• Adjusted EBITDA (Q4 2024): $729 million.
• Adjusted EBITDA (Full Year 2024): $2.78 billion.
• Adjusted EBITDA Guidance (2025): $2.8 billion to $2.95 billion.
• Permian Crude Production Growth (2025): Expected to grow to 300,000 barrels a day.
• Annual Distribution Increase: $0.25 per unit, bringing the annual distribution to $1.52 per unit.
• Adjusted Free Cash Flow (2025): Approximately $1.15 billion.
• Growth Capital Investment (2025): Approximately $400 million.
• Maintenance Capital Investment (2025): Approximately $240 million.
• Senior Unsecured Notes Issuance: $1 billion at a rate of 5.95% maturing in 2035.
• Noncash Impairment (2024): $140 million related to two US NGL terminal assets.
• Insurance Claim Write-off: $225 million related to a 2022 class action settlement.

• Warning! GuruFocus has detected 8 Warning Signs with PAA.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Plains All American Pipeline LP (NASDAQ:PAA) exceeded its expectations for the fourth quarter and full year 2024, reporting adjusted EBITDA of $729 million and $2.78 billion respectively.
• The company provided a positive outlook for 2025 with an adjusted EBITDA guidance of $2.950 billion, indicating approximately 3% growth year over year.
• PAA completed strategic acquisitions, including Ironwood Midstream and the remaining interest in Midway pipeline, which are expected to enhance its integrated asset base and generate attractive returns.
• The company announced a 20% increase in its quarterly distribution, reflecting its commitment to returning capital to unit holders.
• PAA's Permian gathering joint venture continues to benefit from operational synergies and consistent producer activity, supporting high utilization rates and volume growth.

Negative Points

• PAA reported a $140 million non-cash impairment related to two US NGL terminal assets, impacting its GAAP results.
• The company faced a $225 million write-off related to an insurance claim from a 2015 incident, which was not reimbursed by insurers.
• Certain long-haul contract tariffs are expected to reset and step down in the second half of 2025, potentially impacting revenue.
• The NGL segment's adjusted EBITDA is expected to be slightly lower year over year, with a shift to approximately 45% fee-based in 2025.
• PAA's capital investments for 2025 include $400 million in growth capital and $240 million in maintenance capital, which could strain financial resources if not managed effectively.

Q & A Highlights

Q: Can you give a little background on how some of these tuck-ins came together in January, and if there are other meaningful opportunities you're working on currently? A: These deals don't happen overnight. Our organization is constantly looking for opportunities, and we had a number of these that came together at the same time. We think there are more opportunities, and when you think about Plains' footprint and our integrated asset base, we're an infrastructure company. We connect supply to demand, which opens up opportunities for us to create some of these options for opportunities to bolt on into our system. We are not growing for growth's sake; all these have to go through the lens of capital discipline and strategic need.

Q: If we eventually do get tariffs on Canada, can you walk through some of the dynamics of how that could play out for both your NGL and crude business and potential impacts for Plains? A: There are literally a million scenarios that could play out. The short answer is, as you look at our guidance range, we think that guidance range easily encompasses the probable outcomes of what the tariffs may be. We've been spending time on it and tried to mitigate a lot of these proactively. Until the tariffs come out on what they might be or if they come out at all, it's really a scenario planning exercise.

Q: When we look at the 2025 guide, what could drive you towards the upper end of that guide and possibly over it as you did in 2024? A: A big factor for us is volume growth and the oil price. More activity would certainly drive higher volumes, and we have a 2-to-300,000-barrel day guidance for our growth in the Permian. As we go forward, if I were to take the over or under on momentum, I would take the over into 2025.

Q: Could you provide an update on the initiatives to streamline operations and whether any of that is baked into the guidance for 2025? A: It's a continuous process. There are some efficiency and streamlining numbers in our numbers this year. We have a project enterprise risk, enterprise kind of consolidating our financial program, which we think will give us an opportunity to drive more synergies and streamline further. It's baked into what we do every day.

Q: How should we be thinking about the cadence of Permian volumes in 2025, and if the basin comes out to be towards the higher end of that range, should we think of upside in terms of your volume numbers in Permian? A: The cadence is consistent with last year, with growth being second-half weighted. The range certainly encompasses the 2 to 300,000 barrels a day. We look at it as a build-up from all the producers we have, and those align well. You're not going to see material variation based on that range; it will be within our guide.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.