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Energy Transfer Partners (ETP) Q3 Earnings Top, Sales Up Y/Y

Zacks

Natural gas pipeline operator Energy Transfer Partners, L.P. ETP reported third-quarter 2017 earnings of 33 cents per limited partner unit, surpassing the Zacks Consensus Estimate of earnings of 22 cents. The Crude Oil Transportation and Services segment’s stellar performance drove the better-than-expected results.

Further, the bottom line also compared favorably with the year-ago quarter earnings of 16 cents per limited partner unit. Higher revenues, increased EBITDA and absence of impairment charges led to improved results.

Quarterly revenues increased to $6,973 million from $5,531 million a year ago. However, the top line surpassed the Zacks Consensus Estimate of $7,666 million.

Energy Transfer Partners LP Price, Consensus and EPS Surprise


Energy Transfer Partners LP Price, Consensus and EPS Surprise | Energy Transfer Partners LP Quote

Quarterly Cash Distribution

Last month, Energy Transfer Partners announced third-quarter distribution of about 57 cents per unit ($2.26 per unit annualized), reflecting an increase of 2.7% from the prior quarter. This quarterly distribution will be paid on Nov 14, to unit holders of record as of Nov 7.

EBITDA, Operating Income and Net Income

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $1,744 million compared with $1,390 million a year ago. This 25.5% improvement was mainly driven by strong performance from Crude Oil Transportation and Services segment which delivered EBITDA of $396 million, surging a whopping 134% from the year-ago quarter. NGL Transportation and Services segment also reported 10.4% higher EBITDA of $423 million in the quarter under review. The Midstream segment generated EBITDA of $356 million, 13.4% up from third-quarter 2016. Intrastate transportation/storage segment also reported higher EBITDA of $163 million compared with $133 million recorded year ago. However, results from the interstate transportation/storage segment were slightly weaker than the prior-year quarter to stand at $273 million. EBITDA from the all other segments amounted to $133 million compared with $113 million in the year-ago quarter.

The company’s Crude Oil Transportation and Services segment benefited from the Bakken Pipeline project entering service and strong crude oil throughput volumes, particularly from the Permian Basin.

Midstream segment benefited from higher production volumes in the Permian and North East regions along with the acquisition of the outstanding units of Houston-based subsidiary, PennTex Midstream Partners LP. Higher non-fee-based processing margins and increased fee-based revenues also boosted the results when compared with the prior-year quarter.

Increased volumes along with higher refinery and terminal services’ margins drove the results of NGL Transportation and Services segment.

The partnership reported operating income of $825 million compared with $638 million in third-quarter 2016 on the back of higher revenues despite increasing costs.

The partnership reported a net income of $761 million in the reported quarter, skyrocketing 451% from the net profit of $138 million in the year-ago quarter. The massive rise in the partnership’s net income is attributed higher operating income and higher equity in earnings from unconsolidated affiliates. The net income also got a significant boost from the absence of $308-million impairment expenses recorded in the prior year on an investment in an unconsolidated affiliate.

Total Expense

Energy Transfer Partners reported total expense of $6,148 million in third-quarter 2017, reflecting an increase of 25.6% from the prior-year quarter. While the cost of products sold increased 26.8% to $4,876 million in the quarter, operating, depreciation and selling/administration costs rose by 20.2%, 18.5% and 47.9%, respectively.

Distributable Cash Flow

Distributable cash flow of $1,155 million was higher than the prior-year quarter level of $824 million. The 40.2% increase in the distributable cash flow increased the partnership’s distribution coverage to $1.13x compared with 1.10x in the year-ago quarter.

Capital Expenditure

Total capital expenditure for the nine months ended Sep 30 totaled to $2,380 million with growth capex of $2,261 million accounting for 95% of the total capex. The remaining capex balance was attributed toward maintenance activities totaling $119 million.

Balance Sheet

As of Sep 30, 2017, Energy Transfer Partners — which counts Buckeye Partners L.P. BPL, EnLink Midstream Partners, L.P. ENLK and Boardwalk Pipeline Partners, L.P. BWP as its peers — had long-term debt (less current maturities) of $33,630 million. Debt-to-capitalization ratio was about 52.2%. Energy Transfer Partners currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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