What to Expect from Energy Transfer Partners' 2Q15 Earnings
(Continued from Prior Part)
2Q15 distribution growth
In a recent press release, Energy Transfer Partners (ETP) announced a quarterly distribution per unit of $1.035 for 2Q15. This represents an 8.4% YoY (year-over-year) increase over 2Q14 and a 1.97% QoQ (quarter-over-quarter) increase versus 1Q15.
This is Energy Transfer Partners’ eighth consecutive quarter of distribution growth. On the same day, ETP’s general partner, Energy Transfer Equity (ETE), announced a distribution per unit of $0.265 on a post-split basis. This represents a 39% YoY increase compared with 2Q14. ETE recently completed a 2-to-1 split.
Distribution guidance
According to Wall Street estimates, Energy Transfer Partners’ distributions may continue to grow for the rest of 2015. ETP’s expected quarterly distribution per unit of $1.059 and $1.078 for 3Q15 and 4Q15, respectively, would add up to $4.187 for the whole of 2015. This represents an 8.4% YoY increase for fiscal 2015 over fiscal 2014.
Energy Transfer Partners is expected to benefit from growth in fee-based cash flows resulting from the Regency Energy Partners merger completed during 2Q15. ETP should also benefit from other fee-based projects that are expected to come online in the remaining quarters of 2015 and IDR (incentive distribution rights) subsidies from ETE.
Energy Transfer Partners’ (ETP) growth in distributions from its subsidiaries are expected to come from 27% limited partner interest, 10% GP (general partner) interest, and IDRs (incentive distribution rights) in Sunoco Logistics (SXL). Plus, ETP will hold ~57% limited partner interest in Sunoco LP (SUN) following the completion of the recently announced SHC (Susser Holdings Corporation) dropdown—a transfer of Sunoco LP’s GP and IDRs held by Energy Transfer Partners to ETE, and the issuance of additional SUN common units to ETP.
Distribution yield
Energy Transfer Partners has a current distribution yield of 7.91%. ETP’s high distribution yield can be attributed to the tier-4 split IDRs (Incentive Distribution Rights) present in its capital structure and a volatile cash stream. Some of its business segments have commodity price exposure.
Energy Transfer Partners’ peers Williams Partners (WPZ) and Enbridge Energy Partners (EEP) have IDRs in their capital structure. They are trading at current distribution yields of 7.14% and 6.98%, respectively. Enterprise Products Partners (EPD) has no IDRs and trades at a current yield of 5.17%.
ETE has a current distribution yield of 3.46%. Together, ETP, SXL, WPZ, EPD, and EEP account for ~34.18% of the Alerian MLP ETF (AMLP).
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