El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Pipeline Partners Reports Sharp Increase in First Quarter 2010 Results; Expansions and Acquisitions Drive Growth
HOUSTON, TX, May 06, 2010 (MARKETWIRE via COMTEX) --El Paso Pipeline Partners, L.P. (NYSE: EPB) is reporting today first quarter 2010 financial and operational results for the partnership.
- $0.53 earnings per common unit for first quarter 2010, versus $0.40 per
common unit for first quarter 2009
- 134.9 million adjusted EBITDA for the first quarter 2010, up
36 percent from first quarter 2009
- $87.7 million distributable cash flow for first quarter 2010, a
54 percent increase from first quarter 2009
- Raised quarterly cash distributions to $0.38 per common and
subordinated unit for the first quarter 2010, a 17 percent increase
from the first quarter of 2009
- Completed acquisition of controlling interests in Southern LNG Company,
L.L.C. (SLNG) and El Paso Elba Express Company, L.L.C. (Elba Express)
- CIG's Raton 2010 Expansion received Federal Energy Regulatory
Commission approval in April
"We are off to an outstanding start to 2010," said Jim Yardley, president and chief executive officer of El Paso Pipeline Partners. "Our financial performance this quarter highlights the quality of our assets and demonstrates our ability to continue to grow the partnership. In January, we completed a very successful equity offering and by the end of the quarter we completed our third acquisition from El Paso Corporation. The Elba Island LNG terminal and Elba Express pipeline are tremendous additions to the partnership because of their very stable cash flows, long-term contracts, and strategic location near our current assets. This acquisition further strengthened our distributable cash flow, enabling the partnership to once again raise our quarterly distribution to unit holders. We look forward to delivering strong financial and operational results for the remainder of 2010, while remaining opportunistic for future acquisitions."
A summary of financial results for the quarters ended March 31, 2010 and 2009 are as follows:
Financial Results ------------------------
($ in millions, except per-unit amount) 2010 2009
Operating revenues $ 188.1 $ 152.9
Operation and maintenance 47.6 45.2
Depreciation and amortization 19.6 18.4
Taxes, other than income 7.1 7.6
Operating income 113.8 81.7
Earnings from unconsolidated affiliates 19.7 12.8
Other income, net 14.9 9.7
Interest and debt expense, net (18.9) (15.7)
Affiliated interest income, net 0.6 1.0
Income before income taxes 130.1 89.5
Income tax expense (2.4) (5.4)
Net income 127.7 84.1
Net income attributable to noncontrolling
interests (38.4) (23.9)
Net income attributable to EPB $ 89.3 $ 60.2
Net income attributable to EPB per limited
partner unit -- Basic and Diluted common units $ 0.53 $ 0.40
Net income attributable to EPB per limited
partner unit -- Basic and Diluted subordinated
units $ 0.51 $ 0.40
On March 30, 2010, El Paso Pipeline Partners completed its acquisition of a 51-percent interest in both SLNG and Elba Express for $810 million in cash and common units. Following the acquisition of these interests SLNG and Elba Express are now consolidated into the partnership. Financial results for all periods presented include retrospective adjustments to include 51 percent of each SLNG and Elba Express and to reflect El Paso Corporation's 49 percent interests in SLNG and Elba Express as non-controlling interests.
For the quarter ended March 31, 2010, El Paso Pipeline Partners reported $89.3 million of net income attributable to EPB, compared with $60.2 million for the same period in 2009. Operating income was $113.8 million compared with $81.7 million for the first quarter of 2009.
Adjusted EBITDA for the quarter ended March 31, 2010 was $134.9 million, compared with $99.3 million for the same period in 2009. Distributable cash flow was $87.7 million, compared with $57.1 million for the first quarter of 2009 period. Distribution coverage for first quarter of 2010 was 1.5 times.
The significant increases in financial results for the quarter were primarily due to the completion of the Piceance Lateral expansion and Totem Storage facility in 2009 and the Elba Island LNG Phase IIIA (Elba IIIA) expansion and Elba Express pipeline in March 2010. Additionally, adjusted EBITDA and distributable cash flow were higher due to the acquisition of additional interests in CIG in July 2009.
El Paso Pipeline Partners recognized $19.0 million of equity earnings from its 25 percent ownership interest in SNG for the quarter, compared with $12.5 million, for the same 2009 period. The partnership's share of SNG's distributable cash flow was $17.1 million compared with $12.3 million for the same 2009 period.
The increase in earnings and distributable cash flow from El Paso Pipeline Partners' equity investment in SNG is primarily due to increased revenues as a result of SNG's recent rate case settlement.
Interest and Debt Expense
For the quarter ended March 31, 2010 interest and debt expense was $18.9 million, compared with $15.7 million for the same 2009 period. The increase is primarily due to interest expense related to a $135 million debt issuance by SLNG in February 2009, a May 2009 $165 million project financing for Elba Express, and increased obligations incurred associated with the construction of the WYCO Totem Storage project completed in June 2009. These additional interest charges were partially offset by a lower average debt balance outstanding under the partnership's credit facility.
The Partnership continues to execute on its significant backlog of organic growth projects. During the quarter ended March 31, 2010, El Paso Pipeline Partners invested $66 million, primarily for the WIC Expansion, Raton 2010, and Elba IIIA and Elba Express growth projects. Maintenance capital expenditures remain modest and for the quarter totaled $4 million.
Detailed financial and operational information for the partnership will be posted at www.eppipelinepartners.com in the Investors section.
El Paso Pipeline Partners has scheduled a live webcast of a review of its first quarter 2010 results, on May 6, 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' website at www.eppipelinepartners.com in the Investors section. During the webcast, management will refer to slides that will be posted on the website. 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 #70969825) ten minutes prior to the start of the webcast.
A replay of the webcast will be available online through the partnership's website in the Investors section. A telephone audio replay will be also available through May 14, 2010 by dialing (800) 642-1687 (conference ID # 70969825). If you have any questions regarding this procedure, please contact Margie Fox at (713) 420-2903.
The partnership's financial statements, including its March 31, 2010, Form 10-Q, will be available in the Investors section of the partnership's website at www.eppipelinepartners.com. Copies of the filed documents, including the partnership's Quarterly and Annual Reports on Form 10-Q and Form 10-K 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 approximately 62 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, a 58 percent interest in Colorado Interstate Gas Company, which operates in the Rocky Mountain region, a 51 percent interest in Southern LNG Company, L.L.C., which owns the Elba Island LNG storage and regasification terminal near Savannah, Georgia, a 51 percent interest in El Paso Elba Express Company, L.L.C., and a 25 percent interest in Southern Natural Gas Company, both of which are interstate pipeline systems serving 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. The required presentations and reconciliations are attached, or included in the body of this release. Additional detail regarding non-GAAP financial measures can be reviewed in El Paso Pipeline Partners' Financial and Operational Reporting Package, which will be posted at www.eppipelinepartners.com in the Investors section.
We use the non-GAAP financial measure Distributable Cash Flow as it provides important information regarding the relationship between our financial operating performance and 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 items.
We use earnings before interest and taxes, or 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 believe EBIT is useful to investors as it provides them with the same measure used by El Paso to evaluate our performance and it enables them to evaluate our operating results without regard to our financing methods or capital structure. 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.
Adjusted EBITDA is defined as net income adjusted for (i) income taxes (ii) interest and debt expense, net of interest income, (iii) affiliated interest income, net of affiliated interest expense, (iv) depreciation and amortization expense, (v) the partnership's share of distributions declared by unconsolidated affiliates for the applicable period, (vi) earnings from unconsolidated affiliates, and (vii) distributions declared by majority-owned subsidiaries to El Paso Corporation for the applicable period.
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 it with the performance of other publicly traded partnerships within the industry. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for net income, earnings per unit, operating income, cash flow from operating activities or other measures of financial performance presented in accordance with GAAP. 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 equate to available cash as defined in our partnership agreement.
Non-GAAP Reconciliation Schedule March 31,
($ millions) 2010 2009
Net income $ 127.7 $ 84.1
Net income attributable to noncontrolling interest (38.4) (23.9)
Net income attributable to EPB 89.3 60.2
Add: Income tax expense 2.4 5.4
Add: Interest and debt expense, net 18.9 15.7
Less: Affiliated interest income, net (0.6) (1.0)
Earnings before interest expense and income taxes 110.0 80.3
Add: Depreciation and amortization 19.6 18.4
Distributions declared by unconsolidated
affiliates 17.5 13.3
Net Income attributable to noncontrolling
interest 38.4 23.9
Less: Earnings from unconsolidated affiliates (19.7) (12.8)
Distributions declared by majority-owned
subsidiaries to El Paso Corporation(1) (30.9) (23.8)
Adjusted EBITDA $ 134.9 $ 99.3
Less: Cash interest expense, net (22.6) (17.6)
Maintenance capital expenditures (4.0) (4.4)
Other, net(2) (20.6) (20.2)
Distributable cash flow $ 87.7 $ 57.1
(1) In 2010 declared distributions include $23.5 million and $7.4 million from CIG and SLNG, respectively. In 2009 declared distributions were made from CIG.
(2) Includes non-cash items such as AFUDC equity and other items. Other, net includes a $4.6 million reserve for Elba Express' undistributed earnings in 1Q 2010 which will be distributed to El Paso and EPB in July 2010 following the expiration of certain project financing restrictions. This distribution will be included in 2Q2010 distributable cash flow. In 2009, Other, net includes undistributed earnings of $9.1 million from SLNG as it was a wholly-owned subsidiary of El Paso prior to EPB's March 2010 acquisition.
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-time and on-budget; 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.
Investor & Media Relations
SOURCE: El Paso Pipeline Partners