Plains GP Holdings (PAGP) Q4 2023 earnings summary

Executive summary

• FY2023 Adjusted EBITDA was $2.711B, above guidance; year-end leverage was 3.1x, below the 3.25x–3.75x target range.

• Portfolio optimization included two asset sales and three bolt-on acquisitions; two credit-rating upgrades supported progress toward BBB ratings.

• 2024 priorities include free cash flow generation, capital discipline, distribution growth, safe operations and financial flexibility.

Financial highlights

• FY2023 Adjusted EBITDA was $2.711B, up 8% YoY; Q4 Adjusted EBITDA was $737MM, up 12% YoY.

• FY2023 adjusted free cash flow excluding changes in assets and liabilities was $1.60B; Q4 net cash from operating activities was $1.01B.

• FY2023 net income was $1.23B, up 19% YoY; net cash from operating activities was $2.73B, up 13%.

• FY2023 revenue was $48.71B versus $57.34B in 2022; net income was $1.23B versus $1.04B.

Outlook and guidance

• FY2024 Adjusted EBITDA guidance is $2.625–$2.725B; adjusted FCF excluding changes in assets and liabilities is expected to be ~$1.65B.

• FY2024 investment capital guidance is +/- $375MM and maintenance capital is +/- $230MM, net; adjusted FCF after distributions is expected to leave ~$500MM.

• Permian production growth is forecast at 200–300 Mb/d from 2023 exit to 2024 exit, assuming 300–320 average horizontal rigs, $75/bbl WTI and a 45% producer reinvestment ratio.

• Annualized common distribution increased $0.20/unit to $1.27/unit starting February 2024, a 19% increase versus 2023; future annual growth target is ~$0.15/unit until ~160% coverage.

• FY2024 guidance includes 190% common distribution coverage and $1.7B of distributable cash flow available to common unitholders.