August 7, 2019 | ||
Date of Report (Date of earliest event reported) | ||
ENERGY TRANSFER LP | ||
(Exact name of Registrant as specified in its charter) | ||
Delaware | 1-32740 | 30-0108820 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(214) | 981-0700 |
(Registrant’s telephone number, including area code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Common Units | ET | New York Stock Exchange |
Exhibit Number | Description of the Exhibit | |
ENERGY TRANSFER LP | |||
By: | LE GP, LLC, its general partner | ||
Date: | August 7, 2019 | By: | /s/ Thomas E. Long |
Thomas E. Long | |||
Chief Financial Officer (duly authorized to sign on behalf of the registrant) |
• | Net income attributable to partners of $878 million, reflecting an increase over previous period primarily due to higher operating income and the impact of the simplification transaction. |
• | Record Adjusted EBITDA of $2.82 billion, up 25 percent from the second quarter of 2018. |
• | Distributable Cash Flow attributable to partners of $1.60 billion, up 23 percent from the second quarter of 2018. |
• | Distribution coverage ratio of 2.00x, yielding excess coverage of $800 million of Distributable Cash Flow attributable to partners in excess of distributions. |
• | Increases 2019 outlook for Adjusted EBITDA to approximately $10.8 billion to $11.0 billion and reduces capital expenditures to approximately $4.6 billion to $4.8 billion. |
• | ET announces its eighth natural gas liquids (NGL) fractionation facility at Mont Belvieu, Texas. Fractionator VIII will be a 150,000 barrel per day fractionator that is scheduled to be in service in the second quarter of 2021. With the addition of Fractionator VIII, ET will have more than one million barrels per day of fractionation capacity at Mont Belvieu. |
• | ET announced a binding supplemental open season in July 2019 to solicit additional shipper commitments that would further support a capacity optimization on the Bakken pipeline system. |
• | The Permian Express 4 expansion is ongoing, and ET expects to have the project, which adds 120,000 barrels per day of capacity from the Permian Basin to Gulf Coast markets, in-service by the end of the third quarter of 2019. |
• | ET and Sunoco LP closed on the JC Nolan Pipeline joint venture in July 2019 and successfully commissioned the diesel fuel pipeline in West Texas this week. |
• | Construction is ongoing at ET’s ethane storage tank and chilling facilities in Nederland, Texas with an expected in-service date in the fourth quarter of 2020. |
• | ET opened an office in Beijing in April and continues to expand its international marketing efforts to meet growing demand for LNG and NGL products. |
• | In July 2019, ET announced a quarterly distribution of $0.305 per unit ($1.220 annualized) on ET common units for the quarter ended June 30, 2019. The distribution coverage ratio for the second quarter of 2019 is 2.00x. |
• | As of June 30, 2019, ETO’s $6.00 billion revolving credit facilities had an aggregate $3.56 billion of available capacity, and ETO’s leverage ratio, as defined by its credit agreement, was 3.61x. |
June 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets | $ | 7,198 | $ | 6,750 | |||
Property, plant and equipment, net | 68,187 | 66,963 | |||||
Advances to and investments in unconsolidated affiliates | 2,838 | 2,642 | |||||
Lease right-of-use assets, net (a) | 853 | — | |||||
Other non-current assets, net | 1,026 | 1,006 | |||||
Intangible assets, net | 5,827 | 6,000 | |||||
Goodwill | 4,883 | 4,885 | |||||
Total assets | $ | 90,812 | $ | 88,246 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | $ | 6,429 | $ | 9,310 | |||
Long-term debt, less current maturities | 46,499 | 43,373 | |||||
Non-current derivative liabilities | 354 | 104 | |||||
Non-current operating lease liabilities (a) | 803 | — | |||||
Deferred income taxes | 3,071 | 2,926 | |||||
Other non-current liabilities | 1,139 | 1,184 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interests | 500 | 499 | |||||
Equity: | |||||||
Total partners’ capital | 20,834 | 20,559 | |||||
Noncontrolling interests | 11,183 | 10,291 | |||||
Total equity | 32,017 | 30,850 | |||||
Total liabilities and equity | $ | 90,812 | $ | 88,246 |
(a) | Lease-related balances as of June 30, 2019 were recorded in connection with the required adoption of the new lease accounting principles (referred to as ASC 842) on January 1, 2019. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUES | $ | 13,877 | $ | 14,118 | $ | 26,998 | $ | 26,000 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Cost of products sold | 10,302 | 11,343 | 19,717 | 20,588 | |||||||||||
Operating expenses | 792 | 772 | 1,600 | 1,496 | |||||||||||
Depreciation, depletion and amortization | 785 | 694 | 1,559 | 1,359 | |||||||||||
Selling, general and administrative | 179 | 183 | 326 | 331 | |||||||||||
Impairment losses | — | — | 50 | — | |||||||||||
Total costs and expenses | 12,058 | 12,992 | 23,252 | 23,774 | |||||||||||
OPERATING INCOME | 1,819 | 1,126 | 3,746 | 2,226 | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense, net of interest capitalized | (578 | ) | (510 | ) | (1,168 | ) | (976 | ) | |||||||
Equity in earnings of unconsolidated affiliates | 77 | 92 | 142 | 171 | |||||||||||
Losses on extinguishments of debt | — | — | (18 | ) | (106 | ) | |||||||||
Gains (losses) on interest rate derivatives | (122 | ) | 20 | (196 | ) | 72 | |||||||||
Other, net | 46 | (1 | ) | 42 | 56 | ||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 1,242 | 727 | 2,548 | 1,443 | |||||||||||
Income tax expense from continuing operations | 34 | 68 | 160 | 58 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 1,208 | 659 | 2,388 | 1,385 | |||||||||||
Loss from discontinued operations, net of income taxes | — | (26 | ) | — | (263 | ) | |||||||||
NET INCOME | 1,208 | 633 | 2,388 | 1,122 | |||||||||||
Less: Net income attributable to noncontrolling interests | 317 | 278 | 614 | 404 | |||||||||||
Less: Net income attributable to redeemable noncontrolling interests | 13 | — | 26 | — | |||||||||||
NET INCOME ATTRIBUTABLE TO PARTNERS | 878 | 355 | 1,748 | 718 | |||||||||||
Series A Convertible Preferred Unitholders’ interest in income | — | 12 | — | 33 | |||||||||||
General Partner’s interest in net income | 1 | 1 | 2 | 2 | |||||||||||
Limited Partners’ interest in net income | $ | 877 | $ | 342 | $ | 1,746 | $ | 683 | |||||||
NET INCOME PER LIMITED PARTNER UNIT: | |||||||||||||||
Basic | $ | 0.33 | $ | 0.31 | $ | 0.67 | $ | 0.62 | |||||||
Diluted | $ | 0.33 | $ | 0.31 | $ | 0.66 | $ | 0.62 | |||||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: | |||||||||||||||
Basic | 2,621.2 | 1,114.8 | 2,620.3 | 1,097.1 | |||||||||||
Diluted | 2,631.0 | 1,158.2 | 2,630.1 | 1,158.2 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Reconciliation of net income to Adjusted EBITDA and Distributable Cash Flow (b): | |||||||||||||||
Net income | $ | 1,208 | $ | 633 | $ | 2,388 | $ | 1,122 | |||||||
Loss from discontinued operations | — | 26 | — | 263 | |||||||||||
Interest expense, net of capitalized interest | 578 | 510 | 1,168 | 976 | |||||||||||
Impairment losses | — | — | 50 | — | |||||||||||
Income tax expense from continuing operations | 34 | 68 | 160 | 58 | |||||||||||
Depreciation, depletion and amortization | 785 | 694 | 1,559 | 1,359 | |||||||||||
Non-cash compensation expense | 29 | 32 | 58 | 55 | |||||||||||
Losses (gains) on interest rate derivatives | 122 | (20 | ) | 196 | (72 | ) | |||||||||
Unrealized losses (gains) on commodity risk management activities | 23 | 265 | (26 | ) | 352 | ||||||||||
Losses on extinguishments of debt | — | — | 18 | 106 | |||||||||||
Inventory valuation adjustments | (4 | ) | (32 | ) | (97 | ) | (57 | ) | |||||||
Equity in earnings of unconsolidated affiliates | (77 | ) | (92 | ) | (142 | ) | (171 | ) | |||||||
Adjusted EBITDA related to unconsolidated affiliates | 163 | 168 | 309 | 324 | |||||||||||
Adjusted EBITDA from discontinued operations | — | (5 | ) | — | (25 | ) | |||||||||
Other, net | (37 | ) | 15 | (20 | ) | (26 | ) | ||||||||
Adjusted EBITDA (consolidated) | 2,824 | 2,262 | 5,621 | 4,264 | |||||||||||
Adjusted EBITDA related to unconsolidated affiliates | (163 | ) | (168 | ) | (309 | ) | (324 | ) | |||||||
Distributable cash flow from unconsolidated affiliates | 107 | 99 | 200 | 203 | |||||||||||
Interest expense, net of capitalized interest | (578 | ) | (510 | ) | (1,168 | ) | (978 | ) | |||||||
Preferred unitholders’ distributions | (64 | ) | (41 | ) | (117 | ) | (65 | ) | |||||||
Current income tax (expense) benefit | 7 | 27 | (21 | ) | (441 | ) | |||||||||
Transaction-related income taxes | — | (10 | ) | — | 470 | ||||||||||
Maintenance capital expenditures | (170 | ) | (126 | ) | (262 | ) | (217 | ) | |||||||
Other, net | 19 | 7 | 37 | 14 | |||||||||||
Distributable Cash Flow (consolidated) | 1,982 | 1,540 | 3,981 | 2,926 | |||||||||||
Distributable Cash Flow attributable to Sunoco LP (100%) | (101 | ) | (99 | ) | (198 | ) | (183 | ) | |||||||
Distributions from Sunoco LP | 41 | 41 | 82 | 82 | |||||||||||
Distributable Cash Flow attributable to USAC (100%) | (54 | ) | (46 | ) | (109 | ) | (46 | ) | |||||||
Distributions from USAC | 21 | 31 | 42 | 31 | |||||||||||
Distributable Cash Flow attributable to noncontrolling interests in other non-wholly-owned consolidated subsidiaries | (293 | ) | (181 | ) | (544 | ) | (328 | ) | |||||||
Distributable Cash Flow attributable to the partners of ET – pro forma for the Merger (a) | 1,596 | 1,286 | 3,254 | 2,482 | |||||||||||
Transaction-related adjustments | 5 | 14 | 3 | 13 | |||||||||||
Distributable Cash Flow attributable to the partners of ET, as adjusted – pro forma for the Merger (a) | $ | 1,601 | $ | 1,300 | $ | 3,257 | $ | 2,495 | |||||||
Distributions to partners – pro forma for the Merger (a): | |||||||||||||||
Limited Partners (c) | $ | 800 | $ | 798 | $ | 1,599 | $ | 1,507 | |||||||
General Partner | 1 | 1 | 2 | 2 | |||||||||||
Total distributions to be paid to partners | $ | 801 | $ | 799 | $ | 1,601 | $ | 1,509 | |||||||
Common Units outstanding – end of period – pro forma for the Merger (a) | 2,623.2 | 2,616.0 | 2,623.2 | 2,616.0 | |||||||||||
Distribution coverage ratio – pro forma for the Merger (a) | 2.00x | 1.63x | 2.03x | 1.65x |
(a) | The closing of the Merger has impacted the Partnership’s calculation of Distributable Cash Flow attributable to partners, as well as the number of ET Common Units outstanding and the amount of distributions to be paid to partners for the three and six months ended June 30, 2018. In order to provide information on a comparable basis for pre-Merger and post-Merger periods, the Partnership has included certain pro forma information for the three and six months ended June 30, 2018. |
• | ETO is reflected as a wholly-owned subsidiary and pro forma Distributable Cash Flow attributable to partners reflects ETO’s consolidated Distributable Cash Flow (less certain other adjustments); |
• | Distributions from Sunoco LP and USAC include distributions to both ET and ETO; and |
• | Distributable Cash Flow attributable to noncontrolling interests in our other non-wholly-owned subsidiaries is subtracted from consolidated Distributable Cash Flow to calculate Distributable Cash Flow attributable to partners. |
(b) | Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio are non-GAAP financial measures used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of ET’s fundamental business activities and should not be considered in isolation or as a substitute for net income, income from operations, cash flows from operating activities or other GAAP measures. |
• | For subsidiaries with publicly traded equity interests, other than ETO, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to our partners includes distributions to be received by the parent company with respect to the periods presented. |
• | For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiaries, but Distributable Cash Flow attributable to partners reflects only the amount of Distributable Cash Flow of such subsidiaries that is attributable to our ownership interest. |
(c) | The amounts reflected for the six months ended June 30, 2018 includes distributions to unitholders who elected to participate in a plan to forgo a portion of their future potential cash distributions on common units and reinvest those distributions in ETE Series A convertible preferred units representing limited partner interests in the Partnership for the six months ended June 30, 2018. The quarter ended March 31, 2018 was the final quarter of participation in the plan. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Segment Adjusted EBITDA: | |||||||
Intrastate transportation and storage | $ | 290 | $ | 208 | |||
Interstate transportation and storage | 460 | 375 | |||||
Midstream | 412 | 414 | |||||
NGL and refined products transportation and services | 644 | 461 | |||||
Crude oil transportation and services | 751 | 548 | |||||
Investment in Sunoco LP | 152 | 140 | |||||
Investment in USAC | 105 | 95 | |||||
All other | 10 | 21 | |||||
Total Segment Adjusted EBITDA | $ | 2,824 | $ | 2,262 |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Segment Margin: | |||||||
Intrastate transportation and storage | $ | 365 | $ | 267 | |||
Interstate transportation and storage | 493 | 378 | |||||
Midstream | 614 | 593 | |||||
NGL and refined products transportation and services | 764 | 587 | |||||
Crude oil transportation and services | 909 | 442 | |||||
Investment in Sunoco LP | 269 | 310 | |||||
Investment in USAC | 150 | 147 | |||||
All other | 48 | 57 | |||||
Intersegment eliminations | (37 | ) | (6 | ) | |||
Total segment margin | 3,575 | 2,775 | |||||
Less: | |||||||
Operating expenses | 792 | 772 | |||||
Depreciation, depletion and amortization | 785 | 694 | |||||
Selling, general and administrative | 179 | 183 | |||||
Operating income | $ | 1,819 | $ | 1,126 |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Natural gas transported (BBtu/d) | 12,115 | 10,327 | |||||
Revenues | $ | 765 | $ | 813 | |||
Cost of products sold | 400 | 546 | |||||
Segment margin | 365 | 267 | |||||
Unrealized gains on commodity risk management activities | (26 | ) | (8 | ) | |||
Operating expenses, excluding non-cash compensation expense | (47 | ) | (51 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (7 | ) | (7 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 5 | 7 | |||||
Segment Adjusted EBITDA | $ | 290 | $ | 208 |
• | an increase of $65 million in realized natural gas sales and other due to higher realized gains from pipeline optimization activity; and |
• | an increase of $14 million in transportation fees primarily due to new contracts, as well as the impact of the Red Bluff Express pipeline coming online in May 2018. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Natural gas transported (BBtu/d) | 10,825 | 8,707 | |||||
Natural gas sold (BBtu/d) | 17 | 17 | |||||
Revenues | $ | 493 | $ | 378 | |||
Operating expenses, excluding non-cash compensation, amortization and accretion expenses | (138 | ) | (110 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation, amortization and accretion expenses | (18 | ) | (17 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 125 | 123 | |||||
Other | (2 | ) | 1 | ||||
Segment Adjusted EBITDA | $ | 460 | $ | 375 |
• | an increase of $69 million from placing the Rover pipeline fully in-service, resulting in an increase of $101 million in revenues, partially offset by an increase of $32 million in operating expenses; |
• | increases of $5 million and $3 million from higher utilization of our Transwestern and Trunkline pipeline systems, respectively; |
• | an increase of $3 million for additional gas processing revenues on our Panhandle system; |
• | an increase of $3 million from additional volume delivered from our Sea Robin pipeline as a result of fewer third-party supply interruptions; and |
• | an increase of $2 million in Adjusted EBITDA from unconsolidated affiliates primarily due to new fixed transportation contracts on Citrus. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Gathered volumes (BBtu/d) | 13,148 | 11,576 | |||||
NGLs produced (MBbls/d) | 565 | 513 | |||||
Equity NGLs (MBbls/d) | 30 | 31 | |||||
Revenues | $ | 1,198 | $ | 1,874 | |||
Cost of products sold | 584 | 1,281 | |||||
Segment margin | 614 | 593 | |||||
Operating expenses, excluding non-cash compensation expense | (189 | ) | (169 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (23 | ) | (20 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 9 | 9 | |||||
Other | 1 | 1 | |||||
Segment Adjusted EBITDA | $ | 412 | $ | 414 |
• | a decrease of $30 million in non-fee-based margin due to lower NGL prices of $35 million and lower gas prices of $15 million, partially offset by the impact of increased throughput volume in the Permian region of $20 million; |
• | an increase of $20 million in operating expenses due to an increase of $10 million in outside services, $7 million in maintenance project costs, and $3 million in employee costs; and |
• | an increase of $3 million in selling, general and administrative expenses due to an increase in allocated overhead and an insurance payment received in the second quarter of 2018; partially offset by |
• | an increase of $51 million in fee-based margin due to volume growth in the Northeast, Permian, Ark-La-Tex, North Texas and South Texas regions, offset by declines in the Mid-Continent/Panhandle regions. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
NGL transportation volumes (MBbls/d) | 1,305 | 967 | |||||
Refined products transportation volumes (MBbls/d) | 628 | 637 | |||||
NGL and refined products terminal volumes (MBbls/d) | 988 | 789 | |||||
NGL fractionation volumes (MBbls/d) | 701 | 473 | |||||
Revenues | $ | 2,612 | $ | 2,568 | |||
Cost of products sold | 1,848 | 1,981 | |||||
Segment margin | 764 | 587 | |||||
Unrealized losses on commodity risk management activities | 39 | 13 | |||||
Operating expenses, excluding non-cash compensation expense | (155 | ) | (141 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (26 | ) | (17 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 21 | 19 | |||||
Other | 1 | — | |||||
Segment Adjusted EBITDA | $ | 644 | $ | 461 |
• | an increase of $132 million in transportation margin primarily due to a $67 million increase resulting from the initiation of service on our Mariner East 2 pipeline in the fourth quarter of 2018, a $55 million increase resulting from higher throughput volumes received from the Permian region on our Texas NGL pipelines, a $7 million increase due to higher throughput volumes received from the Barnett region and a $3 million increase due to higher throughput volumes received from the Eagle Ford region; |
• | an increase of $55 million in terminal services margin primarily due to a $51 million increase at Marcus Hook resulting from the initiation of service on our Mariner East 2 pipeline in the fourth quarter of 2018 and a $3 million increase due to higher throughput at our refined product terminals in the Northeast; |
• | an increase of $46 million in fractionation and refinery services margin primarily due to a $50 million increase resulting from the commissioning of our fifth and sixth fractionators in July 2018 and February 2019, respectively, and higher NGL volumes from the Permian region feeding our Mont Belvieu fractionation facility. This increase was partially offset by a $3 million decrease primarily resulting from a reclassification between our fractionation and storage margins; and |
• | an increase of $5 million in storage margin primarily due to a $3 million increase resulting from a reclassification between our storage and fractionation margins and a $2 million increase from throughput pipeline fees collected at our Mont Belvieu storage facility; partially offset by |
• | a decrease of $35 million in marketing margin primarily due to a decrease of $16 million from the write down of the value of stored NGL inventory, as well as lower optimization gains due to less favorable market conditions; |
• | an increase of $14 million in operating expenses primarily due to a $4 million increase resulting from to the commissioning of our fifth and sixth fractionators in July 2018 and February 2019, respectively, an aggregate increase of $7 million in ad valorem and employee expenses on our terminal and fractionation assets, and a $2 million increase in allocated costs; and |
• | an increase of $9 million in selling, general and administrative expenses primarily due to a $4 million increase in allocated overhead costs, a $2 million increase in legal fees, a $1 million increase in employee costs and a $1 million increase in insurance expenses. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Crude transportation volumes (MBbls/d) | 4,728 | 4,242 | |||||
Crude terminals volumes (MBbls/d) | 2,383 | 2,103 | |||||
Revenues | $ | 5,046 | $ | 4,803 | |||
Cost of products sold | 4,137 | 4,361 | |||||
Segment margin | 909 | 442 | |||||
Unrealized losses on commodity risk management activities | 11 | 262 | |||||
Operating expenses, excluding non-cash compensation expense | (150 | ) | (144 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (20 | ) | (20 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 1 | 8 | |||||
Segment Adjusted EBITDA | $ | 751 | $ | 548 |
• | an increase of $216 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $142 million increase from higher throughput on our Texas crude pipeline system primarily due to increased production from the Permian region, a $75 million increase from higher throughput on the Bakken pipeline, and a $9 million increase from higher throughput, ship loading and tank rental fees at our Nederland terminal; partially offset by a $10 million decrease (excluding a net change of $251 million in unrealized gains and losses on commodity risk management activities) from our crude oil acquisition and marketing business primarily resulting from non-cash inventory valuation adjustments; partially offset by |
• | an increase of $6 million in operating expenses primarily due to a $14 million increase in throughput-related costs on existing assets, partially offset by an $8 million decrease in ad valorem taxes and management fees; and |
• | a decrease of $7 million in Adjusted EBITDA related to unconsolidated affiliates due to lower margin from jet fuel sales by our joint ventures. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Revenues | $ | 4,475 | $ | 4,607 | |||
Cost of products sold | 4,206 | 4,297 | |||||
Segment margin | 269 | 310 | |||||
Unrealized losses on commodity risk management activities | 3 | — | |||||
Operating expenses, excluding non-cash compensation expense | (89 | ) | (105 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (31 | ) | (31 | ) | |||
Inventory valuation adjustments | (4 | ) | (32 | ) | |||
Adjusted EBITDA related to discontinued operations | — | (5 | ) | ||||
Other | 4 | 3 | |||||
Segment Adjusted EBITDA | $ | 152 | $ | 140 |
• | a decrease of $16 million in operating expenses primarily as a result of lower salaries and benefits, maintenance, utilities, property tax, and environmental expenses as well as $7 million of acquisition costs in the prior periods; and |
• | an increase of $5 million in Adjusted EBITDA from discontinued operations due to Sunoco LP’s retail divestment in January 2018; partially offset by |
• | a decrease of $10 million in segment margin, excluding inventory valuation adjustments and unrealized gains and losses on commodity risk management activities, primarily due to a decrease in gross profit per gallon sold primarily as a result of an $8 million one-time charge related to a reserve for an open contractual dispute. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Revenues | $ | 174 | $ | 167 | |||
Cost of products sold | 24 | 20 | |||||
Segment margin | 150 | 147 | |||||
Operating expenses, excluding non-cash compensation expense | (32 | ) | (38 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (13 | ) | (19 | ) | |||
Other | — | 5 | |||||
Segment Adjusted EBITDA | $ | 105 | $ | 95 |
• | a decrease of $6 million in operating expenses primarily due to a decrease of ad valorem taxes as well as refunds received related to prior period ad valorem taxes; |
• | a decrease of $6 million in selling, general administrative expenses primarily related to decreases of $4 million in transaction-related expenses and $2 million in employee expenses; and |
• | an increase of $3 million in segment margin primarily due to an increase in demand for compression services resulting in an increase in average revenue generating horsepower. |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Revenues | $ | 391 | $ | 502 | |||
Cost of products sold | 343 | 445 | |||||
Segment margin | 48 | 57 | |||||
Unrealized gains on commodity risk management activities | (4 | ) | (2 | ) | |||
Operating expenses, excluding non-cash compensation expense | (6 | ) | (10 | ) | |||
Selling, general and administrative expenses, excluding non-cash compensation expense | (23 | ) | (28 | ) | |||
Adjusted EBITDA related to unconsolidated affiliates | 2 | 2 | |||||
Other and eliminations | (7 | ) | 2 | ||||
Segment Adjusted EBITDA | $ | 10 | $ | 21 |
• | a decrease of $7 million from power trading activities; |
• | a decrease of $10 million due to lower revenue from our compressor equipment business; |
• | a decrease of $4 million in optimized gains on residue gas sales; and |
• | a decrease of $2 million from settled derivatives; partially offset by |
• | an increase of $13 million in storage optimization gains. |
Facility Size | Funds Available at June 30, 2019 | Maturity Date | |||||||
ETO Five-Year Revolving Credit Facility | $ | 5,000 | $ | 2,555 | December 1, 2023 | ||||
ETO 364-Day Revolving Credit Facility | 1,000 | 1,000 | November 29, 2019 | ||||||
$ | 6,000 | $ | 3,555 |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Equity in earnings of unconsolidated affiliates: | |||||||
Citrus | $ | 39 | $ | 33 | |||
FEP | 14 | 13 | |||||
MEP | 7 | 8 | |||||
Other | 17 | 38 | |||||
Total equity in earnings of unconsolidated affiliates | $ | 77 | $ | 92 | |||
Adjusted EBITDA related to unconsolidated affiliates: | |||||||
Citrus | $ | 87 | $ | 85 | |||
FEP | 18 | 18 | |||||
MEP | 20 | 20 | |||||
Other | 38 | 45 | |||||
Total Adjusted EBITDA related to unconsolidated affiliates | $ | 163 | $ | 168 | |||
Distributions received from unconsolidated affiliates: | |||||||
Citrus | $ | 39 | $ | 27 | |||
FEP | 16 | 15 | |||||
MEP | 15 | 18 | |||||
Other | 42 | 21 | |||||
Total distributions received from unconsolidated affiliates | $ | 112 | $ | 81 |
Three Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Adjusted EBITDA of non-wholly-owned subsidiaries (100%) (a) | $ | 695 | $ | 432 | |||
Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries (b) | 380 | 233 | |||||
Distributable Cash Flow of non-wholly-owned subsidiaries (100%) (c) | $ | 657 | $ | 399 | |||
Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries (d) | 364 | 219 |
Non-wholly-owned subsidiary: | ET Percentage Ownership (e) | |
Bakken Pipeline | 36.4 | % |
Bayou Bridge | 60.0 | % |
Ohio River System | 75.0 | % |
Permian Express Partners | 87.7 | % |
Red Bluff Express | 70.0 | % |
Rover | 32.6 | % |
Others | various |
(a) | Adjusted EBITDA of non-wholly-owned subsidiaries reflects the total Adjusted EBITDA of our non-wholly-owned subsidiaries on an aggregated basis. This is the amount of Adjusted EBITDA included in our consolidated non-GAAP measure of Adjusted EBITDA. |
(b) | Our proportionate share of Adjusted EBITDA of non-wholly-owned subsidiaries reflects the amount of Adjusted EBITDA of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. |
(c) | Distributable Cash Flow of non-wholly-owned subsidiaries reflects the total Distributable Cash Flow of our non-wholly-owned subsidiaries on an aggregated basis. |
(d) | Our proportionate share of Distributable Cash Flow of non-wholly-owned subsidiaries reflects the amount of Distributable Cash Flow of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. This is the amount of Distributable Cash Flow included in our consolidated non-GAAP measure of Distributable Cash Flow attributable to the partners of ET. |
(e) | Our ownership reflects the total economic interest held by us and our subsidiaries. In some cases, this percentage comprises ownership interests held in (or by) multiple entities. |