Energy Transfer LP Reports Q4 Earnings, Discusses Unitholder Returns

Energy Transfer LP (ET) reported fourth-quarter 2022 earnings on Wednesday, offering guidance on the partnership’s distribution, which has fully rebounded since being cut in 2020.

During the fourth quarter, Energy Transfer generated adjusted EBITDA of $3.44 billion compared to $2.81 billion a year prior. Reported adjusted EBITDA beat the Eikon consensus estimate of $3.28 billion for the quarter. The partnership’s improved results were attributed to higher volumes across its core segments and the acquisition of Enable Midstream, Energy Transfer said in a statement.

Energy Transfer announced last month a quarterly cash distribution of $0.305 per common unit ($1.22 annualized) for the fourth quarter of 2022, which is a 74.1% increase year over year and a 15% increase from the prior quarter.

With the distribution increase for last quarter, Energy Transfer’s distribution has now rebounded to where it was in the first half of 2020. Future distribution increases will be assessed on an annual basis, balancing Energy Transfer’s leverage targets, growth opportunities, and potential unit buybacks, Energy Transfer co-CEO Thomas Long said during the company’s fourth quarter earnings call on Wednesday.

“We’re going to look at returning capital to the unitholders, and that will be evaluating the distribution levels. Like I mentioned in the kind of the prepared remarks that we’re going to be looking at that distribution more on an annual type basis,” Long said. “We’re going to continue to look at possible unit buybacks. So we put both of those in that same returning capital to the unitholders.”

The company said it will continue to place emphasis on strategically allocated cash flow in a manner that will further improve financial flexibility and leverage.

“We’re going to continue to probably keep a lot of financial flexibility and some dry powder, which means we’ll keep it at the lower end of that 4x to 4.5x,” Long said. “So we’ll continue to focus on bringing that down as far as the leverage ratio.”

Energy Transfer offered guidance for the year ahead, anticipating higher utilization in all of its core segments. However, with the current forward curve for commodity prices and spreads, guidance does not assume the same upside benefits from pricing and spreads that was seen in 2022, Long said.

Energy Transfer is a constituent in the Alerian MLP Infrastructure Index (AMZI), which is tracked by the Alerian MLP ETF (AMLP) and the ETRACS Alerian MLP Infrastructure Index ETN Series B (MLPB), and the Alerian MLP Index (AMZ), which is tracked by the ETRACS Alerian MLP Index ETN Class B (AMUB)and the ETRACS Quarterly Pay 1.5x Leveraged Alerian MLP Index ETN (MLPR). 

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