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Analyst Blog

On May 6, 2014, natural gas pipeline operator Energy Transfer Partners LP (ETP - Analyst Report) reported higher first quarter 2014 earnings. Following the favorable results, the unit price rose 2.5% in the NYSE, as reflected in the higher closing price on Wednesday. However the unit price fell 2.8% on May 8, 2014.

Energy Transfer Partners reported income from continuing operations of 69 cents per limited partner unit, which came in above the year-ago profit of 60 cents per unit, primarily attributable to higher customer demand.

However, the bottom line failed to beat the Zacks Consensus Estimate of 71 cents, owing to increased total expenses.

Quarterly revenues increased 12.7% year over year to $12,232.0 million and also surpassed the Zacks Consensus Estimate of $12,147.0 million. Higher revenues from the Intrastate Transportation and Storage segment and investments in Sunoco Logistics Partners LP (SXL - Analyst Report) that paid off in the reported quarter accounted for the overall growth.

Quarterly Cash Distribution

Last month, Energy Transfer Partners announced first-quarter distribution of 93.5 cents per unit ($3.74 per unit annualized), representing a sequential increase of about 1.6%. The distribution is payable on May 15, 2014, to unitholders of record as of May 5.   

EBITDA & Operating Income

Adjusted earnings before interest, taxes, depreciation, and amortization or EBITDA for the quarter were $1,206.0 million, up from $956.0 million in the year-ago quarter. Contributors to the growth were improved commodity prices and higher customer demand.

The partnership reported an operating income of $688.0 million, up 28.8% from $534.0 million the first-quarter 2013.

Total Expense

Energy Transfer Partners reported total cost of $11,544.0 million for the first quarter, reflecting a year-over-year increase of 11.9%

Distributable Cash Flow

Energy Transfer Partners reported distributable cash flow of $629 million, significantly higher than the prior-year quarter level of $376 million.

Capital Expenditure

Maintenance capital expenditure totaled $39.0 million, down 23.5% year over year.

Balance Sheet

As of Mar 31, 2014, Energy Transfer Partners had long-term debt (less current maturities) of $16,191.0 million. The debt-to-capitalization ratio was 51.6%.

Agreement

In a separate press release, Energy Transfer Partners declared that it has signed a deal with Comisión Federal De Electricidad (“CFE”), a state-owned electric power firm in Mexico.

Per the agreement, Energy Transfer Partners is expected to transport roughly 930,000 million British thermal units of natural gas to CFE every day for a period of 15 years.

Zacks Rank

Energy Transfer Partners currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the same industry like Boardwalk Pipeline Partners LP (BWP - Snapshot Report) and Targa Resources Partners LP (NGLS - Snapshot Report). Both the players sport a Zacks Rank #1 (Strong Buy).
 

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