10-QPeriod: Q1 FY2011

Energy Transfer LP Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported its financial results for the first quarter ended March 31, 2011. Total revenues increased to $1.99 billion from $1.87 billion in the prior year's quarter, driven by higher natural gas operations revenue. However, net income attributable to partners decreased to $88.6 million from $112.8 million in Q1 2010, primarily due to increased interest expenses and operating expenses. The company's balance sheet showed total assets of $17.51 billion and total liabilities of $11.32 billion, with total partners' capital at $6.19 billion. Significant recent developments include the acquisition of LDH Energy Asset Holdings LLC for approximately $1.97 billion, aimed at expanding ET's NGL business. The company also continues to invest in capital expenditures for growth projects within its ETP and Regency segments. Management highlighted strong liquidity with substantial availability under its credit facilities, supporting ongoing operations and strategic investments.

Financial Highlights

43 data points
Beta

Revenue

$1.98B

39.4% Gross Margin

Net Income

$88.64M

4.5% Net Margin

Total Assets

$17.51B

Cash & Equivalents

$143.03M

Free Cash Flow

$358.15M

Financial Statements
Beta
Revenue$1.98B
Cost of Revenue$1.20B
Gross Profit$778.00M
SG&A Expenses$63.50M
Operating Expenses$1.62B
Operating Income$363.00M
Interest Expense$167.93M
Net Income$88.64M

Key Highlights

  • 1Total revenues increased by 6.3% to $1.99 billion for the three months ended March 31, 2011, compared to $1.87 billion for the same period in 2010.
  • 2Net income attributable to limited partners decreased to $88.6 million ($0.40 per unit) in Q1 2011 from $112.8 million ($0.50 per unit) in Q1 2010.
  • 3Operating income rose to $364.2 million from $338.9 million, driven by higher revenues and improved gross margins.
  • 4Interest expense increased significantly to $167.9 million from $121.7 million, largely due to increased borrowings.
  • 5The company completed a significant acquisition of LDH Energy Asset Holdings LLC for $1.97 billion, strengthening its NGL platform.
  • 6Capital expenditures for the first quarter of 2011 were $279.6 million, primarily for growth projects within ETP and Regency.
  • 7Total assets stood at $17.51 billion as of March 31, 2011, with total debt at $9.61 billion.

Frequently Asked Questions

The increase in total revenues to $1.99 billion was primarily driven by higher revenues from natural gas operations, which grew to $1.43 billion from $1.31 billion in the prior year's quarter. This reflects increased activity and potentially favorable pricing in the natural gas segment.

Net income attributable to partners decreased to $88.6 million in Q1 2011 from $112.8 million in Q1 2010. This was primarily due to a substantial increase in interest expense, which rose to $167.9 million from $121.7 million, reflecting higher debt levels or borrowing costs. Additionally, operating expenses and depreciation and amortization also saw increases.

The acquisition of LDH Energy Asset Holdings LLC for approximately $1.97 billion is a significant strategic move that is expected to substantially expand Energy Transfer's asset portfolio, particularly in the natural gas liquids (NGL) sector. It adds NGL storage, transportation, and fractionation capabilities, which are anticipated to provide additional consistent fee-based revenues and diversify the company's income streams.

Energy Transfer maintains substantial liquidity through its credit facilities. As of March 31, 2011, ETP had $1.42 billion available under its credit facility, and Regency had $524.5 million available. The company's total debt was $9.61 billion. The company funded a portion of the LDH acquisition and capital expenditures through borrowings and equity offerings, indicating a strategy to use a combination of debt and equity to finance growth and operations.