Energy Transfer Equity, L.P. (ETE) Q2 2012 Earnings Call August 08, 2012 09:30 am ET Executives Martin Salinas - Chief Financial Officer Kelcy Warren - CEO and Chairman Analysts Gabe Moreen - Bank of America Presentation Operator
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Before going into second quarter results, I would like to give you a quick update on where we stand with our pending acquisition of Sunoco and a subsequent announcement of the ETP HoldCo transaction.We recently filed an amended S-4 proxy statement for the Sunoco transaction and expect to receive clearance soon. Once we receive clearance, the next steps will be to set the Sunoco shareholder record and meeting dates. Assuming a favorable vote at the shareholder meeting, we expect that we will be able to close the Sunoco acquisition sometime in early to mid October, and we couldn't be more excited to get our hands on the these assets and deliver on the unitholder value that we believe these assets will bring to bear. Also, as announced in June, contemporaneous with the Sunoco acquisition, ETP will contribute Southern Union to ETP HoldCo in exchange for a 60% equity interest in HoldCo, ETP will contribute its ownership of Sunoco to ETP HoldCo for a 40% equity interest, though Sunoco's equity interests in Sunoco Logistics will be transferred to ETP prior to the transaction and will not be owned by HoldCo. Through this transaction, we resolved the timing of ETE's drop down of the Southern Union assets without the need for external equity or debt financing of these assets, and we substantially increased ETP scale of operations and ability to serve more customers in the rapidly expanding midstream marketplace. The new HoldCo will be governed by a five person board of directors with three from ETP and two ETE, and HoldCo will be consolidated by ETP in financial statements. Sunoco and Southern Union will continue to operate as separate entity under HoldCo and that some board of directors will remain in place. Now turning to projects update, and I would like to briefly comment on our portfolio of midstream and liquids-rich growth projects which will support both, in our distributable cash flow while continuing to diversify our business mix.
We continue to make significant progress on our projects in both, our Midstream and NGL segments. We should see our Justice NGL pipeline Phase II of a REM pipeline, and our Red River Gathering pipeline and our Karnes County processing plant go in service later this year on time and on budget.We also expect phase one of our Jackson County processing plant and Lone Star's West Texas Gateway pipeline and first Mont Belvieu fractionator to go in service no later than January of 2013. In addition, we are actively evaluating more than $2 billion on growth capital projects in the midstream NGL and crude space, which could be announced over the next year or so and deliver additional distributable cash flow into 2008 to 2013 and into 2014, and we couldn't be more excited about our ability to execute on these projects. Now turning our attention to results, and I will start with ETP's. ETP's adjusted EBITDA was $466.4 million, up approximately 20% from Q2 of 2011. Distributable cash flow for the quarter was $275.2 million, an increase of $51.9 million from this time last June. These increases are primarily due to our Interstate segment, which is seeing the benefits of the contractual ramp ups at FEP and Tiger, as well as our 50% interest in Citrus, one that we acquired in March of this year. For the quarter, ETP will pay its unitholders $0.8938 for the quarter, or $3.575 on an annualized basis per unit on August 14 to our unitholders of record as of August 6. Now from a segment level perspective, and I will begin with our Midstream segment. Our Q2 2012 adjusted EBITDA was $93.4 million. That's down slightly from second quarter of last year and was primarily driven by lower NGL prices as well as higher SG&A and operating expenses. Read the rest of this transcript for free on seekingalpha.com