Did Energy Transfer's earnings per unit improve in the first quarter of 2024?

Not on a per-unit basis. Net income per common unit was $0.32 for both Q1 2024 and Q1 2023. Total net income attributable to partners rose to $1.24 billion from $1.11 billion, but the unit count increased from roughly 3.1 billion to 3.4 billion weighted average units, offsetting the gain. Cash-flow metrics such as Adjusted EBITDA and Distributable Cash Flow grew more clearly than GAAP per-unit earnings.

Why did Energy Transfer raise its 2024 Adjusted EBITDA guidance?

Management attributed the raised range of $15.0-$15.3 billion (from $14.5-$14.8 billion) to new growth projects and to the inclusion of Sunoco LP's acquisition of NuStar Energy, which closed on May 3, 2024. Because acquired earnings contribute to the increase, investors should separate organic growth from acquisition-driven growth when evaluating the revision.

Is Energy Transfer's balance sheet getting more or less leveraged?

Leverage edged up. Long-term debt, less current maturities, rose to $52.3 billion from $51.4 billion at December 31, 2023, and interest expense increased to $728 million from $619 million year over year. Current liabilities also rose to $12.7 billion, partly due to $1.0 billion of Bakken Pipeline senior notes maturing in April 2024. Offsetting this, the revolving credit facility was undrawn, the Fitch rating was upgraded to BBB, and the Series E preferred units were slated for redemption on May 15, 2024.

Is the distribution safe, and how much did it grow?

The declared distribution of $0.3175 per common unit ($1.27 annualized) is 3.3% above the first-quarter 2023 level. Limited partner distributions totaled $1.07 billion in the quarter, and Distributable Cash Flow attributable to partners, as adjusted, of $2.36 billion covered that amount more than twice over, which suggests the distribution is well supported by current cash generation.

Which segments drove the results, and which lagged?

Crude oil transportation and services was the primary driver, with Adjusted EBITDA up $322 million, helped by recently acquired assets, higher pipeline throughput, and better acquisition and marketing optimization. Midstream (up to $696 million) and NGL and refined products (up to $989 million) also improved. Interstate transportation and storage was the laggard, down to $483 million, due to lower operational gas sales, a shipper bankruptcy-related prior-period benefit, and higher unplanned maintenance costs. Intrastate transportation and storage was also a weaker area, with storage margin down $58 million.

ET/ET-PI 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 8, 2024. Cited figures are marked; the original filing is the authoritative source.

Energy Transfer LP reported first-quarter 2024 results on May 8, 2024, with net income attributable to partners of $1.24 billion^a ($0.32 per common unit, flat year over year) and consolidated Adjusted EBITDA of $3.88 billion, up roughly 13% from $3.43 billion.

Distributable Cash Flow attributable to partners, as adjusted, rose to $2.36 billion^b from $2.01 billion, an increase of $348 million. Growth was driven mainly by the Crude Oil Transportation and Services segment, whose Adjusted EBITDA jumped to $848 million from $526 million on higher volumes (crude transportation volumes up 44%) and recent acquisitions, along with gains in Midstream and NGL segments. Interstate transportation and storage was the main weak spot, with Adjusted EBITDA falling to $483 million from $536 million, and intrastate results were pressured by lower storage optimization.

Management raised full-year 2024 Adjusted EBITDA guidance to $15.0^c-$15.3 billion from $14.5-$14.8 billion. The update includes the impact of Sunoco LP's acquisition of NuStar Energy, which closed May 3, 2024, so part of the increase reflects acquired earnings rather than purely organic improvement. Full-year growth capital expenditures are now expected at about $2.9 billion.

The Partnership also reported a Fitch upgrade of its senior unsecured debt to BBB, announced a quarterly distribution of $0.3175^d per common unit (a 3.3% increase year over year), and reported no borrowings under its $5 billion revolving credit facility at quarter end. For investors, the quarter shows strong cash generation, a growing and diversified asset base, and improved balance sheet signals, though leverage rose modestly with long-term debt up to $52.3 billion from $51.4 billion at year-end. Investors should weigh the higher guidance, which partly reflects acquisitions, against rising interest expense ($728 million, up from $619 million) and the noted softness in interstate and intrastate natural gas results.

02—Key points

Key Highlights

Consolidated Adjusted EBITDA rose 13% year over year to $3.88 billion from $3.43 billion, and Distributable Cash Flow attributable to partners, as adjusted, increased $348 million to $2.36 billion.
Net income attributable to partners was $1.24 billion, up from $1.11 billion, though basic and diluted net income per common unit held flat at $0.32.
Crude Oil Transportation and Services Adjusted EBITDA surged 61% to $848 million, with crude transportation volumes up 44% to a Partnership record of 6.1 million Bbls/d.
Full-year 2024 Adjusted EBITDA guidance was raised to $15.0-$15.3 billion from $14.5-$14.8 billion, including the impact of Sunoco LP's May 3, 2024 acquisition of NuStar Energy.
Interstate Transportation and Storage Adjusted EBITDA declined 10% to $483 million, and Intrastate Adjusted EBITDA rose modestly to $438 million despite lower storage optimization.
Quarterly distribution of $0.3175 per common unit ($1.27 annualized) was declared, a 3.3% increase over the first quarter of 2023.
Fitch upgraded senior unsecured debt to BBB, and the $5 billion revolving credit facility had no outstanding borrowings at March 31, 2024; long-term debt rose to $52.3 billion from $51.4 billion at year-end.

03—Questions

Frequently Asked Questions

Did Energy Transfer's earnings per unit improve in the first quarter of 2024?
Not on a per-unit basis. Net income per common unit was $0.32 for both Q1 2024 and Q1 2023. Total net income attributable to partners rose to $1.24 billion from $1.11 billion, but the unit count increased from roughly 3.1 billion to 3.4 billion weighted average units, offsetting the gain. Cash-flow metrics such as Adjusted EBITDA and Distributable Cash Flow grew more clearly than GAAP per-unit earnings.
Why did Energy Transfer raise its 2024 Adjusted EBITDA guidance?
Management attributed the raised range of $15.0-$15.3 billion (from $14.5-$14.8 billion) to new growth projects and to the inclusion of Sunoco LP's acquisition of NuStar Energy, which closed on May 3, 2024. Because acquired earnings contribute to the increase, investors should separate organic growth from acquisition-driven growth when evaluating the revision.
Is Energy Transfer's balance sheet getting more or less leveraged?
Leverage edged up. Long-term debt, less current maturities, rose to $52.3 billion from $51.4 billion at December 31, 2023, and interest expense increased to $728 million from $619 million year over year. Current liabilities also rose to $12.7 billion, partly due to $1.0 billion of Bakken Pipeline senior notes maturing in April 2024. Offsetting this, the revolving credit facility was undrawn, the Fitch rating was upgraded to BBB, and the Series E preferred units were slated for redemption on May 15, 2024.
Is the distribution safe, and how much did it grow?
The declared distribution of $0.3175 per common unit ($1.27 annualized) is 3.3% above the first-quarter 2023 level. Limited partner distributions totaled $1.07 billion in the quarter, and Distributable Cash Flow attributable to partners, as adjusted, of $2.36 billion covered that amount more than twice over, which suggests the distribution is well supported by current cash generation.
Which segments drove the results, and which lagged?
Crude oil transportation and services was the primary driver, with Adjusted EBITDA up $322 million, helped by recently acquired assets, higher pipeline throughput, and better acquisition and marketing optimization. Midstream (up to $696 million) and NGL and refined products (up to $989 million) also improved. Interstate transportation and storage was the laggard, down to $483 million, due to lower operational gas sales, a shipper bankruptcy-related prior-period benefit, and higher unplanned maintenance costs. Intrastate transportation and storage was also a weaker area, with storage margin down $58 million.

04—Continue

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