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XPLR Infrastructure, LP 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

XPLR Infrastructure, LP

Filing date:

02/21/2025

TLDR:

XPLR Infrastructure, LP’s 10-K filing reveals a strategic repositioning involving distribution suspension and a goodwill impairment charge. The company is focusing on long-term value enhancement through clean energy investments.

ELI5:

XPLR, a clean energy company, is changing its strategy by pausing payouts to investors and investing more in its business. They also had to write down the value of some assets, which hurt their profits this year.

Accession #:

0001603145-25-000006

Published on

Analyst Summary

  • Operating Revenues increased from $1,078 million in 2023 to $1,230 million in 2024.
  • A goodwill impairment charge of $575 million was recognized.
  • Net loss of $411 million in 2024 compared to a net income of $218 million in 2023.
  • Strong liquidity position of $2,530 million at December 31, 2024.
  • Gross Profit Margin increased from -2.6% in 2023 to 8.37% in 2024.
  • Operating Profit Margin decreased from -2.6% in 2023 to -37.32% in 2024.
  • Net Profit Margin decreased from 20.22% in 2023 to -33.41% in 2024.
  • Return on Assets (ROA) decreased from 0.97% in 2023 to -2.02% in 2024.
  • Return on Equity (ROE) decreased from 1.42% in 2023 to -0.18% in 2024.
  • EPS decreased from $2.18 in 2023 to -$0.25 in 2024.
  • Current Ratio decreased from 1.33 in 2023 to 0.79 in 2024.
  • Quick Ratio decreased from 1.28 in 2023 to 0.69 in 2024.
  • Cash Ratio increased from 0.16 in 2023 to 0.26 in 2024.
  • Debt-to-Equity Ratio decreased from 0.60 in 2023 to 0.58 in 2024.
  • Debt-to-Assets Ratio decreased from 0.38 in 2023 to 0.37 in 2024.
  • Interest Coverage Ratio decreased from 0.93 in 2023 to -1.7 in 2024.
  • Asset Turnover increased from 0.05 in 2023 to 0.06 in 2024.
  • Price-to-Earnings Ratio (P/E) is not meaningful due to negative earnings in 2024.
  • Price-to-Book Ratio (P/B) increased from 0.06 in 2023 to 0.07 in 2024.
  • Price-to-Sales Ratio (P/S) decreased from 0.81 in 2023 to 0.71 in 2024.
  • Enterprise Value to EBITDA (EV/EBITDA) increased from 5.78 in 2023 to 22.06 in 2024.
  • Revenue growth increased by 14.1% from 2023 to 2024.
  • Net income growth decreased by -288.53% from 2023 to 2024.
  • EPS growth decreased by -111.47% from 2023 to 2024.

Opportunities and Risks

  • Performance Risks: Dependence on weather conditions (wind and solar), potential for unplanned outages, and technical performance issues.
  • Contract Risks: Reliance on a limited number of customers and vendors, exposing XPLR to credit and performance risk.
  • Regulatory Risks: Exposure to changing regulations and permitting requirements.
  • Relationship with NEE: Dependence on NEE for operational and management services, potential conflicts of interest, and NEE’s right of first refusal.
  • Financial Risks: Access to capital, credit ratings, and substantial indebtedness.
  • Growth in Electricity Demand: Anticipated long-term growth in U.S. electricity demand creating opportunities for renewable energy investments.
  • Repowering Projects: Potential to extend the life of existing assets and enhance operations through renewable energy repowering.
  • Strategic Repositioning: Focus on areas adjacent to existing clean energy projects, with a focus on assets that are expected to provide incremental cash flows and opportunities for growth.
  • Policy Incentives: U.S. federal, state and local governments have established various incentives to support the development of clean energy projects.

Potential Implications

Stock Price

  • The strategic shift and distribution suspension could negatively impact the stock price in the short term.
  • Successful execution of the new strategy and growth in renewable energy investments could positively impact the stock price in the long term.
  • Low valuation ratios (P/E, P/B, P/S) suggest the company may be undervalued, potentially attracting investors.

XPLR Infrastructure, LP (XIFR) 10-K Filing Analysis

Executive Summary

This report analyzes XPLR Infrastructure, LP’s 10-K filing for the year ended December 31, 2024. Key findings include a strategic repositioning involving distribution suspension, a goodwill impairment charge, and a focus on long-term value enhancement through clean energy investments. The overall assessment is cautiously neutral, pending further clarity on the execution of the new strategy and the impact of suspended distributions. Recommendations include monitoring capital allocation decisions, PPA renewals, and the sale of Meade Pipeline interest.

Company Overview

XPLR Infrastructure, LP (XIFR) is a limited partnership focused on clean energy infrastructure assets, primarily wind, solar, and battery storage projects, along with a natural gas pipeline investment. The company operates in 31 states and is one of the largest generators of energy from wind and sun in the U.S. A strategic repositioning was announced in January 2025, including the suspension of common unit distributions to fund future growth.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management highlights a strategic repositioning to enhance long-term value through investments in existing assets and adjacent opportunities. The suspension of distributions is a significant shift. A goodwill impairment charge of $575 million was recognized. Management expresses optimism about future growth in U.S. electricity demand and opportunities for XPLR.

Financial Statement Analysis

Key Ratios and Trends

  • Operating Revenues: Increased from $1,078 million in 2023 to $1,230 million in 2024, driven by new projects, favorable wind conditions, and a customer settlement.
  • Operating Expenses: Increased significantly, primarily due to a $575 million goodwill impairment charge. Excluding this, O&M expenses decreased slightly.
  • Net Income (Loss): A net loss of $411 million in 2024 compared to a net income of $218 million in 2023, largely due to the goodwill impairment.
  • Liquidity: Strong liquidity position of $2,530 million at December 31, 2024, including cash, amounts due under the CSCS agreement, and available revolving credit facility capacity.

Uncommon Metrics

  • Wind Production Index: Used to measure the impact of wind resource levels on energy production.
  • IDR Fee Suspension: Suspension of incentive distribution rights fee payments to NEE Management from January 1, 2023, through December 31, 2026.

Risk and Opportunity Assessment

Risks

  • Performance Risks: Dependence on weather conditions (wind and solar), potential for unplanned outages, and technical performance issues.
  • Contract Risks: Reliance on a limited number of customers and vendors, exposing XPLR to credit and performance risk.
  • Regulatory Risks: Exposure to changing regulations and permitting requirements.
  • Relationship with NEE: Dependence on NEE for operational and management services, potential conflicts of interest, and NEE’s right of first refusal.
  • Financial Risks: Access to capital, credit ratings, and substantial indebtedness.

Opportunities

  • Growth in Electricity Demand: Anticipated long-term growth in U.S. electricity demand creating opportunities for renewable energy investments.
  • Repowering Projects: Potential to extend the life of existing assets and enhance operations through renewable energy repowering.
  • Strategic Repositioning: Focus on areas adjacent to existing clean energy projects, with a focus on assets that are expected to provide incremental cash flows and opportunities for growth.
  • Policy Incentives: U.S. federal, state and local governments have established various incentives to support the development of clean energy projects.

Conclusion & Actionable Insights

XPLR Infrastructure, LP is undergoing a significant strategic shift, prioritizing long-term value creation over immediate distributions. While the company maintains a strong liquidity position, the goodwill impairment charge and distribution suspension raise concerns. Investors should closely monitor the company’s capital allocation decisions, PPA renewal success, and the progress of the planned sale of the Meade Pipeline interest. Further analysis is needed to assess the long-term impact of the new strategy and the effectiveness of risk management practices.

Financial Ratio and Metric Analysis

Based on the provided data, here’s an analysis of XPLR Infrastructure, LP’s financial performance:

Profitability

  • Gross Profit Margin:

    • Calculation: Gross Profit = Operating Revenues – Operations and Maintenance – Depreciation and Amortization – Taxes other than income taxes and other – net. Gross Profit Margin = Gross Profit / Operating Revenues. 2024: (1230 – 504 – 550 – 73) / 1230 = 8.37%. 2023: (1078 – 520 – 521 – 65) / 1078 = -2.6%. 2022: (969 – 527 – 394 – 40) / 969 = 0.82%.
    • Trend: The gross profit margin increased from -2.6% in 2023 to 8.37% in 2024, a significant positive change.
    • Industry: The industry average for renewable energy companies is around 30-40%. XPLR’s gross profit margin is significantly lower than the industry average, indicating potential issues with cost management or pricing.
  • Operating Profit Margin:

    • Calculation: Operating Income (Loss) / Operating Revenues. 2024: -459 / 1230 = -37.32%. 2023: -28 / 1078 = -2.6%. 2022: 44 / 969 = 4.54%.
    • Trend: The operating profit margin decreased from -2.6% in 2023 to -37.32% in 2024, a significant negative change.
    • Industry: The industry average for renewable energy companies is around 10-20%. XPLR’s operating profit margin is significantly lower than the industry average, indicating potential issues with cost management or pricing.
  • Net Profit Margin:

    • Calculation: Net Income (Loss) / Operating Revenues. 2024: -411 / 1230 = -33.41%. 2023: 218 / 1078 = 20.22%. 2022: 1121 / 969 = 115.69%.
    • Trend: The net profit margin decreased from 20.22% in 2023 to -33.41% in 2024, a significant negative change.
    • Industry: The industry average for renewable energy companies is around 5-10%. XPLR’s net profit margin is significantly lower than the industry average, indicating potential issues with cost management or pricing.
  • Return on Assets (ROA):

    • Calculation: Net Income (Loss) / Total Assets. 2024: -411 / 20292 = -2.02%. 2023: 218 / 22511 = 0.97%. 2022: 1121 / 23052 = 4.86%.
    • Trend: The ROA decreased from 0.97% in 2023 to -2.02% in 2024, a negative change.
    • Industry: The industry average for renewable energy companies is around 2-4%. XPLR’s ROA is significantly lower than the industry average, indicating potential issues with asset utilization.
  • Return on Equity (ROE):

    • Calculation: Net Income (Loss) Attributable to XPLR / Total Equity. 2024: -23 / 12866 = -0.18%. 2023: 200 / 14057 = 1.42%. 2022: 477 / 14671 = 3.25%.
    • Trend: The ROE decreased from 1.42% in 2023 to -0.18% in 2024, a negative change.
    • Industry: The industry average for renewable energy companies is around 5-10%. XPLR’s ROE is significantly lower than the industry average, indicating potential issues with equity utilization.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Calculation: Net Income (Loss) Attributable to XPLR / Weighted-Average Number of Common Units Outstanding – Basic. 2024: -23 / 93.5 = -0.25. 2023: 200 / 91.6 = 2.18. 2022: 477 / 84.9 = 5.62.
    • Trend: EPS decreased from $2.18 in 2023 to -$0.25 in 2024, a significant negative change.
    • Industry: EPS varies widely based on the specific company and its stage of development. A negative EPS indicates the company is not profitable.

Liquidity

  • Current Ratio:

    • Calculation: Total Current Assets / Total Current Liabilities. 2024: 860 / 1087 = 0.79. 2023: 2216 / 1671 = 1.33.
    • Trend: The current ratio decreased from 1.33 in 2023 to 0.79 in 2024, a negative change.
    • Industry: A current ratio of 1.5 to 2 is generally considered healthy. XPLR’s current ratio is below this range, indicating potential liquidity issues.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Total Current Assets – Inventory) / Total Current Liabilities. 2024: (860 – 108) / 1087 = 0.69. 2023: (2216 – 82) / 1671 = 1.28.
    • Trend: The quick ratio decreased from 1.28 in 2023 to 0.69 in 2024, a negative change.
    • Industry: A quick ratio of 1 or greater is generally considered healthy. XPLR’s quick ratio is below this range, indicating potential liquidity issues.
  • Cash Ratio:

    • Calculation: Cash and Cash Equivalents / Total Current Liabilities. 2024: 283 / 1087 = 0.26. 2023: 274 / 1671 = 0.16.
    • Trend: The cash ratio increased from 0.16 in 2023 to 0.26 in 2024, a positive change.
    • Industry: A cash ratio of 0.5 to 1 is generally considered healthy. XPLR’s cash ratio is below this range, indicating potential liquidity issues.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: Total Liabilities / Total Equity. 2024: 7426 / 12866 = 0.58. 2023: 8454 / 14057 = 0.60.
    • Trend: The debt-to-equity ratio decreased from 0.60 in 2023 to 0.58 in 2024, a slight positive change.
    • Industry: The industry average for renewable energy companies is around 1 to 2. XPLR’s debt-to-equity ratio is below this range, indicating a relatively conservative capital structure.
  • Debt-to-Assets Ratio:

    • Calculation: Total Liabilities / Total Assets. 2024: 7426 / 20292 = 0.37. 2023: 8454 / 22511 = 0.38.
    • Trend: The debt-to-assets ratio decreased from 0.38 in 2023 to 0.37 in 2024, a slight positive change.
    • Industry: The industry average for renewable energy companies is around 0.4 to 0.6. XPLR’s debt-to-assets ratio is below this range, indicating a relatively conservative capital structure.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: Operating Income (Loss) + Interest Expense / Interest Expense. 2024: (-459 + 170) / 170 = -1.7. 2023: (-28 + 394) / 394 = 0.93. 2022: (44 + (-848)) / (-848) = 0.95.
    • Trend: The interest coverage ratio decreased from 0.93 in 2023 to -1.7 in 2024, a significant negative change.
    • Industry: An interest coverage ratio of 1.5 or greater is generally considered healthy. XPLR’s interest coverage ratio is below this range, indicating potential issues with debt servicing.

Activity/Efficiency

  • Asset Turnover:

    • Calculation: Operating Revenues / Total Assets. 2024: 1230 / 20292 = 0.06. 2023: 1078 / 22511 = 0.05. 2022: 969 / 23052 = 0.04.
    • Trend: The asset turnover increased from 0.05 in 2023 to 0.06 in 2024, a slight positive change.
    • Industry: The industry average for renewable energy companies is around 0.3 to 0.5. XPLR’s asset turnover is significantly lower than the industry average, indicating potential issues with asset utilization.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Stock Price / EPS. EPS is negative in 2024, so the P/E ratio is not meaningful. Using 2023 EPS: 9.31 / 2.18 = 4.27.
    • Trend: Not meaningful due to negative earnings in 2024.
    • Industry: The industry average for renewable energy companies is around 20 to 30. XPLR’s P/E ratio is significantly lower than the industry average, indicating that the company may be undervalued.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Total Equity. Market Cap = Stock Price * Common units outstanding = 9.31 * 93.5 = 870.69. 2024: 870.69 / 12866 = 0.07. 2023: (9.31 * 93.4) / 14057 = 0.06.
    • Trend: The P/B ratio increased from 0.06 in 2023 to 0.07 in 2024, a slight positive change.
    • Industry: The industry average for renewable energy companies is around 1 to 3. XPLR’s P/B ratio is significantly lower than the industry average, indicating that the company may be undervalued.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Operating Revenues. 2024: 870.69 / 1230 = 0.71. 2023: (9.31 * 93.4) / 1078 = 0.81.
    • Trend: The P/S ratio decreased from 0.81 in 2023 to 0.71 in 2024, a negative change.
    • Industry: The industry average for renewable energy companies is around 2 to 4. XPLR’s P/S ratio is significantly lower than the industry average, indicating that the company may be undervalued.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: EV = Market Cap + Total Debt – Cash and Cash Equivalents. EBITDA = Net Income + Interest Expense + Taxes + Depreciation and Amortization. 2024: EV = 870.69 + 5314 – 283 = 5801.69. EBITDA = -411 + 170 + (-46) + 550 = 263. EV/EBITDA = 5801.69 / 263 = 22.06. 2023: EV = (9.31 * 93.4) + 6289 – 274 = 6934.34. EBITDA = 218 + 394 + (34) + 553 = 1199. EV/EBITDA = 6934.34 / 1199 = 5.78.
    • Trend: The EV/EBITDA ratio increased from 5.78 in 2023 to 22.06 in 2024, a significant negative change.
    • Industry: The industry average for renewable energy companies is around 10 to 15. XPLR’s EV/EBITDA ratio is higher than the industry average, indicating that the company may be overvalued.

Growth Rates

  • Revenue Growth:

    • Calculation: (Current Year Revenue – Previous Year Revenue) / Previous Year Revenue. (1230 – 1078) / 1078 = 14.1%.
    • Trend: Revenue growth increased by 14.1% from 2023 to 2024.
  • Net Income Growth:

    • Calculation: (Current Year Net Income – Previous Year Net Income) / Previous Year Net Income. (-411 – 218) / 218 = -288.53%.
    • Trend: Net income growth decreased by -288.53% from 2023 to 2024.
  • EPS Growth:

    • Calculation: (Current Year EPS – Previous Year EPS) / Previous Year EPS. (-0.25 – 2.18) / 2.18 = -111.47%.
    • Trend: EPS growth decreased by -111.47% from 2023 to 2024.

Other Relevant Metrics

Goodwill Impairment Charge: A significant goodwill impairment charge of $575 million was recorded in 2024, compared to none in the previous two years. This indicates that the company has reassessed the value of its acquired assets and determined that their fair value is less than their carrying value. This negatively impacts net income and ROA.

CSCS Agreement: Payments from related parties under the CSCS agreement increased significantly in 2024, providing a cash inflow. However, this also suggests a reliance on related-party transactions to manage liquidity.

Debt Issuance and Retirement: The company issued and retired significant amounts of long-term debt in both 2023 and 2024, indicating active management of its capital structure. However, the net effect in 2024 was a decrease in long-term debt, which could impact future growth opportunities.

Commentary

XPLR Infrastructure, LP’s financial performance in 2024 shows a mixed picture. While revenue increased, profitability metrics such as operating and net profit margins declined significantly, primarily due to a large goodwill impairment charge. Liquidity also appears strained, as indicated by the low current and quick ratios. The company’s leverage is relatively conservative, but the declining interest coverage ratio raises concerns about debt servicing. Overall, XPLR needs to address its cost structure and asset utilization to improve profitability and liquidity.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️