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HOUSTON, TX, Aug 04, 2011 (MARKETWIRE via COMTEX) --
El Paso Pipeline Partners, L.P. (NYSE: EPB) is
reporting today second quarter 2011 financial and operational results for the
partnership.
Second Quarter 2011 Highlights:
-- $146 million distributable cash flow,
a 54 percent increase from
second quarter 2010
-- $0.50 earnings per common unit, an 11
percent increase from second
quarter 2010
-- $238 million adjusted EBITDA, up 43
percent from second quarter 2010
-- Raised quarterly cash distributions to
$0.48 per common unit, up 20
percent from the second
quarter of 2010
-- The Southern Natural Gas Company (SNG)
South System III Phase II and
Southeast Supply Header
(SESH) Phase II expansions were placed in
service on-time and
under-budget
-- The partnership continued its
successful acquisition strategy,
acquiring additional
interests in Colorado Interstate Gas (CIG) and
SNG, two leading
interstate natural gas pipelines
"We continue to deliver superior results for
our unitholders with another quarter of higher earnings and cash flow,"
said Jim Yardley, president and chief executive officer of El Paso Pipeline
Partners. "Our portfolio of high-quality assets continues to grow
through acquisitions and expansions. During the quarter, we completed the
acquisition of additional interests in CIG and SNG, and now own 100 percent
of SNG. We also placed into service additional expansion projects which
brings our total to fourteen in less than three years. Our successful
acquisitions and expansions have enabled us to deliver consistent distribution
growth, as we have increased quarterly distributions every quarter since our
IPO in 2007."
A summary of financial results for the quarters and
six months ended June 30, 2011 and 2010 is as follows:
Financial
Results
Quarters Ended Six Months
Ended
June 30,
June 30,
($ in millions,
except
------------------------
------------------------
per-unit amount)
2011
2010
2011
2010
------------------------
----------- ----------- ----------- -----------
Operating
revenues
$
358 $ 328 $ 724 $ 661
Operating expenses
Operation and
maintenance
104
92
196
175
Depreciation and
amortization
43
39
84
73
Taxes, other than
income
18
15
35
30
----------- ----------- ----------- -----------
Operating
income
193
182
409
383
Earnings from
unconsolidated
affiliates
4
3
8
8
Other income,
net
2
5
4 20
Interest and debt
expense, net
(61)
(48)
(120)
(83)
Affiliated interest
income, net
-
1
-
2
----------- ----------- ----------- -----------
Income before income
taxes
138
143
301
330
Income tax
expense
-
-
-
(2)
----------- ----------- ----------- -----------
Net income
138
143
301
328
Net income
attributable
to noncontrolling
interests
(22)
(56)
(70)
(125)
----------- ----------- ----------- -----------
Net income
attributable
to EPB(1)
$
116 $
87 $ 231 $ 203
----------- ----------- ----------- -----------
Net income
attributable
to limited partners $
98 $
63 $ 201 $ 133
----------- ----------- ----------- -----------
Net income
attributable
to EPB per common unit-
-basic and diluted $ 0.50 $ 0.45 $ 1.06 $ 0.98
Weighted average
common
units outstanding(2)
198
114
189
110
(1) For the quarter and six months ended June 30,
2010, amounts include $20 million and $63 million of pre-acquisition
earnings, which were attributable to the general partner
(2) All 27.7 million subordinated units were
converted to common units on a one-for-one basis effective January 3, 2011
Quarterly Financial Results
Net income attributable to the limited partners
continues to grow rapidly; as the partnership reported $98 million for the
second quarter 2011, up 56 percent from the same 2010 period. Earnings per
common unit was also higher, increasing 11 percent to $0.50. These increases
were primarily the result of the acquisitions of Southern LNG (SLNG), Elba
Express, and incremental interests in SNG, as well as the completion of the
organic growth projects that went into service throughout 2010 and 2011
including the SLNG Elba Phase IIIA, WIC System, CIG Raton 2010, SESH Phase II
and Phases I and II of SNG South System III expansions.
Adjusted EBITDA and distributable cash flow both
grew sharply. Adjusted EBITDA grew 43 percent to $238 million, while
distributable cash flow rose by 54 percent to $146 million. Distribution
coverage for the second quarter 2011 was 1.3 times.
Second quarter earnings include a $14 million
benefit related to BG LNG Services' election not to continue with Phase B of
SLNG's Elba III expansion. Distributable cash flow for the same period
increased by approximately $8 million as a result of this cancellation.
The primary drivers for the quarter-to-quarter
increase in adjusted EBITDA and distributable cash flow were the acquisition
of an additional 49 percent interest in both SLNG and Elba Express in
November 2010; the acquisition of an aggregate 55 percent additional interest
in SNG in November 2010, March 2011, and June 2011; the acquisition of an
additional 28 percent interest in CIG in June 2011; and the completion of the
previously mentioned organic growth projects during 2010 and 2011.
Six Month Financial Results
For the first six months of 2011 and 2010, net
income attributable to the limited partners was $201 million and $133
million, respectively. Earnings per common unit for the six months ended June
30, 2011 increased 8 percent to $1.06. These increases were primarily the
result of the acquisition of SLNG and Elba Express, as well as additional
interests in SNG.
Adjusted EBITDA for the six months ended June 30,
2011 grew 38 percent from the first six months of 2010 to $468 million.
Distributable cash flow of $298 million for the first six months of 2011
represents a 60 percent increase from the same period in 2010.
Adjusted EBITDA and distributable cash flow rose
significantly in the first half of 2011 primarily as a result of the
acquisitions of SLNG, Elba Express, and additional interests in SNG and CIG.
The completion of organic growth projects in 2010 and 2011 referenced above
also contributed to the improved results for the first half of 2011.
Interest and Debt Expense
For the second quarter and six months ended June 30,
2011, interest and debt expense was $61 million and $120 million
respectively, compared with $48 million and $83 million, respectively, for
the same 2010 period. The higher interest expense is due to higher average
fixed-rate debt outstanding used to fund acquisitions and organic expansion
projects. The increase was partially offset by lower average balance
outstanding under the revolving credit facility.
Capital Expenditures
The partnership continues to execute on its organic
projects. During the six months ended June 30, 2011, El Paso Pipeline
Partners invested $88 million of growth capital, primarily for the second
phase of SNG's South System III and SESH Phase II expansion projects which
went into service in June 2011. Maintenance capital expenditures for the
first six months of 2011 totaled $46 million.
Webcast Information El Paso Pipeline Partners has
scheduled a live webcast to review its second quarter 2011 results, on August
4, 2011, beginning at 11:30 a.m. Eastern Time, 10:30 a.m. Central Time, which
may be accessed online through El Paso Pipeline Partners' website at
www.eppipelinepartners.com in the Investors section. During the webcast,
management will refer to slides that will be posted on the website. The
slides will be available one hour before the webcast and can be accessed in
the Investors section. A limited number of telephone lines will also be
available to participants by dialing (877)
260-0861 (conference ID #79534170)
ten minutes prior to the start of the webcast.
A replay of the webcast will be available online
through the partnership's website in the Investors section. A telephone audio
replay will also be available through August 12, 2011 by dialing (800)
642-1687 (conference ID #79534170).
If you have any questions regarding this procedure, please contact Margie Fox
at (713) 420-2903.
The partnership's financial statements will be
available in the Investors section of its Web site at www.eppipelinepartners.com.
The partnership's June 30, 2011, Form 10-Q will be available online once it
is filed. Copies of all filed documents, including the partnership's Annual
Reports on Form 10-K are also available, free of charge, by calling (877)
357-2766 .
El Paso Pipeline Partners, L.P. is a Delaware
limited partnership formed by El Paso Corporation to own and operate natural
gas transportation pipelines and storage assets. El Paso Corporation owns a
42 percent limited partner interest, and the 2 percent general partner
interest in the partnership. El Paso Pipeline Partners, L.P. owns Wyoming
Interstate Company, L.L.C. (WIC), Southern LNG Company, L.L.C. (SLNG), Elba
Express Company, L.L.C. (Elba Express), Southern Natural Gas Company, L.L.C.
(SNG), and an 86 percent interest in Colorado Interstate Gas Company (CIG).
WIC and CIG are interstate pipeline systems serving the Rocky Mountain
region, SLNG owns the Elba Island LNG storage and regasification terminal
near Savannah, Georgia, and both Elba Express and SNG are interstate pipeline
systems serving the southeastern region of the United States.
Disclosure of Non-GAAP Financial Measures
The SEC's Regulation G applies to any public
disclosure or release of material information that includes a non-GAAP
financial measure. In the event of such a disclosure or release, Regulation G
requires (i) the presentation of the most directly comparable financial
measure calculated and presented in accordance with GAAP and (ii) a
reconciliation of the differences between the non-GAAP financial measure
presented and the most directly comparable financial measure calculated and
presented in accordance with GAAP. The required presentations and
reconciliations are attached or included in the body of this release. Additional
detail regarding non-GAAP financial measures can be reviewed in El Paso
Pipeline Partners' Financial and Operational Reporting Package, which will be
posted at www.eppipelinepartners.com in the Investors section.
We use the non-GAAP financial measure Distributable
Cash Flow as it provides important information relating to the relationship
between our financial operating performance and our cash distribution
capability. Additionally, we use Distributable Cash Flow in setting forward
expectations and in communications with our board of directors of our general
partner. We define Distributable Cash Flow as Adjusted EBITDA less cash
interest expense, maintenance capital expenditures, pre-acquisition
undistributed earnings from consolidated subsidiaries and other income and
expenses, net, which primarily includes deferred revenue, a non-cash
allowance for equity funds used during construction (AFUDC equity) and other
non-cash items.
We use earnings before interest and taxes, or EBIT,
as a measure to assess the operating results and effectiveness of our
business, which consists of consolidated operations as well as investments in
unconsolidated affiliates. We believe EBIT is useful to investors as it
provides them with the same measure used by management to evaluate our
performance and allows investors to evaluate our operating results without
regard to our financing methods or capital structure. We define the non-GAAP
financial measure EBIT as net income adjusted for interest and debt expense,
net of interest income, affiliate interest income and expense, net, income
tax expense, and net income attributable to non-controlling interests.
Adjusted EBITDA is defined as net income adjusted
for (i) income tax expense (ii) interest and debt expense, net of interest income,
(iii) affiliated interest income, net of affiliated interest expense, (iv)
depreciation and amortization expense, (v) the partnership's share of
distributions declared by unconsolidated affiliates for the applicable
period, (vi) earnings from unconsolidated affiliates, and (vii) distributions
declared by majority-owned subsidiaries to El Paso Corporation for the
applicable period.
We believe that the non-GAAP financial measures
described above are also useful to investors because these measurements are
used by many companies in the industry as a measurement of operating and
financial performance and are commonly employed by financial analysts and
others to evaluate the operating and financial performance of the partnership
and to compare it with the performance of other publicly traded partnerships
within the industry. These non-GAAP financial measures may not be comparable
to similarly titled measures used by other companies and should not be used
as a substitute for net income, earnings per unit, operating income, cash
flow from operating activities or other measures of financial performance
presented in accordance with GAAP. Furthermore, these non-GAAP measures
should not be viewed as indicative of the actual amount of cash that we have
available for distributions or that we plan to distribute for a given period,
nor should they be equated to available cash as defined in our partnership
agreement.
Non-GAAP
Reconciliation Schedule
Quarters Ended
Six Months Ended
June 30,
June 30,
------------------------
------------------------
($ millions)
2011
2010
2011
2010
------------------------
----------- ----------- ----------- -----------
Net income
$
138 $ 143 $ 301 $ 328
Net income
attributable
to noncontrolling
interest
(22)
(56)
(70)
(125)
----------- ----------- ----------- -----------
Net income
attributable
to EPB
116
87
231
203
Add: Income tax
expense
-
-
-
2
Add: Interest and
debt
expense, net
61
48
120
83
Less: Affiliated
interest income, net
-
(1)
-
(2)
----------- ----------- ----------- -----------
Earnings before
interest
expense and income
taxes (EBIT)
177
134
351
286
Add: Depreciation
and
amortization
43
39
84
73
Distributions declared
by unconsolidated
affiliates
4
5
9
9
Net income
attributable to
noncontrolling
interest
22
56
70
125
Less: Earnings from
unconsolidated
affiliates
(4)
(3)
(8)
(8)
Distributions declared
by majority-owned
subsidiaries to El
Paso Corporation(1)
(4)
(64)
(38)
(147)
----------- ----------- ----------- -----------
Adjusted EBITDA
$
238 $ 167 $ 468 $ 338
Less: Cash interest
expense, net
(59)
(47)
(116)
(84)
Maintenance capital
expenditures
(26) (12)
(46)
(23)
Pre-acquisition
undistributed
earnings from
consolidated
subsidiaries(2)
-
(7)
-
(18)
Other, net(3)
(7)
(6)
(8)
(27)
----------- ----------- ----------- -----------
Distributable cash
flow $ 146 $
95 $ 298 $ 186
=========== =========== =========== ===========
(1) In 2Q 2011 and first half 2011, declared
distributions include $4 million and $26 million from CIG, respectively, and
$12 million from SNG in first half of 2011. In 2Q 2010 and first half 2010,
declared distributions include $16 million and $40 million from CIG,
respectively, $30 million and $ 81 million from SNG, respectively, $12
million and $20 million, respectively, from SLNG, and $6 million from Elba
Express for each period
(2) The 2010 amount represents SNG's undistributed
earnings prior to the November 2010 acquisition by EPB (3) Includes deferred
revenue and other non-cash items such as, AFUDC equity, $6 million non-cash
earnings related to BG's cancellation option and related write-off in 2Q
2011, and other items
Cautionary Statement Regarding Forward-Looking
Statements
This release includes forward-looking statements and
projections, made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. El Paso Pipeline Partners has made
every reasonable effort to ensure that the information and assumptions on
which these statements and projections are based are current, reasonable, and
complete. However, a variety of factors could cause actual results to differ
materially from the projections, anticipated results or other expectations expressed
in this release, including, without limitation, the ability to meet our 2011
projections and guidance; our ability to complete planned asset purchases
from El Paso Corporation; volatility in, and access to capital markets, the
ability to obtain necessary governmental approvals for proposed pipeline
projects and to successfully construct such projects on a timely basis and
within estimated costs; operating hazards, natural disasters, weather-related
delays, casualty losses and other matters beyond our control; the risks
associated with contracting and recontracting of transportation commitments;
regulatory uncertainties associated with pipeline rate cases; actions taken
by customers, third-party operators, processors and transporters; conditions
in geographic regions or markets served by El Paso Pipeline Partners and its
affiliates and equity investees or where its operations and affiliates are
located; the effects of existing and future laws and governmental
regulations; competitive conditions in our industry; changes in the
availability and cost of capital; and other factors described in El Paso
Pipeline Partners' (and its affiliates') Securities and Exchange Commission
filings. While these statements and projections are made in good faith, El
Paso Pipeline Partners and its management cannot guarantee that anticipated
future results will be achieved. Reference must be made to those filings for
additional important factors that may affect actual results. El Paso Pipeline
Partners assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking
statements made, whether as a result of new information, future events, or
otherwise.
Contacts:
Investor & Media Relations
Bruce Connery
Vice President
(713)
420-5855
Media Relations
Bill Baerg
Manager
(713)
420-2906
SOURCE: El Paso Pipeline Partners
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