A diversified midstream energy infrastructure and logistics company, MPLX, has been growing leaps and bounds in the last few quarters. But only few have noticed.
Despite having excellent and fast improving fundamentals, along with a high yield, the company hasn’t been able fully engage investor interest. The main reason, perhaps, is that the investor community has recently seen a number of master limited partnerships blow up.
What makes MPLX any different?
MPLX is differentiated by its recession resistant and seemingly low-risk self-funding business model, its short-term hyper growth strategy, its calculated investment strategies which act as a catalyst for its long-term growth, and finally, its strong balance sheet.
The company focused on developing an extensive portfolio of growth projects, but also made sure it didn’t take on too much debt to accomplish its goal. This has resulted in consistently improving quarterly performance.
The company reported its 23rd consecutive quarterly distribution increase to $0.6375 per common unit for the third-quarter 2018. Adjusted EBITDA and distributable cash flow for the quarter stood at $937 million and $766 million respectively, which provided 1.47x distribution coverage and resulted in 3.8x leverage. They also reported 74% adjusted EBIDTA growth in Q3 on a y-o-y basis, and 23% y-o-y adjusted EBITDA growth after excluding the impact from drawdowns.
This rapid growth pace is giving management plenty of cash to invest in the business, while maintaining its streak of consistently increasing its pay-out every quarter.