Some NGL numbers.......
NGL's fiscal year is June to March, so ........
NGL's FY '24 (ends March 2024) EBITDA guidance is $645m+
of that, $500m is expected to be EBITDA from the Water division. The other two divisions are Liquids Logistics - distributes Butane and Propane between refineries and sellers, and Crude Logistics - oil pipelines, primarily Grand Mesa.
June Q EBITDA was $142.2m
Sep Q EBITDA was $176.2m
Dec Q EBITDA is just announced as $150m-$160m.
March Q is always the biggest EBITDA quarter of the fiscal year, because this is the Q where they sell off all the propane / butane inventory that they built up over the preceding warmer seasons.
Last year in 2023 March delivered $173.3m EBITDA.
They've been saying that they expect a jump in water volumes in March 2024 as new connections are coming on line in the first quarter of 2024.
On the other hand, they've also said that they expect to sell some assets before March 31st 2024, and that sale may reduce EBITDA as the sold asset was producing EBITDA.
If we ignore the asset sale, and we assume Dec Q was in the middle of their pre-announced guidance of 150-160m EBITDA, in other words we assume Dec 2023 EBITDA was $155m, then NGL needs to deliver $172m EBITDA in March 2024 to meet their full year EBITDA guidance.
That would be flat with last year's March. Water EBITDA for fiscal 2024 is already running well ahead of water EBITDA for fiscal 2023, AND they've said they think water volumes bump higher in March 2024, so ..... it's pretty easy to see NGL beating their full year EBITDA guidance of $645m+ when they report the March 2024 Q.
The really interesting thing is if the water bump forecast for March 2024 sustains throughout fiscal 2025, we may get another year of nice EBITDA growth in fiscal 2025 (ends March).
S&P Global Credit in their rating report for the $700m term loan said they expect $700m-$720m EBITDA in fiscal 2025. If so.....NGL's unit price is going higher.
How much higher? Well.....it's probably reasonable to give NGL a 6x EBITDA enterprise value. It perhaps should be more than 6x as the EBITDA has grown tremendously over the past few years, and if fiscal 2025 goes above $700m, that's four+ years of very strong growth, worth more than a 6x multiple.
But even if the multiple on Ebitda is just 6x, that's 6x $700m EBITDA = $4.2b, subtract $2.8b long term debt, and Preferred + arrearage + line of credit borrowings of about $1.3b, and ...... hmmm, it doesn't work. A 6x EBITDA multiple says the common is only worth $100m.
Oh well! I guess we gotta wait for EBITDA to get up higher than $700m, or assign a higher multiple to the $700m EBITDA.
The preferreds are the problem. If they could just go away, NGL would be amazing. Getting them down to a manageable level may take 3+ years of free cash flows though..... |
