10-QPeriod: Q2 FY2017

Energy Transfer LP Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 9, 2017For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported its second quarter and first six months of 2017 financial results, marked by significant strategic activity and operational performance. The company completed the merger of Energy Transfer Partners (ETP) and Sunoco Logistics Partners, a major transaction that reshapes its operational structure. Financially, for the second quarter, total revenues increased to $8.9 billion compared to $7.4 billion in the prior year's quarter, driven by strong performance across its segments. Net income attributable to partners was $212 million for the quarter. For the six-month period, total revenues reached $18.2 billion, with net income attributable to partners at $451 million. Key developments include the ongoing sale of Sunoco LP's retail convenience stores to 7-Eleven, which is expected to close in Q4 2017, and a substantial contribution agreement for the Rover pipeline. The company continues to manage its debt effectively, with credit facilities providing ample liquidity. Despite some ongoing legal and regulatory matters, particularly concerning the Dakota Access Pipeline and environmental compliance, management expressed confidence in its ability to navigate these challenges.

Financial Highlights

43 data points
Beta

Revenue

$9.43B

24.0% Gross Margin

Net Income

$212.00M

2.2% Net Margin

Total Assets

$82.61B

Cash & Equivalents

$379.00M

Free Cash Flow

$692.00M

Financial Statements
Beta
Revenue$9.43B
Cost of Revenue$7.17B
Gross Profit$2.26B
SG&A Expenses$173.00M
Operating Expenses$8.68B
Operating Income$743.00M
Interest Expense$477.00M
Net Income$212.00M

Key Highlights

  • 1Total revenues for Q2 2017 increased to $8.9 billion, up from $7.4 billion in Q2 2016.
  • 2Net income attributable to partners for Q2 2017 was $212 million, compared to $241 million in the same period last year.
  • 3The merger between Energy Transfer Partners (ETP) and Sunoco Logistics Partners was completed in April 2017, significantly altering the corporate structure.
  • 4Sunoco LP is proceeding with the sale of its retail convenience store assets to 7-Eleven, Inc. for $3.3 billion, expected to close in Q4 2017.
  • 5The company reported a goodwill impairment charge of $320 million related to assets held for sale from Sunoco LP's retail operations.
  • 6Segment Adjusted EBITDA increased by $329 million to $1.77 billion for the second quarter of 2017 compared to the prior year.
  • 7ETP entered into a contribution agreement to receive approximately $1.57 billion for a 49.9% interest in the holding company owning 65% of the Rover pipeline.

Frequently Asked Questions

For the second quarter of 2017, Energy Transfer LP reported total revenues of $8.9 billion, an increase from $7.4 billion in the prior year. Net income attributable to partners was $212 million, slightly down from $241 million in the same period of 2016. Segment Adjusted EBITDA showed strong growth, increasing to $1.77 billion from $1.44 billion in Q2 2016.

The most significant event was the completion of the merger between Energy Transfer Partners (ETP) and Sunoco Logistics Partners in April 2017. Additionally, Sunoco LP agreed to sell its retail convenience store assets to 7-Eleven for $3.3 billion, expected to close in the fourth quarter of 2017. ETP also entered into an agreement to contribute a significant stake in the Rover pipeline for approximately $1.57 billion.

The company maintained robust liquidity. As of June 30, 2017, the Parent Company had $1.2 billion in borrowings under its $1.5 billion revolver credit facility, with $298 million available. Subsidiary debt levels remained substantial, but the company reported compliance with all debt covenants. The financing activities show a net decrease in debt of $81 million for the six months ended June 30, 2017, indicating a focus on managing debt levels.

Yes, several matters are ongoing. The Dakota Access Pipeline project continues to face legal challenges, although the company believes these are unlikely to block operations. There are also various environmental matters, including a $320 million goodwill impairment related to Sunoco LP's retail assets held for sale, and ongoing discussions with regulatory agencies regarding environmental compliance and potential penalties.