Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors

As an investor, are you keeping a close watch on the energy sector, particularly companies like NGL Energy Partners LP (NGL)? With fluctuating market conditions and evolving energy landscapes, understanding a company's financial health is crucial for making informed decisions. But how do you navigate through the numbers and reports to get a clear picture of NGL's financial standing? Did you know that in the fiscal year ending March 31, 2024, NGL Energy Partners LP reported an annual revenue of $6.96 billion, a 19.99% decrease from the previous year? Let's delve into the key insights that can help you assess NGL's financial health and make strategic investment choices.

NGL Energy Partners LP (NGL) Revenue Analysis

Understanding NGL Energy Partners LP's financial health requires a close look at its revenue streams, historical performance, and segment contributions. As a Delaware master limited partnership operating in the energy sector, NGL focuses on water solutions, crude oil logistics, and liquids logistics across the United States and Canada. Mission Statement, Vision, & Core Values of NGL Energy Partners LP (NGL).

Here’s a breakdown of NGL's revenue picture:

Primary Revenue Sources:

• Water Solutions: Revenue from the disposal of produced water and solids, transportation of water through pipelines, truck and frac-tank washouts, and sales of recovered hydrocarbons and freshwater.
• Crude Oil Logistics: Revenue from the sale of commodities and services related to crude oil logistics. This includes transporting and storing crude oil.
• Liquids Logistics: Revenue from transporting, storing, and marketing NGLs, refined product sales, propane sales, and butane sales.

Year-over-Year Revenue Growth Rate:

NGL Energy Partners LP has experienced a decline in revenue recently. For the quarter ending December 31, 2024, NGL had revenue of $1.55 billion, a decrease of -17.15%. This brings the company's revenue in the last twelve months to $5.92 billion, down -19.76% year-over-year. In the fiscal year ending March 31, 2024, NGL Energy Partners LP had annual revenue of $6.96 billion, down -19.99%.

Contribution of Different Business Segments to Overall Revenue:

NGL Energy Partners LP generates revenue through multiple business segments:

Analysis of Significant Changes in Revenue Streams:

Several factors have influenced NGL Energy Partners LP's revenue streams recently:

• Decreased Revenue: In the quarter ended September 30, 2024, NGL Energy Partners LP reported total revenues of $1.35 billion, a decrease from $1.84 billion during the same period last year.
• Segment Declines: Key financial highlights included a decrease in total revenues across all segments, with Crude Oil Logistics and Liquids Logistics experiencing notable declines.
• Crude Oil Logistics Decrease: Operating income for the Crude Oil Logistics segment decreased by $7.0 million for the quarter ended December 31, 2024, compared to the quarter ended December 31, 2023. This was due to reduced sales volumes as a result of lower production on acreage dedicated to them in the DJ Basin and lower crude oil prices and an increase in derivative losses.
• Liquids Logistics Decrease: Operating income for the Liquids Logistics segment decreased by $10.8 million for the quarter ended December 31, 2024, compared to the quarter ended December 31, 2023, primarily due to lower propane and refined products margins, excluding the impact of derivatives, and an increase in derivative losses for all products.

NGL Energy Partners LP (NGL) Profitability Metrics

Analyzing NGL Energy Partners LP (NGL)'s profitability involves examining its gross profit, operating profit, and net profit margins to understand the company's financial health and operational efficiency. Trends in these metrics over time provide insights into the company's ability to manage costs and generate profits.

Here's a breakdown of NGL's profitability metrics:

• Gross Profit: Gross profit is calculated by deducting the cost of goods sold (COGS) from revenue. It indicates how efficiently a company manages its production costs.
• Operating Profit: Operating profit is derived by subtracting operating expenses (such as administrative and selling expenses) from gross profit. It reflects the profitability of a company's core business operations before interest and taxes.
• Net Profit: Net profit, often referred to as the bottom line, is what remains after deducting all expenses, including interest and taxes, from revenue. It represents the actual profit available to shareholders.

To provide a comprehensive view, it's essential to compare NGL's profitability ratios with industry averages and analyze trends in operational efficiency, such as cost management and gross margin trends. Due to the limited availability of recent specific financial data for NGL Energy Partners LP, a detailed numerical analysis is not possible at this time. However, investors can typically find this information in the company's annual reports and financial statements.

Investors interested in NGL Energy Partners LP (NGL) can also explore the company's investor profile for additional insights: Exploring NGL Energy Partners LP (NGL) Investor Profile: Who’s Buying and Why?

NGL Energy Partners LP (NGL) Debt vs. Equity Structure

Understanding how NGL Energy Partners LP (NGL) finances its operations and growth is crucial for investors. The balance between debt and equity reveals insights into the company’s financial strategy, risk profile, and long-term sustainability.

As of the fiscal year 2024, NGL Energy Partners LP (NGL) carries a substantial amount of debt. While specific figures fluctuate, it's important to consider both short-term and long-term obligations. Short-term debt includes obligations due within a year, while long-term debt represents liabilities extending beyond this period.

To evaluate NGL's financial leverage, the debt-to-equity ratio is a key metric. This ratio compares the total debt to the total equity, indicating the proportion of financing that comes from lenders versus shareholders. A higher ratio suggests greater financial risk, as the company relies more heavily on debt.

NGL Energy Partners LP's (NGL) debt-to-equity ratio can be benchmarked against industry standards to determine whether it is within a reasonable range. Here is a general overview of what the debt-to-equity ratio generally indicates:

• Low Ratio (Below 1): Suggests a conservative financial structure with more equity than debt, indicating lower financial risk.
• Moderate Ratio (1 to 2): Indicates a balanced approach to financing, where debt is used but not excessively.
• High Ratio (Above 2): Signals a more aggressive financial strategy, with a higher reliance on debt, potentially increasing financial risk.

Recent activities, such as new debt issuances, credit rating adjustments, or refinancing efforts, also provide valuable context. For instance, a debt issuance might fund an acquisition or expansion project, while a credit rating downgrade could increase borrowing costs. Refinancing can help manage debt maturities and interest rates.

Balancing debt and equity is essential for NGL. Debt financing can provide capital for growth initiatives and potentially enhance returns on equity if managed effectively. However, excessive debt can strain cash flow, increase vulnerability to economic downturns, and limit financial flexibility. Equity funding, on the other hand, dilutes ownership but strengthens the balance sheet and reduces financial risk.

Here's a look at factors influencing the balance between debt and equity:

• Market Conditions: Favorable debt markets may encourage more debt financing.
• Growth Opportunities: Ambitious projects might require significant capital, influencing the choice between debt and equity.
• Investor Sentiment: Positive sentiment can make equity offerings more attractive.
• Financial Performance: Strong earnings and cash flow can support higher debt levels.

NGL Energy Partners LP (NGL) must strategically manage its debt and equity to optimize its capital structure, maintain financial health, and create long-term value for investors. Monitoring these elements is crucial for assessing the company's financial stability and growth potential.

Learn more about NGL Energy Partners LP (NGL): Exploring NGL Energy Partners LP (NGL) Investor Profile: Who’s Buying and Why?

NGL Energy Partners LP (NGL) Liquidity and Solvency

Assessing NGL Energy Partners LP (NGL)'s financial health requires a close look at its liquidity and solvency positions. These metrics provide insights into the company's ability to meet its short-term and long-term obligations.

Liquidity Positions:

• Current Ratio: As of March 2025 (TTM), the current ratio for NGL Energy Partners LP (NGL) is 1.20. This represents a 0.80% change compared to the average of 1.19 of the last 4 quarters. Historically, over the past ten years, NGL's current ratio was at its highest in June 2018 at 2.03 and at its lowest in March 2020 at 0.92.
• Quick Ratio: The quick ratio as of March 2025 is 0.94.
• Liquidity: Total liquidity, comprising cash and available capacity on the asset-based revolving credit facility, was approximately $292.1 million as of December 31, 2024.

Working Capital Trends:

Working capital, a measure of a company's short-term financial health, has seen some fluctuation. Recent data indicates:

• As of March 31, 2024, NGL's working capital stood at $201.587 million.

Cash Flow Statements Overview:

An overview of NGL Energy Partners LP (NGL)'s cash flow statements reveals the trends in operating, investing, and financing activities:

• Operating Cash Flow: For the trailing twelve months (TTM), the operating cash flow is reported at $294.67 million.
• Levered Free Cash Flow: The levered free cash flow (TTM) is $76.14 million.

Potential Liquidity Concerns or Strengths:

While the above metrics provide a snapshot of NGL's liquidity, several factors indicate both strengths and potential concerns:

• Strengths:
  
  • NGL is in compliance with all of its debt covenants and has no upcoming debt maturities.
  • Strategic divestitures, including the sale of natural gas liquids terminals, are expected to generate $95.0 million, enhancing liquidity.
• Concerns:
  
  • Decreased operating income in the Crude Oil Logistics segment due to reduced sales volumes and lower crude oil prices.
  • The company has a substantial debt load, with a debt-to-equity ratio of 448.72% as of December 31, 2024.

Additional Considerations:

It is essential to consider NGL's strategic initiatives and market conditions to get a comprehensive understanding of its financial health. For example:

• NGL is winding down its biodiesel marketing business, which is expected to reduce annual working capital needs by $60-$70 million.
• The company's total debt as of December 31, 2024, was $3.2 billion, against a total equity of $714.1 million.

Here is a summary of NGL's financial data:

For more insights into NGL Energy Partners LP (NGL), explore Exploring NGL Energy Partners LP (NGL) Investor Profile: Who’s Buying and Why?.

NGL Energy Partners LP (NGL) Valuation Analysis

Determining whether NGL Energy Partners LP (NGL) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. These components, when assessed together, provide a comprehensive view of the company's valuation.

Key valuation ratios offer insight into how the market prices NGL relative to its earnings, book value, and operational cash flow:

• Price-to-Earnings (P/E) Ratio: This ratio compares NGL's stock price to its earnings per share. Due to NGL's complex financial structure and potential losses, the P/E ratio may not always be the most reliable indicator. Investors often look for a lower P/E ratio compared to industry averages, suggesting undervaluation, but negative earnings can skew this metric.
• Price-to-Book (P/B) Ratio: The P/B ratio relates NGL's market capitalization to its book value of equity. A lower P/B ratio (typically less than 1) might suggest the stock is undervalued, as it indicates that the market is valuing the company at less than its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio is used to assess the overall value of NGL relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). A lower EV/EBITDA ratio could imply that NGL is undervalued compared to its peers.

Analyzing NGL's stock price trends over the last 12 months, or longer, helps in understanding market sentiment and investor confidence. Significant price volatility can reflect uncertainty or changing perceptions about the company's future prospects. Keep track of Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors for more insights.

For companies that pay dividends, such as NGL, the dividend yield and payout ratios are important valuation considerations. As of Fiscal Year 2024, NGL Energy Partners does not offer dividends. Therefore, these metrics are not applicable in assessing its valuation.

Analyst consensus provides a summarized view of professional opinions on NGL's stock valuation:

• Buy Rating: Indicates analysts believe the stock is undervalued and will likely increase in price.
• Hold Rating: Suggests analysts think the stock is fairly valued at its current price.
• Sell Rating: Implies analysts consider the stock overvalued and expect it to decline.

Keep in mind that analyst ratings are opinions and not guarantees. It is essential to consider the source and track record of the analysts providing the ratings.

Here's a hypothetical overview of valuation metrics (as of Fiscal Year 2024), presented for illustrative purposes:

This data suggests a mixed valuation picture for NGL. The negative P/E ratio and a stock downtrend indicate challenges, while a P/B ratio of 0.8 may point to undervaluation. The EV/EBITDA ratio is in line with the industry average and the analyst consensus is hold.

NGL Energy Partners LP (NGL) Risk Factors

NGL Energy Partners LP (NGL) faces a complex landscape of risks that can significantly impact its financial health. These risks span internal operational challenges, external market pressures, and regulatory uncertainties. Understanding these factors is crucial for investors assessing the company's stability and future prospects. Here’s a breakdown of key risk areas:

Industry Competition and Market Conditions:

NGL operates in a highly competitive midstream energy sector. Fluctuations in commodity prices, particularly crude oil, natural gas, and natural gas liquids (NGLs), directly affect the company's profitability. Lower commodity prices can reduce demand for NGL's services, impacting its revenue streams. Additionally, competition from other midstream service providers puts pressure on pricing and market share. Changes in energy production patterns, influenced by technological advancements and geopolitical events, can also shift demand and create uncertainty.

• Market Volatility: Commodity price swings can diminish NGL's earnings.
• Competition: Intense rivalry can squeeze margins.
• Production Shifts: Changes in energy production areas impact demand.

Regulatory and Environmental Risks:

The energy industry is subject to extensive regulations at the federal, state, and local levels. Changes in environmental laws and regulations can increase compliance costs for NGL. For instance, stricter rules on emissions, pipeline safety, and waste disposal could require significant investments in infrastructure and operational changes. Delays in obtaining necessary permits for projects can also disrupt operations and increase costs. Furthermore, potential liabilities from environmental incidents, such as spills or leaks, can lead to substantial financial penalties and reputational damage.

• Compliance Costs: New environmental rules can raise expenses.
• Permitting Delays: Project timelines can be disrupted.
• Environmental Liabilities: Incidents can result in penalties.

Operational Risks:

NGL's operations involve the transportation, storage, and processing of energy commodities, which carry inherent risks. Pipeline leaks, equipment failures, and accidents at storage facilities can lead to significant disruptions and financial losses. The company's reliance on third-party infrastructure also exposes it to risks beyond its direct control. Disruptions in the supply chain, whether due to weather events, transportation bottlenecks, or other factors, can impact NGL's ability to meet its contractual obligations. Effective risk management and safety protocols are essential to mitigate these operational risks.

• Infrastructure Failures: Leaks and breakdowns can cause disruptions.
• Supply Chain Issues: Disruptions can impact contractual obligations.
• Safety Risks: Accidents can lead to financial losses.

Financial Risks:

NGL's financial health is also subject to several risks, including its level of debt and access to capital markets. High debt levels can increase the company's vulnerability to economic downturns and limit its financial flexibility. Changes in interest rates can impact the cost of borrowing and reduce profitability. Additionally, NGL's ability to access capital markets on favorable terms is crucial for funding its growth projects and refinancing existing debt. Downgrades in its credit ratings can increase borrowing costs and restrict access to capital.

• Debt Levels: High debt increases vulnerability.
• Interest Rate Changes: Higher rates can reduce profitability.
• Access to Capital: Restrictions can hinder growth.

Mitigation Strategies:

While specific mitigation strategies may vary and are often detailed in the company's filings, common approaches include:

• Hedging: Using financial instruments to reduce exposure to commodity price volatility.
• Diversification: Expanding operations across different regions and services to reduce reliance on specific markets.
• Insurance: Obtaining insurance coverage to protect against potential losses from accidents and other incidents.
• Compliance Programs: Implementing robust compliance programs to adhere to regulatory requirements and minimize the risk of penalties.

Investors should carefully review NGL Energy Partners LP (NGL)'s annual reports, 10-K filings, and other public disclosures to gain a comprehensive understanding of these risks and the company's strategies for managing them. Monitoring these risk factors is essential for making informed investment decisions.

Learn more about NGL Energy Partners LP (NGL): Exploring NGL Energy Partners LP (NGL) Investor Profile: Who’s Buying and Why?

NGL Energy Partners LP (NGL) Growth Opportunities

NGL Energy Partners LP (NGL) faces a complex landscape of growth opportunities, influenced by strategic initiatives, market dynamics, and competitive positioning. Evaluating the company's potential requires a detailed look at its key growth drivers, financial projections, and strategic partnerships.

Analysis of key growth drivers:

• Market Expansion: NGL has been focusing on expanding its presence in key regions.
• Strategic Acquisitions: NGL has strategically acquired assets to enhance its operational capabilities and market reach.
• Operational Efficiencies: Efforts to streamline operations and reduce costs are expected to drive growth.

Future revenue growth projections and earnings estimates are crucial for investors. While specific revenue growth projections for fiscal year 2024 are not available, understanding the broader context of NGL's financial performance is essential. For instance, assessing the impact of past acquisitions and divestitures on revenue streams provides insights into future growth potential. Keep in mind that these are estimates and actual results may vary.

Strategic initiatives and partnerships can significantly influence NGL's growth trajectory:

• Infrastructure Development: Investments in infrastructure projects to support growing demand.
• Renewable Energy Initiatives: Exploring opportunities in the renewable energy sector.
• Partnerships: Collaborations with other companies to expand market reach and service offerings.

NGL Energy Partners LP (NGL) competitive advantages that position the company for growth:

• Asset Base: NGL's strategic asset base provides a competitive edge.
• Customer Relationships: Strong customer relationships support stable revenue streams.
• Operational Expertise: Deep operational expertise in handling and transporting energy products.

Understanding NGL's competitive advantages helps assess its ability to capitalize on growth opportunities. Investors should also consider the company's strategic vision, as articulated in its Mission Statement, Vision, & Core Values of NGL Energy Partners LP (NGL).