Natural gas pipeline operator Energy Transfer Partners, L.P. ETP reported first-quarter 2017 earnings of 9 cents per limited partner unit. The Zacks Consensus Estimate was of earnings of 32 cents per limited partner unit. However, the bottom line compared favorably with the year-ago quarter profit of 8 cents per limited partner unit.
The weaker-than-expected results were led by a 61% increase in total expenses in the reported quarter from the prior-year quarter. Post the earnings release, the units of the company fell 3%.
Quarterly revenues increased to $6,895 million from $4,481 million a year ago. However, the top line missed the Zacks Consensus Estimate of $6,968 million.
This is Energy Transfer Partner’s first earnings release as a combined entity after its merger with Sunoco Logistics Partners. The combined entity is called Energy Transfer Partners and all the financial results are based on the post merger effect.
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Quarterly Cash Distribution
Last month, Energy Transfer Partners announced first-quarter distribution of about 53.5 cents per unit ($2.14 per unit annualized). This cash distribution is equivalent to 80.25 cents per unit on a pre-merger basis. The partnership expects to use the cash flow savings to deliver its balance sheet and fund growth projects.
EBITDA, Operating Income and Net Income
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were $1,414 million compared with $1,412 million a year ago. This 0.14% improvement was mainly driven by strong performance from its Midstream and Liquids Transportation and Services segments. This rise was offset by a decline in Sunoco Logistics’ crude oil acquisition and marketing business.
The company’s Midstream segment benefited from higher Permian volumes, higher non-fee-based processing margins due to a slight recovery in crude oil and natural gas liquid prices, and the PennTex Midstream Partners, LP PTXP acquisition. Higher NGL and crude oil transportation volumes drove the results of Liquids Transportation and Servicessegment.
The partnership reported operating income of $654 million compared to $614 million in first-quarter 2016.
The partnership reported a net income of $364 million in the reported quarter, compared with a net profit of $376 million in the year-ago quarter. The decline in the partnership’s net income is due to an income-tax benefit in first-quarter 2016.