10-QPeriod: Q2 FY2014

Energy Transfer LP Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 7, 2014For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported its second quarter 2014 financial results, showing robust revenue growth driven by its key operating segments, ETP and Regency. Total revenues for the quarter increased by approximately 17.3% year-over-year to $14.1 billion, with net income attributable to partners reaching $163 million. The company's balance sheet saw a significant increase in total assets to $58.6 billion, reflecting substantial growth in property, plant, and equipment, and a notable rise in goodwill and intangible assets, driven by strategic acquisitions. ET's operational performance was bolstered by strong contributions from its ETP and Regency segments, with Segment Adjusted EBITDA showing significant year-over-year increases for both. This growth was underpinned by strategic acquisitions, including Regency's acquisition of Eagle Rock's midstream business and PVR, and ETP's pending acquisition of Susser Holdings. The company also actively managed its capital structure, undertaking a $1 billion unit repurchase program and issuing new debt to fund growth initiatives and operational needs. Overall, the period reflects a company in an active growth phase, with substantial investments and acquisitions shaping its financial and operational landscape.

Financial Highlights

43 data points
Beta

Revenue

$14.14B

12.7% Gross Margin

Net Income

$164.00M

1.2% Net Margin

Total Assets

$58.62B

Cash & Equivalents

$1.23B

Free Cash Flow

$1.07B

Financial Statements
Beta
Revenue$14.14B
Cost of Revenue$12.35B
Gross Profit$1.79B
SG&A Expenses$141.00M
Operating Expenses$13.37B
Operating Income$773.00M
Interest Expense$344.00M
Net Income$164.00M

Key Highlights

  • 1Total revenues for the quarter increased by 17.3% to $14.1 billion, and by 17.1% for the six-month period to $27.2 billion, indicating strong top-line growth.
  • 2Net income attributable to partners was $163 million for the quarter and $330 million for the six-month period, showing profitability on an adjusted basis.
  • 3Total assets grew to $58.6 billion as of June 30, 2014, up from $50.3 billion at the end of 2013, largely due to significant acquisitions and investments in property, plant, and equipment.
  • 4Segment Adjusted EBITDA showed substantial year-over-year increases: ETP's Segment Adjusted EBITDA rose by 8.9% to $1.17 billion for the quarter, and Regency's increased by 99.3% to $307 million for the quarter.
  • 5The company completed significant acquisitions, including Regency's acquisition of Eagle Rock's midstream business and PVR, and is pursuing the acquisition of Susser Holdings via ETP, signaling an aggressive growth strategy.
  • 6Energy Transfer LP repurchased approximately $1 billion of its common units under its buyback program during the first five months of 2014, demonstrating a commitment to returning value to shareholders.
  • 7Long-term debt increased to $25.9 billion as of June 30, 2014, up from $22.6 billion at the end of 2013, reflecting increased borrowings to finance acquisitions and capital expenditures.

Frequently Asked Questions

Revenue growth was primarily driven by increases in natural gas, NGL, and crude sales, as well as gathering, transportation, and other fees. The acquisition of PVR by Regency and the ongoing integration of acquired assets by ETP contributed significantly to the increased volumes and revenues across various segments.

The company's total debt increased significantly to $27.2 billion by June 30, 2014. This increase is primarily due to debt assumed in acquisitions (like PVR and Eagle Rock Midstream) and new debt issuances by subsidiaries (Regency, Sunoco Logistics) and the parent company to fund growth initiatives and acquisitions. While this increases financial leverage, it also provides capital for strategic expansion.

Key initiatives include Regency's acquisitions of PVR and Eagle Rock's midstream business, expanding its gathering and processing capabilities. ETP is also pursuing the acquisition of Susser Holdings, which would enhance its retail operations and NGL midstream assets. Additionally, ETP announced significant pipeline construction projects, including a crude oil pipeline from the Bakken and the ET Rover natural gas pipeline.

Energy Transfer LP utilizes various derivative instruments, including futures, swaps, and options, to manage the volatility of commodity prices across its segments. These are used for hedging physical exposures and taking advantage of market opportunities. The company actively monitors these positions and adheres to its commodity risk management policies.