Energy Transfer Partners L.P.
) announced lackluster first quarter 2012 results, hurt by weak
contributions from the natural gas business, reduced gross margin
at Intrastate Transportation and Storage segment and higher selling
and administrative costs.
The owner of the biggest intrastate pipeline system in Texas
reported earnings per unit, excluding special items, of 25 cents,
down 64.8% from 71 cents in the prior-year quarter. The results
were way below our earnings estimate of 48 cents.
Quarterly revenues of $1,305.9 million missed our projection of
$1,748.0 million. Comparing year over year, sales decreased 22.6%
from $1,687.6 million, also due to lower natural gas sales.
Quarterly Cash Distribution
Last month, Energy Transfer announced first quarter distribution
of 89.375 cents per unit ($3.575 per unit annualized), which
remains unchanged from the year-earlier and previous quarter
distributions. The distribution will be paid on May 15, to unit
holders of record on May 4.
EBITDA & Operating Income
Adjusted EBITDA for the quarter was $536.1 million, compared
with $471.3 million in the year-ago quarter, reflecting robust
performances from most of the business units.
However, operating income of $253.9 million plunged 30.1% from
the first quarter of 2011.
Distributable Cash Flow
Energy Transfer Partners reported distributable cash flows of
$320.5 million in the quarter, down from $337.1 million in the
During the quarter, maintenance capital expenditure totaled
$20.1 million, down 46.8% year over year.
As of March 31, 2012, Energy Transfer had long-term debt (less
current maturities) of $8,741.5 million. Debt-to-capitalization
ratio was 54.0%.
We believe that the near- to medium-term outlook for Energy
Transfer Partners's natural gas gathering and processing business
continues to be clouded and remains a major liability. Moreover,
the uncertain macro environment and cost overruns on expansion
projects are other major areas of concern.
Counterbalancing these negative aspects, we remain optimistic
about the partnership's growth in the coming months aided by
multiple acquisitions and joint ventures, organic growth, strong
volume expansion and modest price increases.
Energy Transfer Partners -- which competes with other large-cap
pipeline master limited partnership peers like
Enterprise Products Partners L.P.
Kinder Morgan Energy Partners L.P.
Plains All American Pipeline L.P.
) -- currently retains a Zacks #3 Rank (short-term Hold rating).
Longer-term, we maintain our Neutral recommendation on the
ENTERPRISE PROD (EPD): Free Stock Analysis
ENERGY TRAN PTR (ETP): Free Stock Analysis
KINDER MORG ENG (KMP): Free Stock Analysis
PLAINS ALL AMER (PAA): Free Stock Analysis
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