10-QPeriod: Q1 FY2015

Energy Transfer LP Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 8, 2015For Securities:ETET-PI

Summary

Energy Transfer Equity, L.P. (ET) reported its first-quarter 2015 financial results, highlighting a decrease in net income to $221 million from $448 million in the prior year's comparable period. This decline was primarily driven by lower revenues across most segments, including natural gas, NGL, crude, and refined product sales, while gathering, transportation, and other fees saw an increase. The company experienced a significant rise in depreciation, depletion, and amortization expenses, as well as increased interest expenses due to higher debt levels. Operationally, ET saw strong performance in its Regency segment, with gross margin increasing significantly due to recent acquisitions. However, ETP's gross margin experienced mixed results, with retail marketing showing gains offset by decreases in Sunoco Logistics and intrastate transportation. The company's balance sheet reflects substantial assets in property, plant, and equipment, alongside a considerable long-term debt of over $33 billion. Recent developments include the Regency merger completion, the acquisition of Sunoco, LLC interests by Sunoco LP, and ongoing strategic transactions like the Bakken Pipeline Transaction, indicating continued focus on asset integration and strategic growth.

Financial Highlights

43 data points
Beta

Revenue

$9.66B

12.2% Gross Margin

Net Income

$284.00M

2.9% Net Margin

Total Assets

$67.00B

Cash & Equivalents

$1.86B

Free Cash Flow

$575.00M

Financial Statements
Beta
Revenue$9.66B
Cost of Revenue$8.49B
Gross Profit$1.17B
SG&A Expenses$155.00M
Operating Expenses$9.76B
Operating Income$758.00M
Interest Expense$371.00M
Net Income$284.00M

Key Highlights

  • 1Net income decreased to $221 million for the three months ended March 31, 2015, down from $448 million in the same period of 2014.
  • 2Total revenues declined to $10.38 billion from $13.08 billion year-over-year.
  • 3Long-term debt increased to $33.16 billion as of March 31, 2015, from $29.65 billion at the end of 2014.
  • 4The company completed the Regency Merger in April 2015, integrating Regency as a wholly-owned subsidiary of ETP.
  • 5Significant capital expenditures were made, with total expenditures in investing activities reaching $2.59 billion for the quarter.
  • 6ETE announced an increase in its quarterly distribution to $0.4900 per unit for the quarter ended March 31, 2015.

Frequently Asked Questions

The primary driver for the decrease in net income to $221 million from $448 million was lower total revenues across most segments, particularly in natural gas, NGL, crude, and refined product sales, which were partially offset by an increase in gathering, transportation, and other fees. Additionally, higher depreciation, depletion, amortization, and interest expenses contributed to the decline.

Significant events included the completion of the Regency Merger in April 2015, where Regency became a wholly-owned subsidiary of ETP. In March 2015, ETE completed the Bakken Pipeline Transaction. Sunoco LP also acquired a significant equity interest in Sunoco, LLC in April 2015. These transactions indicate a strategic focus on consolidating and integrating assets.

The company's total long-term debt increased substantially, reaching $33.16 billion as of March 31, 2015, up from $29.65 billion at the end of 2014. This increase reflects borrowings to fund acquisitions and capital expenditures, including the Bakken Pipeline Transaction and new debt issuances by ETP.

The company announced an increase in its quarterly distribution to $0.4900 per unit for the quarter ended March 31, 2015, signaling confidence in its operational performance and cash flow generation. ETE has also agreed to reduce incentive distributions received from ETP over a five-year period as part of the Regency Merger.