NGL Energy Partners GAAP EPS of -$0.51, revenue of $2.05B

• NGL Energy Partners press release (NYSE:NGL): FQ4 GAAP EPS of -$0.51.
• Revenue of $2.05B (-19.0% Y/Y).

Comments

[RuleofLaw]

Someone please check my math -

In FY 24 EBITDA is $645m, interest will be about $200m and Capex will be about $125m. That leaves me with about $320m of free cash flow before any asset sales. Assuming that all goes to debt reduction, there will be just about $2.5bn of net debt on 3/31/24. There will also be about $350m of accrued dividends on the preferreds.

If I assume a global refi of $2.9bn of debt and preferred arrearages at 8%, the pro forma interest bill is about $235m. Assuming EBITDA and capex are flat in FY 25, free cash flow is $645m - $235m - $125m - $100m of cash pfd dividends = $185m of fcf for the common. If I assume the market requires a 15% fcf yield to the equity, the common equity is worth $1.2bn or $9/share sometime in 18-24 months. Discounting that back 2 years at 15% indicates a current unit price of about $6.80. If I use a 20% fcf yield and a 20% discount rate, the indicated current price is $5.00/unit. What am I missing?

As an aside, at $6.80/unit the TEV is almost exactly $5.0bn or just under 7.9x LTM EBITDA. That is not an outrageous multiple for this business.

[jtonson]

NGL is doing a good job reducing debt levels, even in a challenging environment. They are already well on the way to paying down their 2025 notes, and they expressed confidence they can pay down the rest by end of calendar 2023 or possibly the following quarter. They stated, "As soon as the 2025 unsecured notes are retired we will address the Preferred securities."

That bodes well for the NGL-B preferreds, which are currently at a 12.5% floating yield that is accumulating, with par + accumulated dividends already worth around $32 and growing. I can wait less than a year for that payoff.

Long NGL-B.

[samiamdj]

NGL has a long history of missing estimates. My all time favorite was when NGL's mgmt guided for a dividend increase the following quarter only to cut the dividend. That was many years ago but one has to give them props for their consistency.

[Timothy Stabosz]

@samiamdj
That was then and this is now.

That past you refer to is already discounted in the stock price. Without such historical credibility issues, we would be at $4-5 already.

They are BUILDING credibility now. And the dramatically reduced risk of a future restructuring is still not appropriately factored into the common unit price.

[rjm22]

Down to $2.95 afterhours from a $3.17 close.1100 at that price.

[rjm22]

@rjm22 Someone came in late and took 7500 shares at the then ask $3.18.
That was the largest afterhours trade. So maybe the call sounded positive?

“The Partnership had a strong Fiscal 2023, exceeding expectations with record Adjusted EBITDA (1) , record water disposal volumes, accelerated debt reduction, declining leverage and significant asset sales at attractive multiples. Our team pulled on all the levers available to improve the balance sheet and financial metrics. Fiscal 2024 holds more of the same as we have closed additional asset sales, purchased 2025 unsecured notes and guided to increased Adjusted EBITDA (3) . As soon as the 2025 unsecured notes are retired we will address the Preferred securities," stated Mike Krimbill, NGL’s CEO. “Providing for potential crude oil volatility, we are guiding fiscal 2024 Water Solutions Adjusted EBITDA (3) to a range of $485 - $500 million and full year consolidated Adjusted EBITDA (3) of $645 million plus. Also, we are guiding to $125 million in total maintenance and growth capital expenditures for Fiscal 2024,” Krimbill concluded.