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Energy Transfer Continued Its Strong Earnings Growth in Q1


May. 9 2019, Published 7:06 a.m. ET

Energy Transfer stock

Energy Transfer (ET) reported its first-quarter earnings after the markets closed on May 8. The company continued its solid performance in the first quarter and reported record earnings. In the first quarter, Energy Transfer posted an adjusted EBITDA of $2.80 billion—an increase of 40% compared to the first quarter of 2018. In the fourth quarter of 2018, the company reported an adjusted EBITDA of $2.17 billion.

Energy Transfer reported a distributable cash flow of $1.66 billion—an increase of 39% compared to the first quarter of 2018. The company’s distribution coverage ratio was 2.07x.

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Energy Transfer stock has been weak in the last few years despite its solid earnings growth. The stock has been trading sideways lately. There was a notable increase following the drop after Christmas. So far this year, Energy Transfer stock has risen 15% and has mirrored the Alerian MLP ETF (AMLP).

Earnings drivers

Energy Transfer posted total revenues of $13.21 billion and missed the consensus estimates for the quarter ending March 31. In the same quarter last year, the company reported revenues of $11.88 billion.

Most of Energy Transfer’s segments contributed to its growth in the first quarter due to production growth and growth projects coming online. The crude oil transportation and services segment reported adjusted EBITDA growth of ~73% in the first quarter YoY (year-over-year). The segment benefited from higher transported volumes mainly through Texas pipelines and the Bakken pipeline.

Energy Transfer’s management maintained its 2019 adjusted EBITDA guidance range of $10.6 billion–$10.8 billion, which indicates a potential increase of ~20% YoY. The company kept its planned capital investments budget of ~$5 billion for 2019.


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