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Energy Transfer Partners (ETP) Lags Q1 Earnings Estimates

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Energy Transfer Partners, L.P. ETP delivered first-quarter 2018 earnings of 24 cents per limited partner unit, missing the Zacks Consensus Estimate of 26 cents. The weaker-than-expected results can be attributed to increased costs and the lower-than-anticipated performance by its Midstream segment. The Midstream segment reported EBITDA of $377 million, lagging the Zacks Consensus Estimate of $390 million.

However, the bottom line improved significantly from the year-ago income of 3 cents in the first quarter of 2017, primarily on strong contribution from the Crude Oil and NGL Transportation and Services segments.

Quarterly revenues increased to $8,280 million from $6,895 million a year ago. However, the top line lagged the Zacks Consensus Estimate of $8,499 million.

Energy Transfer Partners, L.P. Price, Consensus and EPS Surprise


Energy Transfer Partners, L.P. Price, Consensus and EPS Surprise | Energy Transfer Partners, L.P. Quote

Quarterly Cash Distribution

Last month, Energy Transfer Partners announced first-quarter distribution of about 57 cents per unit ($2.26 per unit annualized), unchanged from the fourth quarter. This quarterly distribution will be paid tomorrow to its unit holders of record as of May 7, 2018.

EBITDA, Operating Income and Net Income

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the quarter were $1,881 million compared with $1,445 million a year ago. The improvement of 30.2% can be attributed to strong performance from the Crude Oil Transportation and Services segment that delivered EBITDA of $464 million, surging a whopping 148.1% from the year-ago quarter. The company’s Crude Oil Transportation and Services segment benefited from the Bakken Pipeline project (which entered into service in the second quarter of 2017) along with strong crude oil throughput volumes.

Further, the NGL Transportation and Services segment reported EBITDA of $451 million in the quarter under review compared with $381 million in the prior-year quarter. Increased NGL transportation and fractionation volumes drove the results of the above-mentioned segment. However, the results were partly offset by lower refined products terminal volumes.

The Midstream segment generated EBITDA of $377 million, surging 17.8% from first-quarter 2017. The segment benefited from higher production volumes in the Permian, South Texas and North East regions. Higher non-fee-based processing margins and increased fee-based revenues also bolstered the results compared with the prior-year quarter.

The Interstate Transportation/Storage segment also reported higher EBITDA of $323 million compared with $265 million recorded a year ago on higher volumes of natural gas transported. Likewise, the results from the Intrastate Transportation/Storage segment were also stronger, with adjusted EBITDA of $192 million compared with $159 million in the year-ago quarter.  However, EBITDA from all other segments decreased to $74 million compared with $123 million in the year-ago quarter.

The partnership reported operating income of $973 million compared with an income of $683 million in first-quarter 2017 on the back of higher revenues, despite increasing costs.

Notably, the partnership reported total expense of $7,307 million in first-quarter 2018, reflecting an increase of 17.6% from the prior-year quarter. The higher expenses can primarily be attributed to the increased cost of products sold, along with higher operating and depreciation costs.

Energy Transfer Partners reported a net income of $879 million in the reported quarter, skyrocketing 123.6% from the net income of $393 million in the year-ago quarter.

Distributable Cash Flow

Distributable cash flow of $1,366 million was higher than the prior-year quarter level of $972 million, reflecting a hike of 40.5%. However, the partnership’s distribution coverage declined to $1.15x compared with 1.17x in the year-ago quarter.

Balance Sheet

As of Mar 31, 2018, Energy Transfer Partners had long-term debt (less current maturities) of $33,109 million. The debt-to-capitalization ratio was about 49.3%.

Zacks Rank and Key Picks

Energy Transfer Partners currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the same industry include Enable Midstream Partners, LP ENBL, Energy Transfer Equity, L.P. ETE and Oasis Midstream Partners LP OMP, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enable Midstream surpassed earnings estimates in each of the last four quarters, delivering an average positive earnings surprise of 15.9%.

Energy Transfer Equity’s 2018 earnings are expected to witness a year-over-year increase of 55.37%.

Oasis Midstream’s earnings are anticipated to grow 339.59% on a yearly basis in 2018.

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