10-QPeriod: Q3 FY2022

Energy Transfer LP Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 3, 2022For Securities:ETET-PI

Summary

Energy Transfer LP (ET) reported solid financial results for the third quarter and nine months ended September 30, 2022. The company demonstrated strong revenue growth driven by favorable commodity prices and increased volumes across its key segments, particularly Midstream and Crude Oil Transportation. Despite inflationary pressures impacting operating expenses, ET managed to deliver increased Adjusted EBITDA compared to the prior year's comparable periods, showcasing operational resilience. Strategic acquisitions, such as the Enable Midstream Partners transaction, continue to contribute positively to performance, expanding ET's footprint and service offerings. The company also actively managed its debt profile and returned capital to unitholders. While facing some headwinds from ongoing litigation and regulatory matters, ET's overall financial health appears robust, supported by consistent cash flow generation and a commitment to operational efficiency. Investors should monitor the developments in legal proceedings and regulatory environments, as these could present future risks, but the core business operations continue to perform well.

Financial Highlights

40 data points
Beta

Revenue

$22.94B

19.3% Gross Margin

Net Income

$1.01B

4.4% Net Margin

Total Assets

$105.73B

Cash & Equivalents

$326.00M

Free Cash Flow

$2.99B

Financial Statements
Beta
Revenue$22.94B
Cost of Revenue$18.52B
Gross Profit$4.42B
SG&A Expenses$361.00M
Operating Expenses$20.97B
Operating Income$1.97B
Interest Expense$577.00M
Net Income$1.01B

Key Highlights

  • 1Total revenues increased significantly, reaching $22.9 billion for the three months ended September 30, 2022, and $69.4 billion for the nine months ended September 30, 2022, up from $16.7 billion and $48.8 billion, respectively, in the prior year periods, driven by higher refined product, crude, and NGL sales.
  • 2Adjusted EBITDA (consolidated) showed a healthy increase, rising to $3.1 billion for the three months ended September 30, 2022, and $9.7 billion for the nine months ended September 30, 2022, compared to $2.6 billion and $10.2 billion for the respective prior year periods, reflecting strong operational performance and contributions from acquisitions.
  • 3The Midstream segment was a significant performer, with Segment Adjusted EBITDA increasing by 56% to $868 million for the three months and by 97% to $2.6 billion for the nine months ended September 30, 2022, driven by favorable natural gas and NGL prices and the Enable Acquisition.
  • 4The company made strategic acquisitions during the period, including Woodford Express, LLC for approximately $485 million and Caliche Coastal Holdings, LLC for approximately $325 million, enhancing its midstream and storage capabilities.
  • 5Energy Transfer completed the sale of its 51% interest in Energy Transfer Canada in August 2022, generating cash proceeds of US$302 million.
  • 6The company maintained compliance with its debt covenants and demonstrated active debt management, including the redemption of $700 million in Senior Notes in August 2022.
  • 7Cash distributions on common units were consistently paid, with the quarterly distribution increasing to $0.2650 for the quarter ended September 30, 2022.

Frequently Asked Questions

The substantial increase in total revenues for both the three and nine-month periods ending September 30, 2022, was primarily driven by higher sales volumes and prices across refined products, crude oil, and NGLs. This was supported by favorable market conditions and increased production from key regions.

The acquisitions, particularly the Enable Midstream Partners transaction completed in December 2021, significantly contributed to the company's performance. These acquisitions boosted volumes and revenues, especially in the Midstream and Interstate Transportation & Storage segments, leading to increased Segment Adjusted EBITDA.

Energy Transfer is involved in several legal proceedings, including matters related to the Dakota Access Pipeline, FERC investigations, and other litigation. The company believes it has strong defenses and intends to vigorously contest these claims. While some proceedings involve potential monetary sanctions or liabilities, the company generally believes that adverse outcomes, if any, would not have a material adverse effect on its consolidated financial position, though they could impact results of operations in a specific period. The company has accrued approximately $343 million for contingent losses as of September 30, 2022.

The company is actively managing its debt obligations. During the nine months ended September 30, 2022, Energy Transfer saw a net decrease in its debt level and completed the redemption of several senior notes. As of September 30, 2022, the company was in compliance with all debt covenants and had $2.32 billion available for future borrowings under its Five-Year Credit Facility.