Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the fourth
quarter ended December 31, 2015.
Distributable Cash Flow, as adjusted, was $343 million for the
three months ended December 31, 2015 as compared to $243
million for the same period last year, an increase of $100 million.
Distributable Cash Flow, as adjusted, per unit was $0.32 for the
three months ended December 31, 2015, an increase of 45% compared
to the three months ended December 31, 2014. ETE’s net income
attributable to partners was $314 million for the three months
ended December 31, 2015, as compared to net income of $113
million for the same period last year, an increase of $201 million,
including the impacts of non-cash goodwill impairments in 2014 and
2015.
Distributable Cash Flow, as adjusted, for the year ended
December 31, 2015, was $1.33 billion as compared to $895
million for last year, an increase of $430 million. Distributable
Cash Flow, as adjusted, per unit was $1.24 for 2015, an increase of
51% from 2014. ETE’s net income attributable to partners was $1.19
billion for the year ended December 31, 2015, as compared to
$633 million for last year, an increase of $556 million, or
88%.
The Partnership’s recent key accomplishments and other
developments include the following:
- In December 2015, the Lake Charles LNG
Project received approval from the FERC to site, construct and
operate a natural gas liquefaction and export facility in Lake
Charles, Louisiana. On February 15, 2016, Royal Dutch Shell plc
completed its acquisition of BG Group plc. Final investment
decisions from Royal Dutch Shell plc and Lake Charles LNG Export
Company, LLC, a subsidiary of Energy Transfer Partners, L.P.
(“ETP”) and ETE, are expected to be made in 2016, with construction
to start immediately following an affirmative investment decision
and first LNG export anticipated about four years later.
- In November 2015, ETP and Sunoco LP
announced ETP’s contribution to Sunoco LP of the remaining 68.42%
interest in Sunoco, LLC and 100% interest in the legacy Sunoco,
Inc. retail business for $2.23 billion. Sunoco LP will pay ETP
$2.03 billion in cash, subject to certain working capital
adjustments, and will issue to ETP 5.7 million Sunoco LP common
units. The transaction will be effective as of January 1, 2016, and
is expected to close in March 2016.
- On January 27, 2016, the Partnership
announced its quarterly cash distribution of $0.285 per ETE common
unit for the fourth quarter ended December 31, 2015, or $1.14 per
unit on an annualized basis.
- As of December 31, 2015, ETE’s $1.5
billion revolving credit facility had $860 million of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 2.96x.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, February 25, 2016 to discuss its fourth
quarter 2015 results. The conference call will be broadcast live
via an internet webcast, which can be accessed through www.energytransfer.com and will also be available
for replay on the Partnership’s website for a limited time.
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
Sunoco Logistics Partners L.P (“Sunoco Logistics”), distributions
related to its investments in the general partner interests in
Sunoco Logistics, limited and general partner interest in Sunoco
LP, as well as the Partnership’s ownership of Lake Charles LNG.
Prior to ETP’s acquisition of Regency Energy Partners LP
(“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.
Energy Transfer Equity, L.P. (NYSE: ETE) is a
master limited partnership which owns the general partner and 100%
of the incentive distribution rights (IDRs) of Energy Transfer
Partners, L.P. (NYSE: ETP) and Sunoco LP (NYSE: SUN), approximately
2.6 million ETP common units, approximately 81.0 million ETP Class
H Units, which track 90% of the underlying economics of the general
partner interest and IDRs of Sunoco Logistics Partners L.P. (NYSE:
SXL) and 100 ETP Class I Units. On a consolidated basis, ETE’s
family of companies owns and operates approximately 71,000 miles of
natural gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit the Energy Transfer Equity,
L.P. website at www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE: ETP) is a
master limited partnership owning and operating one of the largest
and most diversified portfolios of energy assets in the United
States. ETP’s subsidiaries include Panhandle Eastern Pipe Line
Company, LP (the successor of Southern Union Company) and Lone Star
NGL LLC, which owns and operates natural gas liquids storage,
fractionation and transportation assets. In total, ETP currently
owns and operates more than 62,500 miles of natural gas and natural
gas liquids pipelines. ETP also owns the general partner, 100% of
the incentive distribution rights, and approximately 67.1 million
common units in Sunoco Logistics Partners L.P. (NYSE: SXL), which
operates a geographically diverse portfolio of crude oil and
refined products pipelines, terminalling and crude oil acquisition
and marketing assets. Additionally, ETP owns fuel distribution and
retail marketing assets and approximately 36% of the limited
partner interests in Sunoco LP (formerly Susser Petroleum Partners
LP) (NYSE: SUN), a wholesale fuel distributor and convenience store
operator. ETP’s general partner is owned by Energy Transfer Equity,
L.P. (NYSE: ETE). For more information, visit the Energy Transfer
Partners, L.P. website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master
limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary
crude oil, refined products, and natural gas liquids pipeline,
terminalling and acquisition and marketing assets which are used to
facilitate the purchase and sale of crude oil, refined products,
and natural gas liquids. SXL’s general partner is a consolidated
subsidiary of Energy Transfer Partners, L.P. (NYSE: ETP). For more
information, visit the Sunoco Logistics Partners, L.P. website at
www.sunocologistics.com.
Sunoco LP (NYSE: SUN) is a master limited partnership
that operates more than 850 convenience stores and retail fuel
sites and distributes motor fuel to convenience stores, independent
dealers, commercial customers and distributors located in 30 states
at approximately 6,800 sites, both directly as well as through its
31.58% interest in Sunoco, LLC, in partnership with an affiliate of
Energy Transfer Partners, L.P. (NYSE: ETP). Sunoco LP’s general
partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE). For
more information, visit the Sunoco LP website at www.SunocoLP.com.
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 Partnerships’ Annual Reports on
Form 10-K and other documents filed from time to time with the
Securities and Exchange Commission. The Partnership undertakes no
obligation to update or revise any forward-looking statement to
reflect new information or events.
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
December 31, 2015 2014
ASSETS Current assets $ 5,410 $ 6,139
Property, plant and equipment, net 48,683 40,292 Advances to
and investments in unconsolidated affiliates 3,462 3,659
Non-current derivative assets — 10 Other non-current assets, net
730 732 Intangible assets, net 5,431 5,582 Goodwill 7,473
7,865 Total assets $ 71,189 $ 64,279
LIABILITIES AND EQUITY Current liabilities $
4,910 $ 6,683 Long-term debt, less current maturities 36,837
29,477 Deferred income taxes 4,590 4,410 Non-current derivative
liabilities 137 154 Other non-current liabilities 1,069 1,193
Commitments and contingencies Preferred units of
subsidiary 33 33 Redeemable noncontrolling interest 15 15
Equity: Total partners’ capital (932 ) 664 Noncontrolling interest
24,530 21,650 Total equity 23,598
22,314 Total liabilities and equity $ 71,189 $
64,279
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2015
2014 2015 2014
REVENUES: $ 9,536 $ 13,481 $ 42,126 $ 55,691 COSTS AND EXPENSES:
Cost of products sold 7,561 11,591 34,009 48,414 Operating expenses
706 709 2,661 2,102 Depreciation, depletion and amortization 548
476 2,079 1,724 Selling, general and administrative 146 170 639 611
Goodwill impairment 339 370 339
370 Total costs and expenses 9,300
13,316 39,727 53,221
OPERATING INCOME (LOSS) 236 165 2,399 2,470 OTHER INCOME
(EXPENSE): Interest expense, net of interest capitalized (422 )
(354 ) (1,643 ) (1,369 ) Equity in earnings of unconsolidated
affiliates (8 ) 67 276 332 Losses on extinguishments of debt — (27
) (43 ) (25 ) Losses on interest rate derivatives (4 ) (84 ) (18 )
(157 ) Gain on sale of AmeriGas common units — — — 177 Other, net
(33 ) 27 22 (11 ) INCOME
(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE (231 )
(206 ) 993 1,417 Income tax expense (benefit) from continuing
operations (93 ) 86 (100 ) 357
INCOME (LOSS) FROM CONTINUING OPERATIONS (138 ) (292 ) 1,093
1,060 Income (loss) from discontinued operations —
(2 ) — 64 NET INCOME (LOSS) (138
) (294 ) 1,093 1,124 LESS: Net income (loss) attributable to
noncontrolling interest (452 ) (407 ) (96 )
491 NET INCOME ATTRIBUTABLE TO PARTNERS 314 113 1,189
633 General Partner’s interest in net income 1 1 3 2 Class D
Unitholder’s interest in net income 1 1
3 2 Limited Partners’ interest in net
income $ 312 $ 111 $ 1,183 $ 629 INCOME
FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: Basic $ 0.30
$ 0.11 $ 1.11 $ 0.58 Diluted $ 0.30
$ 0.11 $ 1.11 $ 0.57 NET INCOME PER
LIMITED PARTNER UNIT: Basic $ 0.30 $ 0.11 $ 1.11
$ 0.58 Diluted $ 0.30 $ 0.11 $ 1.11
$ 0.57 WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
Basic 1,052.5 1,077.5 1,062.8
1,088.6 Diluted 1,053.8
1,079.8 1,064.4 1,090.8
ENERGY TRANSFER
EQUITY, L.P.
DISTRIBUTABLE
CASH FLOW (1)
(Dollars and units in millions, except per
unit amounts)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2015
2014 2015 2014
Cash distributions from ETP associated with: Limited partner
interest $ 3 $ 31 $ 54 $ 119 Class H Units 77 60 263 219 General
partner interest 8 5 31 21 Incentive distribution rights 324 208
1,261 754 IDR relinquishments, net of Class I distributions
(28 ) (68 ) (111 ) (250 ) Total cash
distributions from ETP 384 236 1,498 863 Cash distributions from
Regency (prior to merger with ETP)(3) — 40 — 135 Cash distributions
from Sunoco LP (4) 17 — 25
— Cash distributions from investments in
subsidiaries 401 276 1,523 998 Distributable cash flow
attributable to Lake Charles LNG: Revenues 54 54 216 216 Operating
expenses (5 ) (4 ) (17 ) (17 ) Selling, general and administrative
expenses — (1 ) (3 ) (4 )
Distributable cash flow attributable to Lake Charles LNG 49 49 196
195 Deduct expenses of the Parent Company on a stand-alone
basis: Selling, general and administrative expenses, excluding
non-cash compensation expense (12 ) (3 ) (21 ) (13 ) Management fee
to ETP (on a cash basis)(5) (24 ) (24 ) (95 ) (95 ) Interest
expense, net of amortization of financing costs, interest income,
and realized gains and losses on interest rate swaps (75 )
(56 ) (281 ) (197 ) Distributable Cash Flow
339 242 1,322 888 Transaction-related expenses 4 1 9 7 Bakken
Pipeline Transaction — pro forma interest expense (6) —
— (6 ) — Distributable
Cash Flow, as adjusted $ 343 $ 243 $ 1,325 $
895 Distributable Cash Flow, as adjusted, per Unit $
0.32 $ 0.22 $ 1.24 $ 0.82 Cash
distributions to be paid to the partners of ETE: Distributions to
be paid to limited partners $ 298 $ 242 $ 1,139 $ 866 Distributions
to be paid to general partner — — 2 2 Distributions to be paid to
Class D unitholder 1 — 3
2 Total cash distributions to be paid to the partners
of ETE $ 299 $ 242 $ 1,144 $ 870
Common units outstanding — end of period 1,044.8
1,077.5 1,044.8 1,077.5
Distribution Coverage Ratio (7) 1.15x 1.00x 1.16x 1.03x
(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 for each of the years ending December 31,
2014, 2015 and 2016. For GAAP purposes, ETE has capitalized fees
totaling $3 million for the three months ended December 31, 2015
and 2014, and fees totaling $13 million for the years ended
December 31, 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
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(In millions, except per unit amounts)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2015
2014 2015 2014 Net
income attributable to partners $ 314 $ 113 $ 1,189 $ 633 Equity in
earnings related to investments in ETP, Regency, and Sunoco LP (387
) (160 ) (1,443 ) (799 ) Total cash distributions from investments
in subsidiaries 401 276 1,523 998 Amortization included in interest
expense (excluding ETP, Regency, and Sunoco LP) 5 2 12 8 Other
non-cash (excluding ETP, Regency and Sunoco LP) 6
11 41 48 Distributable
Cash Flow 339 242 1,322 888 Transaction-related expenses 4 1 9 7
Bakken Pipeline Transaction — pro forma interest expense —
— (6 ) — Distributable
Cash Flow, as adjusted $ 343 $ 243 $ 1,325 $
895 Weighted average units outstanding (common, Class
D and General Partner) 1,057.4 1,083.4
1,068.0 1,094.4 Distributable
Cash Flow, as adjusted, per Unit $ 0.32 $ 0.22 $ 1.24
$ 0.82
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 (“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 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
(In millions)
(unaudited)
December 31, 2015
2014
ASSETS Current assets $ 35 $ 17 Property,
plant and equipment, net 20 — Advances to and investments in
unconsolidated affiliates 5,764 5,390 Intangible assets, net 6 10
Goodwill 9 9 Other non-current assets, net 10
12 Total assets $ 5,844 $ 5,438
LIABILITIES
AND PARTNERS’ CAPITAL Current liabilities $ 178 $ 72 Long-term
debt, less current maturities 6,332 4,646 Note payable to affiliate
265 54 Other non-current liabilities 1 2 Commitments and
contingencies Partners’ Capital: General Partner (2 ) (1 )
Limited Partners: Common unitholders (952 ) 648 Class D Units 22 22
Accumulated other comprehensive loss — (5 )
Total partners’ capital (932 ) 664 Total
liabilities and partners’ capital $ 5,844 $ 5,438
STATEMENTS OF
OPERATIONS
(In millions)
(unaudited)
Three Months Ended Years Ended
December 31, December 31, 2015
2014 2015 2014
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ (31 ) $ (28 ) $ (112
) $ (111 ) OTHER INCOME (EXPENSE): Interest expense, net of
interest capitalized (80 ) (58 ) (294 ) (205 ) Equity in earnings
of unconsolidated affiliates 427 199 1,601 955 Other, net (2
) (1 ) (5 ) (5 ) INCOME BEFORE INCOME TAXES
314 112 1,190 634 Income tax expense (benefit) —
(1 ) 1 1 NET INCOME 314 113
1,189 633 GENERAL PARTNER’S INTEREST IN NET INCOME 1 1 3 2 CLASS D
UNITHOLDER’S INTEREST IN NET INCOME 1 1
3 2 LIMITED PARTNERS’ INTEREST IN NET
INCOME $ 312 $ 111 $ 1,183 $ 629
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Investor Relations:Energy TransferBrent Ratliff,
214-981-0700orLyndsay Hannah, 214-840-5477orMedia
Relations:Granado Communications GroupVicki Granado,
214-599-8785214-498-9272 (cell)
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