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HOUSTON, TX, May 03, 2012 (MARKETWIRE via COMTEX)
--El Paso Pipeline Partners, L.P. (NYSE: EPB) is reporting today first
quarter 2012 financial and operational results for the partnership.
First Quarter 2012 Highlights:
-- $0.54 earnings per common unit
-- $170 million distributable cash flow,
a 12 percent increase from first
quarter 2011
-- $246 million adjusted earnings before
interest, taxes, depreciation
and amortization (Adjusted
EBITDA), up 7 percent from 2011 levels
-- Raised quarterly cash distributions to
$0.51 per common unit, an 11
percent increase from
first quarter 2011
"We've started the year with another quarter of
good results," said Jim Yardley, president and chief executive officer
of the general partner of El Paso Pipeline Partners. "The partnership
continues to grow; as a result, we raised the quarterly distributions to our
unitholders for the 16th consecutive time, something we've done every quarter
since our initial public offering (IPO) in November 2007."
A summary of financial results for the quarters
ended March 31, 2012 and 2011 is as follows:
Quarters Ended
Financial
Results
March 31,
--------------------
($ in millions,
except per-unit amount)
2012
2011
--------------------
Operating
revenues
$ 363 $ 366
Operating expenses
Operation and
maintenance
95
92
Depreciation and
amortization
43
41
Taxes, other than
income
19
17
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Operating income
206
216
Earnings from unconsolidated affiliates
3
4
Other income, net 2
2
Interest and debt expense, net
(69)
(59)
--------
--------
Net income
142
163
Net income attributable to noncontrolling
interests
(7)
(48)
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--------
Net income attributable to EPB
$ 135 $ 115
-------- --------
Net income attributable to limited
partners
$ 111 $ 103
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--------
Net income attributable to EPB per common
unit -
basic and diluted
$ 0.54 $ 0.57
Weighted average common units
outstanding
206
180
Financial Results
The partnership's first quarter financial results reflect the benefits of
acquisitions during 2011 and the completion of the first two phases of the
Southern Natural Gas (SNG) South System III Expansion. Acquisitions included
an aggregate 40 percent additional interest in SNG in March and June 2011 and
an additional 28 percent interest in Colorado Interstate Gas (CIG) in June
2011. The benefits of acquisitions and expansions were partially offset by
nonrenewal and restructuring of expiring contracts.
Net income
attributable to limited partners continues to grow; as the partnership
reported $111 million for the first quarter of 2012, which is an 8 percent
jump from the same 2011 period. However, earnings per common unit were
slightly lower than a year ago due to higher general partner distributions
and an increase in weighted average units outstanding.
Adjusted EBITDA grew
7 percent to $246 million, while distributable cash flow was up 12 percent to
$170 million. Adjusted EBITDA and distributable cash flow were higher as a
result of the acquisition of 15 percent of SNG and 28 percent of CIG in June
2011 and the expansion projects referenced above. Also contributing to the
increase was lower maintenance capital costs, as a result of project timing,
which was partially offset by higher interest expenses. Distribution coverage
remained strong at 1.3 for the first quarter of 2012.
Interest and Debt
Expense For the first quarter 2012, interest and debt expense increased $10
million from the same period in 2011. The higher interest expense is due to
higher average debt outstanding that was used to fund acquisitions and
organic expansion projects. The increase was also attributable to the 2011
debt issuance of $500 million by the partnership and $300 million by SNG.
Partially offsetting the debt issuances was a lower average balance
outstanding under the revolving credit facility.
Quarterly Cash
Distribution Increase On April 20, 2012, the partnership announced an
increase to its quarterly cash distribution for the first quarter 2012 to
$0.51 per unit, which is an 11 percent increase from the distribution for the
first quarter 2011. The distribution, which will be paid on May 15, 2012,
continues the partnership's successful track record of increasing its cash
distribution every quarter since its IPO in November 2007.
Pipeline Throughput
Pipeline throughput volumes for the first quarter 2012 increased 5 percent
compared with the same period in 2011. The increase was primarily due to
higher volumes on Wyoming Interstate Company and increased power generation
on SNG, partially offset by lower demand on CIG due to mild winter weather
along the Front Range of the Rockies. Throughput volumes, however, have
minimal impact on near-term financial results, as more than 90 percent of the
partnership's revenues are derived by fixed reservation charges.
Capital Expenditures
During the first quarter 2012, the partnership invested $17 million of growth
capital, primarily for Phase III of SNG's South System III expansion, which
is expected to be placed in service in June 2012. Once completed, this three-phase
expansion will have increased SNG's system capacity by 10 percent.
Maintenance capital expenditures for the first quarter 2012 totaled $9
million which was lower during the first quarter as a result of project
timing.
Offer to Purchase
Assets From El Paso Corporation On April 18, the partnership announced that
it received a proposal from El Paso Corporation (NYSE: EP) to purchase the
remaining 14 percent of CIG and all of Cheyenne Plains Investment Company,
L.L.C., which owns Cheyenne Plains Gas Pipeline Company, L.L.C. The Board of
Directors of EPB's general partner has formed a committee made up of
independent directors to review the proposal. Following the committee's
review, the proposal must also be approved by EPB's general partner's full
Board of Directors. If approved, the transaction is expected to close
contemporaneously with Kinder Morgan, Inc.'s (NYSE: KMI) acquisition of El
Paso Corporation and be immediately accretive to distributable cash flow.
The partnership's
financial statements are available in the Investors section of its web site
at www.eppipelinepartners.com. The partnership's March 31, 2012 Form 10-Q
will be filed with the Securities and Exchange Commission (SEC) and will be
available on the partnership's website. Copies of all documents filed with
the SEC, including the partnership's financial statements, are also
available, free of charge, by calling (888)
287-3228 .
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 a 42 percent limited partner
interest, and the 2 percent general partner interest in the partnership. El
Paso Pipeline Partners, L.P. owns Wyoming Interstate Company, L.L.C. (WIC),
Southern LNG Company, L.L.C. (SLNG), Elba Express Company, L.L.C. (Elba
Express), Southern Natural Gas Company, L.L.C. (SNG), and an 86 percent
interest in Colorado Interstate Gas Company, L.L.C. (CIG). WIC and CIG are
interstate pipeline systems serving the Rocky Mountain region, SLNG owns the
Elba Island LNG storage and regasification terminal near Savannah, Georgia,
and both Elba Express and SNG are interstate pipeline systems serving the
southeastern region of the United States.
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 relating to 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, net, maintenance
capital expenditures and adjusted for other income and expenses, net, which
primarily includes deferred revenue, allowance for equity funds used during
construction, and other non-cash 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, and net income attributable to
noncontrolling interest.
Adjusted EBITDA is
defined as net income adjusted for (i) interest and debt expense, net of
interest income, (ii) depreciation and amortization expense, (iii) the
partnership's share of distributions declared by unconsolidated affiliates
for the applicable period, (iv) earnings from unconsolidated affiliates, and
(v) 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 should they be equated to
available cash as defined in our partnership agreement.
Quarters Ended
Non-GAAP Reconciliation Schedule March
31,
--------------------
($ millions)
2012
2011
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Net income
$ 142 $ 163
Net income attributable to noncontrolling
interest
(7)
(48)
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Net income attributable to EPB
$ 135 $ 115
Add: Interest and debt expense, net
69
59
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Earnings before
interest expense and income taxes
(EBIT)
204
174
Add: Depreciation
and amortization
43
41
Distributions declared by
unconsolidated affiliates
3
5
Net income attributable to noncontrolling
interest
7
48
Less: Earnings from
unconsolidated affiliates
(3)
(4)
Distributions declared by
majority-owned
subsidiaries to El Paso
Corporation(1)
(8)
(34)
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Adjusted EBITDA
$ 246 $ 230
Less: Cash interest
expense, net
(66)
(57)
Maintenance capital expenditures (9)
(20)
Other, net(2)
(1)
(1)
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Distributable cash
flow
$ 170 $ 152
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(1) In 1Q 2012, declared distributions include $8
million from CIG. In 1Q 2011, declared distributions include $22 million from
CIG and $12 million from SNG (2) Includes deferred revenue and certain
non-cash items such as AFUDC equity and other items
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, our ability to complete any asset
purchases from El Paso Corporation; volatility in, and access to capital
markets, 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.
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