Energy Transfer Reports Fourth Quarter 2024 Results and Announces 2025 Outlook

There are material limitations to using measures such as Adjusted EBITDA and Distributable Cash Flow, including the difficulty associated with using either as the sole measure to compare the results of one company to another, and the inability to analyze certain significant items that directly affect a company's net income or loss or cash flows. In addition, our calculations of Adjusted EBITDA and Distributable Cash Flow may not be consistent with similarly titled measures of other companies and should be viewed in conjunction with measures that are computed in accordance with GAAP, such as operating income, net income and cash flows from operating activities. 

Definition of Adjusted EBITDA 

We define Adjusted EBITDA as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Inventory valuation adjustments that are excluded from the calculation of Adjusted EBITDA represent only the changes in lower of cost or market reserves on inventory that is carried at last-in, first-out ("LIFO"). These amounts are unrealized valuation adjustments applied to Sunoco LP's fuel volumes remaining in inventory at the end of the period. 

Adjusted EBITDA reflects amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates. Adjusted EBITDA related to unconsolidated affiliates excludes the same items with respect to the unconsolidated affiliate as those excluded from the calculation of Adjusted EBITDA, such as interest, taxes, depreciation, depletion, amortization and other non-cash items. Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates. The use of Adjusted EBITDA or Adjusted EBITDA related to unconsolidated affiliates as an analytical tool should be limited accordingly. 

Adjusted EBITDA is used by management to determine our operating performance and, along with other financial and volumetric data, as internal measures for setting annual operating budgets, assessing financial performance of our numerous business locations, as a measure for evaluating targeted businesses for acquisition and as a measurement component of incentive compensation. 

Definition of Distributable Cash Flow 

We define Distributable Cash Flow as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. For unconsolidated affiliates, Distributable Cash Flow reflects the Partnership's proportionate share of the investees' distributable cash flow. 

Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash, and Distributable Cash Flow is calculated to evaluate our ability to fund distributions through cash generated by our operations. 

On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of Energy Transfer's consolidated subsidiaries. However, to the extent that noncontrolling interests exist among our subsidiaries, the Distributable Cash Flow generated by our subsidiaries may not be available to be distributed to our partners. In order to reflect the cash flows available for distributions to our partners, we have reported Distributable Cash Flow attributable to partners, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows: 

• For subsidiaries with publicly traded equity interests, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiary, and Distributable Cash Flow attributable to our partners includes distributions to be received by the parent company with respect to the periods presented.
• For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow (consolidated) includes 100% of Distributable Cash Flow attributable to such subsidiaries, but Distributable Cash Flow attributable to partners reflects only the amount of Distributable Cash Flow of such subsidiaries that is attributable to our ownership interest.

For Distributable Cash Flow attributable to partners, as adjusted, certain transaction-related adjustments and non-recurring expenses that are included in net income are excluded. 

These amounts exclude Sunoco LP's Adjusted EBITDA and distributable cash flow related to its investment in the ET-S Permian joint venture, which amounts are eliminated in the Energy Transfer consolidation. 

For the year ended December 31, 2024, the amount reflected for transaction-related income taxes reflects current income tax expense recognized by Sunoco LP in connection with its April 2024 sale of convenience stores in West Texas, New Mexico and Oklahoma. 

For the three months and year ended December 31, 2023, transaction-related adjustments includes $49 million of Distributable Cash Flow attributable to the operations of Crestwood for October 1, 2023 through the acquisition date, which represents amounts distributable to Energy Transfer's common unitholders (including the holders of the common units issued in the Crestwood acquisition) with respect to the fourth quarter 2023 distribution.

Transported volumes of gas on our Texas and Oklahoma intrastate pipelines decreased primarily due to less third-party transportation and decreased gas production from the Haynesville area. Transported volumes reported above exclude volumes attributable to purchases and sales of gas for our pipelines' own accounts and the optimization of any unused capacity. 

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our intrastate transportation and storage segment increased due to the net impact of the following: 

• an increase of $13 million in realized natural gas sales and other primarily due to higher pipeline optimization from physical sales; and
• an increase of $11 million in storage margin primarily due to the timing of physical and financial gains.

Transported volumes increased primarily due to more capacity sold and higher utilization on our Panhandle, Trunkline and Gulf Run systems due to increased demand. 

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our interstate transportation and storage segment decreased due to the net impact of the following:

• a decrease of $22 million in segment margin primarily due to a $13 million decrease in parking revenue and a $5 million decrease in interruptible utilization;
• an increase of $12 million in operating expenses primarily due to an aggregate $8 million increase in employee related costs, outside services, materials and office expense, a $3 million increase in maintenance project costs and a $2 million increase in ad valorem taxes and revaluation of system gas;
• an increase of $4 million in selling, general and administrative expenses primarily due to higher professional fees and higher allocated costs;
• a decrease of $6 million in Adjusted EBITDA related to unconsolidated affiliates primarily due to a $7 million decrease from our Citrus joint venture due to higher operating expenses, partially offset by a $3 million increase from our Southeast Supply Header joint venture due to higher contracted volumes; and
• a decrease of $4 million in other primarily due to the prior period recognition of certain amounts related to a shipper bankruptcy.

Gathered volumes increased primarily due to recently acquired assets and higher volumes in the Permian region. NGL production increased primarily due to recently acquired assets and increased Permian plant utilization. 

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our midstream segment increased due to the net impact of the following:

• an increase of $228 million in segment margin primarily due to recently acquired assets and higher volumes in the Permian region; partially offset by
• a decrease of $6 million in segment margin due to lower natural gas prices of $7 million, partially offset by higher NGL prices of $1 million;
• an increase of $181 million in operating expenses primarily due to a $138 million increase related to recent acquisitions and assets placed in service, a $15 million increase in environmental reserves, a $12 million increase in ad valorem and prior period sales taxes accruals and a $12 million increase in materials and projects;
• an increase of $8 million in selling, general and administrative expenses primarily due to higher corporate allocations, insurance claims and recently acquired assets; and
• a decrease of $1 million in Adjusted EBITDA related to unconsolidated affiliates due to the impact of the Partnership's consolidation of Aqua-ETC Water Services, LLC, which previously had been an equity method investment until October 2024.

NGL transportation and terminal volumes increased primarily due to higher volumes from the Permian region, on our Mariner East pipeline system and on our Gulf Coast export pipelines. The increase in transportation volumes and the commissioning of our eighth fractionator in August 2023 also led to higher fractionated volumes at our Mont Belvieu NGL Complex. 

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our NGL and refined products transportation and services segment increased due to the net impact of the following:

• an increase of $45 million in transportation margin primarily due to higher throughput and contractual rate escalations on our Gulf Coast and Mariner East pipeline systems. These increases were partially offset by a $5 million decrease from the timing of third-party deficiency payments on our Northeast region pipelines;
• an increase of $38 million in terminal services margin primarily due to a $34 million increase in fees from loading volumes for export at our Nederland and Marcus Hook terminals and a $3 million increase due to higher throughput and storage at our refined product terminals;
• an increase of $18 million in marketing margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to higher gains during 2024 from the optimization of hedged NGL and refined product inventories; and
• a decrease of $9 million in selling, general and administrative expenses primarily due to a one-time charge related to regulatory expenses in the prior period; partially offset by
• an increase of $29 million in operating expenses primarily due to an $8 million increase in outside services expenses, a $7 million increase in ad valorem taxes, a $6 million increase in employee costs, a $5 million increase resulting from the timing of project related expenses, a $3 million increase in office expenses and increases totaling $6 million from various other operating expenses. These increases were partially offset by a $7 million decrease in gas and power utility costs;
• a decrease of $10 million in fractionators and refinery services margin resulting from a decrease in rates, primarily from our midstream segment due to the restructuring of certain affiliate fractionation agreements; and
• a decrease of $5 million in storage margin primarily due to the timing of third-party deficiency payments.

Crude oil transportation volumes were higher due to continued growth on our gathering systems, as well as contributions from recently acquired assets and from assets contributed upon the recent formation of the ET-S Permian joint venture with Sunoco LP, partially offset by lower volumes on our Bakken Pipeline. 

Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our crude oil transportation and services segment decreased due to the net impact of the following:

• an increase of $21 million in segment margin (excluding unrealized gains and losses on commodity risk management activities) primarily due to a $99 million increase from recently acquired assets and assets contributed upon the recent formation of the ET-S Permian joint venture, partially offset by a $52 million decrease in transportation revenues from existing assets and a $25 million decrease from our crude oil acquisition and marketing activities; partially offset by
• an increase of $26 million in operating expenses primarily due to a $21 million increase from recently acquired assets and assets contributed upon the recent formation of the ET-S Permian joint venture, a $3 million increase in outside services, a $2 million increase in ad valorem taxes, a $2 million increase in employee costs and various increases in volume-driven expenses; and
• an increase of $8 million in selling, general and administrative expenses primarily due to an $11 million increase from recently acquired assets and assets contributed upon the recent formation of the ET-S Permian joint venture, as well as higher employee costs.

The Investment in Sunoco LP segment reflects the consolidated results of Sunoco LP. 

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our investment in Sunoco LP increased due to the net impact of the following:

• an increase of $250 million in segment margin (excluding unrealized gains and losses on commodity risk management activities and inventory valuation adjustments) primarily due to the acquisitions of NuStar and Zenith European terminals; and
• an increase of $46 million in Adjusted EBITDA related to unconsolidated affiliates due to the formation of the ET-S Permian joint venture; partially offset by
• an increase of $78 million in operating expenses and $20 million in selling, general and administrative expenses primarily due to the acquisitions of NuStar and Zenith European terminals.

The Investment in USAC segment reflects the consolidated results of USAC. 

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our investment in USAC increased primarily due to higher revenue-generating horsepower as a result of increased demand for compression services, higher market-based rates on newly deployed and redeployed compression units and higher average rates on existing customer contracts.

Segment Adjusted EBITDA. For the three months ended December 31, 2024 compared to the same period last year, Segment Adjusted EBITDA related to our all other segment increased due to the net impact of the following: 

• an increase of $48 million due to higher M&A expenses in the prior period; and
• an increase of $15 million in our natural gas marketing business due to increased sales following the WTG Midstream acquisition; partially offset by
• a decrease of $45 million primarily due to intersegment eliminations of Sunoco LP's 32.5% share of the ET-S Permian joint venture, which is consolidated in our crude oil transportation and services segment and also reflected as an unconsolidated affiliate in our investment in Sunoco LP segment;
• a decrease of $5 million in our dual drive compression business due to lower gas prices in 2024; and
• a decrease of $3 million from the timing of our compressor sales in our compressor business.

Our proportionate share of Adjusted EBITDA of non-wholly owned subsidiaries reflects the amount of Adjusted EBITDA of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. 

Distributable Cash Flow of non-wholly owned subsidiaries reflects the total Distributable Cash Flow of our non-wholly owned subsidiaries on an aggregated basis. 

Our proportionate share of Distributable Cash Flow of non-wholly owned subsidiaries reflects the amount of Distributable Cash Flow of such subsidiaries (on an aggregated basis) that is attributable to our ownership interest. This is the amount included in our consolidated non-GAAP measure of Distributable Cash Flow attributable to the partners of Energy Transfer.

Our ownership reflects the total economic interest held by us and our subsidiaries. In some cases, this percentage comprises ownership interests held in (or by) multiple entities.