Pipeline Powerhouse Plains All American's Q4 Earnings Leap Forward, Eyes Hefty Cash Flow in 2024

Plains All American Pipeline, L.P.PAA reported fourth-quarter fiscal 2023 revenue of $12.698 billion, in line with the consensus of $12.694 billion.

Adjusted EPS was $0.42 (+27% Y/Y), beating the consensus of $0.37.

PAA reported an operating income of $426 million, compared to an operating loss of $(37) million a year ago.

The adjusted EBITDA attributable to PAA rose 12% Y/Y to $737 million, and the margin expanded by 72 bps to 5.8%.

The Crude Oil Segment Adjusted EBITDA rose 12% Y/Y to $563 million, reflecting higher volumes across pipeline systems, contributions from acquisitions, and the benefit of tariff escalation.

GL Segment Adjusted EBITDA grew 12% Y/Y to $169 million, reflecting favorable NGL basis differentials and additional market-based opportunities.

PAA generated Adjusted Free Cash Flow for fiscal 2023 of $1.60 billion and achieved year-end leverage of 3.1x.

The company said it delivered on its commitment to increase cash return to equity holders by increasing distributions to $0.20 per unit annualized in February 2023, representing a 23% YoY increase.

2024 Outlook: PAA expects adjusted EBITDA attributable to PAA of $2.625 billion to $2.725 billion. The company reaffirms leverage ratio target range of 3.25x – 3.75x.

The company expects to generate ~$1.65 billion of Adjusted Free Cash Flow and $500 million after Distributions.

“Looking forward to 2024, Plains remains well-positioned to deliver value to our unitholders through our continued focus on generating strong free cash flow, capital discipline, and increasing returns to unitholders all while maintaining our financial flexibility,” commented Willie Chiang, Chairman and CEO of Plains.

Price Action: PAA shares are trading lower by 0.13% at $15.33 on the last check Friday.