10-QPeriod: Q2 FY2016

Energy Transfer LP Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 5, 2016For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported its financial results for the fiscal quarter ending June 30, 2016. The company saw a decrease in total revenues to $9.34 billion from $11.59 billion in the prior year's comparable quarter, reflecting challenges in segments like crude oil and refined product sales. Net income attributable to partners was $241 million for the quarter. Despite revenue declines, operational efficiency and strategic transactions, such as the Sunoco LP retail business contribution and progress on major projects like the Bakken Pipeline, are shaping the company's landscape. Despite some top-line pressures, the company is managing its financial condition through prudent debt management and operational adjustments. The significant legal proceedings related to the terminated WMB merger remain a key area of attention for investors, with ongoing appeals and potential financial implications. Investors should monitor the company's ability to navigate these legal challenges and capitalize on opportunities within its diverse energy infrastructure portfolio.

Financial Highlights

43 data points
Beta

Revenue

$14.12B

61.2% Gross Margin

Net Income

$241.00M

1.7% Net Margin

Total Assets

$74.56B

Cash & Equivalents

$460.00M

Free Cash Flow

$395.00M

Financial Statements
Beta
Revenue$14.12B
Cost of Revenue$5.48B
Gross Profit$8.64B
SG&A Expenses$150.00M
Operating Expenses$6.61B
Operating Income$1.13B
Interest Expense$443.00M
Net Income$241.00M

Key Highlights

  • 1Total revenues decreased to $9.34 billion for the three months ended June 30, 2016, down from $11.59 billion in the same period last year.
  • 2Net income attributable to partners was $241 million for the quarter, compared to $298 million in the prior year's quarter.
  • 3The company experienced a decrease in Segment Adjusted EBITDA across most segments, with the 'Investment in ETP' segment seeing a decline, though 'Investment in Sunoco LP' showed an increase.
  • 4Significant legal proceedings related to the terminated merger agreement with WMB are ongoing, with WMB having appealed a court decision that allowed ET to terminate the agreement.
  • 5The company is advancing significant growth projects, including the Bakken Pipeline, with project-level financing nearing completion and an equity sale announced.
  • 6Sunoco LP completed the contribution of its remaining retail business assets from ETP and also entered into an agreement to purchase the fuels business from Emerge Energy Services LP.
  • 7Total debt remained substantial, with long-term debt less current maturities at $38.5 billion as of June 30, 2016.

Frequently Asked Questions

The decrease in total revenues for the quarter was primarily driven by lower sales in crude oil and refined products, reflecting broader market conditions and potentially reduced volumes or prices in these segments. Additionally, the 'Investment in ETP' segment saw a decline in revenue.

The merger agreement with WMB was terminated by Energy Transfer Equity (ETE) after a Delaware Court of Chancery ruling. WMB has appealed this decision to the Delaware Supreme Court. The litigation is ongoing and represents a significant legal contingency for the company.

Energy Transfer LP has a substantial amount of long-term debt. The company has been managing its debt through various credit facilities and notes. For example, Sunoco Logistics issued new senior notes in July 2016 to repay credit facility borrowings. The company stated it was in compliance with all covenants related to its credit agreements as of June 30, 2016.

Sunoco LP saw an increase in Segment Adjusted EBITDA. ETP completed the contribution of its remaining retail marketing operations to Sunoco LP in March 2016. Sunoco LP also entered into an agreement to acquire the fuels business from Emerge Energy Services LP and issued new debt to fund operations and refinance existing debt.