NGL Energy Partners LP (NYSE:NGL) Q4 2023 Earnings Conference Call May 31, 2023 5:30 PM ET

Company Participants

Brad Cooper - EVP & CFO

Michael Krimbill - President, CEO, & Director

Douglas White - EVP, NGL Water Solutions

Conference Call Participants

Patrick Fitzgerald - Robert W. Baird & Co.

Tarek Hamid - JPMorgan Chase & Co.

Jason Mandel - RBC Capital Markets

Sunil Sibal - Seaport Research Partners

Ned Baramov - Wells Fargo Securities

Gregg Brody - Bank of America Merrill Lynch

Operator

Greetings. Welcome to the NGL Energy Partners 4Q '23 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded.

I will now turn the conference over to your host, Brad Cooper, CFO. You may begin.

Brad Cooper

Thank you. Good afternoon, and thank you, everyone, for joining us on the call today, where we will discuss our fiscal '23 results, our deleveraging update and our outlook for fiscal '24. After the market closed today, we issued an earnings release, investor presentation and filed our 10-K.

Comments today will include plans, forecasts and estimates that are forward-looking statements under the U.S. securities law. These comments are subject to assumptions, risks and uncertainties that could cause actual results to differ from the forward-looking statements. Please take note of the cautionary language and risk factors provided in our SEC filings and earnings materials.

Fiscal 2023 was truly a transformational year for NGL across all aspects of the partnership, with record EBITDA, significant reductions in our absolute debt and leverage well below our initial goal of 4.75x. We achieved record adjusted EBITDA of $632.7 million for the year and $173.3 million for the fourth quarter. This record adjusted EBITDA was driven by the strong growth in our Water business, which I will discuss shortly.

We completed the sale of our marine assets and other miscellaneous assets totaling approximately $141 million. The trailing 12-month adjusted EBITDA associated with these assets was approximately $10.7 million, which implies over a 13x multiple on these asset sales. Selling these noncore and underutilized assets at these attractive multiples has allowed us to accelerate our strategy to reduce absolute debt and leverage.

We started fiscal '23 with a $476 million balance remaining on the '23 unsecured notes, and $42 million remaining on the equipment notes supported by the marine assets. Most folks outside the walls of the NGL offices thought the redemption of the '23 unsecured notes wouldn't occur until later this calendar year. But due to the strong operational performance, the noncore asset sales and our ability to project the release of working capital as commodity prices moderated, we were able to redeem all of the 2023 unsecured notes and pay off the equipment note, both totaling about $518 million by year-end. With this debt retired, our leverage at the end of the fiscal year was approximately 4.56x. Our ABL balance at the end of the fiscal year was $138 million, roughly the same level that it was at the beginning of the fiscal year.