DALLAS--(BUSINESS WIRE)-- Energy Transfer LP (NYSE: ET) (“ET” or the “Partnership”) today reported financial results for the quarter and year ended December 31, 2020.

ET reported net income attributable to partners for the three months ended December 31, 2020 of $509 million. For the three months ended December 31, 2020, net income per limited partner unit (basic and diluted) was $0.19 per unit.

Adjusted EBITDA for the three months ended December 31, 2020 was $2.59 billion. Results for the quarter continued to reflect improved efficiencies, with lower operating expenses in all of the Partnership’s core operating segments compared to the same period in the prior year.

Distributable Cash Flow attributable to partners, as adjusted, for the three months ended December 31, 2020 was $1.36 billion.

Key accomplishments and recent developments:

Operational

• In January 2021, the first Very Large Ethane Carrier (“VLEC”) was loaded under ET’s joint venture with Satellite Petrochemical USA Corp., Orbit Gulf Coast NGL Exports, LLC. The Seri Everest, the world’s largest VLEC, departed from Orbit’s newly constructed export facility at our Nederland Terminal in Nederland, Texas, as the largest single shipment of ethane to date.
• In December 2020, the Partnership completed the expansion of its Nederland Terminal LPG facilities to increase its export capabilities.
• Also during the fourth quarter of 2020, the Partnership completed a new 20-inch pipeline directly linking its fractionation and storage facilities in Mont Belvieu, Texas to its Nederland Terminal.
• In October 2020, the Partnership released its Community Engagement Report, which highlights ET’s business achievements and safety programs, as well as its stakeholder outreach and community investment initiatives.

Strategic

• In February 2021, the Partnership announced the acquisition of Enable Midstream Partners, LP (“Enable”) in a $7.2 billion, all-equity transaction.
• In November 2020, the Partnership announced its first-ever dedicated solar power contract, which will reduce the Partnership’s environmental footprint by integrating alternative energy sources when economically beneficial. The Partnership continues to increase its focus on near and long-term alternative energy projects aimed at reducing its environmental footprint throughout its operations.
• In February 2021, the Partnership announced the creation of a new group that will focus on alternative energy initiatives.
• With the addition of ethane export facilities at our Nederland Terminal, the Partnership now owns two of the three U.S. ethane export terminals, and is the only company with export facilities on the Gulf Coast and East Coast.

Financial

• In January 2021, ET announced a quarterly distribution of $0.1525 per unit ($0.61 annualized) on ET common units for the quarter ended December 31, 2020. The distribution coverage ratio for the fourth quarter of 2020 was 3.30x.
• As of December 31, 2020, Energy Transfer Operating, L.P.’s (“ETO’s”) $6.00 billion revolving credit facilities had an aggregate $2.79 billion of available capacity, and the leverage ratio, as defined by its credit agreements, was 4.31x.
• Energy Transfer completed 2020 with full-year Adjusted EBITDA of $10.53 billion, which was above the high end of estimates provided in August 2020.
• For 2021, the Partnership expects Adjusted EBITDA to be $10.6 billion to $11.0 billion, excluding any contribution from the recently announced Enable acquisition.
• For the year ended December 31, 2020, the Partnership spent approximately $3.05 billion on growth capital expenditures. The Partnership expects to spend approximately $1.45 billion on growth capital expenditures in 2021, including approximately $250 million of 2020 growth capital that was deferred into 2021.

ET benefits from a portfolio of assets with exceptional product and geographic diversity. The Partnership’s multiple segments generate high-quality, balanced earnings with no single segment contributing more than 30% of the Partnership’s consolidated Adjusted EBITDA for the three months or full year ended December 31, 2020. The vast majority of the Partnership’s segment margins are fee-based and therefore have limited commodity price sensitivity.

Conference call information:

The Partnership has scheduled a conference call for 4:00 p.m. Central Time/5:00 p.m. Eastern Time on Wednesday, February 17, 2021 to discuss its fourth quarter 2020 results and provide an update on the Partnership, including its outlook for 2021. The conference call will be broadcast live via an internet webcast, which can be accessed through www.energytransfer.com or ir.energytransfer.com and will also be available for replay on the Partnership’s website for a limited time.

Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins. ET is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets. ET, through its ownership of Energy Transfer Operating, L.P., also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco LP (NYSE: SUN), and the general partner interests and 46.1 million common units of USA Compression Partners, LP (NYSE: USAC). For more information, visit the Energy Transfer LP website at www.energytransfer.com.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 30 states as well as refined product transportation and terminalling assets. SUN's general partner is owned by Energy Transfer Operating, L.P., a wholly owned subsidiary of Energy Transfer LP (NYSE: ET). For more information, visit the Sunoco LP website at www.sunocolp.com.

USA Compression Partners, LP (NYSE: USAC) is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of natural gas compression services in terms of total compression fleet horsepower. USA Compression partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USA Compression focuses on providing natural gas compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. For more information, visit the USAC website at www.usacompression.com.

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnership’s Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission, including the Partnership’s Quarterly Report on Form 10-Q to be filed for the current period. In addition to the risks and uncertainties previously disclosed, the Partnership has also been, or may in the future be, impacted by new or heightened risks related to the COVID-19 pandemic, and we cannot predict the length and ultimate impact of those risks. The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.energytransfer.com.

There are material limitations to using measures such as Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio, including the difficulty associated with using any such measure as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company’s net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA, Distributable Cash Flow and distribution coverage ratio may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP, such as operating income, net income and cash flow from operating activities.

Definition of Adjusted EBITDA

We define Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Inventory adjustments that are excluded from the calculation of Adjusted EBITDA represent only the changes in lower of cost or market reserves on inventory that is carried at last-in, first-out (“LIFO”). These amounts are unrealized valuation adjustments applied to Sunoco LP’s fuel volumes remaining in inventory at the end of the period.

Adjusted EBITDA reflects amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly.

Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as an internal measure for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation.

Definition of Distributable Cash Flow

We define Distributable Cash Flow as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership’s proportionate share of the investee’s distributable cash flow.

Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations.

On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of ET’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among our subsidiaries, the Distributable Cash Flow generated by our subsidiaries may not be available to be distributed to our partners. In order to reflect the cash flows available for distributions to our partners, we have reported Distributable Cash Flow attributable to partners, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:

• For subsidiaries with publicly traded equity interests, other than ETO, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to our partners includes distributions to be received by the parent company with respect to the periods presented.
• For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiaries, but Distributable Cash Flow attributable to partners reflects only the amount of Distributable Cash Flow of such subsidiaries that is attributable to our ownership interest.

For Distributable Cash Flow attributable to partners, as adjusted, certain transaction-related adjustments and non-recurring expenses that are included in net income are excluded.

Definition of Distribution Coverage Ratio

Distribution coverage ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by distributions expected to be paid to the partners of ET in respect of such period.

In the following analysis of segment operating results, a measure of segment margin is reported for segments with sales revenues. Segment margin is a non-GAAP financial measure and is presented herein to assist in the analysis of segment operating results and particularly to facilitate an understanding of the impacts that changes in sales revenues have on the segment performance measure of Segment Adjusted EBITDA. Segment margin is similar to the GAAP measure of gross margin, except that segment margin excludes charges for depreciation, depletion and amortization. Among the GAAP measures reported by the Partnership, the most directly comparable measure to segment margin is Segment Adjusted EBITDA; a reconciliation of segment margin to Segment Adjusted EBITDA is included in the following tables for each segment where segment margin is presented.

In addition, for certain segments, the sections below include information on the components of segment margin by sales type, which components are included in order to provide additional disaggregated information to facilitate the analysis of segment margin and Segment Adjusted EBITDA. For example, these components include transportation margin, storage margin, and other margin. These components of segment margin are calculated consistent with the calculation of segment margin; therefore, these components also exclude charges for depreciation, depletion and amortization.

For the three months ended December 31, 2020 compared to the same period last year, transported volumes decreased primarily due to the bankruptcy filing of a transportation customer.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our intrastate transportation and storage segment increased due to the net impacts of the following:

• an increase of $17 million in realized storage margin due to higher physical storage margin from withdrawals and higher realized gains from financial derivatives used to hedge physical storage gas;
• a decrease of $8 million in operating expenses primarily due to a $4 million decrease in maintenance project costs, a $3 million decrease in ad valorem taxes and a $1 million decrease in outside services;
• an increase of $3 million in retained fuel revenue primarily due to higher natural gas prices; and
• a decrease of $2 million in selling, general and administrative expenses due to lower allocated overhead costs; partially offset by
• a decrease of $15 million in realized natural gas sales and other primarily due to lower realized gains from pipeline optimization activity; and
• a decrease of $3 million in transportation fees due to the expiration of certain contracts on our Regency Intrastate Gas System, partially offset by volume ramp-ups from the Permian region.

For the three months ended December 31, 2020 compared to the same period last year, transported volumes decreased primarily due to lower crude production resulting in lower associated gas production and lower volumes on our Tiger Pipeline due to contract expirations, as well as multiple weather events and maintenance of third-party facilities impacting our assets along the Gulf Coast.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our interstate transportation and storage segment increased due to the net impacts of the following:

• a decrease of $6 million in operating expense primarily due to an $18 million settlement related to a property tax appeal with the state of Arizona, a $5 million decrease in maintenance project costs, and a $1 million decrease in storage and transportation expense, partially offset by $14 million in bad debt expense associated with a shipper bankruptcy and the write-off of $4 million of obsolete inventory; and
• a decrease of $21 million in selling, general and administrative expense primarily resulting from a $17 million favorable settlement related to excise taxes on Rover and a $5 million decrease in allocated overhead and employee costs due to cost-cutting initiatives, partially offset by a $2 million increase in legal and consulting fees related to an ongoing rate case and shipper bankruptcies; partially offset by
• a decrease of $12 million in revenues primarily due to a decrease of $16 million from a contractual rate adjustment on commitments at our Lake Charles LNG facility effective January 2020, a decrease of $9 million resulting from contract expirations on Tiger and a decrease of $8 million in transportation fees as a result of multiple weather events and maintenance on third-party facilities connected to our systems. These decreases were partially offset by increased revenues from short-term firm contracts on our Transwestern, Panhandle and Rover systems due to increased demand and higher parking revenues; and
• a decrease of $1 million in Adjusted EBITDA related to unconsolidated affiliates primarily due to lower earnings from Midcontinent Express Pipeline as a result of lower rates received following the expiration of certain contracts.

For the three months ended December 31, 2020 compared to the same period last year, gathered volumes decreased primarily in the South Texas and Northeast regions, partially offset by the impact of the SemGroup acquisition in the Mid-Continent/Panhandle region and volume growth in the Ark-La-Tex and Permian regions. NGL production increased due to the impact of the SemGroup acquisition in the Mid-Continent/Panhandle region and increased ethane recoveries in the Permian, South Texas and North Texas regions.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment decreased due to the net impacts of the following:

• a decrease of $11 million in non fee-based margin due to unfavorable NGL prices of $14 million, partially offset by the impact of favorable natural gas prices of $3 million;
• a decrease of $10 million in non fee-based margin due to decreased throughput volumes, primarily in the South Texas region; and
• a decrease of $36 million in fee-based margin due to volume declines in the South Texas region; partially offset by
• a decrease of $40 million in operating expenses due to cost-saving initiatives, including a decrease of $13 million in maintenance project costs, $13 million in materials and $11 million in outside services; and
• a decrease of $7 million in selling, general and administrative expenses primarily due to a decrease in allocated overhead costs resulting from overall corporate cost reductions.

For the three months ended December 31, 2020 compared to the same period last year, NGL transportation volumes increased due to higher throughput volumes on our Mariner East pipeline system. In addition, throughput barrels on our Texas NGL pipeline system increased primarily due to higher export volumes feeding into our Nederland Terminal resulting from the initiation of service on our propane export pipeline in the fourth quarter 2020.

Refined products transportation volumes decreased for the three months ended December 31, 2020 compared to the same period last year due to less domestic demand for jet fuel and other refined products. This decrease in volume was partially offset by the impact from Midwest refinery turnarounds in the prior period.

NGL and refined products terminal volumes increased for the three months ended December 31, 2020 compared to the same period last year primarily due to higher volumes from our Mariner East system and an increase in loaded vessels at our Nederland Terminal.

Average fractionated volumes at our Mont Belvieu, Texas fractionation facility increased for the three months ended December 31, 2020 compared to the same period last year primarily due to the commissioning of our seventh fractionator in February 2020.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our NGL and refined products transportation and services segment decreased due to net impacts of the following:

• a decrease of $74 million in marketing margin primarily due to a $50 million decrease resulting from lower optimization gains from the sale of NGL component products at our Mont Belvieu facility, a $41 million decrease due to lower margin from our butane blending business, and a $33 million decrease in gasoline blending and optimization due to unfavorable market conditions primarily attributable to the COVID-19 pandemic. These decreases were partially offset by a $28 million increase in NGL export and rack volumes, a $17 million increase due to lower capacity lease fees incurred by our marketing affiliate, and a $4 million increase due to the timing of the settlement of financial derivative contracts; and
• a decrease of $22 million in terminal services margin primarily due to a $27 million decrease resulting from the expiration of a third-party contract at our Nederland Terminal in the second quarter of 2020, a $7 million decrease due to lower third party and intercompany volumes feeding our Marcus Hook Terminal, and a $6 million decrease due to less domestic demand for jet fuel and other refined products. These decreases were partially offset by a $14 million increase due to higher throughput on our Mariner East system and a $4 million increase from higher storage tank rental revenues in the fourth quarter of 2020; partially offset by
• an increase of $20 million in transportation margin primarily due to a $13 million increase from higher throughput volumes on our Mariner East pipeline system, a $7 million increase due to higher export volumes feeding into our Nederland Terminal resulting from the initiation of service on our propane export pipeline in the fourth quarter of 2020, a $4 million increase due to the impact from Midwest refinery turnarounds in the prior period, and a $3 million increase resulting from higher throughput volumes received from the Southwest Texas region. These increases were partially offset by an $8 million decrease due to lower throughput volumes received from the Eagle Ford region;
• an increase of $12 million in storage margin primarily due to a $6 million increase from component product storage revenues and a $6 million increase from throughput fees generated from exported volumes;
• an increase of $11 million in fractionators and refinery services margin primarily due to the commissioning of our seventh fractionator in February 2020 and higher NGL volumes at our Mont Belvieu fractionation facility; and
• a decrease of $8 million in selling, general and administrative expenses primarily due to lower allocated overhead costs, lower employee costs resulting from cost-cutting initiatives, and a decrease in insurance expenses.

For the three months ended December 31, 2020 compared to the same period last year, crude transportation volumes were lower on our Texas pipeline system and our Bakken pipeline, driven by lower production in these regions due to lower crude oil prices as well as lower refinery utilization caused by COVID-19 demand destruction, partially offset by contributions from assets acquired in 2019. Crude terminal volumes were lower primarily due to lower Permian and Bakken pipeline volumes, reduced refinery utilization, and reduced export demand at our Nederland Terminal, partially offset by contributions from assets acquired in 2019.

Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our crude oil transportation and services segment decreased due to the net impacts of the following:

• a decrease of $182 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $106 million decrease from our Texas crude pipeline system due to lower utilization and lower average tariff rates realized, a $48 million decrease (excluding a net change of $25 million in unrealized gains and losses on commodity risk management activities) from our crude oil acquisition and marketing business primarily due to less favorable pricing conditions impacting our Permian to Gulf Coast and Bakken to Gulf Coast trading operations, a $43 million decrease due to lower volumes on our Bakken Pipeline resulting from lower basin production, an $18 million decrease in throughput at our crude terminals primarily driven by lower Permian and Bakken pipeline volumes, reduced refinery utilization from COVID-19 demand destruction, and reduced export demand, and an $11 million decrease due to lower volumes on our Bayou Bridge pipeline; partially offset by an increase of $45 million related to assets acquired in 2019;
• an increase of $11 million in selling, general and administrative expenses primarily due to legal expenses; and
• a decrease of $4 million in Adjusted EBITDA related to unconsolidated affiliates due to lower margin from jet fuel sales by our joint ventures; partially offset by
• a net decrease of $35 million in operating expenses primarily due to lower volume-driven pipeline expenses and corporate cost-cutting initiatives, partially offset by increased costs related to assets acquired in 2019.

Investment in Sunoco LP

The Investment in Sunoco LP segment reflects the consolidated results of Sunoco LP.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our investment in Sunoco LP decreased due to the net impacts of the following:

• a decrease of $32 million in margin (excluding changes in inventory fair value adjustments and unrealized losses on commodity risk management activities) due to a 12% decrease in volume primarily resulting from the COVID-19 pandemic, as well as an approximately 7% decrease in gross profit per gallon sold, offset by
• a decrease of $13 million in operating expenses and $10 million in selling, general and administrative expenses, primarily attributable to lower employee costs, professional fees, credit card processing fees and advertising costs.

The Investment in USAC segment reflects the consolidated results of operations for USAC.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our investment in USAC decreased primarily due to a decrease in demand for compression services driven by a decline in U.S. crude oil and natural gas activity resulting in a decrease in average revenue generating horsepower per month.

Segment Adjusted EBITDA. For the three months ended December 31, 2020 compared to the same period last year, Segment Adjusted EBITDA related to our all other segment increased due to the net impacts of the following:

• an increase of $21 million from the acquisition of Energy Transfer Canada (formerly SemCAMS);
• an increase of $6 million primarily due to insurance proceeds received on settled claims related to our MTBE litigation;
• an increase of $6 million from lower power and operating costs at our compression services business; and
• an increase of $3 million from power trading activities; partially offset by
• a decrease of $4 million due to lower revenue from our compressor equipment business; and
• a decrease of $3 million due to lower royalties and producer demand at our natural resources business.

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Energy Transfer

Investor Relations:

Bill Baerg, Brent Ratliff, Lyndsay Hannah, 214-981-0795

or

Media Relations:

Vicki Granado, 214-840-5820

Source: Energy Transfer LP