Energy Transfer Equity Reports Third Quarter Results
Distributable Cash Flow, as adjusted, for the three months ended
September 30, 2015 was
Distributable Cash Flow, as adjusted, for the nine months ended
September 30, 2015 was
The Partnership’s recent key accomplishments and other developments include the following:
-
In
September 2015 , ETE and theWilliams Companies, Inc. (“WMB”) announced a business combination transaction valued at$37.7 billion , including the assumption of debt and other liabilities. The combination will create the third largest energy franchise inNorth America and one of the five largest global energy companies. The transaction is expected to close in the first half of 2016. -
In
October 2015 , ETE entered into an Amended and Restated Commitment Letter with a syndicate of 20 banks for a senior secured credit facility in an aggregate principal amount of$6.05 billion in order to fund the cash portion of the WMB Merger. Under the terms of the facility, the banks have committed to provide a 364-day secured loan that can be extended at ETE’s option for an additional year. The interest rate on the facility is capped at 5.5%. -
During the third quarter 2015,
Lake Charles LNG Export Company, LLC (“Lake Charles LNG”), an entity owned 60% by ETE and 40% byEnergy Transfer Partners, L.P. (“ETP”), received theFederal Energy Regulatory Commission (“FERC”) Final Environmental Impact Study for the liquefaction project. This issuance starts the 90-day period in which other federal agencies are required to complete their review of the liquefaction project and issue any agency authorizations. That decision deadline isNovember 12, 2015 . The FERC authorization for the liquefaction project is expected to be issued during this 90-day period. With the expected emphasis on capital discipline and overall cost, ETE continues to believe that Lake Charles LNG is one of the most attractive pre-final investment decision (“FID”) projects for bothRoyal Dutch Shell plc andBG Group plc and that as a result, the project remains on track to receive FID in 2016, with construction to start immediately thereafter and first LNG exports anticipated in late-2020. -
Effective
July 1, 2015 , ETE exchanged 21.0 million of the ETP common units that it held at that time for 100% of the general partner interest and incentive distribution rights ofSunoco LP (the “SUN GP/IDR Exchange”). -
In
October 2015 , ETE’s Board of Directors approved a$0.02 increase in its quarterly distribution to$0.285 per ETE common unit for the third quarter endedSeptember 30, 2015 , an increase of 37% compared to the third quarter of 2014 and an increase of 8% compared to the second quarter of 2015. For the quarter endedSeptember 30, 2015 , ETE’s distribution coverage ratio is 1.09x, which was lower than the second quarter due to the cash flow impact from the SUN GP/IDR Exchange. -
During 2015, ETE has repurchased approximately
$1.06 billion of ETE common units under its current$2.00 billion buyback program. -
As of
September 30, 2015 , ETE’s$1.5 billion revolving credit facility had$930 million of outstanding borrowings and its leverage ratio, as defined by the credit agreement, was 3.27x.
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, 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 |
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||
(In millions) |
|||||||||
(unaudited) |
|||||||||
September 30, 2015 | December 31, 2014 | ||||||||
ASSETS |
|||||||||
CURRENT ASSETS | $ | 6,072 | $ | 6,153 | |||||
PROPERTY, PLANT AND EQUIPMENT, net | 46,305 | 40,292 | |||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 3,637 | 3,659 | |||||||
NON-CURRENT DERIVATIVE ASSETS | 15 | 10 | |||||||
GOODWILL | 7,655 | 7,865 | |||||||
INTANGIBLE ASSETS, net | 5,522 | 5,582 | |||||||
OTHER NON-CURRENT ASSETS, net | 962 | 908 | |||||||
Total assets | $ | 70,168 | $ | 64,469 | |||||
LIABILITIES AND EQUITY |
|||||||||
CURRENT LIABILITIES | $ | 5,049 | $ | 6,782 | |||||
LONG-TERM DEBT, less current maturities | 36,332 | 29,653 | |||||||
DEFERRED INCOME TAXES | 4,256 | 4,325 | |||||||
NON-CURRENT DERIVATIVE LIABILITIES | 189 | 154 | |||||||
OTHER NON-CURRENT LIABILITIES | 1,246 | 1,193 | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||||
PREFERRED UNITS OF SUBSIDIARY | 33 | 33 | |||||||
REDEEMABLE NONCONTROLLING INTEREST | 15 | 15 | |||||||
EQUITY: | |||||||||
Total partners’ capital | (906 | ) | 664 | ||||||
Noncontrolling interest | 23,954 | 21,650 | |||||||
Total equity | 23,048 | 22,314 | |||||||
Total liabilities and equity | $ | 70,168 | $ | 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 September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
REVENUES | $ | 10,616 | $ | 14,987 | $ | 32,590 | $ | 42,210 | |||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||
Cost of products sold | 8,581 | 13,015 | 26,406 | 36,808 | |||||||||||||||||
Operating expenses | 706 | 557 | 1,997 | 1,409 | |||||||||||||||||
Depreciation, depletion and amortization | 524 | 425 | 1,531 | 1,248 | |||||||||||||||||
Selling, general and administrative | 155 | 168 | 493 | 440 | |||||||||||||||||
Total costs and expenses | 9,966 | 14,165 | 30,427 | 39,905 | |||||||||||||||||
OPERATING INCOME | 650 | 822 | 2,163 | 2,305 | |||||||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||||
Interest expense, net of interest capitalized | (442 | ) | (356 | ) | (1,221 | ) | (1,015 | ) | |||||||||||||
Equity in earnings of unconsolidated affiliates | 110 | 84 | 284 | 265 | |||||||||||||||||
Gains (losses) on extinguishments of debt | (10 | ) | 2 | (43 | ) | 2 | |||||||||||||||
Losses on interest rate derivatives | (64 | ) | (25 | ) | (14 | ) | (73 | ) | |||||||||||||
Gain on sale of AmeriGas common units | — | 14 | — | 177 | |||||||||||||||||
Other, net | 31 | (15 | ) | 55 | (38 | ) | |||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 275 | 526 | 1,224 | 1,623 | |||||||||||||||||
Income tax expense (benefit) from continuing operations | 37 | 56 | (7 | ) | 271 | ||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 238 | 470 | 1,231 | 1,352 | |||||||||||||||||
Income from discontinued operations | — | — | — | 66 | |||||||||||||||||
NET INCOME | 238 | 470 | 1,231 | 1,418 | |||||||||||||||||
Less: Net income (loss) attributable to noncontrolling interest | (55 | ) | 282 | 356 | 898 | ||||||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 293 | 188 | 875 | 520 | |||||||||||||||||
General Partner’s interest in net income | 1 | — | 2 | 1 | |||||||||||||||||
Class D Unitholder’s interest in net income | 1 | — | 2 | 1 | |||||||||||||||||
Limited Partners’ interest in net income | $ | 291 | $ | 188 | $ | 871 | $ | 518 | |||||||||||||
INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: | |||||||||||||||||||||
Basic | $ | 0.28 | $ | 0.17 | $ | 0.81 | $ | 0.47 | |||||||||||||
Diluted | $ | 0.28 | $ | 0.17 | $ | 0.81 | $ | 0.47 | |||||||||||||
NET INCOME PER LIMITED PARTNER UNIT: | |||||||||||||||||||||
Basic | $ | 0.28 | $ | 0.17 | $ | 0.81 | $ | 0.47 | |||||||||||||
Diluted | $ | 0.28 | $ | 0.17 | $ | 0.81 | $ | 0.47 | |||||||||||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: | |||||||||||||||||||||
Basic | 1,052.5 | 1,077.5 | 1,068.9 | 1,093.2 | |||||||||||||||||
Diluted | 1,054.1 | 1,079.7 | 1,070.5 | 1,095.3 | |||||||||||||||||
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) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Cash distributions from ETP associated with: | |||||||||||||||||||||
Limited partner interest | $ | 3 | $ | 30 | $ | 51 | $ | 88 | |||||||||||||
Class H Units | 68 | 56 | 186 | 159 | |||||||||||||||||
General partner interest | 8 | 6 | 23 | 16 | |||||||||||||||||
Incentive distribution rights | 320 | 200 | 937 | 546 | |||||||||||||||||
IDR relinquishments, net of distributions on Class I Units (2) | (28 | ) | (67 | ) | (83 | ) | (182 | ) | |||||||||||||
Total cash distributions from ETP | 371 | 225 | 1,114 | 627 | |||||||||||||||||
Total cash distributions from Regency (prior to merger with ETP) (3) | — | 38 | — | 95 | |||||||||||||||||
Cash distributions from Sunoco LP (4) | 8 | — | 8 | — | |||||||||||||||||
Total cash distributions from investments in subsidiaries | 379 | 263 | 1,122 | 722 | |||||||||||||||||
Distributable cash flow attributable to Lake Charles LNG: | |||||||||||||||||||||
Revenues | 54 | 55 | 162 | 162 | |||||||||||||||||
Operating expenses | (4 | ) | (5 | ) | (12 | ) | (13 | ) | |||||||||||||
Selling, general and administrative expenses | (1 | ) | 1 | (3 | ) | (3 | ) | ||||||||||||||
Distributable cash flow attributable to Lake Charles LNG | 49 | 51 | 147 | 146 | |||||||||||||||||
Deduct expenses of the Parent Company on a stand-alone basis: | |||||||||||||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense | (2 | ) | (3 | ) | (9 | ) | (10 | ) | |||||||||||||
Management fee to ETP (on a cash basis) (5) | (24 | ) | (24 | ) | (72 | ) | (71 | ) | |||||||||||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps | (78 | ) | (55 | ) | (206 | ) | (141 | ) | |||||||||||||
Distributable Cash Flow | 324 | 232 | 982 | 646 | |||||||||||||||||
Transaction-related expenses | 1 | 2 | 5 | 6 | |||||||||||||||||
Bakken Pipeline Transaction — pro forma interest expense (6) | — | — | (6 | ) | — | ||||||||||||||||
Distributable Cash Flow, as adjusted | $ | 325 | $ | 234 | $ | 981 | $ | 652 | |||||||||||||
Distributable Cash Flow, as adjusted, per Unit | $ | 0.31 | $ | 0.22 | $ | 0.91 | $ | 0.59 | |||||||||||||
Cash distributions to be paid to the partners of ETE: | |||||||||||||||||||||
Distributions to be paid to limited partners | $ | 296 | $ | 224 | $ | 841 | $ | 624 | |||||||||||||
Distributions to be paid to general partner | 1 | 1 | 2 | 2 | |||||||||||||||||
Distributions to be paid to Class D unitholder | 1 | 1 | 2 | 2 | |||||||||||||||||
Total cash distributions to be paid to the partners of ETE | $ | 298 | $ | 226 | $ | 845 | $ | 628 | |||||||||||||
Common units outstanding — end of period | 1,044.8 | 1,077.6 | 1,044.8 | 1,077.6 | |||||||||||||||||
Distribution coverage ratio (7) |
1.09 |
x |
1.04 |
x |
1.16 |
x |
1.04 |
x |
_________________ | ||
(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 ended March 31, 2015 were 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) |
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. | |
(5) |
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. For GAAP purposes, ETE has capitalized fees totaling $3 million for the three months ended September 30, 2015 and 2014 and $10 million for the nine months ended September 30, 2015 and 2014. | |
(6) |
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. | |
(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) | |||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Net income attributable to partners | $ | 293 | $ | 188 | $ | 875 | $ | 520 | |||||||||||||
Equity in earnings related to investments in ETP, Regency and Sunoco LP | (365 | ) | (229 | ) | (1,056 | ) | (639 | ) | |||||||||||||
Total cash distributions from investments in subsidiaries | 379 | 263 | 1,122 | 722 | |||||||||||||||||
Amortization included in interest expense (excluding ETP, Regency and Sunoco LP) | 3 | 2 | 7 | 6 | |||||||||||||||||
Other non-cash (excluding ETP, Regency and Sunoco LP) | 14 | 8 | 34 | 37 | |||||||||||||||||
Distributable Cash Flow | 324 | 232 | 982 | 646 | |||||||||||||||||
Transaction-related expenses | 1 | 2 | 5 | 6 | |||||||||||||||||
Bakken Pipeline Transaction — pro forma interest expense | — | — | (6 | ) | — | ||||||||||||||||
Distributable Cash Flow, as adjusted | $ | 325 | $ | 234 | $ | 981 | $ | 652 | |||||||||||||
Weighted average units outstanding (common, Class D and General Partner on a post-split basis) | 1,057.4 | 1,083.3 | 1,074.1 | 1,099.1 | |||||||||||||||||
Distributable Cash Flow, as adjusted, per Unit | $ | 0.31 | $ | 0.22 | $ | 0.91 | $ | 0.59 | |||||||||||||
Distributable Cash Flow, as adjusted | $ | 325 | |||||||||||||||||||
Impact of SUN GP/IDR Exchange (1) | 27 | ||||||||||||||||||||
Distributable Cash Flow, as adjusted, excluding impact of SUN GP/IDR Exchange | $ | 352 | |||||||||||||||||||
Distributable Cash Flow, as adjusted, excluding impact of SUN GP/IDR Exchange, per unit | $ | 0.33 |
(1) | Based on pro forma distributions of $22 million on 21.0 million ETP common units redeemed in the SUN GP/IDR Exchange, plus the related general partner and IDR impacts of $13 million, minus actual distributions received on the SUN general partner and IDR interest of $8 million. | |
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) | ||||||||||
(unaudited) | ||||||||||
September 30, 2015 |
December 31, |
|||||||||
ASSETS | ||||||||||
CURRENT ASSETS | $ | 99 | $ | 17 | ||||||
PLANT, PROPERTY AND EQUIPMENT | 15 | — | ||||||||
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 5,760 | 5,390 | ||||||||
INTANGIBLE ASSETS, net | 7 | 10 | ||||||||
GOODWILL | 9 | 9 | ||||||||
OTHER NON-CURRENT ASSETS, net | 51 | 46 | ||||||||
Total assets | $ | 5,941 | $ | 5,472 | ||||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||||
CURRENT LIABILITIES | $ | 222 | $ | 72 | ||||||
LONG-TERM DEBT, less current maturities | 6,439 | 4,680 | ||||||||
NOTE PAYABLE TO AFFILIATE | 184 | 54 | ||||||||
OTHER NON-CURRENT LIABILITIES | 2 | 2 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
PARTNERS’ CAPITAL: | ||||||||||
General Partner | (2 | ) | (1 | ) | ||||||
Limited Partners: | ||||||||||
Common Unitholders | (925 | ) | 648 | |||||||
Class D Units | 21 | 22 | ||||||||
Accumulated other comprehensive loss | — | (5 | ) | |||||||
Total partners’ capital | (906 | ) | 664 | |||||||
Total liabilities and partners’ capital | $ | 5,941 | $ | 5,472 | ||||||
STATEMENTS OF OPERATIONS |
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(In millions) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | $ | (24 | ) | $ | (20 | ) | $ | (81 | ) | $ | (83 | ) | |||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||||
Interest expense, net of interest capitalized | (81 | ) | (57 | ) | (214 | ) | (147 | ) | |||||||||||||
Equity in earnings of unconsolidated affiliates | 403 | 269 | 1,174 | 756 | |||||||||||||||||
Other, net | (4 | ) | (2 | ) | (3 | ) | (4 | ) | |||||||||||||
INCOME BEFORE INCOME TAXES | 294 | 190 | 876 | 522 | |||||||||||||||||
Income tax benefit | 1 | 2 | 1 | 2 | |||||||||||||||||
NET INCOME | 293 | 188 | 875 | 520 | |||||||||||||||||
GENERAL PARTNER’S INTEREST IN NET INCOME | 1 | — | 2 | 1 | |||||||||||||||||
CLASS D UNITHOLDER’S INTEREST IN NET INCOME | 1 | — | 2 | 1 | |||||||||||||||||
LIMITED PARTNERS’ INTEREST IN NET INCOME | $ | 291 | $ | 188 | $ | 871 | $ | 518 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006889/en/
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)