Thu, May 29, 8:27 PM (45 days ago)
### Summary of NGL Energy Partners LP (NGL) Annual Report **Ticker:** NGL **Financial Performance:** - **Revenue:** $3,469,186,000 (2025) - **Net Income:** $43,163,000 (2025) - **Operating Expenses:** $297,686,000 (2025) - **Earnings per Share:** Not explicitly stated, but can be inferred from the net income and number of outstanding units. **Strategic Overview:** - **Business Segments:** Water Solutions, Crude Oil Logistics, Liquids Logistics. - **Key Initiatives:** Debt refinancing, strategic acquisitions, and divestitures. - **Market Position:** Largest independent produced water transportation and disposal company in the U.S. **Future Outlook:** - **Growth Strategy:** Focus on accretive organic growth projects and strategic acquisitions. - **Financial Condition:** Strong balance sheet, with a focus on reducing leverage and maintaining liquidity. **Risk Factors:** - **Commodity Price Volatility:** Significant exposure to crude oil and natural gas prices. - **Regulatory Risks:** Environmental regulations and climate change policies. - **Operational Risks:** Dependence on third-party suppliers and customers. **Market Position Changes:** - **Divestitures:** Sale of refined products business and biodiesel business. - **Acquisitions:** None reported for 2025. **Financial Condition:** - **Debt:** $3.0 billion in long-term debt as of March 31, 2025. - **Liquidity:** Strong liquidity position with $222.8 million in excess of current liabilities. **Operational Highlights:** - **Water Solutions:** Handled approximately 958.3 million barrels of produced water. - **Crude Oil Logistics:** Transported approximately 61,000 barrels per day on the Grand Mesa Pipeline. - **Liquids Logistics:** Sold approximately 1.6 billion gallons of natural gas liquids. **Strategic Initiatives:** - **Debt Refinancing:** Closed a $2.9 billion debt refinancing transaction in February 2024. - **Divestitures:** Completed the sale of refined products business and biodiesel business in April 2025. **Risk Management:** - **Commodity Price Risk:** Uses derivatives to hedge against price fluctuations. - **Credit Risk:** Manages credit risk through credit analysis and approval processes. **Environmental and Regulatory Compliance:** - **Environmental Regulations:** Subject to stringent environmental laws and regulations. - **Climate Change:** Monitoring and adapting to regulatory changes related to climate change. **Human Capital:** - **Employee Count:** 569 employees across 27 states and Canada. - **Benefits:** Competitive benefits package, including health and retirement benefits. **Government Regulation:** - **Environmental:** Subject to various environmental laws and regulations. - **Safety:** Complies with safety regulations and standards. **Forward-Looking Statements:** - **Future Performance:** Expects to continue focusing on generating stable, growing, and predictable cash flows. - **Risk Factors:** Includes commodity price volatility, regulatory risks, and operational risks. **Non-GAAP Financial Measures:** - **EBITDA and Adjusted EBITDA:** Provides additional information for evaluating financial performance. **Liquidity and Capital Resources:** - **Sources of Capital:** Cash flows from operations, borrowings under ABL Facility, issuing long-term notes, common and/or preferred units. - **Capital Expenditures:** Expected to be approximately $105 million for the year ending March 31, 2026. **Contractual Obligations:** - **Debt Principal and Interest:** $3.0 billion in long-term debt, with $8.8 million due within one year. - **Operating Lease Obligations:** $142.8 million, with $35.7 million due within one year. **Distributions:** - **Cash Distribution:** Declared a cash distribution for the quarter ended March 31, 2025. **Segment Operating Results:** - **Water Solutions:** Generated operating income of $311.5 million (2025). - **Crude Oil Logistics:** Generated operating income of $46.1 million (2025). - **Liquids Logistics:** Generated operating income of $14.1 million (2025). **Critical Accounting Estimates:** - **Impairment of Goodwill:** Evaluated annually and when events indicate potential impairment. - **Derivative Financial Instruments:** Recorded at fair value, with changes in fair value affecting financial statements. **Corporate Governance:** - **Board of Directors:** Six members, with three independent directors. - **Executive Compensation:** Aligned with long-term shareholder value creation. **Market Information:** - **Stock Symbol:** NGL - **Trading Volume:** Approximately 70 common unitholders of record. **Available Cash:** - **Distributions:** Requires that within 45 days after the end of each quarter, all available cash be distributed to unitholders. **General Partner Interest:** - **Distribution Rights:** Entitled to 0.1% of all quarterly distributions prior to liquidation. **Incentive Distribution Rights (IDRs):** - **Distribution Levels:** Allocations based on specified target distribution levels. **Restrictions on Payment of Distributions:** - **Default Conditions:** Restrictions under ABL Facility, Term Loan B, and Indenture. **Securities Authorized for Issuance Under Equity Compensation Plan:** - **Long-Term Incentive Plan:** Adopted in connection with the initial public offering. **Item 6. [Reserved]** **Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations:** - **Overview:** Diversified midstream energy partnership with three segments: Water Solutions, Crude Oil Logistics, and Liquids Logistics. - **Sale of Refined Products Business and Exiting Biodiesel Business:** Completed winding down of biodiesel business and sale of refined products business. - **Sale of Certain Natural Gas Liquids Terminals and Most of Our Wholesale Propane Business:** Sold 17 natural gas liquids terminals and most of the wholesale propane business. - **Business Repositioning:** Focus on core areas of competitive strength and generating stable, growing, and predictable cash flows. - **Debt Refinancing:** Closed a $2.9 billion debt refinancing transaction in February 2024. **Item 7A. Quantitative and Qualitative Disclosures About Market Risk:** - **Interest Rate Risk:** Long-term debt and interest rate swaps. - **Commodity Price Risk:** Uses derivatives to manage price volatility. **Item 8. Financial Statements and Supplementary Data:** - **Consolidated Financial Statements:** Included in the annual report. **Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:** - **None reported.** **Item 9A. Controls and Procedures:** - **Evaluation of Disclosure Controls and Procedures:** Effective as of March 31, 2025. - **Management’s Report on Internal Control Over Financial Reporting:** Effective as of March 31, 2025. **Item 9B. Other Information:** - **Rule 10b5-1 Trading Arrangements:** None reported. **Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections:** - **Not applicable.** **Item 10. Directors, Executive Officers and Corporate Governance:** - **Board of Directors:** Six members, with three independent directors. - **Executive Compensation:** Aligned with long-term shareholder value creation. **Item 11. Executive Compensation:** - **Compensation Philosophy:** Aligned with long-term shareholder value creation. **Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters:** - **Security Ownership:** Information on beneficial owners and management. **Item 13. Certain Relationships and Related Transactions, and Director Independence:** - **Related Transactions:** None reported. **Item 14. Principal Accountant Fees and Services:** - **Audit Fees:** $2.5 million (2025). - **Audit-Related Fees:** $0.5 million (2025). - **Tax Fees:** $0.3 million (2025). - **All Other Fees:** $0.2 million (2025). **Item 15. Exhibit and Financial Statement Schedules:** - **Exhibits:** Included in the annual report. **Item 16. Form 10-K Summary:** - **Summary:** Included in the annual report. **Forward-Looking Statements:** - **Future Performance:** Expects to continue focusing on generating stable, growing, and predictable cash flows. - **Risk Factors:** Includes commodity price volatility, regulatory risks, and operational risks.