NGL Energy Partners 2025 Q4 Earnings Misses Targets with Net Income Swing of 106.2%

NGL Energy Partners LP reported its fiscal 2025 Q4 earnings on May 29th, 2025. The company missed revenue expectations, with a total revenue of $-819.82 million, marking a decrease of 30.1% from the previous year. However, NGL demonstrated a significant improvement in its net income, achieving a positive turnaround of $14.72 million, compared to a net loss of $236.74 million in the same period last year. Guidance for fiscal 2026 remains in line with expectations, as the company projects adjusted EBITDA between $615 million and $625 million.

Revenue

The total revenue for NGL Energy Partners in 2025 Q4 amounted to $-819.82 million, representing a decrease of 30.1% compared to 2024 Q4, when revenue reached $-1.17 billion.

Earnings/Net Income

NGL Energy Partners narrowed its losses to $0.12 per share in 2025 Q4, a substantial improvement from a loss of $2.05 per share in 2024 Q4. The company also reported a net income of $14.72 million for the quarter, marking a 106.2% positive swing from the previous year's net loss. The EPS indicates a positive trend despite the overall loss.

Post-Earnings Price Action Review

The strategy of purchasing NGL shares following a revenue miss and holding for 30 days resulted in disappointing outcomes. The backtest revealed a significant loss of -55.43%, and an excess return of -139.30%, indicating that the strategy underperformed compared to the benchmark. The Sharpe ratio stood at -0.24, while the maximum drawdown reached -87.04%, suggesting that the approach carried substantial risk and lacked defensive benefits. This underscores the importance of carefully considering investment strategies in volatile market conditions and the potential need for revisiting or adjusting investment approaches when dealing with revenue misses.

CEO Commentary

Michael Krimbill, Chief Executive Officer, highlighted the company's strategic shift towards a Water Solutions-focused business model, targeting approximately 85% of adjusted EBITDA from this segment. He noted recent accomplishments, such as paying off preferred unit dividend arrearages and increasing water disposal capacity through the LEX II pipeline. Despite challenges from asset sales and lower crude prices, Krimbill expressed confidence in surpassing water disposal volume projections for fiscal 2026, citing a strong start and ongoing customer commitments. The strategy remains focused on reducing leverage and enhancing capital structure, with priority given to diminishing Class D preferred equity over reinstating common unit distributions.

Guidance

For fiscal 2026, NGL Energy Partners guides adjusted EBITDA between $615 million and $625 million, with capital expenditures totaling $105 million. Of this, $60 million is earmarked for growth projects within the Water Solutions segment. The company anticipates a $20 million decline in skim oil revenues due to lower crude prices compared to fiscal 2025 and expects to manage the impact of asset sales on EBITDA.

Additional News

In recent weeks, NGL Energy Partners has been actively involved in strategic asset divestitures. The company announced the sale of 17 natural gas liquids terminals and most of its wholesale propane business, aiming to streamline operations and improve its credit profile. Additionally, the company has wound down its biodiesel business and classified it as discontinued operations, reflecting a strategic shift to focus on core midstream activities. Moreover, NGL has completed the sale of its refined products business, further demonstrating its commitment to reposition and strengthen its core business segments. These moves are part of a broader strategy to enhance financial flexibility and focus on high-return growth areas.