Lower Volumes Hurt Energy Transfer - Analyst Blog

Energy Transfer Partners L.P. (ETP), a master limited partnership (MLP), announced its weak first quarter results, adversely affected by a decrease in volumes in its transportation pipelines. The pipeline operator’s results were also pulled down by lower ‘Retail Propane’ segment results. The partnership reported earnings per unit of 74 cents, well below the Zacks Consensus Estimate of $1.06 and the year-ago earnings of $1.37.
 
However, revenue was up 14.8% year over year to $1.9 billion. The positive comparison was mainly on account of a 17.5% rise in sales from natural gas operations (which accounts for roughly 70% of total sales).
 
Distribution Unchanged
 
Energy Transfer’s quarterly distribution of 89.375 cents per unit ($3.575 per unit annualized), remains unchanged from the year-earlier quarter and the previous quarter distribution. The distribution was paid on May 15, to unit-holders of record as on May 7, 2010.
 
EBITDA
 
Adjusted EBITDA for the quarter was $454.4 million, compared with $440.8 million in the year-ago quarter. The year-over-year increase in EBITDA was primarily, due to favorable natural gas and NGL prices and increases in average wholesale propane commodity prices.
 
Capital Expenditure
 
During the quarter, maintenance capital expenditure totaled $19.6 million, compared with the year-earlier level of $15.0 million. Looking forward to the remainder of 2010, the partnership expects to devote between $70 million and $90 million in maintenance capital spending.
 
Balance Sheet
 
As of March 31, 2010, Energy Transfer had cash on hand of $384.3 million and long-term debt (including current maturities) of $6.1 billion. Debt-to-capitalization ratio was 54.2%.