NGL Energy Partners LP Reports Mixed Q3 Results; Shares Decline on Earnings Miss
NGL Energy Partners LP (NYSE:NGL) announced financial results for its third quarter of fiscal 2026, delivering a significant revenue beat but falling short on profitability as measured by earnings per share. The market's immediate reaction was negative, with shares trading down sharply in after-hours activity.
Earnings and Revenue Versus Estimates
The partnership's performance against Wall Street expectations presented a clear dichotomy. Revenue substantially exceeded estimates, while adjusted earnings per share came in below the consensus forecast.
- Revenue: Reported revenue of $909.8 million for the quarter, surpassing analyst estimates of approximately $818.0 million.
- Earnings Per Share (Non-GAAP): Reported EPS of $0.10, missing the consensus estimate of $0.1616.
This divergence between top-line strength and bottom-line weakness appears to be the primary driver behind the stock's negative after-market reaction, which saw a decline of over 9%. Investors often penalize misses on profitability metrics more heavily than revenue beats, particularly when the latter may be influenced by commodity price volatility or lower-margin business segments.
Quarterly Performance Highlights
The earnings release underscored the continued dominance of the Water Solutions segment as the partnership's core growth engine. Key operational and financial takeaways from the quarter include:
- Water Solutions Strength: The segment delivered a record 3.07 million barrels per day of produced water physically disposed, a 17.1% increase year-over-year. This volume growth translated directly to the bottom line, with the segment's operating income jumping to $98.2 million from $65.4 million in the prior-year period.
- Adjusted EBITDA Growth: Consolidated Adjusted EBITDA from continuing operations rose to $172.5 million, up from $158.0 million in Q3 of fiscal 2025. The Water Solutions segment contributed $154.5 million of this total.
- Capital Allocation: The partnership continued to execute on its capital return initiatives, repurchasing an additional 1.6 million common units during the quarter at an average price of $5.70. It also redeemed more of its Class D preferred units, reducing its outstanding balance by approximately 15% since issuance.
Management Outlook and Forward Estimates
CEO Mike Krimbill reaffirmed the partnership's full-year fiscal 2026 guidance for Adjusted EBITDA in the range of $650 million to $660 million. Furthermore, he expressed optimism for the following year, stating that "Fiscal 2027 will be another strong year for the Partnership with Adjusted EBITDA eclipsing $700 million."
This forward commentary provides a benchmark against analyst projections. Current consensus estimates for the upcoming fourth quarter of fiscal 2026 are for EPS of $0.14 and revenue of $741.3 million. For the full fiscal year 2026, analysts are modeling sales of approximately $2.78 billion.
Financial Position
NGL reported total liquidity of approximately $331.1 million as of December 31, 2025. The partnership noted it is in compliance with all debt covenants and has no upcoming debt maturities, providing financial flexibility as it continues to invest in its Water Solutions infrastructure.
Conclusion
NGL Energy Partners' third quarter illustrates a business executing on its strategic focus in produced water handling, evidenced by strong volume and cash flow growth in its Water Solutions segment. However, the earnings per share miss relative to estimates has tempered investor enthusiasm in the near term, as reflected in the stock's decline. The partnership's reiterated guidance and positive commentary for fiscal 2027 suggest management confidence in the durability of its core business model. Investors will likely monitor subsequent quarters for improved translation of robust revenue into bottom-line earnings that meet or exceed expectations.
For a detailed look at NGL's historical earnings, future estimates, and analyst projections, visit the NGL earnings and estimates page.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The data presented is based on publicly available information. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
