Plains GP Holdings LP (PAGP) Reports Q3 2023 Earnings, Raises Full-Year Guidance
Net income attributable to PAA reported at $203 million
Adjusted EBITDA attributable to PAA at $662 million
Full-year 2023 Adjusted EBITDA guidance raised to $2.60 - $2.65 billion
Announced two bolt-on acquisitions in the Permian Basin
On November 3, 2023, Plains GP Holdings LP (NASDAQ:PAGP) released its third-quarter 2023 earnings report, highlighting strong performance and updated guidance for the full year. The company also announced updates to its capital allocation framework and two bolt-on acquisitions in the Permian Basin.
Financial Highlights
For the third quarter, Plains GP Holdings LP (NASDAQ:PAGP) reported a net income attributable to PAA of $203 million and net cash provided by operating activities of $85 million. The company delivered robust results with Adjusted EBITDA attributable to PAA of $662 million.
Looking ahead, PAGP has raised its full-year 2023 Adjusted EBITDA guidance to $2.60 - $2.65 billion, up from the previous estimate of $2.45 - $2.55 billion. This upward revision reflects the company's strong quarterly results and positive business outlook.
Capital Allocation and Acquisitions
As part of its capital allocation updates, PAGP's management intends to recommend a $0.20 per unit annualized increase to PAA's and PAGPs fourth-quarter 2023 distribution payable in February 2024. This would raise the annualized rate from $1.07 to $1.27 per common unit and Class A share, representing a 19% increase.
In addition, PAGP announced two bolt-on acquisitions in the Permian Basin. Subsidiaries of Plains Oryx Permian Basin LLC acquired Rattler Midstreams Southern Delaware Basin crude oil gathering system and LM Energys Northern Delaware Basin Touchdown crude oil gathering system for an aggregate cash consideration of approximately $205 million.
CEO Commentary
Todays announcements include strong quarterly results contributing to an upward revision of our full-year EBITDA guidance. We closed two bolt-on acquisitions that complement our existing portfolio and enhance the service offering of our Permian JV. Our strong performance and positive outlook for our business combined with the contribution from recent bolt-on transactions underpins our intent to recommend to our Board a 19% increase in the annualized distribution rate for the distribution payable in February 2024. We remain committed to operating with a strong balance sheet that can withstand various commodity cycles and consistent with this objective, we are reducing our long-term leverage ratio target range. These steps underscore the confidence we have in our business and reflect the continued focus on execution by our entire team, said Willie Chiang, Chairman & CEO of Plains.
Financial Tables Summary
For the three months ended September 30, 2023, PAGP reported a GAAP net income attributable to PAA of $203 million, a decrease of 47% compared to the same period in 2022. Diluted net income per common unit was $0.20, down 58% from the previous year. The company declared a distribution per common unit of $0.2675 for the period, up 23% from the prior year.
On a non-GAAP basis, adjusted net income attributable to PAA for the quarter was $308 million, up 10% from the same period in 2022. Adjusted EBITDA for the period was $779 million, an increase of 8% year-over-year.
For the nine months ended September 30, 2023, PAGP reported a GAAP net income attributable to PAA of $918 million, up 19% from the same period in 2022. Diluted net income per common unit was $1.04, an increase of 17% year-over-year.
Explore the complete 8-K earnings release (here) from Plains GP Holdings LP for further details.
This article first appeared on GuruFocus.
