Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the
“Partnership”) today reported financial results for the quarter
ended September 30, 2016.
ETE’s net income attributable to partners was $209 million for
the three months ended September 30, 2016 compared to $293
million for the three months ended September 30, 2015.
Distributable Cash Flow, as adjusted, for the three months ended
September 30, 2016 was $281 million compared to $325 million
for the three months ended September 30, 2015. The decreases
in net income attributable to partners and Distributable Cash Flow,
as adjusted, were primarily driven by an $85 million reduction in
incentive distributions from ETP. As previously reported, 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 the quarter ended June 30, 2016.
The Partnership’s recent key accomplishments and other
developments include the following:
- In October 2016, ETE announced a $0.285
distribution per ETE common unit for the quarter ended
September 30, 2016, or $1.14 per unit on an annualized
basis.
- As of September 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 3.08x.
The Partnership has scheduled a conference call for 8:00 a.m.
Central Time, Thursday, November 10, 2016 to discuss its third
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 Energy Transfer
Partners, L.P. (“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,
including Sunoco LP Common Units, 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 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 of Sunoco Logistics Partners L.P. (NYSE: SXL), which
operates a geographically diverse portfolio of pipelines,
terminalling and acquisition and marketing assets. ETP recently
acquired the general partner, 100% of the incentive distribution
rights, and an approximate 65% limited partnership interest in
PennTex Midstream Partners, LP (Nasdaq: PTXP), which is a
growth-oriented master limited partnership that provides natural
gas gathering and processing and residue gas and natural gas
liquids transportation services to producers in northern Louisiana.
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. 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 approximately 1,345 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 6,900 sites. SUN’s 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In millions)(unaudited)
September 30, 2016 December 31, 2015
ASSETS
Current assets $ 6,467 $ 5,410 Property, plant and
equipment, net 53,565 48,683 Advances to and investments in
unconsolidated affiliates 3,104 3,462 Non-current derivative assets
11 — Other non-current assets, net 776 730 Intangible assets, net
5,318 5,431 Goodwill 7,598 7,473 Total
assets $ 76,839 $ 71,189
LIABILITIES AND
EQUITY
Current liabilities $ 7,042 $ 4,910 Long-term debt,
less current maturities 40,020 36,837 Long-term notes payable to
related company 83 — Non-current derivative liabilities 160 137
Deferred income taxes 5,209 4,590 Other non-current liabilities
1,087 1,069 Commitments and contingencies Preferred
units of subsidiary 33 33 Redeemable noncontrolling interests 15 15
Equity: Total partners’ deficit (1,703 ) (932 )
Noncontrolling interest 24,893 24,530
Total equity 23,190 23,598 Total
liabilities and equity $ 76,839 $ 71,189
ENERGY TRANSFER
EQUITY, L.P. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In millions, except per unit
data)(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015 REVENUES $
9,675 $ 10,616 $ 26,701 $ 32,590 COSTS AND EXPENSES: Cost of
products sold 7,448 8,581 20,124 26,406 Operating expenses 689 706
2,018 1,997 Depreciation, depletion and amortization 595 524 1,745
1,531 Selling, general and administrative 246
155 589 493 Total costs and
expenses 8,978 9,966 24,476
30,427 OPERATING INCOME 697 650 2,225 2,163
OTHER INCOME (EXPENSE): Interest expense, net of interest
capitalized (481 ) (442 ) (1,358 ) (1,221 ) Equity in earnings of
unconsolidated affiliates 49 110 205 284 Impairment of investment
in affiliate (308 ) — (308 ) — Losses on extinguishments of debt —
(10 ) — (43 ) Losses on interest rate derivatives (28 ) (64 ) (179
) (14 ) Other, net 54 31 94
55 INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)
(17 ) 275 679 1,224 Income tax expense (benefit) (58 )
37 (122 ) (7 ) NET INCOME 41 238 801
1,231 Less: Net income (loss) attributable to noncontrolling
interest (168 ) (55 ) 39 356
NET INCOME ATTRIBUTABLE TO PARTNERS 209 293 762 875 General
Partner’s interest in net income — 1 2 2 Convertible Unitholders’
interest in income 2 — 3 — Class D Unitholder’s interest in net
income — 1 — 2
Limited Partners’ interest in net income $ 207 $ 291
$ 757 $ 871 NET INCOME PER LIMITED PARTNER
UNIT: Basic $ 0.20 $ 0.28 $ 0.72 $ 0.81
Diluted $ 0.19 $ 0.28 $ 0.71 $ 0.81
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: Basic 1,045.5
1,052.5 1,045.0 1,068.9
Diluted 1,100.7 1,054.1
1,071.3 1,070.5
ENERGY TRANSFER
EQUITY, L.P.SUPPLEMENTAL INFORMATION(Dollars in
millions)(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015 Cash
distributions from ETP associated with: Limited partner interest $
3 $ 3 $ 8 $ 51 Class H Units 92 68 263 186 General partner interest
8 8 24 23 Incentive distribution rights 346 320 1,012 937 IDR
relinquishments, net of distributions on Class I Units (1)
(127 ) (28 ) (271 ) (83 ) Total cash
distributions from ETP 322 371 1,036 1,114 Cash distributions from
Sunoco LP (2) 22 8 66
8 Total cash distributions from investments in
subsidiaries 344 379 1,102 1,122 Distributable cash flow
attributable to Lake Charles LNG: Revenues 50 54 148 162 Operating
expenses (4 ) (4 ) (13 ) (12 ) Selling, general and administrative
expenses (1 ) (1 ) (2 ) (3 )
Distributable cash flow attributable to Lake Charles LNG 45 49 133
147 Expenses of the Parent Company on a cash basis: Selling,
general and administrative expenses, excluding certain non-cash
expenses 17 2 72 9 Management fee to ETP (3) 24 24 72 72 Interest
expense, net of amortization of financing costs, interest income,
and realized gains and losses on interest rate swaps 78
78 235 206 Total
Parent Company expenses 119 104
379 287 Cash distributions to be paid
to the partners of ETE: Distributions to be paid to limited
partners (4) $ 241 $ 296 $ 721 $ 841 Distributions to be paid to
general partner 1 1 2 2 Distributions to be paid to Class D
unitholder — 1 — 2
Total cash distributions to be paid to the partners of ETE $
242 $ 298 $ 723 $ 845 Common
units outstanding — end of period 1,047.0
1,044.8 1,047.0 1,044.8
_________________
(1)
IDR relinquishments for the three and nine months ended
September 30, 2016 include the impact of $85 million and $160
million, respectively, of incentive distribution reduction with
respect to the second and third quarters 2016 distributions, 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
September 30, 2016 and 2015 and $9 million and $10 million for the
nine months ended September 30, 2016 and 2015, respectively.
(4)
Includes distributions of $0.11 per common unit for the three
months ended September 30, 2016, and $0.33 per common unit for the
nine months ended September 30, 2016, 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
INFORMATIONRECONCILIATION OF DISTRIBUTABLE CASH
FLOW(Dollars in millions)(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015 Net income
attributable to partners $ 209 $ 293 $ 762 $ 875 Equity in earnings
related to investments in ETP and Sunoco LP (333 ) (365 ) (1,065 )
(1,056 ) Total cash distributions from investments in subsidiaries
344 379 1,102 1,122 Amortization included in interest expense
(excluding ETP and Sunoco LP) 3 3 9 7 Other non-cash (excluding ETP
and Sunoco LP) 47 14 48
34 Distributable Cash Flow 270 324 856 982
Transaction-related expenses 11 1 51 5 Bakken Pipeline Transaction
— pro forma interest expense — —
— (6 ) Distributable Cash Flow, as adjusted $ 281
$ 325 $ 907 $ 981 Total cash
distributions to be paid to the partners of ETE $ 242 $ 298 $ 723 $
845 Distribution coverage ratio(1)
1.16
x
1.09
x
1.25
x
1.16
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
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)
September 30,2016
December 31,2015
ASSETS Current assets $ 58 $ 35 Property, plant and
equipment, net 36 20 Advances to and investments in unconsolidated
affiliates 5,069 5,764 Intangible assets, net 2 6 Goodwill 9 9
Other non-current assets, net 9 10
Total assets $ 5,183 $ 5,844
LIABILITIES AND
PARTNERS’ CAPITAL Current liabilities $ 122 $ 178 Long-term
debt, less current maturities 6,365 6,332 Note payable to related
company 396 265 Other non-current liabilities 3 1 Commitments and
contingencies Partners’ capital: General Partner (3 ) (2 ) Limited
Partners: Common Unitholders (1,818 ) (952 ) Class D Units — 22
Series A Convertible Preferred Units 118 —
Total partners’ deficit (1,703 ) (932 ) Total
liabilities and partners’ deficit $ 5,183 $ 5,844
STATEMENTS OF
OPERATIONS(In millions)(unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015 SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES $ (75 ) $ (24 ) $ (156 ) $ (81
) OTHER INCOME (EXPENSE): Interest expense, net of interest
capitalized (81 ) (81 ) (244 ) (214 ) Equity in earnings of
unconsolidated affiliates 367 403 1,166 1,174 Other, net (2
) (4 ) (4 ) (3 ) INCOME BEFORE INCOME TAX
BENEFIT 209 294 762 876 Income tax benefit — 1
— 1 NET INCOME 209 293 762 875
General Partner’s interest in net income — 1 2 2 Convertible
Unitholders' interest in income 2 — 3 — Class D Unitholder’s
interest in net income — 1 —
2 Limited Partners’ interest in net income $
207 $ 291 $ 757 $ 871
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Investor Relations:Energy TransferLyndsay Hannah or Brent
Ratliff, 214-981-0795orMedia Relations:Granado
Communications GroupVicki Granado, 214-599-8785Cell:
214-498-9272
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