Plains All American Pipeline (NASDAQ:PAA) reported fourth-quarter results on Friday that missed market expectations, even as the midstream operator announced a higher cash distribution for unitholders.
The company posted adjusted earnings of $0.40 per unit for the quarter, below the analyst consensus of $0.47. Revenue totaled $10.57 billion, also undershooting expectations of $13.42 billion. Following the release, the stock slipped 1.75% in pre-market trading.
Adjusted EBITDA attributable to PAA came in at $738 million for the quarter, marking a modest 1% increase compared with the same period last year.
Performance in the crude oil segment was stronger, with Adjusted EBITDA rising 7% to $611 million. The increase was supported by recently completed acquisitions, including the Cactus III pipeline, higher pipeline throughput and tariff escalations. These positives were partly offset by rate resets on certain Permian long-haul pipeline contracts and weaker commodity prices.
“Last year we took significant steps to transition the company toward becoming the premier North American pure play crude oil midstream provider,” said Willie Chiang, Chairman, CEO and President. “For 2026, the team is focused on closing the pending NGL sale, realizing synergies on the Cactus III acquisition and driving efficiency initiatives throughout the organization.”
Despite the quarterly earnings miss, Plains announced a 10% increase in its annualized distribution to $1.67 per unit. The company also reduced its distribution coverage ratio threshold to 150% from 160%, citing more stable and predictable cash flows and a clearer path for sustained distribution growth over the coming years.
Looking ahead, Plains forecast Adjusted EBITDA attributable to PAA of approximately $2.75 billion for 2026, plus or minus $75 million. This outlook includes one quarter of contribution from its NGL business, estimated at $100 million. Management also expects to achieve around $100 million in cost savings by 2027, with roughly half realized in 2026, alongside $50 million in synergies from the Cactus III acquisition.
For 2026, the company projects Adjusted Free Cash Flow of about $1.80 billion, excluding changes in working capital and anticipated proceeds from its planned NGL divestiture, which is expected to close toward the end of the first quarter.