Energy Transfer Equity Reports Fourth Quarter Results
ETE’s net income attributable to partners was
The decreases in net income attributable to partners and Distributable
Cash Flow, as adjusted, were primarily driven by a
The Partnership’s recent key accomplishments and other developments include the following:
-
In
January 2017 , ETE issued 32.2 million common units representing limited partner interests in the Partnership to certain institutional investors in a private transaction for gross proceeds of approximately$580 million , which ETE used to purchase 15.8 million newly issued ETP common units. -
On
January 26, 2017 , the Partnership announced its quarterly cash distribution of$0.285 per ETE common unit for the fourth quarter endedDecember 31, 2016 , or$1.14 per unit on an annualized basis. -
As of
December 31, 2016 , ETE’s$1.50 billion revolving credit facility had$875 million of outstanding borrowings and its leverage ratio, as defined by the credit agreement, was 3.00x.
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
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 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In millions) |
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(unaudited) |
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December 31, | ||||||||||
2016 | 2015 | |||||||||
ASSETS | ||||||||||
Current assets | $ | 6,985 | $ | 5,410 | ||||||
Property, plant and equipment, net | 55,438 | 48,683 | ||||||||
Advances to and investments in unconsolidated affiliates | 3,040 | 3,462 | ||||||||
Other non-current assets, net | 818 | 730 | ||||||||
Intangible assets, net | 5,992 | 5,431 | ||||||||
Goodwill | 6,738 | 7,473 | ||||||||
Total assets | $ | 79,011 | $ | 71,189 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities | $ | 7,277 | $ | 4,910 | ||||||
Long-term debt, less current maturities | 42,608 | 36,837 | ||||||||
Long-term notes payable - related companies | 250 | — | ||||||||
Deferred income taxes | 5,112 | 4,590 | ||||||||
Non-current derivative liabilities | 76 | 137 | ||||||||
Other non-current liabilities | 1,123 | 1,069 | ||||||||
Commitments and contingencies | ||||||||||
Preferred units of subsidiary | 33 | 33 | ||||||||
Redeemable noncontrolling interest | 15 | 15 | ||||||||
Equity: | ||||||||||
Total partners’ deficit | (1,694 | ) | (932 | ) | ||||||
Noncontrolling interest | 24,211 | 24,530 | ||||||||
Total equity | 22,517 | 23,598 | ||||||||
Total liabilities and equity | $ | 79,011 | $ | 71,189 |
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) |
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(unaudited) |
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Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
REVENUES: | $ | 10,803 | $ | 9,536 | $ | 37,504 | $ | 42,126 | ||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||
Cost of products sold | 8,532 | 7,561 | 28,656 | 34,009 | ||||||||||||||||
Operating expenses | 678 | 706 | 2,696 | 2,661 | ||||||||||||||||
Depreciation, depletion and amortization | 614 | 548 | 2,359 | 2,079 | ||||||||||||||||
Selling, general and administrative | 218 | 146 | 807 | 639 | ||||||||||||||||
Impairment losses | 1,487 | 339 | 1,487 | 339 | ||||||||||||||||
Total costs and expenses | 11,529 | 9,300 | 36,005 | 39,727 | ||||||||||||||||
OPERATING INCOME (LOSS) | (726 | ) | 236 | 1,499 | 2,399 | |||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Interest expense, net of interest capitalized | (474 | ) | (422 | ) | (1,832 | ) | (1,643 | ) | ||||||||||||
Equity in earnings (losses) of unconsolidated affiliates | 65 | (8 | ) | 270 | 276 | |||||||||||||||
Impairment of investment in an unconsolidated affiliate | — | — | (308 | ) | — | |||||||||||||||
Gain on acquisitions | 83 | — | 83 | — | ||||||||||||||||
Losses on extinguishments of debt | — | — | — | (43 | ) | |||||||||||||||
Gains (losses) on interest rate derivatives | 167 | (4 | ) | (12 | ) | (18 | ) | |||||||||||||
Other, net | 30 | (33 | ) | 124 | 22 | |||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (855 | ) | (231 | ) | (176 | ) | 993 | |||||||||||||
Income tax expense (benefit) from continuing operations | (95 | ) | (93 | ) | (217 | ) | (100 | ) | ||||||||||||
NET INCOME (LOSS) | (760 | ) | (138 | ) | 41 | 1,093 | ||||||||||||||
LESS: Net loss attributable to noncontrolling interest | (993 | ) | (452 | ) | (954 | ) | (96 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 233 | 314 | 995 | 1,189 | ||||||||||||||||
General Partner’s interest in net income | 1 | 1 | 3 | 3 | ||||||||||||||||
Convertible Unitholders’ interest in income | 6 | — | 9 | — | ||||||||||||||||
Class D Unitholder’s interest in net income | — | 1 | — | 3 | ||||||||||||||||
Limited Partners’ interest in net income | $ | 226 | $ | 312 | $ | 983 | $ | 1,183 | ||||||||||||
NET INCOME PER LIMITED PARTNER UNIT: | ||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.30 | $ | 0.94 | $ | 1.11 | ||||||||||||
Diluted | $ | 0.21 | $ | 0.30 | $ | 0.92 | $ | 1.11 | ||||||||||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: | ||||||||||||||||||||
Basic | 1,046.9 | 1,052.5 | 1,045.5 | 1,062.8 | ||||||||||||||||
Diluted | 1,105.3 | 1,053.8 | 1,078.6 | 1,064.4 |
ENERGY TRANSFER EQUITY, L.P. |
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SUPPLEMENTAL INFORMATION |
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(In millions) |
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(unaudited) |
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Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Cash distributions from ETP associated with: | ||||||||||||||||||||
Limited partner interest | $ | 20 | $ | 3 | $ | 28 | $ | 54 | ||||||||||||
Class H Units | 94 | 77 | 357 | 263 | ||||||||||||||||
General partner interest | 8 | 8 | 32 | 31 | ||||||||||||||||
Incentive distribution rights | 351 | 324 | 1,363 | 1,261 | ||||||||||||||||
IDR relinquishments, net of Class I distributions (1) | (138 | ) | (28 | ) | (409 | ) | (111 | ) | ||||||||||||
Total cash distributions from ETP | 335 | 384 | 1,371 | 1,498 | ||||||||||||||||
Cash distributions from Sunoco LP (2) | 22 | 17 | 88 | 25 | ||||||||||||||||
Cash distributions from investments in subsidiaries | $ | 357 | $ | 401 | $ | 1,459 | $ | 1,523 | ||||||||||||
Distributable cash flow attributable to Lake Charles LNG: | ||||||||||||||||||||
Revenues | $ | 49 | $ | 54 | $ | 197 | $ | 216 | ||||||||||||
Operating expenses | (3 | ) | (5 | ) | (16 | ) | (17 | ) | ||||||||||||
Selling, general and administrative expenses | — | — | (2 | ) | (3 | ) | ||||||||||||||
Distributable cash flow attributable to Lake Charles LNG | $ | 46 | $ | 49 | $ | 179 | $ | 196 | ||||||||||||
Expenses of the Parent Company on a cash basis: | ||||||||||||||||||||
Selling, general and administrative expenses, excluding certain non-cash expenses | $ | 8 | $ | 12 | $ | 80 | $ | 21 | ||||||||||||
Management fee to ETP (3) | 24 | 24 | 95 | 95 | ||||||||||||||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate swaps | 80 | 75 | 315 | 281 | ||||||||||||||||
Total Parent Company expenses | $ | 112 | $ | 111 | $ | 490 | $ | 397 | ||||||||||||
Cash distributions to be paid to the partners of ETE: | ||||||||||||||||||||
Distributions to be paid to limited partners (4) | $ | 250 | $ | 298 | $ | 971 | $ | 1,139 | ||||||||||||
Distributions to be paid to general partner | 1 | — | 3 | 2 | ||||||||||||||||
Distributions to be paid to Class D unitholder | — | 1 | — | 3 | ||||||||||||||||
Total cash distributions to be paid to the partners of ETE | $ | 251 | $ | 299 | $ | 974 | $ | 1,144 | ||||||||||||
Common units outstanding — end of period | 1,046.9 | 1,044.8 | 1,046.9 | 1,044.8 |
(1) |
IDR relinquishments for the three months and year ended December 31, 2016 include the impact of incentive distribution reductions with respect to the second, third and fourth quarters 2016 of $75 million, $85 million and $95 million, respectively, 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 December 31, 2016 and 2015 and $13 million for the years ended December 31, 2016 and 2015. | |
(4) |
Includes distributions of $0.11 per common unit for the three months ended December 31, 2016, and $0.44 per common unit for the year ended December 31, 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 INFORMATION |
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RECONCILIATION OF DISTRIBUTABLE CASH FLOW |
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(Dollars in millions) |
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(unaudited) |
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Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Net income attributable to partners | $ | 233 | $ | 314 | $ | 995 | $ | 1,189 | ||||||||||||
Equity in earnings related to investments in ETP and Sunoco LP | (309 | ) | (387 | ) | (1,374 | ) | (1,443 | ) | ||||||||||||
Total cash distributions from investments in subsidiaries | 357 | 401 | 1,459 | 1,523 | ||||||||||||||||
Amortization included in interest expense (excluding ETP and Sunoco LP) | 3 | 5 | 12 | 12 | ||||||||||||||||
Other non-cash (excluding ETP and Sunoco LP) | 7 | 6 | 56 | 41 | ||||||||||||||||
Distributable Cash Flow | 291 | 339 | 1,148 | 1,322 | ||||||||||||||||
Transaction-related expenses | 8 | 4 | 59 | 9 | ||||||||||||||||
Bakken Pipeline Transaction — pro forma interest expense | — | — | — | (6 | ) | |||||||||||||||
Distributable Cash Flow, as adjusted | $ | 299 | $ | 343 | $ | 1,207 | $ | 1,325 | ||||||||||||
Total cash distributions to be paid to the partners of ETE | 251 | 299 | 974 | 1,144 | ||||||||||||||||
Distribution coverage ratio(1) | 1.19x | 1.15x | 1.24x | 1.16x |
(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. |
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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. |
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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”). |
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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. |
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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. |
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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 |
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(In millions) |
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(unaudited) |
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December 31, | ||||||||||
2016 | 2015 | |||||||||
ASSETS | ||||||||||
Current assets | $ | 57 | $ | 35 | ||||||
Property, plant and equipment, net | 36 | 20 | ||||||||
Advances to and investments in unconsolidated affiliates | 5,088 | 5,764 | ||||||||
Intangible assets, net | 1 | 6 | ||||||||
Goodwill | 9 | 9 | ||||||||
Other non-current assets, net | 10 | 10 | ||||||||
Total assets | $ | 5,201 | $ | 5,844 | ||||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||||
Current liabilities | $ | 92 | $ | 178 | ||||||
Long-term debt, less current maturities | 6,358 | 6,332 | ||||||||
Note payable to affiliate | 443 | 265 | ||||||||
Other non-current liabilities | 2 | 1 | ||||||||
Commitments and contingencies | ||||||||||
Partners’ deficit: | ||||||||||
General Partner | (3 | ) | (2 | ) | ||||||
Limited Partners: | ||||||||||
Common unitholders | (1,871 | ) | (952 | ) | ||||||
Class D Units | — | 22 | ||||||||
Series A Convertible Preferred Units | 180 | — | ||||||||
Total partners’ deficit | (1,694 | ) | (932 | ) | ||||||
Total liabilities and partners’ deficit | $ | 5,201 | $ | 5,844 |
STATEMENTS OF OPERATIONS |
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(In millions) |
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(unaudited) |
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Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | $ | (29 | ) | $ | (31 | ) | $ | (185 | ) | $ | (112 | ) | ||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Interest expense, net of interest capitalized | (83 | ) | (80 | ) | (327 | ) | (294 | ) | ||||||||||||
Equity in earnings of unconsolidated affiliates | 345 | 427 | 1,511 | 1,601 | ||||||||||||||||
Other, net | — | (2 | ) | (4 | ) | (5 | ) | |||||||||||||
INCOME BEFORE INCOME TAXES | 233 | 314 | 995 | 1,190 | ||||||||||||||||
Income tax expense | — | — | — | 1 | ||||||||||||||||
NET INCOME | 233 | 314 | 995 | 1,189 | ||||||||||||||||
General Partner’s interest in net income | 1 | 1 | 3 | 3 | ||||||||||||||||
Convertible Unitholders’ interest in income | 6 | — | 9 | — | ||||||||||||||||
Class D Unitholder’s interest in net income | — | 1 | — | 3 | ||||||||||||||||
Limited Partners’ interest in net income | $ | 226 | $ | 312 | $ | 983 | $ | 1,183 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170222006658/en/
Source:
Investor Relations:
Energy Transfer
Helen Ryoo, Lyndsay
Hannah or Brent Ratliff, 214-981-0795
OR
Media Relations:
Granado
Communications Group
Vicki Granado, 214-599-8785
214-498-9272
(cell)