Q1 2027 NGL Energy Partners LP Earnings Call Transcript
Key Points
- Record produced water volumes of 3.32 million barrels per day, up 19.6% year-over-year, driving record Water Solutions adjusted EBITDA.
- Raised fiscal 2027 adjusted EBITDA guidance by $10 million to a range of $725-$735 million due to strong performance and customer execution.
- Executed LEX II extension project, expanding pipeline capacity to 560,000 barrels per day, underwritten by new long-term volume commitments.
- Total produced water volume commitments increased to approximately 1.77 million barrels per day, representing about 53% of total volumes.
- Improved credit profile with over 90% of produced water from investment-grade counterparties and over 85% of trailing 12-month EBITDA from Water Solutions.
- Reduced leverage in Q1 despite heavy growth capital spend, with expectations for continued deleveraging throughout the fiscal year.
- Positioned to potentially redeem about 50% of Class D preferreds this fiscal year, with a path to reinstating common unit distribution in 2027.
- Exploring beneficial reuse and mineral extraction opportunities, including a TPDES permit expected this month, which could open new revenue streams.
- Growth capital spend of over $200 million this fiscal year, with a significant portion of EBITDA not recognized until fiscal 2028, pressuring near-term cash flow.
- Long-term debt expected to remain relatively flat until the back half of the year due to heavy first-half capital spending.
- Crude oil logistics adjusted EBITDA declined to $8.6 million from $9.6 million year-over-year.
- Class D preferreds can be put to the company on January 1, 2028, requiring preparation for potential redemption and financing.
- M&A opportunities are limited due to lack of competitors and the need for higher equity prices to make deals accretive.
- Water Solutions operating expenses per barrel only slightly decreased by $0.01, indicating limited cost reduction despite volume growth.
- Potential constraints on growth in the back half of the year due to timing of large development projects, with new deals expected to contribute more in fiscal 2028.
You're going to make calls tonight to the. Greetings. Welcome to the NGL Energy Partners 1Q27 earnings call. (Operator Instructions) Please note this conference is being recorded.
I will now turn the conference over to your host, Brad Cooper, CFO, you may begin.
Good afternoon and thank you to everyone for joining us on the call today. Our comments today will include plans, forecasts, and estimates that are forward-looking statements under the US securities law. These comments are subject to assumptions, risks, and uncertainties that could cause actual results to differ from the forward-looking statements. Please take note of the cautionary language and risk factors provided in our presentation materials and our other public disclosure materials. We are pleased to report a strong start to fiscal 2027 and continued execution on our multi-year strategy of deleveraging the balance sheet through high return water growth projects. This positions the partnership to
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