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Energy Transfer’s Strong Growth Continued in Q4 2018

Vineet Kulkarni - Author

Nov. 20 2020, Updated 5:20 p.m. ET

ET scores again

Midstream major Energy Transfer (ET) released its fourth-quarter and full-year 2018 earnings yesterday. The company reported adjusted EBITDA of $2.67 billion for the quarter ended on December 31, an increase of ~29% YoY. ET posted adjusted EBITDA of $2.58 billion in Q3 2018.

Almost all the segments of Energy Transfer exhibited significant growth in 2018. During the fourth quarter, a strong performance at its Intrastate and Interstate segments boosted earnings. Energy Transfer’s distributable cash flow came in at $1.52 billion in Q4 2018, a rise of 29% compared to Q4 2017. Its distributable coverage ratio was 1.90x, up from 1.66x in Q4 2017.

It will be interesting to see how ET stock reacts to its quarterly numbers. The stock has already been on the rise in the last few trading sessions. The stock is up more than 30% in the last one month. The Alerian MLP ETF (AMLP) is up 20% in the same period.

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Earnings highlights

Energy Transfer reported total revenues of $13.6 billion in the fourth quarter against $11.45 billion in Q4 2017. In fiscal 2018, ET generated total revenues of $54.08 billion, a significant increase of 33% YoY.

Sunoco’s (SUN) adjusted EBITDA came in at $180 million, 14% higher than in Q4 2017. USA Compression Partners (USAC), which was acquired by ET in April last year, earned $104 million in Q4.

Energy Transfer reaffirmed its 2019 adjusted EBITDA guidance range of $10.6 billion to $10.8 billion, implying an increase of approximately 20% YoY.

Energy Transfer declared a quarterly distribution of $0.305 per unit last month, which implies an annualized distribution of $1.22 per unit and a yield of 7.8%.

To learn about Energy Transfer’s recent valuation, read How Energy Transfer Stock Is Currently Valued Compared to Peers.


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