What happened
Units of NGL Energy Partners (NGL 0.85%) were up more than 20% as of 11 a.m. ET on Friday. Fueling the master limited partnership's (MLP) rally was its fiscal third-quarter report.
So what
NGL Energy Partners' adjusted EBITDA increased from $147.7 million in last year's fiscal Q3 to $193.3 million. The main driver was record adjusted EBITDA in its water solutions segment, which jumped 47.1% to $121.7 million. The company benefited from strong disposal volume and skim oil growth, enabling it to achieve a record for water volumes processed in the quarter. NGL Energy Partners' crude oil logistics segment also reported increased earnings, fueled by higher product margins. That helped offset weaker liquids logistics earnings.
That strong performance and the return of working capital gave the company the cash to repurchase $97.5 million of its 2023 notes during the quarter. That reduced its remaining balance to $203 million. This year, the its key strategic goal is to pay off those notes and reduce total leverage. It plans to call the remaining notes by the end of June.
NGL Energy Partners' strong showing in the period has given it the confidence to boost its full-year outlook. It now expects water solutions adjusted EBITDA to be over $440 million for the year, up from its prior view of more than $430 million. The MLP also increased its capital expenditure guidance range to $115 million-$125 million so it can keep up with its customers' growth.
Now what
NGL Energy Partners is making good progress on its debt reduction goal. In addition to using excess cash, it's also working to sell noncore assets to help pay off more debt. That would put it on a much firmer financial foundation. Hitting its debt reduction goal could eventually enable the MLP to start distributing cash to its investors again.
