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SOURCE: El Paso Pipeline Partners
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March 01, 2010 07:45 ET
El Paso Pipeline Partners Reports Significant Increases in Fourth Quarter and Full-Year Results
HOUSTON, TX--(Marketwire - March 1, 2010) - El Paso Pipeline Partners, L.P. (NYSE: EPB) is
reporting today fourth quarter and full-year 2009 financial and operational
results for the partnership.
Highlights:
-- $0.51 earnings per common unit for the fourth quarter of 2009, versus
$0.37 per common unit for the fourth quarter of 2008. Fourth quarter
2009 results include a gain of approximately $8 million, or $0.04 per
common unit, on the sale of CIG's Natural Buttes compressor station
and gas processing plant
-- $241.2 million distributable cash flow for 2009, a 63 percent increase
from 2008
-- Raised quarterly cash distributions to $0.36 per common and
subordinated unit for the fourth quarter 2009, a 12.5 percent increase
from the fourth quarter of 2008
-- Very strong 2009 distribution coverage ratio of 1.38 times
"We've had tremendous financial and operational success in 2009 as we
continue to deliver both organic expansions and growth through
acquisitions," said Jim Yardley, president and chief executive officer of
El Paso Pipeline Partners. "Last year, we placed two pipeline projects
into service, settled the Southern Natural Gas (SNG) rate case, and
completed a significant acquisition that increased our ownership in
existing pipeline assets. These are tangible results of our unique
combination of stability and growth as we continue to deliver solid cash
flows and strong distribution growth for our unitholders."
A summary of financial results for the quarters and 12 months ended
December 31, 2009 and 2008 are as follows:
Quarters Ended Twelve Months Ended
Financial Results December 31, December 31,
---------------- ----------------
($ in millions, except per-unit amount) 2009 2008 2009 2008
------- ------- ------- -------
Operating revenues $ 151.1 $ 125.5 $ 537.6 $ 457.2
Operating expenses
Operation and maintenance 40.0 32.7 154.4 147.2
Depreciation and amortization 17.2 14.9 67.0 58.6
Taxes, other than income 5.7 5.5 23.7 21.6
------- ------- ------- -------
Operating income 88.2 72.4 292.5 229.8
Earnings from unconsolidated affiliates 16.4 12.9 53.4 32.9
Other income, net 0.9 3.1 5.6 9.7
------- ------- ------- -------
EBIT before noncontrolling interest 105.5 88.4 351.5 272.4
Net income attributable to
noncontrolling interests (21.3) (19.9) (66.0) (62.4)
------- ------- ------- -------
EBIT 84.2 68.5 285.5 210.0
Interest and debt expense, net (19.8) (19.7) (73.7) (61.6)
Affiliated interest income, net 0.2 2.7 1.7 23.2
------- ------- ------- -------
Net income attributable to EPB $ 64.6 $ 51.5 $ 213.5 $ 171.6
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Net income attributable to EPB per
limited partner unit -- Basic and
Diluted common units $ 0.51 $ 0.37 $ 1.64 $ 1.26
Net income attributable to EPB per
limited partner unit -- Basic and
Diluted subordinated units $ 0.47 $ 0.37 $ 1.56 $ 1.12
Financial Results
For the quarter and 12 months ended December 31, 2009, El Paso Pipeline
Partners reported net income attributable to EPB of $64.6 million and
$213.5 million, respectively, compared with $51.5 million and $171.6
million, respectively, for the same periods in 2008. Earnings before
interest and taxes (EBIT) for the quarter and 12 months ended December 31,
2009, were $84.2 million and $285.5 million, respectively, compared with
$68.5 million and $210.0 million, respectively, for the same 2008 periods.
Operating income for the quarter and 12 months ended December 31, 2009 was
$88.2 million and $292.5 million, respectively, compared with $72.4 million
and $229.8 million, respectively, for the same 2008 periods.
Distributable cash flow for the quarter and year ended December 31, 2009
was $ 70.4 million and $241.2 million respectively, compared with $40.1
million and $147.7 million for the same 2008 periods, respectively.
The significant increases in net income, EBIT, operating income and
distributable cash flow for the quarter and the year were primarily due to
the completion of several growth projects, including the Piceance Lateral
expansion and Totem Storage facility in 2009, and the Medicine Bow and High
Plains Pipeline expansions in 2008. In addition, the gain from the sale of
CIG's Natural Buttes compressor station and gas processing plant
contributed to higher net income and EBIT for both periods. The
acquisition of an additional interest in SNG in September 2008 also
contributed to higher net income, EBIT and distributable cash flow for the
year ended December 31, 2009 relative to the same period in 2008.
Equity Investments
El Paso Pipeline Partners recognized equity in earnings of $16.8 million
from its 25 percent ownership interest in SNG for the quarter, and $52.5
million for the 12 months ended December 31, 2009, compared with $10.7
million and $29.8 million, respectively, for the same 2008 periods. The
partnership's share of SNG's distributable cash flow was $20.7 million and
$54.8 million for the quarter and 12 months ended December 31, 2009,
respectively, compared with $8.8 million and $32.9 million, respectively,
for the same 2008 periods.
The increase in earnings and distributable cash flow from El Paso Pipeline
Partners' equity investment in SNG for the 12 months ended December 31,
2009 is due to the acquisition of an additional interest in SNG in
September 2008, increased service revenues related to SNG's recent rate
case settlement; which was partially offset by proceeds received by SNG
from the Calpine bankruptcy settlement in 2008 and lower allowance for
funds used for construction (AFUDC) equity income due to the completion of
pipeline projects in 2008.
Interest and Debt Expense
For the quarter and 12 months ended December 31, 2009, interest and debt
expense was $19.8 million and $73.7 million, respectively, compared with
$19.7 million and $61.6 million, respectively, for the same 2008 periods.
The increase for the year is due to higher average debt balances, primarily
related to the financing of the acquisition of additional interests in CIG
and SNG in September 2008, and interest expense related to the WYCO
financing obligation. These additional interest charges were partially
offset by lower interest rates on the partnership's credit facility, under
which the average rate for the 12 months ended December 31, 2009, was 0.8
percent compared with 3.3 percent for the same 2008 period.
Liquidity
El Paso Pipeline Partners maintains a $750 million revolving credit
facility that is underwritten by a diverse group of 25 financial
institutions and matures in November 2012. As of December 31, 2009, the
partnership had approximately $215 million of available capacity on this
facility. In addition to the amounts available under its credit facility,
the partnership had a cash balance of approximately $17 million and $93
million in demand notes receivable from El Paso Corporation.
The partnership will utilize its revolving credit facility and demand notes
receivable from El Paso Corporation to fund its on-going growth capital
expenditures. The partnership has more than adequate liquidity to execute
on its backlog of committed growth projects through 2010.
Capital Projects
During the 12 months ended December 31, 2009, El Paso Pipeline Partners
invested $128 million, primarily for the Piceance Lateral, Raton 2010, and
Totem Storage expansion projects. Maintenance capital expenditures for
2009 totaled $26 million.
Webcast Information
El Paso Pipeline Partners has scheduled a live webcast of a review of its
2009 results, on March 1, 2010, beginning at 11:30 a.m. Eastern Time, 10:30
a.m. Central Time, which may be accessed online through El Paso Pipeline
Partners' Web site at www.eppipelinepartners.com in the Investors section.
During the webcast, management will refer to slides that will be posted on
the Web site. The slides will be available one hour before the webcast and
can be accessed in the Investors section. A limited number of telephone
lines will also be available to participants by dialing (877) 260-0861
(conference ID #55636714) ten minutes prior to the start of the webcast.
A replay of the webcast will be available online through the partnership's
Web site in the Investors section. A telephone audio replay will be also
available through March 12, 2010 by dialing (800) 642-1687 (conference ID #
55636714). If you have any questions regarding this procedure, please
contact Margie Fox at (713) 420-2903.
The partnership's financial statements, including its December 31, 2009,
Form 10-K, are available in the Investors section of the partnership's Web
site at www.eppipelinepartners.com. Copies of the filed documents,
including the partnership's Quarterly Reports on Form 10-Q are also
available, free of charge, by calling (877) 357-2766.
El Paso Pipeline Partners, L.P. is a Delaware limited partnership formed by
El Paso Corporation to own and operate natural gas transportation pipelines
and storage assets. El Paso Corporation owns 60 percent of the limited
partner units, and the 2 percent general partner interest. El Paso Pipeline
Partners, L.P. owns Wyoming Interstate Company, an interstate pipeline
system serving the Rocky Mountain region, and a 58 percent interest in
Colorado Interstate Gas Company which operates in the Rocky Mountain
region, and a 25 percent interest in Southern Natural Gas Company, which
operates in the southeastern region of the United States. For more
information about El Paso Pipeline Partners, visit
www.eppipelinepartners.com.
Disclosure of Non-GAAP Financial Measures
The SEC's Regulation G applies to any public disclosure or release of
material information that includes a non-GAAP financial measure. In the
event of such a disclosure or release, Regulation G requires (i) the
presentation of the most directly comparable financial measure calculated
and presented in accordance with GAAP and (ii) a reconciliation of the
differences between the non-GAAP financial measure presented and the most
directly comparable financial measure calculated and presented in
accordance with GAAP.
We use the non-GAAP financial measure Distributable Cash Flow as it
provides important information relating our financial operating performance
to our cash distribution capability. Additionally, we use Distributable
Cash Flow in setting forward expectations and in communications with our
board of directors of our general partner. We define Distributable Cash
Flow as Adjusted EBITDA less cash interest expense, maintenance capital
expenditures, and other income and expenses, net, which primarily includes
a non-cash allowance for equity funds used during construction and other
non-cash items. We use EBIT as a measure to assess the operating results
and effectiveness of our business, which consists of consolidated
operations as well as investments in unconsolidated affiliates. We define
the non-GAAP financial measure EBIT as net income adjusted for interest and
debt expense, net of interest income, and net income attributable to
non-controlling interests so that investors may evaluate our operating
results without regard to our financing methods or capital structure. We
believe EBIT is useful to our investors as it provides them with the same
measure used by El Paso to evaluate our performance. Adjusted EBITDA, which
is also a non-GAAP financial measure, is defined as net income adjusted for
(i) interest and debt expense, net of interest income, (ii) affiliated
interest income, net of affiliated interest expense, (iii) depreciation and
amortization expense, (iv) the partnership's share of distributions
declared by unconsolidated affiliates for the applicable period, (v)
earnings from unconsolidated affiliates, and (vi) CIG's declared
distributions to El Paso Corporation.
We believe that the non-GAAP financial measures described above are also
useful to investors because these measurements are used by many companies
in the industry as a measurement of operating and financial performance and
are commonly employed by financial analysts and others to evaluate the
operating and financial performance of the partnership and to compare the
operating and financial performance of the partnership with the performance
of other publicly traded partnerships within the industry. Distributable
Cash Flow, EBIT and Adjusted EBITDA should not be considered an alternative
to net income, earnings per unit, operating income, cash flow from
operating activities or any other measure of financial performance
presented in accordance with GAAP.
These non-GAAP measures both exclude some, but not all, items that affect
net income and operating income and these measures may vary among other
companies. Therefore, Distributable Cash Flow, EBIT and Adjusted EBITDA may
not be comparable to similarly titled measures of other companies.
Furthermore, these non-GAAP measures should not be viewed as indicative of
the actual amount of cash that we have available for distributions or that
we plan to distribute for a given period, nor does it equate to available
cash as defined in our partnership agreement.
Quarters Ended Twelve Months Ended
Non-GAAP Reconciliation Schedule December 31, December 31,
---------------- ----------------
($ millions) 2009 2008 2009 2008
------- ------- ------- -------
Net income $ 85.9 $ 71.4 $ 279.5 $ 234.0
Net income attributable to
noncontrolling interest (21.3) (19.9) (66.0) (62.4)
------- ------- ------- -------
Net income attributable to EPB 64.6 51.5 213.5 171.6
Add: Interest and debt expense, net 19.8 19.7 73.7 61.6
Less: Affiliated interest income, net (0.2) (2.7) (1.7) (23.2)
------- ------- ------- -------
EBIT 84.2 68.5 285.5 210.0
Add: Depreciation and amortization 17.2 14.9 67.0 58.6
Distributions declared by
unconsolidated affiliates 21.2 8.8 58.4 32.9
Net Income attributable to
noncontrolling interest 21.3 19.9 66.0 62.4
Less: Equity earnings from
unconsolidated affiliates (16.4) (12.9) (53.4) (32.9)
CIG declared distributions to El Paso (18.5) (26.1) (68.1) (101.6)
------- ------- ------- -------
Adjusted EBITDA $ 109.0 $ 73.1 $ 355.4 $ 229.4
Less: Cash interest expense, net (19.3) (20.1) (71.3) (41.2)
Maintenance capital expenditures (9.1) (8.4) (25.8) (27.4)
Other, net (10.2) (4.5) (17.1) (13.1)
------- ------- ------- -------
Distributable cash flow $ 70.4 $ 40.1 $ 241.2 $ 147.7
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Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections, made in
reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. El Paso Pipeline Partners 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 projections, anticipated results or other expectations
expressed in this release, including, without limitation, the ability to
obtain necessary governmental approvals for proposed pipeline projects and
to successfully construct such projects on a timely basis and within
estimated costs; operating hazards, natural disasters, weather-related
delays, casualty losses and other matters beyond our control; the risks
associated with contracting and recontracting of transportation
commitments; regulatory uncertainties associated with pipeline rate cases;
actions taken by customers, third-party operators, processors and
transporters; conditions in geographic regions or markets served by El Paso
Pipeline Partners and its affiliates and equity investees or where its
operations and affiliates are located; the effects of existing and future
laws and governmental regulations; competitive conditions in our industry;
changes in the availability and cost of capital; and other factors
described in El Paso Pipeline Partners' (and its affiliates') Securities
and Exchange Commission filings. While these statements and projections are
made in good faith, El Paso Pipeline Partners and its management cannot
guarantee that anticipated future results will be achieved. Reference must
be made to those filings for additional important factors that may affect
actual results. El Paso Pipeline Partners assumes no obligation to publicly
update or revise any forward-looking statements made herein or any other
forward-looking statements made, whether as a result of new information,
future events, or otherwise.