El Paso Pipeline Partners, L.P. Q1 2010 Earnings Call Transcript

El Paso Pipeline Partners, L.P. Q1 2010 Earnings Call Transcript
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El Paso Pipeline Partners, L.P. (EPB)

Q1 2010 Earnings Call

May 6, 2010 11:30 a.m. ET

Executives

Bill Baird - Manager, El Paso Pipeline Partner & IR

Jim Yardley - President & CEO

JR Sult - SVP & CFO

Analysts

Craig Scherer - Tuohy Brothers

Presentation

Operator

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Good morning, my name is [Maulie] and I will be your conference operator today. At this, I would like to welcome everyone to the El Paso Pipeline Partners First Quarter 2010 Earning's Conference Call. All lines have been placed on mute in order to prevent any background noise. After the speakers remarks there will be a question and answer session. (Operator Instructions).

Thank you. I would now like to turn the conference over to Bill Baird. You may begin you conference.

Bill Baird

Thank you and good morning. We appreciate you joining our call. In just a moment I will turn over the call to Jim Yardley, who is President and Chief Executive Officer of El Paso Pipeline partners. Jim will be followed by JR Sult, who is Chief Financial Officer of our MLP. Throughout this call, we will be referring to slides which are available on our website, www.eppipelinepartners.com. This morning we issued a press release and filed it with the SEC as an 8-K and it's also on our website.

Please note that we have a financial and operational reporting package in the supporting materials of the webcast details located in the Investors section of our webcast which includes non-GAAP reconciliation. If you have not done so, please download this package so you have all relevant financial information.

During this conference call we'll include certain forward-looking statements and projections. The company 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 statements and projections expressed on this call.

Those factors are identified under the cautionary statement regarding forward-looking statements section of our earning's press release as well as in other filings with the SEC, and you should refer to them. The company assumes no obligation to publicly update or revise any forward-looking statement made during this conference call, or any forward-looking statements made by the company, whether as a result of new information, future events or otherwise.

And with that I'll now turn over the call over to Jim.

Jim Yardley

Thanks Bill and good morning. I'll provide a brief overview and JR will review our financial performance and I'll finish up with a business and operations update. Slide three provides highlights for the quarter in which we continue to grow both organically and through acquisition. We're off to a great start for the year as earnings and cash flow are up significantly in 2010. During the quarter, we completed our largest acquisition to date and acquired controlling interest in Southern LNG and Elba Express. We're very exited about broadening our asset base and these assets are a perfect fit for the partnership.

Slide four summarizes this acquisition. In March, we completed the purchase of 51% interest in the entities that own the Elba Island LNG terminal and Elba Express pipeline. The $810 million was financed with a combination of debt, equity and cash on hand. We issued $425 million of 6.5% senior notes in our initial public debt offering, a transaction which was well supported and significantly over subscribed. This is our third acquisition for El Paso Corporation which has now taken equity units in two of the three transactions.

For the full year 2010 we expect Southern LNG and Elba Express combined to generate approximately $170 million of EBITDA and approximately $140 million of distributable cash flow, which both reflect the Elba IIIA expansion and new Elba Express pipeline from March forward. The transaction was immediately accretive to distributable cash flow and as a result of this transaction and our continued growth, we increased our quarterly distribution by $0.02 per unit for the first quarter.

Slide five shows our quarterly distribution growth which is supported by strong and growing cash flows. Our distribution is up 17% from last year. We've now increased our quarterly distribution for eight consecutive quarters since our IPO in 2007.

And now I'll turn it over to JR to review our first quarter financial results.

JR Sult

Thanks Jim and good morning to everyone on the call. I'm starting my comments on slide six titled first quarter 2010 key financial metrics. As Jim indicated we had an excellent start for 2010, driven by organic growth in our pipelines and acquisitions from El Paso Corporation, our supported sponsor.

Our scorecard of key financial metrics for the first quarter reflect the continuing success executing on our growth strategy. Earnings per unit for the quarter was $0.53, up 33% for the same period in 2009. adjusted EBITDA was approximately $135 million for the quarter, 36% higher than 2009 levels, while our distributable cash flow year-over-year increased by more than half to approximately $88 million.

Similar to previous calls, I'm going to drill down a bit more on the underlying drivers of the performance but I wanted to frame the discussion that follows with an overview of the key metrics. A complete reconciliation of adjusted EBITDA and distributable cash flow to our reported GAAP financial measures are included in our financial and operational reporting packaging on our website.

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