NGL Energy Partners LP (NYSE:NGL) Q1 2023 Earnings Conference Call August 9, 2022 5:00 PM ET

Company Participants

Linda Bridges - EVP and CFO

Mike Krimbill - CEO

Conference Call Participants

James Spicer - TD Securities

Operator

Good afternoon, ladies and gentlemen, and welcome to the NGL Energy Partners LP First Quarter 2023 Earnings Call. [Operator Instructions] After comments from Michael Krimbill and Linda Bridges, we will open the Q&A to sell-side analysts after the presentation.

It is now my pleasure to turn the floor over to your host, Linda Bridges, CFO of NGL Energy Partners. Ma'am, the floor is yours.

Linda Bridges

Thanks. Hi, and welcome to NGL's first quarter fiscal 2023 earnings call. To start, I'd like to call your attention to our safe harbor language, which can be found towards the end of the partnership's earnings release, which was filed after the market close this afternoon. Today's remarks may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In accordance with the act, I would also like to direct your attention to the Management's Discussion and Analysis section and the risk factors discussed in the partnership's annual report on Form 10-K for the year ended March 31, 2022, and in other SEC filings made by the partnership, which are available on the website and on the SEC's website.

These, together with the safe harbor statement in the earnings release set forth important factors that could cause actual results to differ materially from those contained in any such forward-looking statements.

Starting with the financial results for the quarter, our Water Solutions segment had a very strong quarter and reported record adjusted EBITDA of $105 million, an increase of 29% when compared to the first quarter of fiscal 2022 and an increase of more than 16% from the immediately preceding quarter.

These results were driven by record produced water volumes processed of approximately 2.15 million barrels per day, which was 12% higher than the immediately preceding quarter, as well as higher-than-expected skim oil volumes sold.

Operating expenses continued to decrease and totaled $0.25 a barrel as the business successfully controlled costs in a challenging supply chain and inflationary macro environment. A reminder, three of our largest variable costs, utility, royalty and chemical expenses have not been and are not expected to be impacted by inflation due to contracted rates and favorable agreements with suppliers. Due to the outperformance of the Water Solutions segment in the first quarter, we are increasing our full year guidance for this segment from over $400 million to over $410 million.