On Wednesday, pipeline operator Energy Transfer Partners (click ticker for report: ) reported mixed second-quarter results. Natural gas sales marked the biggest headwind during the period, falling by over 33% from the same quarter last year. Propane sales also dropped but this was due entirely to the completion of the contribution of its retail propane operations to AmeriGas Partners (APU) in exchange for approximately $2.7 billion. NGL sales advanced nearly 22% from last year’s quarter. Though net income fell during the period due to higher interest costs and losses on non-hedged interest rate derivatives, adjusted EBITDA and distributable cash flow increased thanks to solid performance related to its interstate transportation operations (which included a 50% interest in Citrus in the most recently-reported period).
All things considered, we continue to be fans of Energy Transfer Partner’s competitive position as it owns the largest intrastate pipeline system in Texas. Though our Valuentum Dividend Cushion score for Energy Transfer Partners is highly dependent on the healthy functioning of the capital markets (as it considers cash flow generated by future expected unit issuance), the firm’s distribution remains healthy, in our view. We continue to hold the company in the portfolio of our Dividend Growth Newsletter as one of our highest-yielding ideas.