10-QPeriod: Q3 FY2021

Energy Transfer LP Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 4, 2021For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported strong financial results for the nine months ended September 30, 2021, with Net Income of $5.46 billion, a significant improvement from a net loss of $693 million in the same period of 2020. This turnaround was substantially driven by the positive impacts of Winter Storm Uri, which significantly boosted storage margins and natural gas sales, particularly in the intrastate transportation and storage segment. Adjusted EBITDA also saw a substantial increase to $10.24 billion from $7.94 billion year-over-year, reflecting improved operational performance and favorable commodity price impacts. The company continued its strategic capital allocation by completing its "Rollup Mergers" on April 1, 2021, simplifying its corporate structure. Additionally, ET is progressing with its planned acquisition of Enable Midstream Partners, expecting to close in the fourth quarter of 2021, pending regulatory approval. The company also repurchased debt and managed its credit facilities effectively, maintaining compliance with all debt covenants. Despite some segment-level pressures, such as contract expirations in interstate transportation, the overall financial health appears robust, supported by diversified operations and strategic initiatives.

Financial Highlights

41 data points
Beta

Revenue

$16.66B

20.9% Gross Margin

Net Income

$635.00M

3.8% Net Margin

Total Assets

$96.70B

Cash & Equivalents

$313.00M

Free Cash Flow

$2.26B

Financial Statements
Beta
Revenue$16.66B
Cost of Revenue$13.19B
Gross Profit$3.48B
SG&A Expenses$198.00M
Operating Expenses$15.23B
Operating Income$1.44B
Interest Expense$558.00M
Net Income$635.00M

Key Highlights

  • 1Strong financial recovery driven by Winter Storm Uri impacts, leading to a significant increase in Net Income to $5.46 billion for the nine months ended September 30, 2021, compared to a net loss in the prior year.
  • 2Adjusted EBITDA increased by 29% to $10.24 billion for the nine months ended September 30, 2021, reflecting improved operational performance and commodity price tailwinds.
  • 3Completed significant "Rollup Mergers" on April 1, 2021, aimed at simplifying the corporate structure.
  • 4Actively managing debt, with repayments and refinancing efforts contributing to lower interest expenses.
  • 5Progressing with the acquisition of Enable Midstream Partners, with an expected closing in Q4 2021, pending regulatory clearance.
  • 6Maintained compliance with all debt covenants as of September 30, 2021.
  • 7Reported a solid $313 million in cash and cash equivalents as of September 30, 2021.

Frequently Asked Questions

The primary driver was the significant positive impact of Winter Storm Uri in February 2021. This event led to substantial increases in storage margins and natural gas sales, particularly benefiting the intrastate transportation and storage segment. These gains, combined with overall improved operational performance and favorable commodity prices, led to a strong recovery in net income and Adjusted EBITDA.

Energy Transfer entered into a definitive merger agreement to acquire Enable Midstream Partners on February 16, 2021. The transaction has received approval from Enable's unitholders, but is subject to customary closing conditions, including Hart-Scott-Rodino Act (HSR) clearance. The Federal Trade Commission (FTC) has issued a Second Request, extending the waiting period. ET expects to close the transaction in the fourth quarter of 2021, believing the FTC will grant clearance.

ET has actively managed its debt, including assuming ETO's debt following the Rollup Mergers and executing several debt redemptions and refinancing activities. For example, ET redeemed significant portions of its senior notes and repaid its Term Loan. Sunoco LP also completed a private offering of senior notes to repurchase its existing notes. The company's debt management, along with lower borrowing costs on refinanced and floating-rate debt, contributed to a decrease in interest expense. ET confirmed compliance with all debt covenants as of September 30, 2021.

Energy Transfer is involved in several ongoing legal and regulatory matters. Key among these is the Dakota Access Pipeline litigation, where operations continue pending an Environmental Impact Statement (EIS) completion estimated for the end of 2022, with ET expecting the pipeline to continue operating. The company also faces investigations and potential liabilities related to environmental matters, including MTBE litigation and specific incidents like the Mont Belvieu Incident. While the company accrues for probable and estimable losses, some matters have uncertain outcomes and could impact future results. Additionally, a cybersecurity risk factor has been highlighted due to the increasing sophistication of attacks.