01—Abstract
Summary
Summary of the 8-K filed November 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(Nasdaq: PAA) and Plains GP Holdings (Nasdaq: PAGP) reported third-quarter 2024 results on November 8, 2024, as furnished in Exhibit 99.1. PAA reported net income attributable to PAA of $220 milliona for the quarter, up from $203 million a year earlier, and net cash provided by operating activities of $692 million. Adjusted EBITDA attributable to PAA was $659 million, compared with $662 million in the prior-year quarter.
For the nine months, net income attributable to PAA was $736 millionb versus $918 million, and Adjusted EBITDA attributable to PAA was $2.051 billion versus $1.974 billion. The company ended the quarter with a 3.0x leverage ratio, below its 3.25x to 3.75x target range, and Moody's upgraded its rating from Baa3 to Baa2 with a stable outlook. The release states the company is now mid-BBB at all three credit rating agencies.
The quarter also included a $120 millionc charge to GAAP earnings from two lawsuit settlements resolving the remaining material Line 901 claims against Plains. For full-year 2024, the company expects Adjusted EBITDA attributable to PAA toward the high end of its $2.725 to $2.775 billion guidance range, and Adjusted Free Cash Flow of approximately $1.45 billion, excluding changes in assets and liabilities. Crude Oil segment Adjusted EBITDA rose 4% in the quarter, while NGL segment Adjusted EBITDA fell 26% on lower weighted average frac spreads.
02—Key points
Key Highlights
- Net income attributable to PAA was $220 million in Q3 2024 versus $203 million in Q3 2023; diluted net income per common unit was $0.22 versus $0.20.
- Adjusted EBITDA attributable to PAA was $659 million in Q3 2024, essentially flat with $662 million a year earlier.
- Leverage ratio of 3.0x at quarter end, below the company's 3.25x to 3.75x target range.
- Moody's upgraded the company from Baa3 to Baa2 with a stable outlook; the release says the company is now mid-BBB at all three credit rating agencies.
- Two Line 901 lawsuit settlements resulted in a $120 million charge to GAAP earnings, resolving the remaining material Line 901 claims against Plains.
- Full-year 2024 Adjusted EBITDA attributable to PAA is expected toward the high end of the $2.725 to $2.775 billion guidance range.
- Full-year 2024 Adjusted Free Cash Flow is expected to be approximately $1.45 billion, excluding changes in assets and liabilities.
03—Questions
Frequently Asked Questions
How did the Line 901 settlements affect earnings?
Two lawsuit settlements resolving the remaining material Line 901 claims resulted in a $120 million charge to GAAP earnings in the third quarter. The release lists this as a selected item impacting comparability, so it is excluded from Adjusted EBITDA and adjusted net income.
What drove the change in segment results?
Crude Oil segment Adjusted EBITDA increased 4% to $577 million, primarily due to higher tariff volumes, tariff escalations and acquisition contributions, partly offset by fewer market-based opportunities. NGL segment Adjusted EBITDA decreased 26% to $73 million, primarily due to lower weighted average frac spreads.
How much cash did the business generate in the quarter?
Net cash provided by operating activities was $692 million in Q3 2024, compared with $85 million in Q3 2023. Adjusted Free Cash Flow was $401 million, compared with a negative $386 million a year earlier.
What is the outlook for 2024?
The company expects full-year 2024 Adjusted EBITDA attributable to PAA toward the high end of its $2.725 to $2.775 billion range and Adjusted Free Cash Flow of approximately $1.45 billion, excluding changes in assets and liabilities and including bolt-on acquisition capital and legal settlements.
04—Continue