Summary
Energy Transfer Equity, L.P. (ET) reported its first-quarter results for the period ending March 31, 2008. The company saw a notable increase in total revenues, reaching $2.64 billion, up from $2.06 billion in the comparable period of the prior year. This growth was primarily driven by significant increases in natural gas operations revenue, which rose to $2.01 billion from $1.49 billion, and retail propane revenue, which grew to $598 million from $499 million. Despite the revenue growth, net income decreased to $126.7 million ($0.57 per unit) from $147.4 million ($0.67 per unit) in the prior year's first quarter. This decline can be attributed to a substantial increase in interest expense, higher operating expenses, and a significant unrealized loss on non-hedged interest rate derivatives. The company also reported ongoing legal proceedings and regulatory matters, notably a $10 million settlement with the CFTC regarding alleged natural gas price manipulation, which was paid from operating cash flow. Investors should monitor the resolution of these legal issues and the company's ability to manage its increasing debt load and operational costs.
Key Highlights
- 1Total revenues increased by 28% to $2.64 billion for the three months ended March 31, 2008, compared to $2.06 billion for the same period in 2007.
- 2Net income decreased by approximately 14% to $126.7 million ($0.57 per unit) from $147.4 million ($0.67 per unit) year-over-year.
- 3Interest expense significantly increased by $15.4 million, primarily due to higher debt levels for growth capital expenditures and acquisitions.
- 4The company reported a $31.6 million loss on non-hedged interest rate derivatives during the quarter.
- 5Total assets grew to $9.99 billion from $9.46 billion, primarily driven by increases in property, plant, and equipment.
- 6Total long-term debt increased to $6.21 billion from $5.87 billion.
- 7Energy Transfer Equity settled a Commodity Futures Trading Commission (CFTC) action for $10 million in March 2008.