Natural gas pipeline operator
Energy Transfer Partners L.P.
) announced impressive fourth-quarter 2012 results, aided by
strong margins in all of its business segments.
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The partnership reported a profit of 62 cents per limited partner
unit, breezing past the Zacks Consensus Estimate of 44 cents.
Reported profit was also above the year-earlier earnings of 41
Quarterly revenues of $10,981 million were above our projection
of $6,326 million. Comparing year over year, sales saw a whopping
increase from $1,805 million to $10,981 million, due to higher
natural gas sales.
Quarterly Cash Distribution
Last month, Energy Transfer announced fourth quarter distribution
of $0.89375 per unit ($3.575 per unit annualized), unchanged from
the year-earlier as well as previous quarter distributions.
EBITDA & Operating Income
Adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA) for the quarter was $948 million compared
with $493 million in the year-ago quarter, reflecting robust
performance from the Interstate Transportation and Storage
business unit along with investments in
Sunoco Logistics Partners L.P.
Operating income of $463 million was up 37.8% from the fourth
quarter of 2011.
Distributable Cash Flow
Energy Transfer Partners reported distributable cash flow of $488
million, up from $319 million in the prior-year quarter.
Maintenance capital expenditure totaled $143 million, up 164.8%
year over year.
As of Dec 31, 2012, Energy Transfer had long-term debt (less
current maturities) of $15,442 million. Debt-to-capitalization
ratio was 47.1%.
The partnership currently retains a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next 1 to 3 months.
Acquisitions have historically played a major role in the
partnership's growth profile and are expected to remain
significant in the future as well. Energy Transfer may find it
difficult to complete accretive transactions in the future, and
this could negatively impact its growth rate.
Additionally, unfavorable regulatory changes by the Federal
Energy Regulatory Commission (FERC) would impact the
partnership's results. This will also contribute towards higher
borrowing costs and depress the market value of its limited
In addition to Energy Transfer, there are certain other pipeline
operators that offer value and are worth buying now. These
Access Midstream Partners L.P.
) with a Zacks Rank #1 (Strong Buy) and
Atlas Pipeline Partners L.P.
) with a Zacks Rank #2 (Buy).