NGL Energy Partners cuts 2017 guidance; -10.6% premarket

|About: NGL Energy Partners LP (NGL)|By:, SA News Editor

NGL Energy Partners (NYSE:NGL) -10.6% premarket after lowering its FY 2017 guidance for adjusted EBITDA to ~$380M, down from a prior outlook for $485M-$500M, and deferring a distribution increase.

NGL cites significantly warmer than normal winter resulting in lower propane volumes and pricing, continued pressure in crude marketing and transportation, weaker demand for diesel fuel, lower than expected margins for biodiesel sales, and an extended decline in gasoline line space values on the Colonial Pipeline.

For FY 2018, NGL expects to generate adjusted EBITDA of $500M-$525M, with distributable cash flow of $300M-$325M which could generate $100M-plus of excess cash flow, which would provide at least 1.3x coverage for the year.

In downgrading shares to Market Perform from Outperform and cutting its price target to $22 from $28, FBR analysts say their greatest concern regarding the updated guidance is that it seems to imply a greater degree of variability in cash flows than may have been previously represented.