NGL Energy Partners LP (NYSE:NGL) Q1 2021 Earnings Conference Call - Final Transcript

Aug 10, 2020 • 05:00 pm ET

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NGL Energy Partners LP (NYSE:NGL) Q1 2021 Earnings Conference Call - Final Transcript

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Presentation
Executive
Robert W. Karlovich

from last year. We completed a significant reduction in headcount as well as reductions in chemicals and other supplies and utilities costs. We only benefited from these reductions in the last month or so of the quarter and expect our operating costs per barrel to continue to decrease in the second quarter and beyond as we target opex per barrel of less than $0.30.

Moving to Liquids. Adjusted EBITDA for our Liquids and Refined Products segment totaled $12 million this quarter. Volumes for propane were strong through the quarter and compared to last year as we saw little to no impact in propane demand as a result of the pandemic at this time of the year. Butane, refined fuels and other liquids were down compared to last year, primarily as these products are utilized in transportation. We've seen a pickup in volumes heading into the second quarter, however, we continue to be cautious on our volume expectations for these products this year.

Product margins were generally in line with our expectations during the quarter as this is the period that we are building inventory and preparing for the blending and heating seasons. Overall, our quarterly results were impacted by the pandemic, like many others. However, we took the opportunities to capitalize on our asset positions and maximize value, most of which will be recognized in future periods. Had those items been fully reflected in the first quarter, our financial results would have been more in line with market expectations. Based on these results and expectations for the rest of fiscal 2021, we're adding a range to our adjusted EBITDA guidance of $560 million to $600 million.

Turning to capital expenditures and cash flows. Our growth capex totaled approximately $21 million for the quarter as we are completing the water infrastructure project we started last year, including the Poker Lake tie-in for Exxon, which we expect to bring online this fall. We have entered into incremental acreage dedications recently that will require minimal, if any, growth capex to meet the producers' disposal need. We have made no changes to our target growth capex for fiscal 2021. Note, we did fund a significant amount of our growth capital expenditures that were incurred prior to and accrued on March 31, 2020, coming into this fiscal year as well as approximately $66 million of the $100 million remaining for the deferred purchase price of Mesquite. The remaining $34 million for Mesquite will be funded ratably through December 2020 and has been accrued on our balance sheet. We also focused on reducing our maintenance capex, which came down again in the first quarter to $9 million. Our combined capital expenditures forecast remains approximately $100 million for both growth and maintenance capex for the entire year.

Our common unit distribution of $0.20 per unit for the quarter, $0.80 per unit on an annualized basis was declared a couple weeks ago, along with our preferred unit distributions, and will be paid on August 14. We continue to