Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the quarter
ended March 31, 2016.
Distributable Cash Flow, as adjusted, for the three months ended
March 31, 2016 was $349 million compared to $321 million for
the three months ended March 31, 2015, an increase of $28
million. Distributable Cash Flow, as adjusted, per unit was $0.33
for the three months ended March 31, 2016, an increase of 10%
compared to the three months ended March 31, 2015. ETE’s net
income attributable to partners was $312 million for the three
months ended March 31, 2016 compared to $284 million for the
three months ended March 31, 2015, an increase of $28
million.
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 be May 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 ended March 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 8:00 a.m.
Central Time, Thursday, May 5, 2016 to discuss its first quarter
2016 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, 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 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. 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 that 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). ETE also
owns approximately 2.6 million ETP common units and 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). 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 that owns and operates 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 approximately 62,500 miles of natural gas and
natural gas liquids pipelines. ETP also owns the general partner,
100% of the incentive distribution rights, and 67.1 million common
units of Sunoco Logistics Partners L.P. (NYSE: SXL), which operates
a geographically diverse portfolio of complementary crude oil,
refined products, and natural gas liquids pipeline, terminalling
acquisition and marketing assets which are used to facilitate the
purchase and sale of crude oil, natural gas liquids, and refined
products. 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, natural gas liquids,
and refined products. Sunoco Logistics’ 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 approximately 1,340 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. 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 Partnership’s 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.
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) March 31, 2016 December 31, 2015
ASSETS
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
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
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data) (unaudited) Three Months
EndedMarch 31, 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.
DISTRIBUTABLE
CASH FLOW(1)
(Dollars and units in millions, except per
unit amounts)
(unaudited)
Three Months EndedMarch 31, 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
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(In millions, except per unit amounts)
(unaudited)
Three Months EndedMarch 31, 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
(In millions)
(unaudited)
March 31,2016
December 31,2015
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
(In millions)
(unaudited)
Three Months EndedMarch 31, 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
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Energy Transfer Equity, L.P.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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