Energy Transfer (NYSE:ET) Q4 2025 Earnings call February 17, 2026 09:00 AM ET Speaker14Thank you, operator, and good morning, everyone, and welcome to the Energy Transfer fourth quarter 2025 earnings call. I'm also joined today by Mackie McCrea and other members of the senior management team, who are here to help answer your questions after our prepared remarks. Hopefully, you saw the press release we issued earlier this morning. As a reminder, our earnings release contains an update to guidance and a thoro ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 was CAD 1.25 billion, a 2% increase year-over-year [16] - Adjusted Segment Operating Income rose to CAD 195.8 million, up 3% from CAD 190 million in the same quarter last year [16] - Adjusted EPS increased to CAD 0.34, compared to CAD 0.29 a year ago [16] - Net finance expense decreased to CAD 54.1 million from CAD 56.6 million in the previous year [17] - Free cash flow was CAD 411.3 million, slightly above CAD 409.8 million recorded in the same quarter last year [18] - Capital expenditures totaled CAD 50.6 million, with expectations for full-year CapEx to be over 10% lower than last year [18] Business Line Data and Key Metrics Changes - In the civil segment, revenue decreased by 5% year-over-year to CAD 717.2 million, with adjusted operating income down 6% to CAD 141.8 million [19] - Training Center Utilization in the civil segment was 71%, down from 76% in the prior year [20] - In the defense segment, revenue increased by 14% year-over-year to CAD 534.9 million, with adjusted segment operating income rising 38% to CAD 54 million, achieving a margin of 10.1% [20] Market Data and Key Metrics Changes - The civil aviation market is expected to grow at 4%-5% annually over the long term, despite current disruptions [52] - The defense segment is also projected to grow at a similar rate, supported by increased defense spending across allied nations [32] Company Strategy and Development Direction - The company is implementing a multi-pronged transformation plan focusing on portfolio sharpening, disciplined capital management, and operational excellence [5][12] - The transformation plan aims to improve margins, cash flow, and returns on investment, with specific targets to be shared in the next quarter [7][35] - The company is rationalizing its civil training network to align capacity with current demand, which may have a near-term revenue impact [30][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the softness in the civil business but remains optimistic about the defense segment's performance [5][30] - The company expects the fourth quarter to be the strongest of the year in the civil segment, despite a mid-single-digit percentage decline in annual adjusted segment operating income [30] - Long-term fundamentals in aviation remain strong, with significant backlogs reported by major OEMs [31][32] Other Important Information - The company has identified non-core assets representing approximately 8% of revenue for potential divestiture [36] - Recent leadership changes include the appointment of Ryan McLeod as Chief Financial Officer, expected to enhance operational finance and capital discipline [13] Q&A Session Summary Question: Long-term perspective on civil business returns - Management indicated that the civil business could generate solid mid-teen returns over the long term, with a focus on improving utilization and profitability [50][54] Question: Conversations with civil customers regarding network rationalization - Initial conversations with civil customers have been positive, focusing on resizing the network to meet current demand [58][59] Question: Nature of identified non-core assets - Non-core assets are present in both civil and defense segments, with the intention to divest those that do not align with the company's strategic focus [66] Question: Outlook for civil aviation training demand - Management noted that while current demand is softer than expected, the long-term growth trajectory remains at 4%-5% annually [72][74] Question: Timing of potential divestitures - Management emphasized a cautious approach to divestitures, indicating that the process could take 18-24 months [75][76] Question: Defense segment margin improvements - The defense segment's margin improvements are attributed to better contract mix and cost controls, with expectations for continued growth [80]

Core Viewpoint - BP reported a significant decline in underlying replacement cost profit for Q4 2025, reflecting challenges in upstream realizations and refining operations, while also announcing a suspension of its share buyback program to strengthen its balance sheet [1][2][3]. Financial Performance - BP's underlying replacement cost profit for Q4 2025 was $1.5 billion, a 32% decrease from $2.2 billion in Q3 2025, but a 25% increase from $1.2 billion in Q4 2024 [1]. - Total revenues and other income for Q4 2025 were $47.7 billion, a 1% decrease compared to $48.1 billion in Q4 2024 [2]. - For the full year 2025, BP reported an underlying replacement cost profit of $7.5 billion, a 16% decrease from $8.9 billion in 2024 [5]. Operational Challenges - The decline in Q4 profit was attributed to lower upstream realizations and a change in production mix, alongside weakened refining results due to reduced throughput and a temporary outage at the Whiting refinery [1][3]. - BP reported a loss of $3.4 billion for Q4 2025, which included an inventory holding loss of $700 million after tax and adjusting items that reduced results by $4.3 billion after tax [3]. Strategic Actions - The company has suspended its share buyback program and is reducing capital expenditure for 2026 to the lower end of the guidance range to support its balance sheet [2][5]. - BP is executing a $20 billion disposal program and reallocating excess cash to strengthen its financial position [6]. Future Outlook - BP's interim CEO emphasized the importance of capital discipline and the need for continued progress in cash flow growth, cost reduction, and balance sheet strengthening [4]. - The company is focusing on long-term value growth opportunities, particularly in its upstream business, including the Bumerangue discovery in Brazil, estimated to contain around eight billion barrels of liquids in place [7].

Financial Data and Key Metrics Changes - For the full year 2025, total company production grew by 11% to approximately 100,000 barrels of oil equivalent per day, with oil production growing by 4% to nearly 40,000 barrels per day [7] - Fourth quarter adjusted net income was approximately $71 million or $0.38 per diluted share, with adjusted EBITDA coming in at $216 million [8][16] - Free cash flow for the full year exceeded $425 million, with approximately 75% returned to shareholders through dividends and share repurchases [9][19] Business Line Data and Key Metrics Changes - The company achieved a new production record in the fourth quarter, averaging nearly 104,000 barrels of oil equivalent per day, reflecting a sequential increase of 3% [8] - Operationally, field-level cash operating expenses declined by 7% to $5.12 per BOE during 2025 [7] Market Data and Key Metrics Changes - Total revenue per BOE declined 13% quarter-over-quarter due to a decrease in oil prices [21] - The company remains completely unhedged for all its oil and natural gas production, with anticipated oil price differentials of approximately $3 per barrel [23] Company Strategy and Development Direction - The company's strategy focuses on steady mid-single-digit total production growth, high pre-tax margins, and reliable free cash flow while maintaining a low reinvestment rate [10][11] - The company plans to remain fiscally prudent with capital spending expected to be approximately flat year-over-year while delivering total production growth of approximately 5% in 2026 [13][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate product price volatility and emphasized the importance of maintaining low leverage and a strong balance sheet [15][11] - The outlook for 2026 is optimistic, with expectations for gradual production growth despite potential winter weather impacts in the first quarter [23][44] Other Important Information - The company repurchased approximately 8.9 million shares throughout 2025, reducing the diluted share count by roughly 4.5% [9][17] - A 10% increase in the quarterly dividend to $0.16 per share was recently announced, marking the fifth consecutive annual increase [19] Q&A Session Summary Question: Performance of recent wells in Giddings - Management noted that recent wells have outperformed type curves due to improved drilling practices and better rock quality, with no significant changes in completion design [25][26] Question: M&A activity and pricing trends - Management indicated that competition for acquisitions has increased, particularly for larger deals, and expressed a preference for opportunities with undeveloped upside rather than PDP-heavy assets [28][30] Question: Well-cost reductions and capital efficiency - Management reported a reduction in the cost of standard Giddings wells to around $1,000 per foot, with expectations for flat to slightly decreasing service costs [35][36] Question: Capital allocation strategy in a higher oil price scenario - In a scenario with higher oil prices, management indicated that excess cash would likely be allocated to dividends, share repurchases, or opportunistic acquisitions, rather than increasing rig counts [99][100] Question: Development approach and well pad sizes - The company continues to operate with an average of 3-4 wells per pad, with flexibility to drill longer laterals when possible [50][51] Question: Maintenance capital expectations - Management estimated maintenance capital to be around $400 million, with a focus on maintaining production levels without excessive spending [79][80]

Financial Data and Key Metrics Changes - For the full year 2025, total company production grew by 11% to approximately 100,000 barrels of oil equivalent per day, with oil production growing by 4% to nearly 40,000 barrels per day [7][9] - Fourth quarter adjusted net income was approximately $71 million or $0.38 per diluted share, with adjusted EBITDA at $216 million [9][17] - Free cash flow for the full year exceeded $425 million, with approximately 75% returned to shareholders through dividends and share repurchases [10][20] Business Line Data and Key Metrics Changes - The company achieved a new production record in Q4, averaging nearly 104,000 barrels of oil equivalent per day, reflecting a sequential increase of 3% [8] - Field-level cash operating expenses declined by 7% to $5.12 per BOE during 2025, contributing to improved operational efficiency [7][9] Market Data and Key Metrics Changes - Total revenue per BOE declined 13% quarter-over-quarter due to lower oil prices, impacting operating income margins [21] - The company remains unhedged for all oil and natural gas production, which allows for upside potential in commodity prices [24] Company Strategy and Development Direction - The company's strategy focuses on steady mid-single-digit production growth, high pre-tax margins, and reliable free cash flow while maintaining a low reinvestment rate [11][12] - Magnolia plans to maintain capital spending at similar levels year-over-year while targeting a production growth of approximately 5% in 2026 [13][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate product price volatility and emphasized the importance of maintaining low leverage for financial flexibility [15][20] - The outlook for 2026 includes expectations for gradual production growth despite potential weather impacts in Q1 [24][43] Other Important Information - The company repurchased approximately 8.9 million shares throughout 2025, reducing the diluted share count by roughly 4.5% [10][18] - A 10% increase in the quarterly dividend was announced, marking the fifth consecutive annual increase [14][19] Q&A Session Summary Question: Performance of recent wells in Giddings - Management noted that recent wells have outperformed type curves, attributing success to improved drilling techniques and better rock quality [26][27] Question: M&A activity and pricing trends - Management acknowledged increased competition and rising prices for acreage but emphasized a preference for undeveloped opportunities rather than PDP-heavy deals [28][30] Question: Cost reductions and capital efficiency - Management indicated that well costs have decreased, with current costs around $1,000 per foot for standard Giddings wells, and service costs are expected to remain flat to slightly down [34][35] Question: Capital allocation strategy - Management stated that excess cash from higher oil prices would be directed towards dividends, share repurchases, or opportunistic acquisitions, without plans to add another rig [96][99] Question: Production outlook for 2026 - Management expects steady growth throughout 2026, with a heavier capital outlay in the first half of the year [42][43] Question: Development approach and well pad sizes - The average well pad size remains around 3-4 wells, with opportunities for longer laterals if adjacent acreage can be acquired [49][51] Question: Maintenance capital estimates - Management suggested that maintenance capital is likely around $400 million, reflecting efficiencies gained over the years [78][80]

Financial Data and Key Metrics Changes - For the full year 2025, the company achieved adjusted earnings per share of $10.70 and adjusted EBITDA of approximately $12 billion, with a cash flow from operations of $8.7 billion [13][5] - The fourth quarter adjusted earnings per share was reported at $4.07, with adjusted EBITDA around $3.5 billion [13][5] - The refining and marketing segment adjusted EBITDA per barrel was $5.63 for the year and $7.15 for the fourth quarter [13][5] Business Line Data and Key Metrics Changes - The midstream segment grew adjusted EBITDA year-over-year, reaching nearly $7 billion, while the refining and marketing segment's fourth quarter adjusted EBITDA was $2 billion [5][14] - Refining utilization was reported at 95% for the fourth quarter, with total throughput exceeding 3 million barrels per day [14][15] - The renewable segment achieved 94% utilization, benefiting from a one-time sale of credits [17] Market Data and Key Metrics Changes - Global consumption trends for refined products remained steady, with gasoline and distillates each growing by approximately 1% and jet fuel demand increasing nearly 4% [6] - The global refining system is expected to remain tight, with limited new capacity coming online in 2026, further tightening U.S. markets due to regional closures [6] Company Strategy and Development Direction - The company plans to invest approximately $700 million in refining value-enhancing capital in 2026, focusing on lowering operating costs and enhancing system reliability [7] - Investments in marketing are set at $250 million to expand the reach of branded stations in targeted markets, supporting long-term secured offtake [8] - The company aims for a disciplined capital strategy, targeting returns of 25% or above on capital deployment [10] Management's Comments on Operating Environment and Future Outlook - Management remains constructive on refined product demand, expecting growth to outpace capacity additions through the end of the decade [6] - The company anticipates that the structural demand growth across refined products will continue, supported by a strong midstream business outlook [10] - Management expressed confidence in the long-term fundamentals of the energy markets, particularly in the context of MPLX's growth and distribution [12][20] Other Important Information - The company returned $4.5 billion to shareholders in 2025, including a 6.5% reduction in shares outstanding [13] - The company has a net debt to capital ratio within the range of 25%-30% and targets an annual cash balance of $1 billion [18] Q&A Session Summary Question: Capture Rate Performance - The capture rate was strong at 114%, attributed to optimization through the commercial team and improved structural capabilities [25][26] Question: Return of Capital Expectations - The company expects to match or exceed the $4.5 billion returned to shareholders in 2026 based on current market conditions [31][32] Question: Venezuelan Crude Absorption - The company views access to Venezuelan crude positively, with capabilities to absorb incremental barrels, enhancing its competitive position [35][36] Question: Refining Utilization Sensitivity - The company can adjust refining operations to optimize margins based on market conditions, demonstrating flexibility in its operations [50][51] Question: CapEx Guidance - The company expects a 20% reduction in refining capital expenditures in 2026, with further reductions anticipated in 2027 and 2028 [53][56] Question: Negotiations with USW - Ongoing negotiations with the United Steelworkers are progressing positively, with rolling extensions in place [64][65]

Financial Data and Key Metrics Changes - For the full year 2025, the company achieved adjusted earnings per share of $10.70 and adjusted EBITDA of approximately $12 billion, with a fourth quarter adjusted earnings per share of $4.07 and adjusted EBITDA of about $3.5 billion [13][14] - The company generated $8.3 billion in cash from operations and returned $4.5 billion to shareholders through share repurchases and dividends, reflecting a 6.5% reduction in shares outstanding [5][13] Business Line Data and Key Metrics Changes - The refining and marketing segment reported adjusted EBITDA of $2 billion for the fourth quarter, with refineries running at 95% utilization and total throughput just over 3 million barrels per day [14][15] - The midstream segment's adjusted EBITDA grew year-over-year, reaching a record of nearly $7 billion, although fourth quarter results declined due to divestitures of non-core assets [5][11][17] Market Data and Key Metrics Changes - Global refined product demand is expected to continue growing, with gasoline and distillates each increasing by roughly 1% and jet fuel demand rising nearly 4% [6] - The global refining system is anticipated to remain tight, with limited new capacity coming online in 2026, further tightening U.S. markets due to regional closures [6][10] Company Strategy and Development Direction - The company plans to invest approximately $700 million in refining value-enhancing capital in 2026, focusing on lowering operating costs and enhancing system reliability [7][10] - Investments in marketing will total $250 million to expand the reach of branded stations in targeted markets, supporting long-term secured offtake and enhancing performance [8] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about refined product demand and expects growth to outpace the net effect of capacity additions through the end of the decade [6][10] - The company emphasizes a disciplined capital strategy and aims for returns of 25% or above on capital investments, reflecting confidence in long-term opportunities across the energy space [10][12] Other Important Information - The company achieved its strongest process safety performance in the last four years and the lowest OSHA recordable injury rate, reflecting a commitment to safe and environmentally sound operations [5] - MPLX, the company's midstream segment, plans to invest $2.4 billion in growth capital, with 90% directed towards natural gas and NGL services, targeting a distribution growth rate of 12.5% over the next two years [11][12] Q&A Session Summary Question: Capture rate performance - Management highlighted that the strong capture rate of 114% was driven by optimization through the commercial team and improved structural capabilities [25][26][28] Question: Return of capital expectations - Management indicated that based on current market conditions, they expect to match or exceed the previous year's capital return of $4.5 billion [31][32] Question: Incremental Venezuelan crude absorption - Management expressed confidence in their ability to absorb more Venezuelan crude, leveraging their system's capabilities and optimizing sour crude processing [35][36][39] Question: CapEx guidance and negotiations with USW - Management confirmed that CapEx for 2026 is expected to be lower than in 2025, and negotiations with the USW are ongoing with positive dialogue [62][65][66]

Core Insights - Air Products and Chemicals reported a solid start to fiscal 2026, with a 12% year-over-year increase in adjusted operating income and a 10% rise in adjusted earnings per share to $3.16, alongside an adjusted operating margin of 24.4% [8] Group 1: Regional Performance - In Europe, sales and operating income increased due to higher volumes and favorable currency effects, although higher depreciation and fixed cost inflation were noted as offsets [1] - In Asia, sales rose by 2% and operating income increased by 7%, aided by productivity improvements and reduced depreciation from certain gasification assets, despite lower helium volumes [2] - In the Americas, sales increased by 4% driven by higher energy pass-through, with operating income improving due to price increases and lower maintenance costs, although prior-year non-recurring items impacted year-over-year comparisons [3] Group 2: Financial Metrics - The return on capital was reported at 11%, lower than the previous year but stable sequentially, with EPS exceeding the top end of the company's guidance range for the quarter [4] - Adjusted operating income rose by 12%, with a margin expansion of 140 basis points attributed to business mix and non-helium pricing, despite a headwind from higher energy costs [5] - The company maintained full-year EPS guidance of $12.85 to $13.15, with expectations for the second quarter EPS to be between $2.95 and $3.10, reflecting a year-over-year growth of 10% to 15% [21] Group 3: Strategic Initiatives - CEO Eduardo Menezes emphasized three strategic priorities for fiscal 2026: unlocking earnings growth, optimizing large projects, and maintaining capital discipline [10] - The company plans to reduce capital expenditures by approximately $1 billion in fiscal 2026, with a projected capital expenditure outlook of around $4 billion [11] - Air Products is in advanced negotiations with Yara International regarding low-emission ammonia projects in Saudi Arabia and the U.S., with expectations to finalize agreements in the first half of 2026 [14][15] Group 4: Cash Flow and Debt Management - The company reported strong cash flows from its base business, with a net debt to EBITDA ratio of 2.2 times, and plans to deconsolidate the NEOM green hydrogen joint venture once operational [20] - Additional operating costs are anticipated as the NEOM venture adds resources ahead of start-up, with the project expected to be operational by mid-2027 [20]

Hecla Mining Company Investor Day Summary Company Overview - **Company Name**: Hecla Mining Company (NYSE: HL) - **Headquarters**: Coeur d'Alene, Idaho - **Market Capitalization**: Over $17 billion as of mid-January 2026 - **Share Ownership**: 22% retail, 78% institutional - **Operations**: Four precious metals mines located in the United States and Canada, positioning Hecla as the lowest geopolitical risk silver miner in the sector [4][5] Key Points from the Investor Day Strategic Transformation - **Leadership Change**: Rob Krcmarov appointed as CEO in November 2024, focusing on fundamental transformation and disciplined capital allocation [7][8] - **Exploration Budget**: The board approved a $55 million exploration budget for 2026, nearly double the previous year, indicating a commitment to future growth [9] - **Operational Excellence**: Emphasis on operational performance, financial frameworks, and exploration strategies to sustain growth through commodity cycles [9][10] Recent Developments - **Sale of Hecla Quebec**: Agreement to sell Hecla Quebec for nearly $600 million, redirecting focus towards silver production [11][12] - **Production Guidance**: Expected silver production for 2026 is between 15.1 million and 16.5 million ounces, with a potential pathway to 20 million ounces in the medium term [35][36] Financial Performance - **Free Cash Flow**: Generated $310 million in free cash flow in 2025, with all operations being free cash flow positive [26][43] - **Debt Reduction**: Gross leverage improved from 1.6x to 0.4x, with a target for complete deleveraging [43][44] - **Return on Invested Capital (ROIC)**: Increased from 4% in 2024 to 12% in 2025, with expectations for continued strong performance [44][46] Market Position and Silver Focus - **Silver Revenue**: Approximately 50% of revenues generated from silver, compared to 20%-30% for peers, highlighting Hecla's commitment to silver over gold [29][61] - **Supply-Demand Dynamics**: The silver market is in a structural deficit, with a cumulative supply deficit of 800 million ounces since 2021, driven by strong industrial demand and constrained supply [58][59] - **Investment in Silver**: Hecla's focus on silver is expected to yield significant returns due to its unique properties and increasing demand in various sectors, including solar energy and electrification [60][61] Operational Excellence - **Safety Improvements**: Achieved a 13% improvement in total reportable injury frequency rate in 2025, with ongoing investments in safety training and hazard reporting [64][65] - **Technology Integration**: Implementation of integrated systems for real-time monitoring and decision-making to enhance operational efficiency [66] Conclusion Hecla Mining Company is positioned for significant growth in the silver market, driven by a strategic focus on operational excellence, disciplined capital allocation, and a strong commitment to safety and sustainability. The company's transformation under new leadership aims to unlock value and capitalize on the growing demand for silver in a favorable geopolitical landscape.

Core Viewpoint - Cenovus Energy Inc. is nearing its 52-week high of $18.75, closing at $17.68, with its stock performance driven by strong operational execution and production growth rather than just macroeconomic factors [1][2]. Group 1: Operational Performance - Cenovus has demonstrated strong operational execution, with visible production growth and a disciplined capital framework, making it a compelling story in the Canadian energy sector [2]. - The company has outperformed Canadian Natural Resources Limited and has shown an 18.1% increase in share price over the past year, compared to 9.2% for CNQ and 25.8% for Suncor Energy [3]. - Cenovus has beaten the Zacks Consensus Estimate in three of the last four quarters, achieving an average earnings surprise of 25.96% [6][7]. Group 2: Production Growth Outlook - Cenovus is positioned for significant production growth, with a portfolio of sanctioned projects expected to support production exceeding 1 million BOE/d by 2027-2028 without needing new approvals [9]. - Key projects contributing to this growth include the Christina Lake North expansion and the Sunrise optimization program, which are projected to add significant production by 2028 [10]. Group 3: Strategic Acquisition - The acquisition of MEG Energy is a strategic move that strengthens Cenovus' oil sands portfolio, adding approximately 110 Mbbls/d of low-cost production and expected to be accretive to funds flow in the first year [11]. - Management anticipates pre-tax synergies of $150 million in 2026, growing to over $400 million annually by 2028, primarily through operational efficiencies [12]. Group 4: Financial Discipline and Valuation - Cenovus is transitioning to a focus on volume ramp-ups and reliability, with capital spending projected between C$5 billion and C$5.3 billion, indicating a balanced approach to sustaining operations and pursuing high-return projects [14]. - The company currently trades at a trailing 12-month EV/EBITDA multiple of 5.55X, below the industry average of 6.14X, suggesting potential for multiple expansion as cash flow visibility improves [15]. Conclusion - As Cenovus approaches its 52-week high, the stock's rise is supported by steady production growth, improving cash flow, and a clear capital return plan, indicating an attractive valuation relative to peers [17][18].