Earnings call transcript Q3 2023

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Operator

Greetings. Welcome to the NGL Energy Partners LP 3Q '23 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Brad Cooper.

You may begin.

Brad Cooper

you. Thank thank afternoon. for and the us to this call you afternoon, joining everyone on Good market today, the and After closed filed investor earnings our presentation release, Q. we issued an are include and plans, Comments under today estimates will that U.S. the forward-looking forecasts statements law. securities to the These from uncertainties that to statements. risks could comments assumptions, and actual cause are results subject forward-looking differ factors SEC filings our take of note in the Please earnings cautionary materials. provided language and risk and

to Mike fiscal fruition, results. quarterly With quarters reality. 'XX the externally happy is call fourth books, what spring The coming employees on we into are get Let's a quarter communicated the of with and in three 'XX extremely outlined are seeing. the 'XX and fiscal in becoming the of we plan to that is

stretch exciting fiscal to this company. enter for As and year, employees their home very we all thank to hard the this spot want tenacity to for work our of the us I get of

guidance $XXX over increasing from out and We're adjusted working notes million the repurchasing strong to into few of return unsecured for capital of quarters. the 'XX. million to 'XX our performance Water lean of last our This $XXX over us fiscal has the Water Solutions EBITDA over

and run balance strong while than is fully our our notes, XX of was started liquidity is notes on $XXX We of these in reducing million. million, third we balance a of the the plan year This during a maintaining At an position significant January, outstanding to the of notes, of in retired balance million 'XX remaining the $XXX of an June and the no businesses. first balance fiscal this with million end to notes. additional $XXX balance the weeks 'XX few progress all 'XX quarter, on retire the later $XXX leaving the current the our

million approximately fiscal balance have end sheet and reported we third liquidity of at million. the the of ABL a quarter facility borrowings of $XXX $XXX the From on perspective, total

of the reminder, ABL As a fiscal we would we and balance are to quarter. the the season, expect propane over fourth decrease liquidation phase the entering see

At within million that the us ABL with ABL to process will we feature completed to $XXX million. accordion extend be group commitment of beginning the our have This the allow our $XXX February, by of process should started mid-February. an bank

the adjusted trailing the our With is year. EBITDA should 'XX on the this This fiscal next not will milestone, leverage XX-month balance as we very total our of a over at we strong the laser continue notes, fiscal but end reduction and be rest below the focus year. our of X.XXx important sheet strengthening

Water our see from earlier, benefiting Solutions Delaware and diameter-produced in strong integrated owning business the Water network Solutions pipelines largest of mentioned Water I large and wells growth. disposal is Basin. continues the operating As to

Our the quarter volumes year XX% versus grown a Water disposal have ago same approximately this last quarter X% over quarter. and

and recover to Delaware for fully quickly in experienced three advantage volumes due we million with from of our Our weather of unexpected several achieve Water barrels days. non-contracted cold barrels to of million volumes system, able take were days sub-X December. record over customers integrated of oncoming X.X system But to

second in maintaining the field face on reducing for while by thanks focus costs costs to not per the inflationary Operating Water team of EBITDA weather, to The barrel per the rapid quarter pressures excellent quarter third versus was barrel Water were Our continued $X.XX growth. impacted our quarter. efforts. $X.XX has operating in staff in

continue operating As an to is there our volumes opportunity to cost. further barrel grow, lower per

continued growth. EBITDA positions All our of for this Water segment

our first been strong is where We crude the price is oil year, half hedged skim our for oil performance market which has barrels. approximately 'XX Water's $XX, It's about and driven today. important skim $XXX-plus is not to in fiscal realized our by oil the average of financial that the note on

negatively continues impacted permitting compared pipeline the last barrels XX,XXX per quarter to in to delays Mesa approximately Grand per by approximately The day Grand the producer XX,XXX barrels in day be Mesa year. third DJ averaged Basin.

basin We Grand are encouraged the And get those of And closely as positioned we fair share capture the are monitoring well see basin the if is the production that activity. out of we resolved, issues permitting could its more to future. so, volumes. in Mesa

market driving the tight biodiesel marketing their of rack capture the have businesses cheaper and additional biodiesel benefited performance. financial Our diesel supply strong to margins higher gasoline and from case has benefited and in from

butane wholesale of continues season the that lower product for purchased earlier Propane quarter Recall our due currently purchased market. normal the discounted overall majority from December business in March. occurs EBITDA warmer derivatives, of through the excluding in the Our far. propane were expectations, months the so a an than below to compete with to were results blending winter partially product of as margins impact the in

to like the call I'd that, to With over Mike. turn

Mike Krimbill

Thanks, Brad.

to like our significant volumes summarize bit a Water would I disposal growth the here. in little

have first, growth thought quarter. Water growth, a year. XX%. a In volumes grew additional disposal X%. you year, growth some quarter, and we the second, versus X% last ago, volumes another quarter the grow If then year fourth rate, and the XX% second quarter, This we we see grew we'll And versus our In year we versus this remember, saw first in were a saw XX% we in would quarter quarter we fourth way the off. one first

lot we that. we're will dependable, rate us rid get they to growth is water, the really But one producers being give XX% Water year it. a just incredible of in our the know to that is and a So it kudos able and for of in accomplish guys

incredible this is impressive the they of million our increasing Recently, guidance are customers in their EBITDA growth a we $X.XX hear in growing increased adjusted our And with indicated to EBITDA This why at This continue year. Delaware. day. Water Solutions for again, largest driver pretty for confidence $XXX we inflation the every $XXX million XXXX. will costs activity gives that from the couple publicly is about barrel us and volumes a

nine think, I We're million months. perspective. little the for $XXX EBITDA - a at Maybe

Third quarter was million. $XXX.X

So be $XXX that duplicate guidance. the million-plus $XXX in quarter, the if we we'd at fourth to million, were above

trying beat numbers. to little and a are we be that our We sure conservative make

like discuss Now focus our to - strategic short-term I'd goal in focus and intermediate strategy.

been So 'XX unsecured first, focus our key notes. addressing has the

As off balance, the Brad mentioned, current lot XX. will we we've by of progress, million, pay made a $XXX rest and June

anticipated, think than I see folks and we if better can before well that. is we'll do this most

breathing debt we immediate So hurdle out get the the some us way, room. get of

this March XX, when at the X.Xx. pay year, that below our And we of advance that's 'XXs, regardless end in will X.XXx. I've of be think third 'XX, on Street. in leverage our the with we any off Second, the of the quarter, read I or estimates of contrast leverage think by Again, fiscal the fiscal well

total X X turns approximately within just turns reduced full we is and X.X leverage This quarters, by by So March XX. progress. have possibly remarkable

our February in XX Third, 'XX. mature of notes secured

roll So debt 'XXs. that same all terms. with they remaining of to 'XX. extend We we is years our the current will will situation absolute to get these into drive February away. the down two did That leverage continue to Therefore, and to only maturities we the with do the a liability partnership become position with best in not want possible

on preferred the time. and thereafter radar. certainly dividend also at we will dividend fourth, then arrearages the appropriate They're preferred the our address And

sales. Now that without reductions point about I'd and out were increased significant nine talked guidance like that we've any debt reductions, these in Water accomplished debt first Solutions asset these to year-to-date achieved months

fourth make progress to more by balance sheet on end in completed, of the We year, continue asset us the sign several flexibility. to which are even sales, the the we If and giving leverage go proceeds to will quarter. hope these and drive directly even financial close noncore lower the

So with open let's Q&A. up that, for

Operator

Baird. Instructions] [Operator from Fitzgerald with Patrick proceed. question please comes Patrick, First

Patrick Fitzgerald

Hi, thanks for taking the questions.

I the on the help reversed million in any $XX.X guess, was, provide you could charge quarter? that So

Brad Cooper

This is Brad.

what that? we about the respect our one. to Kurston the That's call want do think if point the language know General in on can to really as Q Counsel There's on I that. I I McMurray, elaborate Kurston, is all on with is Q you that well. you to can don't say.

Kurston McMurray

the Sure. we your you. need this appreciate is what's Yes. Thank Yes. confidential. say And be Brad. can in our to Sure, legal so What matter, is to respect a we Q.

Patrick Fitzgerald

wasn't benefit a in cash it? That the Okay. quarter, though, was

Brad Cooper

benefit? Cash it Yes, was.

Patrick Fitzgerald

right. All Okay.

obviously, Water there. strong very results In segment, the terms of

down of One in of that because came out actually by a and December? winter impacted the volumes tamped they look said region your your their lower were competitors the bit the weather that little actually had they guidance Obviously, great, but storms. winter to

Brad Cooper

over then three I'm X.X%. talked Doug days that going a to we handful in and we comments, answer sub or my $X prepared of days but were about so that had were let million,

So Doug's it's you the line right where average was across I there? probably think add in handful if those Doug, quarter. days, average for with anything to of

Doug White

confirm would Brad. that, I No,

Patrick Fitzgerald

end? In quarter, balance the - working terms the take Is working $XXX quarter? quarter fourth Or you paid do million. a a that you since release you to of down bonds did fourth the capital expect capital release, $XXX your in the and see additional usually significant use revolver you've million out of

Brad Cooper

release, the working rest we as of with done release expect propane season. we through bond capital working was move and capital reduction our would the Now further

Patrick Fitzgerald

us Like magnitude? the sense of a give could you

Brad Cooper

be quarter, to the I ABL could are From it fair at there the where year. $XX might the that balance of fiscal million $XX the of to we end third be on the million at end think say it's

forward. retirement than Assuming point no this more

Patrick Fitzgerald

$XX million on nothing the the $XX million, and ABL on So less the - million on 'XXs? $XXX or

Brad Cooper

Correct.

Patrick Fitzgerald

Okay. That's great.

big like be terms the the a the close and start you the Logistics, at weather? so this kind you Or expected - to because Liquids bit of fourth in year flat, said any warm year of a little that year, that NGL of Is expectation? guys not of kind this In is would been trending I your the quarter. worse of think you're implying segment, flat still than you

Brad Cooper

Yes.

the We relative than year, weather, year. Logistics in to this The the lack expectations done down business. biodiesel see across the marketing it liked the bit full butane have think at key from lighter our blending would our wholesale do driver. I have and a in team, nice would we I in rack group but for been a fourth of point quarter has propane the a little think to I expect Liquids say, well, areas but the weather, up the

see strong our from under year. we'll the them, but I for expectations full think were fourth quarter probably what still a

Pinter is you Jeff do runs anything? the division. Jeff, here have who

Jeff Pinter

comments your think I captured it well.

Patrick Fitzgerald

great. Thanks lot guys. a right, All

Brad Cooper

you. Thank

Operator

Okay.

proceed. Next, we Hamid with JPMorgan. have Please Tarek

Tarek Hamid

Good afternoon, gentlemen.

Water to able you're how that a to the performance want some was the in - business, sort of to there and continue business. I just sense of costs of drivers get of particularly On impressive the reduce

Mike Krimbill

Doug, one. do take want you to that

Doug White

Yes, sir.

but barrel held really, really per We're is volumes our them the we add so fixed we've that our the on on as of in One washes out basis, can, per cumulative cost reduced and the we barrel. of that today year, reduces grew a very really as always steady amount the basis. it's factors per the grow, costs metric our on but we Every cost. fixed OpEx ratably and barrel important to we large any barrel this a going But reduce variable expense are working fixed see and volumes cost. a certainly basis, it we total that higher on forward,

cost to We We're those go mentioned look our cost really XXXX. gas employee on costs keeping costs we've low as in not like at has more our fixed times, did run and on we those the extremely in can past, hedge natural through variable we Texas but example. the and That's doing we many that increased. certainly power the then And much down. headcount are and Those the fortunate at and those side, business, ones what were we prices, focus control. water an to as

So help. big, a that's big

our So cost, apply every on, and per get to better. metric low bring we these to barrel we're barrel able too, continues

Tarek Hamid

Got it.

absorption fixed benefit huge time? really So cost over a

Doug White

correct. That's

Tarek Hamid

the point? it fair I but this the you million and say onetime much say is that gain, know And at closed matter to - is $XX.X it, about can't then on

Doug White

Yes.

Tarek Hamid

size you about be And further of for the then should assets of on touched nature be you. can the noncore or us basis. Any we Thank thinking sense of asset helpful. sales on potential would kind you a give kind

Doug White

take you do to Mike, that one? want

Mike Krimbill

is Not $XXX range a million. really. $XX can we million I give to guess

Tarek Hamid

paid get Mike. it. paid enough, the back I I not ask you one Fair just guess get for and to mean last me, question, I'll And answer to get queue. the I in

capital sense incredible system your the to time? As you beyond, growing but right I you're can't rate you're much of you at it over 'XX targeting the of of think sort Water additional at about how get sort will repeat the of take and the now, of keep know just - rates at your sort kind love to

Mike Krimbill

Doug, you want to...

Doug White

Mike. Yes ahead. Go take it

Mike Krimbill

I built were think the new where is we had past thinking out pipelines. $XX that we after couple forward. system given had would our me, we've going range fully million million a more comment I'll I the guidance say, we have in Doug big the, of but year to this $XX in after really

a I think because anything, haven't Do yet, so you we that's new don't But to have number. going Doug? the have of increase opportunities. budgeted we

Doug White

we're on Yes. contracts, quarter, added term acreage extended dedications amended took signed. They're and acreage we currently. couple to that very third a It's of up dedications. few close and XX-year then well, working picked of couple And we this long important there this dedications, to we note, new to contracts as being our term another our quarter of and some a have

Those all include additional acreage.

up other then the to the other to comments, really their important within certainly - public - thing ramp and planning Delaware, in they're note and the in the footprint. our see majors, can So you it super is

from can basis going we be and contracted overbuild margins. Water to take to it barrel and of there we're everything but great to not very system, our every do smart do these capture and So a

Tarek Hamid

Thank I in the it. I'll Got guys. it. jump back appreciate queue. you,

Operator

[Operator Instructions] next Please have we proceed. America. Bank with Gregg Brody Up of

Gregg Brody

Good afternoon, guys.

this seismic strong that how leading any was and not their can just from quantify how is to in quarter. being may able of very had activity forward? curious, that there some the you about that - deeper - from competitors growth benefit inject to something you going your water Just volume benefit wells, I'm and you talk that

Mike Krimbill

to one. question we knock-on wood a answer where That's that

we review fortunate Certainly, Mexico, risk That's OCD like New Commission which that been maintains been really that in steps has it Railroad the taken positive. affected areas. a reducing that toward our but good. remediating by feel have materially seismic risk both very to the footprint very as We not is our risk, the business, have Texas in large or

from system Hillstone, that all to have We integrate. these [indiscernible] years in money that we've have certainly fully benefited we this the spent

benefited but of risk. regulatory agencies working have that an the with We I believe from out seismicity, everyone is woods to but we future and certainly as together greatly reduce industry, the due the along aren't yet to

Gregg Brody

from Got regions other to material? was over it. that There water is moved you no

Mike Krimbill

day No, be our would basis, due reductions would a I would on barrels to say it's That comes material give from or others. limitations XXX,XXX to day. volumetric estimate I approximately XXX,XXX an that barrels a a direction

Gregg Brody

Got it.

that I say think stay it's volume? going that's to excellent into to that fair

Mike Krimbill

expect We would it this to time.

Gregg Brody

more you. just for one And Great.

there's you potentially rig coming? You activity they highlighted are just looking to operating increased that announcements on producers and Or your the Have indicated there interpreting two your of you area in at highlighted timing you when from would those activity. rate volumes? see

Mike Krimbill

immediate. I would say their needs are very

Gregg Brody

you comments. the Okay. Thank for

Operator

proceed. next Wells coming Baramov Please is from Fargo. question The with Ned

Ned Baramov

Thanks next you a the capital X.XXx little allocation get Hi, on Mike, touched But taking debt a could good leverage the for quarter. you how target you about to on bit questions. you more think reductions. little further between after allocating maybe elaborate evening.

years. maybe XXXXs you payment the of As and preferred in distributions noted, the

Mike Krimbill

of Board We our haven't Yes. discussed really arrearage. We're mindful yet. the with that

sheet to certain in leverage balance X.XXx right? roll needs your be - a balancing it's high really to debt, is that. it's able So be condition do too able So to to to your be out

worry out, that debt, push then don't we'd talking us with the address out it our allows And it so press. we is what the we is about be X.XXx, have anymore. then launch, to figure we'll X.Xx, So to and that bankers,

Ned Baramov

haven't And could maybe corporate helpful. lower Whatever something the announcement curious you're it. on the be the complexity just of a your it Got why would it else. lower function Is initiatives, then you we finalize or seen bids to and environment? Is transactions an color current yet. of trying provide in demand

Mike Krimbill

- Others longer different. take strength - they into consent requiring they're third is I'd from the and sell we are receive. a - wanted of to the it's parties all say, those little I'll I'll to Yes, - One took say, market. say

stronger. until with end much price. more market So then was we the we we'll up a I launched think And waited attractive and

consent. and fire thoughtful now We to a timing, some get signed we think one go wasn't fourth back it we So sale. we've about third I have very one quarter was were and pushed to have like the the from quarter,

Another difficulty able one, having financing. and the they've that getting to was it financing, buyer secure appears been

want push then different to get that, price. So a you're didn't if to but do because going you you're right, reasons, we lower

Ned Baramov

And that. what average me remind the Grand on remaining Appreciate it. can Got just you term maybe then contract Mesa?

Mike Krimbill

know I two there? Don, Is Jeez, sure. on? of I for the know you Robinson don't are Don contracts.

Don Robinson

are four years contracts These them left today, years. about - Yes. about four on to have three

Ned Baramov

Got it. had. I Thank you. That's all

Don Robinson

you. Thank

Operator

proceed. question comes RBC. Jason next The with from Mandel Please

Jason Mandel

Hi If so they a guys. business of much. that answered, asset have you possible, on been quick questions those the of Thanks or some? sales. can are include Water follow-up just asset but my the Most outside may confirm sales

Mike Krimbill

Yes, confirm growth other that's they're two - a well, are and There small Water in I side that's outside. no can't the the a one asset that. is

- an a giving of really you're then a The kind - pruning there's good annuity. But growth. if call I it's just other no-growth are not any two because if larger. have it And you up asset one that's it's then future basically

are XXx. in multiples we areas ones over where other get The can

Jason Mandel

That's great. right. All

questions. guys all my help. other Thank You answered you for

Operator

Okay.

session. to the now any remarks. would call like closing for management to end the question-and-answer reached I have turn back the We of

Mike Krimbill

Yes. participation Thanks, everyone, your for today.

with a fiscal full day. we this quarter year. discuss We and fourth results. this progress excited Have good we're heard, to our look speaking when our year you've summer As you about forward

Operator

lines disconnect conference, time. your Thank this you and your at participation. may concludes today's you for This

NGL Energy Partners (NGL) 9 Feb 232023 Q3 Earnings call transcript