10-QPeriod: Q1 FY2010

Energy Transfer LP Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 7, 2010For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported its first quarter 2010 financial results, highlighting revenue growth driven by its natural gas and retail propane operations. Total revenues increased to $1.87 billion from $1.63 billion in the prior year's comparable quarter. While operating income saw a slight decrease year-over-year, this was largely offset by increased equity in earnings from affiliates. The company's balance sheet shows growth in total assets to $12.49 billion, supported by significant property, plant, and equipment, as well as goodwill and intangibles, indicating ongoing investment and potential acquisitions. The company's cash flow from operations remained robust, increasing to $475 million from $413 million in the prior year's quarter. However, significant cash outflows were noted in investing activities due to acquisitions and capital expenditures, totaling $266 million. Financing activities showed net cash provided by borrowings and equity offerings, reflecting strategic financial management. Investors should note the continued focus on growth projects and a steady distribution policy, with the company announcing a quarterly distribution of $0.54 per Common Unit.

Financial Highlights

20 data points
Beta

Revenue

$1.87B

34.6% Gross Margin

Net Income

$112.78M

6.0% Net Margin

Cash & Equivalents

$384.43M

Free Cash Flow

$475.04M

Financial Statements
Beta
Revenue$1.87B
Gross Profit$647.12M
SG&A Expenses$51.11M
Operating Expenses$1.53B
Operating Income$338.93M
Interest Expense$121.67M
Net Income$112.78M

Key Highlights

  • 1Total revenues increased by 14.9% to $1.87 billion for the three months ended March 31, 2010, compared to $1.63 billion for the same period in 2009.
  • 2Operating income decreased by 4.8% to $338.9 million, primarily due to an increase in interest expense and a less favorable derivative impact.
  • 3Net income attributable to partners decreased to $112.8 million ($0.50 per unit) from $151.5 million ($0.68 per unit) in the prior year, reflecting higher costs and financing expenses.
  • 4Cash flow from operating activities increased by 15% to $475.0 million, demonstrating strong operational cash generation.
  • 5The company made significant investing activities, with $149.6 million spent on acquisitions, including a natural gas gathering company, and $119.7 million in capital expenditures.
  • 6Total assets grew to $12.49 billion as of March 31, 2010, up from $12.16 billion at the end of 2009, driven by increases in property, plant, and equipment.
  • 7Total liabilities decreased to $8.77 billion from $8.94 billion, primarily due to a reduction in long-term debt.

Frequently Asked Questions

Energy Transfer LP reported a 14.9% increase in total revenues to $1.87 billion for Q1 2010, driven by growth in natural gas and retail propane operations. However, net income attributable to partners decreased to $112.8 million from $151.5 million in Q1 2009, primarily due to higher interest expenses and derivative impacts. Despite this, operating cash flow strengthened, increasing by 15% to $475 million.

The company's total assets grew to $12.49 billion by March 31, 2010, up from $12.16 billion at the end of 2009, reflecting investments in property, plant, and equipment. Total liabilities decreased to $8.77 billion, mainly due to a reduction in long-term debt, indicating a deleveraging trend.

The revenue increase was primarily driven by higher performance in natural gas operations, which saw revenues rise to $1.31 billion from $1.11 billion, and retail propane operations, with revenues growing to $533.4 million from $487.9 million year-over-year.

The company made significant investments in acquisitions ($149.6 million) and capital expenditures ($119.7 million) during the quarter. The management's discussion indicates a focus on growing midstream and intrastate transportation/storage businesses, as well as propane operations through organic growth and potential acquisitions. The company also maintained its quarterly distribution policy.