Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors

You're looking at NGL Energy Partners LP (NGL) and trying to map the real financial trajectory behind the headlines, which is smart because this isn't a simple growth story; it's a complex deleveraging and refocusing play. The good news is Fiscal Year 2025, ending March 31, showed a massive swing in profitability, moving from a loss of $157.7 million in FY2024 to an income from continuing operations of $65.0 million, which is defintely a win. Plus, the core business-Water Solutions-is strong, driving full-year Adjusted EBITDA up to a solid $622.9 million, beating guidance and processing 2.63 million barrels per day, an 8.6% volume increase. But here's the realist check: the company is still managing significant leverage, with long-term debt sitting around $2.9 billion, so that debt-to-EBITDA ratio remains a primary risk, even with the successful sale of non-core assets like the 17 natural gas liquids terminals. We need to break down how the shift to water and the aggressive asset sales are actually impacting free cash flow and the balance sheet, because that's the only thing that changes the investment decision here.

Revenue Analysis

You need to know where NGL Energy Partners LP (NGL) is actually making its money, especially after their strategic asset sales. The direct takeaway is that while the total top-line revenue for Fiscal Year (FY) 2025 saw a drop, the underlying shift toward the more stable Water Solutions business is the real story, with that segment hitting record volumes.

The company's primary revenue streams are organized into three core operating segments: Liquids Logistics, Crude Oil Logistics, and Water Solutions. For the fiscal year ending March 31, 2025, NGL Energy Partners LP reported annual revenue of approximately $3.47 billion. This figure represents a historical year-over-year decline of -16.47%. That's a big drop, but it's defintely tied to the company's deliberate move to shed volatile assets.

Here's the quick look at how the segments contributed to the FY 2025 top line, with the vast majority of revenue, $3.34 billion, originating from the United States and Canada.

The significant change in revenue mix is a direct result of NGL Energy Partners LP's strategy to reduce volatility. During FY 2025, the company completed the sale of non-core assets, including 17 natural gas liquids terminals that made up the majority of its wholesale propane business, plus its refined products Rack Marketing business. These sales, which raised around $270 million, are intended to reduce the seasonality and working capital requirements of the business, shifting the focus to more stable, fee-based segments like Water Solutions.

The Water Solutions segment is now the clear growth engine. The segment processed approximately 2.63 million barrels of produced water per day for the full fiscal year 2025. Plus, a smaller but important revenue source is the recovered skim oil, which totaled $36.7 million for the fourth quarter of FY 2025 alone. This segment's increased volumes and disposal fees, along with new infrastructure like the LEX II pipeline, are what you should be watching for future stability. If you want to dive deeper into who is buying into this shift, you should check out Exploring NGL Energy Partners LP (NGL) Investor Profile: Who's Buying and Why?

The key near-term opportunity is the acceleration of the Water Solutions segment, which is backed by strong volume commitments. The risk is that the Liquids Logistics segment, while still the largest by revenue, continues its sharp decline, which could offset the gains from the Water Solutions segment. You need to see the volume growth in Water Solutions translate into a larger percentage of the overall revenue mix in FY 2026.

Profitability Metrics

You're looking at NGL Energy Partners LP (NGL) to understand if the turnaround story is real, and the 2025 fiscal year data gives us a clear answer: profitability is low but improving, driven by strategic focus on the Water Solutions segment. Don't let the low net margin fool you; for a Master Limited Partnership (MLP) with high capital intensity, the gross and operating margins tell a more important story about core business health.

For the fiscal year ended March 31, 2025, NGL Energy Partners LP reported a significant swing in its bottom line, moving from a substantial loss in the prior year to a positive income from continuing operations of $64.989 million. Here's the quick math on where the profits shake out:

• Gross Profit Margin: 27.73%
• Operating Profit Margin: 9.50%
• Net Profit Margin: 1.87%

This is a low Net Profit Margin, but it's a huge step up from the prior year's loss of $157.728 million.

Gross, Operating, and Net Margins

The gross profit margin is the first indicator of the business's pricing power and cost of sales efficiency. NGL Energy Partners LP achieved a Gross Profit of $962.109 million on $3.469 billion in revenue for FY 2025, resulting in a 27.73% Gross Margin. This margin is generally healthy for a midstream company, reflecting the nature of their fee-based contracts (like those in Water Solutions) where the cost of the product sold (like crude oil or NGLs) is passed through, but the fee-for-service model provides a high markup on the core service.

However, the Operating Profit Margin drops sharply to 9.50% (Operating Income of $329.355 million on $3.469 billion in revenue). This steep decline is typical for MLPs, which carry high fixed costs like depreciation and amortization, plus significant general and administrative expenses. The net profit margin of only 1.87% further reflects the massive debt load, as interest expense alone was $280.078 million in FY 2025. Interest expense is the single largest drag on NGL's final net profitability.

Trends and Operational Efficiency

The trend is one of strategic de-risking and focus. Management has been actively shedding non-core, lower-margin assets-like the wholesale propane and refined products businesses-to concentrate on the higher-margin Water Solutions and more stable Crude Oil Logistics segments. Water Solutions, in particular, is the growth engine, achieving record annual water disposal volumes processed and Adjusted EBITDA in FY 2025.

This operational shift is visible in the segment-level efficiency: in the fourth quarter of Fiscal 2025, for example, the operating expense per produced barrel processed in Water Solutions was a stable $0.23, matching the prior year. That stability in unit cost is defintely a win. But, the Liquids Logistics segment still saw margins for product sales decrease due to external pressures like a weak gasoline blending season and declining butane margins. The overall strategy is to reduce the volatility that comes from these commodity-exposed logistics segments.

Comparison with Industry Averages

Comparing NGL Energy Partners LP's profitability to the broader midstream Master Limited Partnership (MLP) sector requires nuance. The sector generally benefits from fee-based contracts, which means most MLPs have inherently strong Gross Margins.

The key difference for NGL Energy Partners LP is the Net Profit Margin. The midstream sector's investment thesis often revolves around cash flow metrics like Distributable Cash Flow (DCF) or Adjusted EBITDA, not Net Income, due to high non-cash depreciation and amortization expenses. While the industry average Net Profit Margin for MLPs is often low single digits, NGL's 1.87% Net Margin is constrained by its high interest expense, a direct result of its historical capital structure. For a deeper dive into NGL's overall financial picture, check out Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors.

Here is a snapshot of the core profitability metrics for the fiscal year:

The takeaway is that the core business is highly profitable at the gross level, but the heavy debt load is consuming most of the operating profit. The path to higher net profitability requires continued debt reduction, which management is focused on through asset sales and cash flow generation.

Debt vs. Equity Structure

You're looking at NGL Energy Partners LP (NGL) and the first thing that jumps out is the sheer scale of their financial leverage. The company's funding model relies heavily on debt, which is common in capital-intensive midstream operations, but NGL's ratio is an outlier. For investors, this structure means higher risk, but also potentially higher returns if their growth strategy works out.

As of the end of fiscal year 2025 (March 31, 2025), NGL Energy Partners LP carried significant debt. The total long-term debt, including current maturities, stood at approximately $2.97 billion. While the current maturities of long-term debt were a modest $8.805 million, the company did have borrowings of $109.0 million on its Asset-Based Revolving Credit Facility (ABL) as of March 31, 2025, though they paid this off shortly after with proceeds from asset sales.

The core of the story is the Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of its equity. For NGL Energy Partners LP, this ratio is substantially elevated. As of June 2025, the D/E ratio was around 4.92. Here's the quick math: you're looking at nearly five dollars of debt for every dollar of equity. To be fair, the industry average for the midstream energy sector is much lower, typically around 0.97. This gap tells you NGL is defintely more aggressive in its financing than its peers, which is a major risk factor.

The recent focus has been on managing this debt load. In early 2024, NGL Energy Partners LP executed a major $2.9 billion refinancing. This was a crucial move that pushed out maturity walls, essentially buying the company time. The new debt consisted of:

• $900 million of 8.125% senior secured notes due 2029.
• $1.3 billion of 8.375% senior secured notes due 2032.
• A $700.0 million senior secured term loan facility.

The company balances its high debt reliance with strategic asset sales to deleverage. In March 2025, S&P Global Ratings affirmed NGL's 'B' issuer credit rating, with a stable outlook, following the announcement of plans to exit non-core businesses like wholesale propane and biodiesel marketing. Management expects these asset sales to be credit positive, helping to reduce the adjusted debt-to-EBITDA ratio to a range of 5.5x to 5.7x in fiscal 2026. They also used cash from sales to purchase preferred equity, showing a commitment to improving the capital structure. You can read more about their core strategy here: Mission Statement, Vision, & Core Values of NGL Energy Partners LP (NGL).

What this estimate hides is the persistent challenge of high interest expense and the need for flawless execution on their growth projects, especially in the Water Solutions segment, to generate the cash flow required to service this debt. The high D/E ratio means any operational misstep will quickly amplify financial distress. The goal is to shift the mix toward internally generated equity (retained earnings) and use debt more strategically for high-return growth capital expenditures (capex).

Liquidity and Solvency

You're looking at NGL Energy Partners LP (NGL) to see if they can cover their near-term bills, and the quick answer is yes, but it's a tight squeeze that relies on strategic asset sales. Their liquidity positions, measured by the Current Ratio and Quick Ratio, are acceptable for a midstream company, but they don't offer much cushion. A Current Ratio of 1.26 (Trailing Twelve Months or TTM, as of November 2025) means NGL has $1.26 in current assets for every $1.00 in current liabilities. That's defintely above the critical 1.0 mark.

The Quick Ratio, which strips out inventory-often less liquid in a pinch-is sitting right at 0.99 (TTM). Honestly, that's a key number. It tells you that without selling off their product inventory, NGL is essentially at a 1:1 ratio for covering immediate, non-inventory-backed obligations. For a capital-intensive business, this is a sign of disciplined, but not expansive, short-term financial management. You want to see that Quick Ratio consistently above 1.0 for a true comfort level.

The working capital trend for NGL Energy Partners LP in fiscal year 2025 (FY2025) was heavily influenced by a deliberate, strategic pivot. The company's management made a clear move to reduce the volatility and seasonality of their working capital requirements by selling non-core assets. This is a huge positive for stability, even if it feels like a one-time boost. Here's the quick math on the impact: asset sales, including associated working capital, generated approximately $270 million in proceeds. This cash was immediately used to pay down debt, specifically the Asset-Based Lending (ABL) Facility, which went from $109.0 million in borrowings on March 31, 2025, to being paid off completely by May 1, 2025. That's a massive, immediate working capital strength-less short-term debt to service.

Moving to the Cash Flow Statements, the picture is much stronger, which is typical for a midstream master limited partnership (MLP). Cash flow from operations is what really matters here, and it's robust. Over the last twelve months (TTM to November 2025), NGL generated $382.46 million in Operating Cash Flow (OCF). That's the engine of the business, and it's running well.

The cash flow breakdown shows a healthy self-funding capacity:

• Operating Cash Flow (OCF) was $382.46 million (TTM).
• Investing Cash Flow (largely Capital Expenditures) was -$149.34 million (TTM).
• Free Cash Flow (FCF) was a strong $233.12 million (TTM).

The Investing Cash Flow line is where you see the strategic asset sales, but the core capital expenditures (CapEx) of $149.34 million were comfortably covered by OCF, leaving a substantial $233.12 million in FCF. This FCF is what pays down debt and funds other obligations, so it's a clear strength. The Financing Cash Flow side saw significant activity, including the ABL payoff and a $98.1 million distribution to fully pay remaining preferred unit distribution arrearages in April 2024 (a non-recurring event in FY2025). The key takeaway is that the cash generated by the business is more than enough to cover its capital needs and is being used to de-lever the balance sheet, which is a great sign for solvency.

The potential liquidity concern is less about immediate cash and more about the debt load, which is being managed. The company is in compliance with all of its debt covenants and has no significant current debt maturities before February 2029, which buys them a lot of time to continue executing their deleveraging strategy. The strong FCF and strategic asset sales have significantly mitigated near-term liquidity risk. For a deeper dive into who is betting on this turnaround, you should check out Exploring NGL Energy Partners LP (NGL) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at NGL Energy Partners LP (NGL) and asking the crucial question: Is this stock priced fairly, or is the market missing something? Given the strong run-up in the stock price over the last year, a deep dive into the core valuation metrics is defintely necessary. The short answer is that NGL is currently trading at a premium to its book value, but its Enterprise Value (EV) relative to its cash flow is reasonable for the midstream sector.

The company's valuation is complex because it's an energy Master Limited Partnership (MLP) that has been focused on deleveraging and stabilizing earnings. We need to look beyond the simple Price-to-Earnings (P/E) ratio because NGL has had negative earnings per share (EPS) in the trailing twelve months, resulting in a negative P/E ratio of -24.21 as of November 2025. That's a red flag for a novice investor, but it's common when a company is turning around or has high non-cash charges.

Here's the quick math on the key multiples, using the most recent data:

• Price-to-Book (P/B): At approximately 2.00, the market is valuing NGL at double its book value. For an asset-heavy midstream company, this suggests investors are optimistic about the future value of the assets, or that the book value is understated.
• Forward P/E: The forward P/E, which uses analyst estimates for future earnings, is around 26.06. This implies that the market expects positive earnings soon, but it's a high multiple that prices in significant growth and execution.
• Enterprise Value-to-EBITDA (EV/EBITDA): The current EV/EBITDA is around 6.53. This is the most telling metric for an MLP, and it suggests the company is reasonably valued against its cash flow generation, especially considering NGL reported Adjusted EBITDA of $622.9 million for the full Fiscal Year 2025.

Stock Performance and Analyst View

The stock price trend over the last 12 months has been a dramatic story of recovery. The common units of NGL Energy Partners LP have delivered a change of approximately 129.14% over the past year, moving from a 52-week low of $2.64 to a recent high of $10.29 in November 2025. That kind of run is driven by operational improvements and a more favorable energy market, not just speculation.

What this estimate hides is the volatility; the stock price has recently traded around $9.73. This rapid appreciation suggests the market has already factored in much of the expected operational turnaround and debt reduction. The analyst community, however, is cautious. The consensus rating on NGL is a simple Hold. This single-analyst consensus reflects a wait-and-see approach, acknowledging the operational progress but wanting to see sustained financial health.

The average analyst price target is significantly higher at $17, which implies a substantial upside if the company can meet or exceed future financial guidance, particularly the Fiscal 2026 Adjusted EBITDA guidance of $650 million to $660 million.

Dividend Status and Payout

If you are an income investor looking at the common units (NGL), you need to know that the company is currently prioritizing debt reduction over distributions. The current trailing twelve months (TTM) dividend payout for the common units is $0.00, resulting in a 0.00% dividend yield. The last common unit distribution was back in 2020. This is a crucial distinction: while some of the company's preferred stock carries a high yield (e.g., over 12%), the common equity is a pure capital appreciation play right now. You are investing in the turnaround, not the cash flow.

For a deeper dive into the operational segments driving these numbers, check out Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors. Your next step should be to monitor the debt-to-EBITDA ratio, as that will be the true indicator of long-term stability.

Risk Factors

You need to know that NGL Energy Partners LP (NGL) is in the middle of a major strategic shift, which introduces both opportunity and clear risks. The biggest near-term challenge isn't operational-it's the massive debt wall coming in early 2026. You can't ignore that.

The $2.05 Billion Debt Wall

The most critical financial risk facing NGL is the substantial debt maturity of approximately $2.05 billion looming in February 2026. This amount is enormous, especially when compared to the company's market capitalization, and servicing it will consume a significant portion of their operating income, as interest expense has historically been very high. Honestly, successfully addressing this debt is the single most important action for the company's financial health post-2025.

Here's the quick math: while the company achieved a positive income from continuing operations of $65.0 million for the full Fiscal Year 2025, that debt figure still requires a massive financing or refinancing effort. They are defintely focused on it, but the market's perception of their ability to execute remains a key risk factor.

Operational and Market Volatility Risks

While the Water Solutions segment is now the core business, generating a record $542.0 million in Adjusted EBITDA in Fiscal 2025, NGL still faces external market pressures in its legacy segments. The price of crude oil directly impacts their skim oil revenues, and management anticipates a $20 million decline in skim oil revenues in Fiscal 2026 compared to Fiscal 2025 due to lower crude prices. Also, the Crude Oil Logistics segment saw reduced sales volumes in Fiscal 2025, partly due to lower production in the DJ Basin.

The company's shift away from volatile businesses is a good move, but it doesn't eliminate all commodity price risk. You still have to watch the oil and gas drilling activity in the basins where NGL operates its water network, as that drives their primary revenue stream.

• Commodity price swings cut into skim oil revenue.
• Lower drilling activity reduces water disposal volumes.
• Regulatory changes in water disposal could increase costs.

Mitigation Strategies: Streamlining for Stability

NGL is not sitting still; they are actively mitigating risks by streamlining their business. Their strategy is simple: sell non-core, volatile assets to focus on the stable, fee-based Water Solutions segment and use the proceeds to improve the balance sheet. This is a clear, actionable plan.

In Fiscal 2025, NGL executed several non-core asset sales, including 17 natural gas liquids terminals and the majority of their wholesale propane business. These sales raised approximately $270 million, which is earmarked to reduce volatility and strengthen their credit profile. They are aiming for a more predictable cash flow, which is exactly what you want to see before tackling that 2026 maturity.

For a deeper dive into the company's performance metrics, you can read our full analysis here: Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at NGL Energy Partners LP (NGL) and trying to figure out if the recent financial stabilization is a springboard for real growth. The short answer is yes, but the growth is focused, not broad. The company has made a defintely strategic pivot, shedding non-core assets to double down on its most profitable segment: Water Solutions.

This focus is already translating into stronger future earnings estimates. For the full fiscal year 2025, NGL reported an Adjusted EBITDA from continuing operations of $622.9 million, a solid performance. Looking ahead, the company has revised its consolidated Adjusted EBITDA guidance for Fiscal 2026 to a range of $650 million to $660 million, and they anticipate Fiscal 2027 Adjusted EBITDA to exceed $700 million. That's a clear trajectory. Here's the quick math: they are projecting a minimum 4.3% increase in Adjusted EBITDA from FY 2025 to FY 2026, and an over 12% increase by FY 2027.

Core Growth Drivers and Strategic Focus

The primary engine for NGL's future is its Water Solutions segment, which manages and disposes of produced water from oil and gas operations. This is less volatile than commodity prices, plus it's a critical environmental service. This segment achieved a record Adjusted EBITDA of $542.0 million in Fiscal 2025. The growth is driven by sheer volume, as total produced water volumes processed for the year grew 8.6% to 2.63 million barrels per day.

On the Crude Oil Logistics side, new contracts are setting the stage for volume increases. The partnership signed a long-term acreage dedication contract with Prairie Operating, which could boost crude oil volumes on the Grand Mesa pipeline to 100,000 barrels per day. New contracts like this are the reason NGL is boosting its growth capital expenditures for Fiscal 2026 from $60 million to a substantial $160 million, backed by new producer volume commitments totaling 500,000 barrels per day. That's a big jump in capital allocation, signaling confidence in volume visibility.

• Focus capital on Water Solutions and key pipeline expansions.
• Use asset sales to pay down debt and fund growth.
• Secure long-term, high-volume producer contracts.

Competitive Edge and Financial Discipline

NGL's competitive advantage is its specialized footprint in key U.S. energy basins, particularly the Permian Basin, Eagle Ford, and DJ Basin. Their comprehensive midstream services, especially the environmentally focused water management, make them a crucial partner for major producers. They are a leaner, more resilient player now, too.

The strategic initiative to sell noncore assets is a key part of this financial discipline. They sold 17 natural gas liquids terminals and one in Green Bay, Wisconsin, for an estimated total consideration of $95.0 million, with the total noncore asset divestiture planned to raise approximately $270 million by the end of 2025. These proceeds are being used to reduce debt, which is crucial given the high debt-to-equity ratio, and to fund the high-return growth projects. This is a classic move to improve financial risk profile and lower interest expenses.

To give you a quick snapshot of the core financial performance and growth drivers, look at this table:

What this estimate hides is the execution risk on the new volume contracts, but still, the management is putting capital where the contracts are. You can read more about the financial health here: Breaking Down NGL Energy Partners LP (NGL) Financial Health: Key Insights for Investors.