ETP and Sunoco LP) | 3 | 2 | ||||||
Other non-cash (excluding ETP and Sunoco LP) | (6 | ) | 7 | |||||
Distributable Cash Flow | 323 | 326 | ||||||
Transaction-related expenses | 26 | 1 | ||||||
Bakken Pipeline Transaction — pro forma interest expense | — | (6 | ) | |||||
Distributable Cash Flow, as adjusted | $ | 349 | $ | 321 | ||||
Weighted average units outstanding (common, Class D and General Partner) | 1,048.4 | 1,083.4 | ||||||
Distributable Cash Flow, as adjusted, per Unit | $ | 0.33 | $ | 0.30 | ||||
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 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) |
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(unaudited) |
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March 31, |
December 31, |
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ASSETS | ||||||||
Current assets | $ | 46 | $ | 35 | ||||
Property, plant and equipment, net | 27 | 20 | ||||||
Advances to and investments in unconsolidated affiliates | 5,106 | 5,764 | ||||||
Intangible assets, net | 5 | 6 | ||||||
Goodwill | 9 | 9 | ||||||
Other non-current assets, net | 10 | 10 | ||||||
Total assets | $ | 5,203 | $ | 5,844 | ||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
Current liabilities | $ | 135 | $ | 178 | ||||
Long-term debt, less current maturities | 6,439 | 6,332 | ||||||
Note payable to affiliate | 315 | 265 | ||||||
Other non-current liabilities | — | 1 | ||||||
Commitments and contingencies | ||||||||
Partners’ capital: | ||||||||
General Partner | (2 | ) | (2 | ) | ||||
Limited Partners: | ||||||||
Common Unitholders | (1,684 | ) | (952 | ) | ||||
Class D Units | — | 22 | ||||||
Total partners’ capital | (1,686 | ) | (932 | ) | ||||
Total liabilities and partners’ capital | $ | 5,203 | $ | 5,844 |
STATEMENTS OF OPERATIONS |
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(In millions) |
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(unaudited) |
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Three Months Ended March 31, |
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2016 | 2015 | |||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | $ | (37 | ) | $ | (28 | ) | ||
OTHER INCOME (EXPENSE): | ||||||||
Interest expense, net of interest capitalized | (81 | ) | (61 | ) | ||||
Equity in earnings of unconsolidated affiliates | 430 | 373 | ||||||
Other, net | — | 1 | ||||||
INCOME BEFORE INCOME TAXES | 312 | 285 | ||||||
Income tax benefit | — | 1 | ||||||
NET INCOME | 312 | 284 | ||||||
General Partner’s interest in net income | 1 | 1 | ||||||
Class D Unitholder’s interest in net income | — | 1 | ||||||
Limited Partners’ interest in net income | $ | 311 | $ | 282 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160504006866/en/
Source:
Energy Transfer Equity, L.P.
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)