Tallgrass Energy, LP (NASDAQ:TGE) Q3 2016 Earnings Conference Call - Final Transcript

Nov 02, 2016 • 04:30 pm ET

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Tallgrass Energy, LP (NASDAQ:TGE) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to the Tallgrass Energy quarterly investor conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Nate Lien, please go ahead.

Executive
Nate Lien

Thank you, Jessica. Good afternoon, everyone. And thank you for joining the Tallgrass Energy quarterly earnings call. As we discuss among other things that the TEP and TEGP results from the third quarter of 2016, which were released through our joint press release and 10Q this afternoon.

Joining me on the call are David Dehaemers, Tallgrass' President and Chief Executive Officer, Bill Moler, Tallgrass' Executive Vice President and Chief Operating Officer, Gary Brauchle, Tallgrass' Executive Vice President and Chief Financial Officer.

Before turning the call over to David, let me remind you that this event is being recorded, and a replay will be available for a limited time on our website.

Additionally, our comments today will include forward looking statements and estimates. These forward looking comments are subject to various risks and uncertainties and reflect management's views as of November 2, 2016. Please refer to our filings with the SEC which are available on our website, including our 10Ks and 10Qs which provide discussions of factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations.

Note that except to the extent required by law, Tallgrass undertakes no obligation to update any forward looking statements. Please also refer to our earnings release for reconciliations between the non-GAAP financial measures referenced in this presentation and the most comparable financial measure or measures calculated and presented in accordance with GAAP.

With that, let me now turn the call over to David for his opening remarks.

Executive
David Dehaemers

Good afternoon, everybody and thank you for everyone joining our Tallgrass Energy third quarter earnings call. Third quarter was another strong quarter of financial and operational performance for TEP, Tallgrass marked by our inaugural senior notes offering.

The first quarter with a 25% interest of REX in for the entire quarter in TEP and additional contracted capacity on REX's capacity enhancement project which we will discuss later in the call, with some more detail and specificity. Strong performance and continued execution resulted in TEP's 13th consecutive quarterly distribution increase and TEGP's fifth consecutive quarterly distribution increase both from the time of our IPOs in May of 2013 and 2015.

So, let's review the third quarter financial results driving the increases. Adjusted EBITDA for TEP was $108.5 million not including any of our fully collected net deficiency payments under our take or pay contracts, and including three months of distributions from REX if you include the quarters net deficiency payments and adjusted EBITDA, the amount would have been $117.6 million. We've included -- we've again included a table in our press release, showing the impact of the deficiency payments if we were to have included them in adjusted EBITDA. We've also included a table illustrating the impact in incremental barrels shipped on Pony Express, add on our current results, as well as