What analyst Jason Stevens wrote: "Energy Transfer Partners ETP reported somewhat better results than we had expected for the first quarter. We had been concerned that the intrastate segment would be hurt by lower gas volumes and margins because of continued flat basis differentials between gas market hubs in Texas. Although volumes were down this quarter compared with last year, Energy Transfer managed to increase gas sales margins to mitigate some of the impact. Also, transportation volumes increased about 5% from the fourth quarter of 2009. Interstate transportation delivered a 12% increase over last year, and the midstream segment benefited from strong processing margins and natural gas liquids prices, more than doubling operating income from last year. Propane results were slightly down from l ast year. Overall, Energy Transfer generated $344 million in operating income, $427 million in EBITDA, and $378 million in distributable cash flow. We're pleased with this level of distributable cash flow, as by our calculations it is enough to cover distributions 1.4 times, suggesting that Energy Transfer will be positioned to contemplate a distribution increase later this year."
ETP reported that 'Distributable cash flow for the three months ended March 31, 2010 totaled $376.8 million, a decrease of $64.8 million from the three months ended March 31, 2009'
ETP had 2009 DCF of $3.55/uni compared to a distribution of $3.575. Q1-10 DCF [in absolute terms] is falling, and with more units out there [could not find number of units outstanding in the earnings release], DCF per unit is falling even more.
Yet the analyst from Morningstar is "pleased with this level of distributable cash flow, as by our calculations it is enough to cover distributions 1.4 times, suggesting that Energy Transfer will be positioned to contemplate a distribution increase later this year."
One of us is getting a failing grade on their reading and comprehension of this release - and while I hope it is me [given that I am an ETP unit holder], I think the above is going to be another example of how Morningstar and the other part time MLP analysts do not understand the sector.
factoid, I have been following your post for quite a while and I respect your knowledge. Whether you are right, or the analyst is right, I just added 200 more shares at 45. 8% yield on a really good MLP like ETP is hard for me to pass up. I think the correction has more to go but I view it as a buying opportunity. Only time will tell.
Aren't you mixing quarterly and yearly numbers. The DCF for the quarter was 376 million, the payout is $.895 per unit per QUARTER, not $3.58 per quarter. $.895 per unit times approx. 189 million units outstanding is 169 million dollars or so. They have the payout covered quite nicely , AM I MISSING SOMETHING. if so ,what??