NGL Energy Partners LP(NGL) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The Water Solutions segment reported record adjusted EBITDA of $105 million, a 29% increase compared to Q1 fiscal 2022 and over 16% from the previous quarter [5][6] - Operating expenses decreased to $0.25 per barrel, reflecting successful cost control despite inflationary pressures [7] - Total liquidity reported at $286 million as of June 30, with $23.3 million of unsecured notes repurchased during the quarter [13] Business Line Data and Key Metrics Changes - The Liquids Logistics segment achieved adjusted EBITDA of $12.9 million, up from $5.6 million in Q1 fiscal 2022, driven by strong margins on refined products and biodiesel [8] - Crude Logistics reported adjusted EBITDA of $15.1 million, impacted by approximately $20 million in net financial losses on derivatives [10][11] - Water disposal volumes processed reached approximately 2.15 million barrels per day, a 12% increase from the previous quarter [6] Market Data and Key Metrics Changes - The propane and butane businesses are expected to generate most earnings later in the fiscal year, influenced by winter weather and agricultural demand [9] - The company anticipates a build-up of inventory for butane and propane during late summer and fall, with liquidation expected in the fourth fiscal quarter [23] Company Strategy and Development Direction - The company is focused on repaying unsecured 2023 notes and reducing leverage below 4.75 to reinstate preferred dividends [16] - Growth in water disposal volumes is expected to continue, supported by new pipeline additions [17] - The Water Solutions EBITDA guidance has been increased by $10 million to over $410 million for the fiscal year [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for further increases in guidance if the current energy environment persists [18] - The company is making significant progress on initiatives to enhance liquidity and manage elevated working capital requirements [14] Other Important Information - The company incurred 50% of its growth CapEx budget in the first quarter, amounting to $31 million, and accelerated maintenance capital expenditures [17] Q&A Session Summary Question: Trajectory of water volumes during the year - Management guided for water volumes to reach 2.2 million barrels for the year, with first quarter volumes at 2.15 million barrels [21][22] Question: Working capital expectations for next quarter - Working capital balances are expected to follow historical trends, with inventory builds occurring earlier this year [23][24] Question: Free cash flow timing - Majority of free cash flow is anticipated to come in the second half of the year [25]