Energy Transfer Partners (ETP) Reports Q2 Loss, Sales Beat

Natural gas pipeline operator Energy Transfer Partners, L.P. (NYSE:ETP) reported second-quarter 2017 loss of 4 cents per limited partner unit, missing the Zacks Consensus Estimate of earnings of 17 cents by a wide margin. Further, the bottom line also compared unfavorably with the year-ago quarter earnings of 6 cents per limited partner unit.

The weaker-than-expected results were attributed to increase in total expenses (operating and other) in the reported quarter from the prior-year quarter along with the absence of income tax benefits in the prior-year quarter.

Quarterly revenues increased to $6,576 million from $5,289 million a year ago. Further, the top line surpassed the Zacks Consensus Estimate of $6,330 million.

Energy Transfer Partners LP Price and Consensus

Energy Transfer Partners LP Price and Consensus | Energy Transfer Partners LP Quote

Quarterly Cash Distribution

Last month, Energy Transfer Partners announced second-quarter distribution of about 55 cents per unit ($2.20 per unit annualized), reflecting an increase of 2.8% from the prior quarter. This quarterly distribution will be paid on Aug 14, to unit holders of record as of Aug 7.

EBITDA, Operating Income and Net Income

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $1,599 million compared with $1,370 million a year ago. This 16.7% improvement was mainly driven by strong performance from its Midstream segment which delivered EBITDA of $412 million, up 38.3% from the year-ago quarter. Liquids (NGL and crude oil) Transportation and Services segments also reported improved performance. However, results were offset by poor performance from the interstate and intrastate transportation/storage segments along with a decrease of $27 million in EBITDA from its subsidiary Philadelphia Energy Solutions Inc.

The company’s Midstream segment benefited from higher production volumes in the Permian and North East regions along with the acquisition of the outstanding units of its Houston-based subsidiary, PennTex Midstream Partners LP. Higher non-fee-based processing margins and lower operating expenses in this segment also boosted the results when compared with the prior-year quarter. Increased NGL and crude oil transportation volumes drove the results of Liquids Transportation and Services segment.

The partnership reported operating income of $732 million compared to $715 million in second-quarter 2016.

The partnership reported a net income of $292 million in the reported quarter, compared with a net profit of $472 million in the year-ago quarter. The decline in the partnership’s net income is due to an income-tax benefit in second-quarter 2016 along with non-cash loss attributed to its investment in Sunoco LP (NYSE:SUN) related to Sunoco LP’s anticipated sale of its retail business.

Total Expense

Energy Transfer Partners reported total expense of $5,844 million in second-quarter 2017, reflecting an increase of 27.8% from the prior year quarter. While the cost of products sold increased 30.6% to $4,742 million in the quarter, operating, depreciation and selling/administration costs rose by 13.6%, 12.3% and 62.2% respectively.

Distributable Cash Flow

Distributable cash flow of $1,022 million was higher than the prior-year quarter level of $824 million. The 24% increase in the distributable cash flow increased the partnership’s distribution coverage to $1.18x compared with 1.15x in the year-ago quarter.

Capital Expenditure

Total capital expenditure for the quarter totaled to $1,867 million with growth capex of $1,760 million accounting for 94.3% of the total capex. The remaining capex balance was attributed toward maintenance activities totaling $107 million.

Balance Sheet

As of Jun 30, 2017, this company – which counts Plains All American Pipeline, L.P. (NYSE:PAA) and Boardwalk Pipeline Partners, LP (NYSE:BWP) as its peers – had long-term debt (less current maturities) of $32,029 million. Debt-to-capitalization ratio was about 52.1%. Energy Transfer Partners currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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