Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the quarter
ended June 30, 2016.
ETE’s net income attributable to partners was $241 million for
the three months ended June 30, 2016 compared to $298 million
for the three months ended June 30, 2015. Distributable Cash
Flow, as adjusted, for the three months ended June 30, 2016
was $276 million compared to $335 million for the three months
ended June 30, 2015.
The Partnership’s recent key accomplishments and other
developments include the following:
- In July 2016, ETE announced a $0.285
distribution per ETE common unit for the quarter ended June 30,
2016, or $1.14 per unit on an annualized basis.
- As of June 30, 2016, ETE’s $1.5 billion
revolving credit facility had $885 million of outstanding
borrowings and its leverage ratio, as defined by the credit
agreement, was 3.18x.
- In light of Energy Transfer Partners,
L.P.’s (“ETP”) current common unit price and its resultant cost of
capital, ETE has agreed to a reduction in incentive distributions
from ETP in the aggregate amount of $720 million over a period of
seven quarters, beginning with the quarter ended June 30, 2016
through the quarter ending December 31, 2017. The quarterly
incentive distribution reduction for the quarter ended June 30,
2016 was $75 million, and incentive distribution reductions will
increase each subsequent quarter, reaching $130 million for the
quarter ending December 31, 2017. Through these incentive
distribution reductions, ETE is providing support for ETP during
its current major capital spending related to new projects. As
these projects are completed, ETP is expected to receive
significant cash flow from these projects which, in turn, is
expected to facilitate cash distribution growth related to ETP’s
common units as well as growth in future incentive distributions to
ETE.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, August 4, 2016 to discuss its second
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 approximately 67.1
million common units of Sunoco Logistics Partners L.P. (NYSE: SXL),
which operates a geographically diverse portfolio of pipelines,
terminalling and acquisition and marketing assets. 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
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 1,300 retail fuel sites and convenience
stores (including APlus, Stripes, Aloha Island Mart and Tigermarket
brands) and distributes motor fuel to convenience stores,
independent dealers, commercial customers and distributors located
in 30 states at approximately 6,800 sites. Our parent -- Energy
Transfer Equity, L.P. (NYSE: ETE) -- owns SUN's general partner and
incentive distribution rights. 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)
June 30, 2016 December 31, 2015
ASSETS
Current assets $ 6,090 $ 5,410 Property, plant and
equipment, net 51,386 48,683 Advances to and investments in
unconsolidated affiliates 3,453 3,462 Non-current derivative assets
18 — Other non-current assets, net 742 730 Intangible assets, net
5,356 5,431 Goodwill 7,515 7,473 Total assets $
74,560 $ 71,189
LIABILITIES AND
EQUITY
Current liabilities $ 6,188 $ 4,910 Long-term debt,
less current maturities 38,501 36,837 Long-term notes payable to
related company 107 — Non-current derivative liabilities 367 137
Deferred income taxes 5,215 4,590 Other non-current liabilities
1,137 1,069 Commitments and contingencies Preferred
units of subsidiary 33 33 Redeemable noncontrolling interests 15 15
Equity: Total partners’ capital (1,681) (932) Noncontrolling
interest 24,678 24,530 Total equity 22,997
23,598 Total liabilities and equity $ 74,560 $ 71,189
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30, 2016
2015 2016 2015 REVENUES $ 9,344 $
11,594 $ 17,026 $ 21,974 COSTS AND EXPENSES: Cost of products sold
7,054 9,338 12,676 17,825 Operating expenses 688 663 1,329 1,291
Depreciation, depletion and amortization 588 514 1,150 1,007
Selling, general and administrative 187 183
343 338 Total costs and expenses
8,517 10,698 15,498
20,461 OPERATING INCOME 827 896 1,528 1,513 OTHER
INCOME (EXPENSE): Interest expense, net of interest capitalized
(450 ) (408 ) (877 ) (779 ) Equity in earnings of unconsolidated
affiliates 95 117 156 174
Losses on extinguishments of debt
—
(33
)
—
(33
)
Gains (losses) on interest rate derivatives (81 ) 127 (151 ) 50
Other, net 24 17 40
24 INCOME BEFORE INCOME TAX BENEFIT 415 716 696 949
Income tax benefit (9 ) (56 ) (64 ) (44
) NET INCOME 424 772 760 993 Less: Net income attributable to
noncontrolling interest 183 474
207 411 NET INCOME ATTRIBUTABLE TO PARTNERS
241 298 553 582 General Partner’s interest in net income 1 — 2 1
Convertible Unitholders’ interest in income 1 — 1 — Class D
Unitholder’s interest in net income — —
— 1 Limited Partners’ interest in net
income $ 239 $ 298 $ 550 $ 580 NET
INCOME PER LIMITED PARTNER UNIT: Basic $ 0.23 $ 0.28
$ 0.53 $ 0.54 Diluted $ 0.23 $ 0.28 $
0.52 $ 0.54 WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING: Basic 1,048.9 1,076.0
1,046.9 1,077.2 Diluted 1,063.8
1,077.6 1,052.5 1,079.0
ENERGY TRANSFER
EQUITY, L.P.
SUPPLEMENTAL
INFORMATION
(Dollars in millions)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30, 2016
2015 2016 2015 Cash distributions from
ETP associated with: Limited partner interest $ 2 $ 24 $ 5 $ 48
Class H Units 88 62 171 118 General partner interest 8 7 16 15
Incentive distribution rights 335 317 666 617 IDR relinquishments,
net of distributions on Class I Units (1) (110 ) (28
) (144 ) (55 ) Total cash distributions from ETP 323
382 714 743 Cash distributions from Sunoco LP (2) 22
— 44 — Total cash
distributions from investments in subsidiaries 345 382 758 743
Distributable cash flow attributable to Lake Charles LNG:
Revenues 49 54 98 108 Operating expenses (5 ) (4 ) (9 ) (8 )
Selling, general and administrative expenses —
(1 ) (1 ) (2 ) Distributable cash flow attributable
to Lake Charles LNG 44 49 88 98 Expenses of the Parent
Company on a cash basis: Selling, general and administrative
expenses, excluding non-cash compensation expense 24 5 55 7
Management fee to ETP (3) 24 24 48 48 Interest expense, net of
amortization of financing costs, interest income, and realized
gains and losses on interest rate swaps 79 70
157 128 Total Parent Company
expenses 127 99 260
183 Cash distributions to be paid to the
partners of ETE: Distributions to be paid to limited partners (4) $
240 $ 281 $ 480 $ 545 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 $ 240 $ 281
$ 481 $ 547 Common units outstanding —
end of period 1,044.8 1,069.8
1,044.8 1,069.8 _________________ (1)
IDR relinquishments for the three and six months ended June 30,
2016 include the impact of $75 million of incentive distribution
reduction with respect to the second quarter 2016 distribution, as
agreed to between ETE and ETP in July 2016. (2) 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. (3) 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 June 30, 2016 and 2015 and $6
million for the six months ended June 30, 2016 and 2015. (4)
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 ended March 31, 2016, and reinvest those distributions
in the Convertible Units representing limited partner interest in
the Partnership.
SUPPLEMENTAL
INFORMATION
RECONCILIATION OF
DISTRIBUTABLE CASH FLOW
(Dollars in millions)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30, 2016
2015 2016 2015 Net income attributable
to partners $ 241 $ 298 $ 553 $ 582 Equity in earnings related to
investments in ETP and Sunoco LP (334 ) (363 ) (732 ) (691 ) Total
cash distributions from investments in subsidiaries 345 382 758 743
Amortization included in interest expense (excluding ETP and Sunoco
LP) 3 2 6 4 Other non-cash (excluding ETP and Sunoco LP) 7
13 1 20
Distributable Cash Flow 262 332 586 658 Transaction-related
expenses 14 3 40 4 Bakken Pipeline Transaction — pro forma interest
expense — — — (6 )
Distributable Cash Flow, as adjusted $ 276 $ 335 $
626 $ 656 Total cash distributions to be paid
to the partners of ETE $ 240 $ 281 $ 481 $ 547 Distribution
coverage ratio(1)
1.15
x
1.19
x
1.30
x
1.20
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. 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.
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.
Distribution Coverage Ratio. The
Partnership defines Distribution Coverage Ratio for a period 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
INFORMATIONFINANCIAL 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)
June 30,2016
December 31,2015
ASSETS Current assets $ 43 $ 35 Property, plant and
equipment, net 35 20 Advances to and investments in unconsolidated
affiliates 5,074 5,764 Intangible assets, net 3 6 Goodwill 9 9
Other non-current assets, net 10 10
Total assets $ 5,174 $ 5,844
LIABILITIES AND
PARTNERS’ CAPITAL Current liabilities $ 138 $ 178 Long-term
debt, less current maturities 6,362 6,332 Note payable to related
company 353 265 Other non-current liabilities 2 1 Commitments and
contingencies Partners’ capital: General Partner (2 ) (2 ) Limited
Partners: Common Unitholders (1,738 ) (952 ) Class D Units — 22
Series A Convertible Preferred Units 59 —
Total partners’ capital (1,681 ) (932 ) Total
liabilities and partners’ capital $ 5,174 $ 5,844
STATEMENTS OF
OPERATIONS
(In millions)
(unaudited)
Three Months EndedJune 30, Six Months EndedJune 30, 2016
2015 2016 2015 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES $ (44 ) $ (29 ) $ (81 ) $ (57 ) OTHER
INCOME (EXPENSE): Interest expense, net of interest capitalized (82
) (72 ) (163 ) (133 ) Equity in earnings of unconsolidated
affiliates 369 398 799 771 Other, net (2 ) —
(2 ) 1 INCOME BEFORE INCOME TAXES 241 297 553
582 Income tax benefit — (1 ) —
— NET INCOME 241 298 553 582 General Partner’s
interest in net income 1 — 2 1 Convertible Unitholders' interest in
income 1 — 1 — Class D Unitholder’s interest in net income —
— — 1 Limited
Partners’ interest in net income $ 239 $ 298 $ 550
$ 580
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Investor Relations:Energy TransferLyndsay Hannah or Brent
Ratliff, 214-981-0795orMedia Relations:Granado
Communications GroupVicki Granado, 214-599-8785214-498-9272
(cell)
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