Plains All American Reports Third-Quarter 2024 Results
HOUSTON, Nov. 08, 2024 (GLOBE NEWSWIRE) -- Plains All American Pipeline, L.P. (NASDAQ:PAA) and Plains GP Holdings (NASDAQ:PAGP) today reported third-quarter 2024 results.
Third-Quarter Results
Reported net income attributable to PAA of $220 million and net cash provided by operating activities of $692 million
Delivered solid Adjusted EBITDA attributable to PAA of $659 million
Progressed our efficient growth strategy with a small bolt-on acquisition of a Permian gathering system
Exited the quarter with 3.0x leverage ratio, below our target range of 3.25x, 3.75x
Received Moody's upgrade from Baa3 to Baa2 with stable outlook; now mid-BBB at all three credit rating agencies
Resolved remaining material Line 901 claims against Plains with two lawsuit settlements resulting in a $120 million charge to GAAP earnings
2024 Guidance Update
Expect to be toward the high-end of the guidance range for full-year 2024 Adjusted EBITDA attributable to PAA of $2.725 - $2.775 billion
Expect 2024 Adjusted Free Cash Flow to be approximately $1.45 billion (excluding changes in Assets & Liabilities; including bolt-on acquisition capital and legal settlements)
"We delivered solid operational and financial results in the third quarter and we continue to make progress on our efficient growth strategy, which includes generating multi-year Free Cash Flow, maintaining capital discipline and returning capital to our investors while preserving financial flexibility," said Willie Chiang, Chairman and CEO of Plains. "Our company is well positioned, and we have grown increasingly confident in both the durability and cash generating potential of the asset base. The improved outlook for the year provides more confidence in our long-term return of capital framework, which should continue creating value for our unitholders."
Plains All American Pipeline
Summary Financial Information (unaudited)(in millions, except per unit data)
Three Months EndedSeptember 30,
%
Nine Months EndedSeptember 30,
%
GAAP Results
2024
2023
Change
2024
2023
Change
Net income attributable to PAA
$
220
$
203
8
%
$
736
$
918
(20
)%
Diluted net income per common unit
$
0.22
$
0.20
10
%
$
0.77
$
1.04
(26
)%
Diluted weighted average common units outstanding
702
700
—
%
702
699
—
%
Net cash provided by operating activities
$
692
$
85
**
$
1,763
$
1,716
3
%
Distribution per common unit declared for the period
$
0.3175
$
0.2675
19
%
$
0.9525
$
0.8025
19
%
Three Months EndedSeptember 30,
%
Nine Months EndedSeptember 30,
%
Non-GAAP Results (1)
2024
2023
Change
2024
2023
Change
Adjusted net income attributable to PAA
$
320
$
308
4
%
$
962
$
894
8
%
Diluted adjusted net income per common unit
$
0.37
$
0.35
6
%
$
1.09
$
1.01
8
%
Adjusted EBITDA
$
805
$
779
3
%
$
2,459
$
2,292
7
%
Adjusted EBITDA attributable to PAA (2)
$
659
$
662
—
%
$
2,051
$
1,974
4
%
Implied DCF per common unit and common unit equivalent
$
0.61
$
0.62
(2
)%
$
1.86
$
1.78
4
%
Adjusted Free Cash Flow
$
401
$
(386
)
**
$
882
$
1,088
(19
)%
Adjusted Free Cash Flow after Distributions
$
114
$
(636
)
**
$
24
$
350
(93
)%
Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities)
$
357
$
57
**
$
1,039
$
1,202
(14
)%
Adjusted Free Cash Flow after Distributions (Excluding Changes in Assets & Liabilities)
$
70
$
(193
)
**
$
181
$
464
(61
)%
________________________** Indicates that variance as a percentage is not meaningful.(1) See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding our Non-GAAP financial measures, including their reconciliation to the most directly comparable measures as reported in accordance with GAAP, and certain selected items that PAA believes impact comparability of financial results between reporting periods.(2) Excludes amounts attributable to noncontrolling interests in the Plains Oryx Permian Basin LLC joint venture, Cactus II Pipeline LLC and Red River Pipeline LLC.
Summary of Selected Financial Data by Segment (unaudited)(in millions)
Segment Adjusted EBITDA
Crude Oil
NGL
Three Months Ended September 30, 2024
$
577
$
73
Three Months Ended September 30, 2023
$
553
$
99
Percentage change in Segment Adjusted EBITDA versus 2023 period
4
%
(26
)%
Segment Adjusted EBITDA
Crude Oil
NGL
Nine Months Ended September 30, 2024
$
1,707
$
326
Nine Months Ended September 30, 2023
$
1,600
$
352
Percentage change in Segment Adjusted EBITDA versus 2023 period
7
%
(7
)%
Third-quarter 2024 Crude Oil Segment Adjusted EBITDA increased 4% versus comparable 2023 results primarily due to higher tariff volumes on our pipelines, tariff escalations and contributions from acquisitions. These items were partially offset by fewer market-based opportunities.
Third-quarter 2024 NGL Segment Adjusted EBITDA decreased 26% versus comparable 2023 results primarily due to lower weighted average frac spreads in the third quarter of 2024.
Plains GP Holdings
PAGP owns an indirect non-economic controlling interest in PAA's general partner and an indirect limited partner interest in PAA. As the control entity of PAA, PAGP consolidates PAA's results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement tables attached hereto.
Conference Call and Webcast Instructions
PAA and PAGP will hold a joint conference call at 9:00 a.m. CT on Friday, November 8, 2024 to discuss third-quarter performance and related items.
To access the internet webcast, please go to https://edge.media-server.com/mmc/p/cjupfudo/
Alternatively, the webcast can be accessed on our website (www.plains.com) under Investor Relations (Navigate to: Investor Relations / either "PAA" or "PAGP" / News & Events / Events & Presentations). Following the live webcast, an audio replay will be available on our website and will be accessible for a period of 365 days. Slides will be posted prior to the call at the above referenced website.
Non-GAAP Financial Measures and Selected Items Impacting Comparability
To supplement our financial information presented in accordance with GAAP, management uses additional measures known as "non-GAAP financial measures" in its evaluation of past performance and prospects for the future and to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. The primary additional measures used by management are Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied Distributable Cash Flow ("DCF"), Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions.
Our definition and calculation of certain non-GAAP financial measures may not be comparable to similarly-titled measures of other companies. Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied DCF and certain other non-GAAP financial performance measures are reconciled to Net Income, and Adjusted Free Cash Flow, Adjusted Free Cash Flow after Distributions and certain other non-GAAP financial liquidity measures are reconciled to Net Cash Provided by Operating Activities (the most directly comparable measures as reported in accordance with GAAP) for the historical periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our Consolidated Financial Statements and accompanying notes. In addition, we encourage you to visit our website at www.plains.com (in particular the section under "Financial Information" entitled "Non-GAAP Reconciliations" within the Investor Relations tab), which presents a reconciliation of our commonly used non-GAAP and supplemental financial measures. We do not reconcile non-GAAP financial measures on a forward-looking basis as it is impractical to do so without unreasonable effort.
Non-GAAP Financial Performance Measures
Adjusted EBITDA is defined as earnings before interest expense, income tax (expense)/benefit, depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities), gains and losses on asset sales and asset impairments, gains or losses on investments in unconsolidated entities and interest income on promissory notes by and among PAA and certain Plains entities, adjusted for certain selected items impacting comparability. Adjusted EBITDA attributable to PAA excludes the portion of Adjusted EBITDA that is attributable to noncontrolling interests.
Management believes that the presentation of Adjusted EBITDA, Adjusted EBITDA attributable to PAA and Implied DCF provides useful information to investors regarding our performance and results of operations because these measures, when used to supplement related GAAP financial measures, (i) provide additional information about our core operating performance and ability to fund distributions to our unitholders through cash generated by our operations and (ii) provide investors with the same financial analytical framework upon which management bases financial, operational, compensation and planning/budgeting decisions. We also present these and additional non-GAAP financial measures, including adjusted net income attributable to PAA and basic and diluted adjusted net income per common unit, as they are measures that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These non-GAAP financial performance measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our core operating results and/or (v) other items that we believe should be excluded in understanding our core operating performance. These measures may be further adjusted to include amounts related to deficiencies associated with minimum volume commitments whereby we have billed the counterparties for their deficiency obligation and such amounts are recognized as deferred revenue in "Other current liabilities" in our Condensed Consolidated Financial Statements. We also adjust for amounts billed by our equity method investees related to deficiencies under minimum volume commitments. Such amounts are presented net of applicable amounts subsequently recognized into revenue. Furthermore, the calculation of these measures contemplates tax effects as a separate reconciling item, where applicable. We have defined all such items as "selected items impacting comparability." Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We do not necessarily consider all of our selected items impacting comparability to be non-recurring, infrequent or unusual, but we believe that an understanding of these selected items impacting comparability is material to the evaluation of our operating results and prospects.
Although we present selected items impacting comparability that management considers in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions, divestitures, investment capital projects and numerous other factors. These types of variations may not be separately identified in this release, but will be discussed, as applicable, in management's discussion and analysis of operating results in our Quarterly Report on Form 10-Q.
Non-GAAP Financial Liquidity Measures
Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Adjusted Free Cash Flow is defined as Net Cash Provided by Operating Activities, less Net Cash Provided by/(Used in) Investing Activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and the impact from the purchase and sale of linefill, net of proceeds from the sales of assets and further impacted by distributions to and contributions from noncontrolling interests and proceeds from the issuance of related party notes. Adjusted Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions.
We also present these measures and additional non-GAAP financial liquidity measures as they are measures that investors have indicated are useful. We present Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) for use in assessing our underlying business liquidity and cash flow generating capacity excluding fluctuations caused by timing of when amounts earned or incurred were collected, received or paid from period to period. Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) is defined as Adjusted Free Cash Flow excluding the impact of "Changes in assets and liabilities, net of acquisitions" on our Condensed Consolidated Statements of Cash Flows. Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions (Excluding Changes in Assets & Liabilities).
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in millions, except per unit data)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
REVENUES
$
12,743
$
12,071
$
37,671
$
36,014
COSTS AND EXPENSES
Purchases and related costs
11,557
11,106
34,333
32,972
Field operating costs
483
372
1,191
1,062
General and administrative expenses
98
92
287
263
Depreciation and amortization
257
260
769
776
(Gains)/losses on asset sales, net
1
7
1
(144
)
Total costs and expenses
12,396
11,837
36,581
34,929
OPERATING INCOME
347
234
1,090
1,085
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities
97
99
298
277
Gain on investment in unconsolidated entities
—
29
—
28
Interest expense, net (1)
(113
)
(97
)
(318
)
(290
)
Other income, net (1)
26
—
45
85
INCOME BEFORE TAX
357
265
1,115
1,185
Current income tax expense
(20
)
(22
)
(143
)
(104
)
Deferred income tax (expense)/benefit
(25
)
36
21
22
NET INCOME
312
279
993
1,103
Net income attributable to noncontrolling interests
(92
)
(76
)
(257
)
(185
)
NET INCOME ATTRIBUTABLE TO PAA
$
220
$
203
$
736
$
918
NET INCOME PER COMMON UNIT:
Net income allocated to common unitholders, Basic and Diluted
$
157
$
140
$
540
$
728
Basic and diluted weighted average common units outstanding
702
700
702
699
Basic and diluted net income per common unit
$
0.22
$
0.20
$
0.77
$
1.04
________________________(1) PAA and certain Plains entities have issued promissory notes by and among such entities to facilitate financing. "Interest expense, net" and "Other income, net" each include $16 million and $31 million for the three and nine months ended September 30, 2024, respectively, related to interest on such notes. These amounts offset and do not impact Net Income or Non-GAAP metrics such as Adjusted EBITDA, Implied DCF and Adjusted Free Cash Flow.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEET DATA(in millions)
September 30,2024
December 31,2023
ASSETS
Current assets (including Cash and cash equivalents of $640 and $450, respectively)
$
5,169
$
4,913
Property and equipment, net
15,651
15,782
Investments in unconsolidated entities
2,846
2,820
Intangible assets, net
1,674
1,875
Linefill
991
976
Long-term operating lease right-of-use assets, net
298
313
Long-term inventory
257
265
Other long-term assets, net
269
411
Total assets
$
27,155
$
27,355
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
$
5,136
$
5,003
Senior notes, net
7,140
7,242
Other long-term debt, net
72
63
Long-term operating lease liabilities
269
274
Other long-term liabilities and deferred credits
1,006
1,041
Total liabilities
13,623
13,623
Partners' capital excluding noncontrolling interests
10,235
10,422
Noncontrolling interests
3,297
3,310
Total partners' capital
13,532
13,732
Total liabilities and partners' capital
$
27,155
$
27,355
DEBT CAPITALIZATION RATIOS(in millions)
September 30,2024
December 31,2023
Short-term debt
$
765
$
446
Long-term debt
7,212
7,305
Total debt
$
7,977
$
7,751
Long-term debt
$
7,212
$
7,305
Partners' capital excluding noncontrolling interests
10,235
10,422
Total book capitalization excluding noncontrolling interests ("Total book capitalization")
$
17,447
$
17,727
Total book capitalization, including short-term debt
$
18,212
$
18,173
Long-term debt-to-total book capitalization
41
%
41
%
Total debt-to-total book capitalization, including short-term debt
44
%
43
%
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
COMPUTATION OF BASIC AND DILUTED NET INCOME PER COMMON UNIT (1)(in millions, except per unit data)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Basic and Diluted Net Income per Common Unit
Net income attributable to PAA
$
220
$
203
$
736
$
918
Distributions to Series A preferred unitholders
(44
)
(44
)
(131
)
(129
)
Distributions to Series B preferred unitholders
(19
)
(19
)
(59
)
(56
)
Amounts allocated to participating securities
(1
)
(1
)
(9
)
(8
)
Other
1
1
3
3
Net income allocated to common unitholders
$
157
$
140
$
540
$
728
Basic and diluted weighted average common units outstanding (2) (3)
702
700
702
699
Basic and diluted net income per common unit
$
0.22
$
0.20
$
0.77
$
1.04
________________________(1) We calculate net income allocated to common unitholders based on the distributions pertaining to the current period's net income. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to common unitholders and participating securities in accordance with the contractual terms of our partnership agreement in effect for the period and as further prescribed under the two-class method.(2) The possible conversion of our Series A preferred units was excluded from the calculation of diluted net income per common unit for each of the three and nine months ended September 30, 2024 and 2023 as the effect was antidilutive.(3) Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. Equity-indexed compensation plan awards that are deemed to be dilutive are reduced by a hypothetical common unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
CONDENSED CONSOLIDATED CASH FLOW DATA(in millions)
Nine Months EndedSeptember 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
993
$
1,103
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization
769
776
(Gains)/losses on asset sales, net
1
(144
)
Deferred income tax benefit
(21
)
(22
)
Equity earnings in unconsolidated entities
(298
)
(277
)
Distributions on earnings from unconsolidated entities
383
351
Other
93
43
Changes in assets and liabilities, net of acquisitions
(157
)
(114
)
Net cash provided by operating activities
1,763
1,716
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities (1)
(1,240
)
(444
)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities (1)
(330
)
(1,409
)
Effect of translation adjustment
(3
)
(4
)
Net increase/(decrease) in cash and cash equivalents and restricted cash
190
(141
)
Cash and cash equivalents and restricted cash, beginning of period
450
401
Cash and cash equivalents and restricted cash, end of period
$
640
$
260
________________________(1) PAA and certain Plains entities have issued promissory notes by and among such entities to facilitate financing. For the nine months ended September 30, 2024, "Net cash used in investing activities" includes a cash outflow of $629 million associated with our investment in related party notes. An equal and offsetting cash inflow associated with our issuance of related party notes is included in "Net cash used in financing activities."
CAPITAL EXPENDITURES(in millions)
Net to PAA (1)
Consolidated
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
2024
2023
2024
2023
Investment capital expenditures:
Crude Oil
$
51
$
68
$
158
$
170
$
73
$
91
$
221
$
234
NGL
37
12
74
51
37
12
74
51
Total Investment capital expenditures
88
80
232
221
110
103
295
285
Maintenance capital expenditures
65
55
174
158
69
60
188
169
$
153
$
135
$
406
$
379
$
179
$
163
$
483
$
454
________________________(1) Excludes expenditures attributable to noncontrolling interests.
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIESFINANCIAL SUMMARY (unaudited)
NON-GAAP RECONCILIATIONS(in millions, except per unit and ratio data)
Computation of Basic and Diluted Adjusted Net Income Per Common Unit (1) :
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Basic and Diluted Adjusted Net Income per Common Unit
Net income attributable to PAA
$
220
$
203
$
736
$
918
Selected items impacting comparability - Adjusted net income attributable to PAA (2)
100
105
226
(24
)
Adjusted net income attributable to PAA
$
320
$
308
$
962
$
