Greetings. Welcome to the NGL Energy Partners 4Q '24 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Brad Cooper, CFO. You may begin.

Good afternoon and thank you to everyone for joining us on the call today. Our comments today will include plans, forecasts, and estimates that are forward-looking statements under the US Securities Law. These comments are subject to assumptions, risks, and uncertainties that could cause actual results to differ from the forward-looking statements. Please take note of the cautionary language and risk factors provided in our presentation materials and our other public disclosure materials. Fiscal 2024 was a transformational year for NGL. These are some of the key highlights from the year. In the first quarter, we purchased approximately $100 million of notes with the proceeds from the Marine asset sale that closed on March 30, 2023. In the third quarter, we launched an open season on the Grand Mesa Pipeline, resulting in a 20,000 barrel per day MVC for five years. In the fourth quarter, the LEX II project was announced. Recall, this project is underwritten by an MVC with an investment grade counterparty and an extension of an existing acreage dedication with the same counterparty. During the third quarter, we internally kicked off our global refinancing that we officially launched to the market in fiscal fourth quarter. As part of the global refinancing, we amended and extended the ABL with the same commitment level of $600 million, adding a few more banks than we previously had, as well as negotiating with the bank group relief on key covenants that provide us more operational flexibility than we previously had. Our permanent refinancing included $2.2 billion of senior secured notes with $900 million of five-year non-call 2 notes at 8.125% interest due 2029 and $1.3 billion eight-year non-call three notes at 8.375% to 2032. In addition to the secured notes, we entered a seven-year, $700 million term loan B facility. The…

Thanks, Brad. Good afternoon, everyone. Let's start out with EBITDA guidance. Our fiscal 2025 consolidated adjusted EBITDA adjusted guidance is $665 million. This guidance implies year-over-year adjusted EBITDA growth of 9%. Our Water Solutions segment is the primary driver of this year-over-year EBITDA growth and we expect 8% to 10% growth in fiscal 2025 from Water. When you consider the EBITDA impact of the recently announced North South Ranch transaction and the associated adjusted EBITDA recorded in fiscal 2024, which will not recur in fiscal 2025, the year-over-year growth is an additional 1% to 2% higher. With respect to Water Solutions. January 1 of 2024, our commitment of Poker Lake increased 100,000 barrels per day to a total of 450,000 barrels per day. As Brad mentioned earlier, the LEX II project will add 200,000 barrels per day that will go into service in October this year. So in other words, our adjusted EBITDA growth for Water Solutions is further de-risked with these known contract volume increases. And as a reminder, our combined capacity on Lea County Express Pipeline is 500,000 per day. Secondarily, just like our competitors, we are working on ways to derive additional value from our water, such as reuse, mineral extraction, desalinization. We just don't talk about it until the economic viability has been proven. Regarding Crude Logistics, we believe we're at the low point of volumes and tariff on the Grand Mesa Pipeline in fiscal 2024. There is upside to this segment in this fiscal year. We have been contacted by several producers who have interest in shipping on Grand Mesa beginning sometime in the next six to 12 months. Concerning Liquids Logistics, this segment has had some disappointing results historically, so we are exploring strategic alternatives on portions of that segment. With respect to asset…

Absolutely. Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] The first question comes from Tarek Hamid with J.P. Morgan. Please proceed.

Good afternoon.

Hey, thank you.

On the common unit repurchase program, we'd love to get a little bit more flavor on sort of how you're thinking about the timing of using it. Is that something that you're looking to sort of put to work now or is that something that you just want to have in place in case and even more attractive opportunity were to show up down the road?

We are -- depending on the unit price, we could use it right away, yes.

And then I guess, on Grand Mesa you talked about sort of a handful of potential opportunities to increase volumes over the next few months. I guess we'd just love to get kind of your sense on sort of the magnitude of that, sort of how do you think about kind of the exit volumes on Grand Mesa year-end versus kind of year-end '25 versus year-end '24?

Yes, I think with what Don and his team are working on right now, line of sight, we probably assume 70,000 barrel a day range today, call it 50% uptick from there. I think north of 100 with the potential to get to 110, 115 per day over the next six to 12 months.

So potentially very material growth there.

Yes.

And then just last one for me. You talked about looking at potential strategic alternatives for the Liquids business. Just love to get any kind of additional flavor you have there? Are you thinking kind of acquisitions, divestitures, joint ventures, sort of where is your head at on that?

Yes, I think it's more on the divestiture side. We've got a suite of assets in that Liquids business, hard assets that could fetch a nice multiple for the right buyer. We don't need to do anything. I think it's just a continued rationalization of each business unit and each segment and what assets we have at our disposal.

Got it. Thank you. I'll jump back in the queue.

Thank you.

[Operator Instructions] The next question comes from Gregg Brody with Bank of America. Please proceed.

Good afternoon, guys, and congrats for getting carted on those preferred, I know it's a lot of hard work. Great job there…

Thanks, Gregg.

Just on the preferred, I know you have some payments coming after the quarter. Just remind us what that is? And to get to complete, just to being current and then just -- also just as part of the repurchase program, is it still the same leverage guidance that's driving you when you think about that? When you were talking about, previous, you were talking about buying back preferreds with sort of leverage target, you just talk to us about how you're thinking about that?

Yes, on the preferreds, we are current as of April 25, we are caught up. We made the Q1 calendar payment on April 25. So we'll have -- we'll just -- now we get into the normal cycle of making quarterly payments to all three classes of the Bs, the Cs, and Ds a few weeks after the quarter ends, so we're current. In terms of the common unit buyback program, yes, I mean, the same leverage governors we've had in place, you know, we will manage to the leverage targets we've discussed publicly and with bond holders during the refinance. I think to Mike's opening comments, this is really just another tool in the toolbox that allows us to address the capital structure. If we see a pullback in the unit price and we have the capacity to step in and buy units and do something for the common unit holders here.

And then just remind me on the preferreds, does the coupon move back to, has it moved back to the lower fixed rate, is that right versus the floating rates on them?

Yes. We've got, the B's are floating today, the C's go to floating here pretty soon. The B's go to floating the summer. And recall that's on a quarterly basis, somewhere around $28 million per quarter across all three classes in terms of the distribution.

Got it. And then just, just going back to water. Could you talk about the underlying volume growth you're assuming excluding LEX II? And then how does LEX II layer in and how should we think about how volumes are going to ramp there?

Well, if LEX -- let's say LEX II is 200, if we're at 2.6-ish, I mean 10%, 260. So that's kind of LEX II plus what we -- the other contract we talked about that goes from [350 to 450] (ph). So it's really -- I mean, the good news is that, it's really what we've already got in our back pocket. So if there are additional deals, contracts, volumes, that'll -- it would be a higher rate of increase than the 9%, 10%.

Just remind me, so is all that minimum volume commence on that on LEX II and then I'm just wondering if there's opportunity for excess or beyond that?

I think we said they're both minimum volume commitments. That's correct.

And you'll be -- I guess you won't be above that or on any of that, it's just you'll be earning that initially, right? Just trying to figure out when you can maybe get above that or what if that's factored onto, yes?

Yes, you're right. That is just beginning. And we just have to see more frac crews and drilling in those areas to see if the volume is going to increase. But yes, I think that's just what we're anticipating. And what's in our guidance is that number for the full-year. Well, not the -- it's the full, it's from January 1 '24 to 3/31/25. And then for the other, it's November through March. So about a half a year.

Got it And just last question, those volume increases you're talking about at Grand Mesa are pretty significant. What's the dynamic -- what's the dynamic that's driving that type of volumes coming towards you?

I think we've been pretty clear and open that when the basin gets back to about 500,000 barrels a day, that's where we historically saw tightness within the basin on the pipeline. I think December production was north of 500,000 barrels, 509,000. I think that coupled with just the amount of calls and discussions Don Robinson is having with producers, gives us confidence that we can grow the volumes from where they are today out of this current trough.

I appreciate the time, guys, and perhaps you got on the preferred.

Thank you, Gregg.

Okay. The next question comes from Jason Mendel with RBC. Jason, please proceed.

Hi, good afternoon. Just wondering on the Water Solutions business, you guys gave some commentary for the decreases on a year-over-year basis. Just curious if on a sequential basis, from third quarter to fourth quarter the decline, if it's the same issues or if there's anything else to talk about on a more sequential basis?

No, I think it's the same sequential issues or -- not issue, but topic quarter-over-quarter. I think we look at total volumes that we get paid on. I mean, we're very diligent in how we contract and ensure that we've got MVCs behind big capital spends and or acreage dedication. And so we look at total disposed plus paid, and we're up year-over-year, 8%, 9%, I think is what we had in the press release.

Okay, got you. Great. Thank you. And then just one quick follow up on the Liquids business, to the extent that you have good success with exiting or with selling parts of that business, does that likely come with meaningful amounts of working capital release?

It does, yes.

Okay. Any way to put that in context or wait and see?

Yes, let's -- can we wait and see, maybe an update on the next call -- the next call is short, eight, nine weeks away.

Right. Thank you. Thanks for the time.

Up next, we have Ned Baramov with Wells Fargo. Please proceed.

Hey, thanks for taking the questions. On water, is M&A something you guys spend time on, or is growth in Water going to be primarily driven by continued organic investments? And then separately on the Water OpEx side, is the $0.23 to $0.24 per barrel sustainable going-forward?

I think on the M&A side, we've got organic growth opportunities like LEX II staring us in the face. Those will be, I think, the first projects we look at. I think we've been very clear over the years. We wanted to get the capital structure addressed. We still have the preferreds in front of us. I think there'll be a time for M&A here in the future. But as we -- Doug continues to bring the returns he's bringing, we're going to deploy capital to those to the extent we can ahead of M&A. And on the operating expenses, I think we've seen at the last couple of quarters and maybe over the last fiscal year, sub $0.25. So I believe it's a sustainable number. I don't think we've seen a lot of volatility in that number over the last handful of quarters. I think we've kind of fought off any inflation impacts along the way. And the team does a great job managing the cost side of the equation. Yes, Mike's got a good point. Probably not a lot of further move downward from where it is today. We've always kind of signaled this $0.23 to $0.25 as the landing zone for operating expenses.

Okay. Thanks for that color. And then maybe, can you talk about some of the growth projects that you've identified outside of LEX II or basically the remaining 40% of your CapEx budget?

We probably cannot until we get the deal signed up.

Okay. Thanks for that.

Okay. We have no further questions in queue. I'd like to turn the floor back to management for any closing remarks.

Thanks, everyone for your interest in NGL. We look forward to catching up in a couple of months on the fiscal 2025 first-quarter call. Thanks and have a nice weekend.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.