Energy Transfer(ET) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for 2024 was $15.5 billion, up 13$8.4 billion, a 10% increase from 2023, also a partnership record [6] - For Q4 2024, adjusted EBITDA was $3.9 billion, compared to$3.6 billion in Q4 2023 [7] - DCF for Q4 2024 was $2 billion, consistent with Q4 2023 [8] Business Line Data and Key Metrics Changes - NGL and refined products segment adjusted EBITDA was$1.1 billion, up from $1.04 billion in Q4 2023, driven by higher throughput and rates [9] - Midstream segment adjusted EBITDA increased to$705 million from $674 million in Q4 2023, attributed to higher volumes in the Permian Basin [10] - Crude oil segment adjusted EBITDA decreased to$760 million from $775 million in Q4 2023, impacted by lower transportation revenue [11] - Interstate natural gas segment adjusted EBITDA fell to$493 million from $541 million in Q4 2023, due to lower interruptible utilization [12] - Intrastate natural gas segment adjusted EBITDA rose to$263 million from $242 million in Q4 2023, due to pipeline and storage optimization gains [13] Market Data and Key Metrics Changes - Record volumes were moved across interstate, midstream, NGL, and crude segments for the year [7] - Record NGL exports were achieved from Nederland and Marcus Hook terminals [7] Company Strategy and Development Direction - The company plans to spend approximately$5 billion on organic growth capital in 2025, focusing on various segments including intrastate natural gas and NGL [15][16][17][18] - Key growth projects include the Mustang Draw processing plant and expansions at existing terminals to meet international NGL demand [18][23][24] - The company is positioned to capitalize on the anticipated rise in natural gas demand, particularly for power generation and data centers [30][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in the Permian Basin and the increasing demand for natural gas [35] - The new administration is viewed positively, with expectations of reduced regulatory burdens benefiting the industry [71][74] - Adjusted EBITDA guidance for 2025 is projected between $16.1 billion and$16.5 billion, reflecting a 5% increase from 2024 [34] Other Important Information - The company is actively pursuing M&A opportunities as part of its growth strategy, while also focusing on organic growth projects [97][100] - The company is renegotiating contracts from previous years to align with current market conditions [140] Q&A Session Summary Question: Can you talk about the returns you're seeing with incremental projects? - Management targets mid-teen to upper teen rates of return depending on project synergies [40][41] Question: Does the $5 billion growth CapEx include any unsanctioned projects? - The$5 billion includes sanctioned projects with great rates of return [50] Question: Is the CloudBurst project supporting a new gas-fired power plant? - Yes, the project is expected to scale up over time, potentially reaching 450 million cubic feet per day [55][56] Question: How much do you think natural gas demand could grow in the next five to seven years? - Management believes they can capture between 3 and 4 billion cubic feet of demand over the next 18 to 24 months [83] Question: Are you worried about competition in the NGL space? - Management focuses on their customers and market needs rather than competitors, believing they can fill their assets effectively [108][109] Question: How do you view the rate of contracts from 2019 and 2020? - The company is in negotiations to restructure those contracts to reflect current pricing [140]