NGL Energy Partners LP Common Units (NGL) Q4 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with significant EBITDA growth, improved operational efficiencies, and a robust share buyback program. The company's strategic plans, including AI-driven efficiencies and expansion projects, are promising. Despite some risks related to regulatory compliance and customer dependency, the positive outlook on water disposal volumes and beneficial reuse projects, alongside optimistic guidance, suggests a positive stock price movement in the short term.
Key Financial Performance
Adjusted EBITDA from continuing operations (Fiscal 2026) Approximately $660 million, representing meaningful growth year-over-year, driven by the Water Solutions segment.
Adjusted EBITDA (4Q Fiscal 2026) Approximately $176 million.
Income from continuing operations (4Q Fiscal 2026) Approximately $70 million, excluding the goodwill impairment charge.
Water Solutions Adjusted EBITDA (4Q Fiscal 2026) Approximately $153 million.
Water Solutions Adjusted EBITDA (Fiscal 2026) Approximately $603 million, with an 11% year-over-year growth driven by disposal volumes and efficiency gains.
Produced water volumes (4Q Fiscal 2026) Approximately 3 million barrels per day, a 10% increase in physical volumes disposed compared to the previous year's fourth quarter.
Disposal volumes (Fiscal 2026) Averaged approximately 2.9 million barrels per day, up 11% from the prior year.
Operating expenses per barrel (4Q Fiscal 2026) $0.22, reflecting improved efficiency compared to the same quarter from the prior year.
Crude Oil Logistics Adjusted EBITDA (4Q Fiscal 2026) Approximately $17 million.
Grand Mesa Pipeline volumes (4Q Fiscal 2026) Averaged approximately 78,000 barrels per day.
Grand Mesa Pipeline volumes (Fiscal 2026) Averaged 72,000 barrels per day.
Liquids Logistics Adjusted EBITDA (4Q Fiscal 2026) Approximately $17 million.
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Operating Highlights
LEX II system expansion: Increased capacity by 165,000 barrels per day, with the capability to transport approximately 560,000 barrels of water per day. Expansion is underwritten by a long-term volume commitment contract and is expandable up to 650,000 barrels per day.
Water Solutions segment growth: Achieved produced water volumes of approximately 3 million barrels per day in Q4, a 10% increase compared to the previous year's Q4. Disposal volumes averaged 2.9 million barrels per day for the full year, up 11% from the prior year.
Operational cost efficiency: Operating expenses per barrel improved to $0.22 in Q4, reflecting efficiency gains and system optimization.
Capital structure simplification: Completed a $950 million refinancing transaction, redeemed approximately 285,000 Class D preferred units, and repurchased 8.7 million common units at $5.72 under a $50 million buyback program.
Transition to pure-play water company: Sold wholesale propane and rack marketing businesses to reduce volatility and focus on water infrastructure. Monetizing noncore assets in the Liquids segment.
Growth strategy for fiscal 2027: Guiding adjusted EBITDA to $715-$725 million, driven by Water Solutions expansion and contracted projects. Allocating $200 million for growth capital and $45 million for maintenance capital.
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Risk or Challenges
Capital Structure Risks: The company has a significant amount of Class D preferred units and Term Loan B debt, which are high-cost capital components. While progress has been made in reducing these, they remain a financial burden and could impact financial flexibility if not managed effectively.
Market Volatility: The company has streamlined its Liquids Logistics segment to reduce volatility, but market fluctuations in crude oil and other commodities could still impact financial performance.
Operational Costs: While operating costs per barrel have improved, maintaining these efficiencies is critical. Any increase in operational costs could negatively affect margins.
Regulatory and Environmental Risks: Expansion in the Delaware Basin and other areas involves regulatory and environmental compliance risks, which could delay projects or increase costs.
Customer Dependency: The company relies heavily on long-term contracts with large investment-grade producers. Any changes in customer activity levels or contract renewals could impact revenue stability.
Supply Chain and Project Costs: The increased cost of pipeline projects is being absorbed by the company, which could strain financial resources if costs continue to rise.
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Guidance & Outlook
Fiscal 2027 Adjusted EBITDA Guidance: The company is guiding consolidated adjusted EBITDA to a range of $715 million to $725 million, representing approximately 10% growth year-over-year at the high end of the guidance.
Primary Growth Driver: Growth is expected to be driven by continued expansion in the Water Solutions segment, supported by already contracted projects.
Capital Expenditures for Fiscal 2027: Guidance includes approximately $200 million of growth capital and $45 million of maintenance capital. The company is absorbing increased costs of pipeline projects without passing them on to customers.
Water Solutions Expansion: The LEX II system capacity is being expanded by 165,000 barrels per day, with the capability to transport approximately 560,000 barrels of water per day. The expansion is underwritten by a long-term volume commitment contract and is expandable up to 650,000 barrels per day.
Future Contracting and Crude Oil Price Benefits: The adjusted EBITDA guidance does not include potential new contracts or benefits from current crude oil price levels.
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Shareholder Return Plan
Share Buyback Program: The partnership bought 8.7 million common units under the buyback program at an attractive price of $5.72. The Board approved a $50 million buyback program, believing the common units to be the best return in the portfolio. The recent performance in the unit price validates this investment and aligns with the multiyear strategy to allocate capital to common units.
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Key Q&A
Q:Does the growth CapEx of $200 million for 2027 include growth projects beyond the LEX II expansion?
A:A bulk of the $200 million is allocated to the LEX II expansion, with some incremental projects embedded in that amount.
Q:What is the split between new and existing clients for underwriting the LEX II expansion capacity, and is there a need for further expansion to 650,000 barrels?
A:The expansion is primarily supported by current customers, with amended agreements including longer-term commitments and additional volume. There is significant demand for additional capacity, indicating a potential need for further expansion.
Q:What are you hearing about plans for activity acceleration beyond the pull forward in activity announced by independents during Q1 earnings?
A:The pull forward in activity has been the main trend observed. Growth in water volumes (at least 10%) has driven interest in new underwriting and projects, with demand driven more by development acceleration and efficiencies rather than commodity prices.
Q:How would you characterize the opportunities in beneficial reuse and next-gen businesses like water desalination?
A:Progress is being made on previously announced projects, including a draft permit from TCEQ expected soon. Significant progress is also noted on the energy campus project, which includes nuclear power, a potential data center addition, and large-scale desalination.
Q:What is the EBITDA and production outlook for the Crude Logistics segment in 2027?
A:There is strong activity in the DJ Basin, with smaller private equity-backed players consolidating acreage and developing cohesive plans. This activity is expected to continue into the next fiscal years.
Q:Is all the capital for the LEX II expansion accounted for within 2027, or will it extend beyond 2027?
A:All capital for the LEX II expansion is accounted for within this fiscal year, with the bulk of it allocated to the first two to three quarters.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific split between new and existing clients for the LEX II expansion and provided a vague response regarding the need for further expansion to 650,000 barrels. Additionally, while progress on beneficial reuse and next-gen opportunities was mentioned, details on specific timelines and outcomes were lacking.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Basin barrel
Basin disposal
Bs amount
Class Bs
County LEX
County million
Delaware Basin
Ds cash
Ds respect
II expansion
II system
LEX II
Loan market
balance sheet
barrel water
buyback program
capacity
capital structure
contract volume
cost capital
debt
level
marketing business
maturity
priority
progress
propane marketing
record
return
sale
volume commitment
water day
NGL Transcript
NGL Energy Partners LP Common Units (NGL) Q4 2026 Earnings Call Transcript
Positive5-29
The earnings call highlights strong financial performance with significant EBITDA growth, improved operational efficiencies, and a robust share buyback program. The company's strategic plans, including AI-driven efficiencies and expansion projects, are promising. Despite some risks related to regulatory compliance and customer dependency, the positive outlook on water disposal volumes and beneficial reuse projects, alongside optimistic guidance, suggests a positive stock price movement in the short term.
NGL Energy Partners LP Common Units (NGL) Q3 2026 Earnings Call Transcript
Positive2-3
The earnings call indicates strong financial performance, particularly in the Water Solutions segment, with increased EBITDA and disposal volumes. The company also announced a significant share repurchase plan, reducing dilution. Despite some declines in other segments, the overall guidance is optimistic, with increased EBITDA projections and new growth projects. The Q&A section revealed strong long-term commitments and opportunities in water treatment, although management was vague on AI's financial impact. Given these factors, a positive stock price movement is likely in the short term.
NGL Energy Partners LP Common Units (NGL) Q2 2026 Earnings Call Transcript
Positive11-4
The earnings call summary and Q&A reveal strong performance in the Water Solutions segment and strategic repurchases of units, indicating positive financial health. The reaffirmation of full-year EBITDA guidance and potential for guidance revision add optimism. Risks are acknowledged but seem manageable. The Q&A supports a positive sentiment with clear responses and no evasive answers. The unit repurchase plan and Class D preferred units repurchase enhance shareholder returns, contributing to a positive outlook.
NGL Energy Partners LP Common Units (NGL) Q1 2026 Earnings Call Transcript
Unknown8-8
The earnings call presents a mixed picture. Positive aspects include increased EBITDA driven by Water Solutions and successful repurchase plans. However, challenges like declining Grand Mesa pipeline volumes, reduced Liquids Logistics EBITDA, and reliance on butane blending pose concerns. The Q&A shows management's strategic flexibility, but lack of clear guidance and dependency on market conditions add uncertainty. Overall, the positives and negatives balance out, suggesting a neutral stock price movement.
NGL Slides
NGL Energy Partners Q3 2026 slides: Water Solutions drives 17% EBITDA growth2026-02-03
NGL Energy Partners Q2 FY2026 slides: Water Solutions powers growth amid mixed results2025-11-04
NGL Energy Partners Q1 FY2026 slides: Water Solutions growth masks revenue miss2025-08-07
NGL Energy Q3 2025 slides: Water Solutions drives growth amid strategic transformation2025-05-29
NGL Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Why do some answers appear as “Unclear” or “Inaudible”?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
