HOUSTON, TX -- 11/04/09 --
El Paso Pipeline Partners, L.P. (NYSE: EPB) is
reporting today third quarter 2009 financial and operational results for
the partnership.
Highlights:
-- Net income attributable to El Paso Pipeline Partners, L.P. (EPB) of
$46.6 million -- up from $33.2 million in the third quarter of 2008
-- Earnings of $0.35 per common unit, versus $0.29 per common unit in the
third quarter of 2008
-- Distributable cash flow of $53.7 million -- an increase of 57 percent
from the third quarter of 2008
-- Increased quarterly cash distributions to $0.35 per common and
subordinated unit for the third quarter of 2009, an approximately 17
percent increase from the third quarter of 2008
-- Placed WIC-Piceance Lateral Expansion in-service
-- Completed the acquisition of additional interests in Colorado
Interstate Gas Company (CIG)
"We completed another outstanding quarter with strong increases in cash
flow and earnings," said Jim Yardley, president and chief executive officer
of El Paso Pipeline Partners. "Our growth is supported by high quality
assets with underlying expansion opportunities and a strong sponsor whose
interests are fully aligned with unitholders. During the quarter we
completed our second acquisition from El Paso Corporation and placed the
WIC Piceance Lateral Expansion into service on schedule and on budget."
A summary of financial results for the quarter and nine months ended
September 30, 2009 and 2008 follows:
Quarters Ended Nine Months Ended
Financial Results September 30, September 30,
($ in millions, except per unit amounts) 2009 2008 2009 2008
------- ------- ------- -------
Operating revenues $ 128.8 $ 103.3 $ 386.5 $ 331.7
Operating expenses
Operation and maintenance 39.2 40.0 114.4 114.5
Depreciation and amortization 16.7 14.6 49.8 43.7
Taxes, other than income 5.9 5.4 18.0 16.1
------- ------- ------- -------
Operating income 67.0 43.3 204.3 157.4
Earnings from unconsolidated affiliates 11.9 4.8 37.0 20.0
Other income, net 0.4 3.4 4.7 6.6
------- ------- ------- -------
EBIT before adjustment for
noncontrolling interests (NCI) 79.3 51.5 246.0 184.0
Net income attributable to NCI (13.7) (10.7) (44.7) (42.5)
------- ------- ------- -------
EBIT 65.6 40.8 201.3 141.5
Interest and debt expense, net (19.4) (12.1) (53.9) (41.9)
Affiliated interest income, net 0.4 4.5 1.5 20.5
------- ------- ------- -------
Net income attributable to EPB $ 46.6 $ 33.2 $ 148.9 $ 120.1
======= ======= ======= =======
Net income attributable to EPB per
limited partner unit--Basic and Diluted
Common units $ 0.35 $ 0.29 $ 1.14 $ 0.87
Subordinated units $ 0.35 $ 0.14 $ 1.09 $ 0.73
Financial Results
In July 2009, El Paso Pipeline Partners completed its acquisition of an
additional 18 percent interest in CIG for $214.5 million in cash and now
owns a 58 percent interest in CIG. Following the acquisition of these
additional interests, CIG is now consolidated into the partnership.
Financial results for all periods presented include retrospective
adjustments to include 58 percent of CIG and to reflect El Paso
Corporation's 42 percent interest in CIG as a noncontrolling interest.
For the quarter and nine months ended September 30, 2009, El Paso Pipeline
Partners reported net income attributable to the partnership of $46.6
million and $148.9 million, respectively, compared with $33.2 million and
$120.1 million, respectively, for the same periods in 2008. Earnings before
interest and taxes (EBIT) for the quarter and nine months ended September
30, 2009 was $65.6 million and $201.3 million respectively, compared with
$40.8 million and $141.5 million respectively, for the same 2008 periods.
Operating income for the quarter and nine months ended September 30, 2009,
was $67.0 million and $204.3 million, respectively compared with $43.3
million and $157.4 million for the same 2008 periods
The improvement in net income, EBIT, and operating income for both periods
is due to the completion of several organic growth projects including the
Medicine Bow expansion, High Plains pipeline, Totem Gas Storage facility,
and the Piceance Lateral expansion. Net income and EBIT also increased due
to the acquisition of additional interests in SNG in 2008.
Distributable cash flow for the quarter ended September 30, 2009 was $53.7
million, up 57 percent from $34.1 million in the third quarter 2008.
Distributable cash flow increased as a result of the acquisition of
additional interests in CIG and SNG , and the completion of the organic
growth projects mentioned above. Distribution coverage for the third
quarter of 2009 was 1.19 times.
Equity Investment
El Paso Pipeline Partners recognized equity in earnings of $11.2 million
from its 25 percent ownership interest in SNG for the quarter and $35.7
million for the nine months ended September 30, 2009, compared with $4.5
million and $19.1 million, respectively, for the same 2008 periods. The
partnership's share of SNG's distributable cash flow was $10.6 million and
$34.1 million for the quarter and nine months ended September 30, 2009,
respectively, compared with $10.2 million and $24.1 million, respectively,
for the same 2008 period.
The increase in earnings and distributable cash flow from El Paso Pipeline
Partners' equity investment in SNG for the nine month ended periods is due
primarily to its higher ownership interest following its September 2008
acquisition and increased service revenues related to SNG's recent rate
case settlement. This 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 nine months ended September 30, 2009, interest and debt
expense was $19.4 million and $53.9 million, respectively, compared with
$12.1 million and $41.9 million, respectively, for the same 2008 periods.
The increase 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 substantially offset by
lower interest rates on the partnership's credit facility, under which
average rates for the quarter and nine months ended September 30, 2009,
were 0.7 percent and 0.8 percent, respectively, compared with 3.0 percent
and 3.6 percent, respectively, for the same 2008 periods.
Liquidity
El Paso Pipeline Partners maintains a $750 million revolving credit
facility, which is underwritten by a diverse group of 25 financial
institutions and matures in November 2012. As of September 30, 2009, the
partnership had approximately $200 million of available capacity on this
facility. In addition to the amounts available under its revolving credit
facility, the partnership had a cash balance of approximately $12 million
and $112 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 nine months ended September 30, 2009, El Paso Pipeline Partners
invested $102.4 million primarily for the Piceance Lateral, Raton 2010, and
Totem Storage expansion projects. Maintenance capital expenditures for the
same 2009 period were $16.7 million.
Increased Third Quarter Cash Distribution
On October 19, 2009, El Paso Pipeline Partners declared cash distributions
of $0.35 per limited partner unit for the third quarter 2009, which is a
6.1 percent increase from the $0.33 paid for the second quarter 2009 and a
16.7 percent increase from the $0.30 paid for the third quarter 2008. The
cash distribution will be paid on November 13, 2009 on all outstanding
common and subordinated units to holders of record as of the close of
business on October 30, 2009.
Webcast Information
El Paso Pipeline Partners has scheduled a live webcast to review its third
quarter 2009 results on November 4, 2009, 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)
221-1089 (conference ID # 38673418) 10 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 November 13, 2009 by dialing (800) 642-1687 (conference
ID # 38673418). If you have any questions regarding this procedure, please
contact Margie Fox at (713) 420-2903.
The partnership's financial statements, including its September 30, 2009,
Form 10-Q, will be 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 and its 2008
Annual Report on 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 a 65 percent limited partner
interest and a 2 percent general partner interest in the partnership. 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, 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
noncontrolling interests so that investors may evaluate our operating
results without regard to our financing methods or capital structure. We
believe EBIT is useful to investors because it provides them with one of
the same metrics used by El Paso to evaluate our performance. Adjusted
EBITDA, which is also a non-GAAP financial measure, is defined as net
income plus, (i) depreciation and amortization expense, (ii) interest and
debt expense, net of interest income, (iii) the partnership's share of
distributions declared by unconsolidated affiliates for the applicable
period, (iv) net income attributable to noncontrolling interests, less (i)
affiliated interest income, net of affiliated interest expense, (ii)
earnings from unconsolidated affiliates, and (iii) 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 do they equate to available cash as defined in our partnership
agreement.
Non-GAAP Reconciliation Schedule Quarters Ended Nine Months Ended
September 30, September 30,
($ millions) 2009 2008 2009 2008
------- ------- ------- -------
Net income $ 60.3 $ 43.9 $ 193.6 $ 162.6
Net income attributable to NCI (13.7) (10.7) (44.7) (42.5)
------- ------- ------- -------
Net income attributable to EPB 46.6 33.2 148.9 120.1
Add: Interest and debt expense, net 19.4 12.1 53.9 41.9
Less: Affiliated interest income, net (0.4) (4.5) (1.5) (20.5)
------- ------- ------- -------
EBIT 65.6 40.8 201.3 141.5
Add: Depreciation and amortization 16.7 14.6 49.8 43.7
Distributions declared by
unconsolidated affiliates 10.9 10.2 37.2 24.1
Net income attributable to NCI 13.7 10.7 44.7 42.5
Less: Equity earnings from
unconsolidated affiliates (11.9) (4.8) (37.0) (20.0)
CIG declared distributions to El Paso* (14.9) (16.8) (49.6) (75.5)
------- ------- ------- -------
Adjusted EBITDA 80.1 54.7 246.4 156.3
Less: Cash interest expense, net (18.4) (8.2) (52.0) (21.1)
Maintenance capital expenditures (7.0) (8.3) (16.7) (19.0)
Other, net (1.0) (4.1) (6.9) (8.6)
------- ------- ------- -------
Distributable cash flow $ 53.7 $ 34.1 $ 170.8 $ 107.6
======= ======= ======= =======
*CIG declared distributions to El Paso include distributions of
pre-acquisition earnings at El Paso's historical ownership interest level
of $5.1 million for the quarter ended September 30, 2008, and $7.2 million
and $36.4 million for the nine months ended September 30, 2009 and 2008.
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 and operate such projects; 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.
Contacts:
Investor-Media Relations
Bruce Connery
Vice President
(713) 420-5855
Media Relations
Bill Baerg
Manager
(713) 420-2906
