DT Midstream(DTM) - 2024 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for the periods ended June 30, 2024, and 2023 Consolidated Financial Statements (Unaudited) Financial statements show increased revenues and net income, with stable total assets and increased cash from operations Consolidated Statements of Operations (Unaudited) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | (millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | | Operating revenues | $244 | $224 | $484 | $444 | | Operating Income | $130 | $117 | $254 | $227 | | Net Income | $100 | $94 | $200 | $178 | | Net Income Attributable to DT Midstream | $96 | $91 | $193 | $172 | | Diluted Earnings per Common Share | $0.98 | $0.93 | $1.97 | $1.76 | Consolidated Statements of Financial Position (Unaudited) | | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | (millions) | | | | Total Current Assets | $256 | $272 | | Total Assets | $8,986 | $8,982 | | Total Current Liabilities | $306 | $434 | | Long-Term Debt, net | $3,068 | $3,065 | | Total Liabilities | $4,649 | $4,702 | | Total Equity | $4,337 | $4,280 | Consolidated Statements of Cash Flows (Unaudited) | | Six Months Ended June 30, | | :--- | :--- | | (millions) | 2024 | 2023 | | Net cash from operating activities | $406 | $389 | | Net cash from (used for) investing activities | ($143) | ($31) | | Net cash from (used for) financing activities | ($246) | ($374) | | Net Increase (Decrease) in Cash | $17 | ($16) | | Cash and Cash Equivalents at End of Period | $73 | $45 | Notes to Consolidated Financial Statements (Unaudited) This section provides detailed explanations supporting the financial statements, including accounting policies and segment data Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, strategic objectives, liquidity, and segment results - The company's strategy is focused on disciplined capital deployment, capitalizing on asset integration, pursuing economically attractive opportunities, and growing cash flows through long-term firm revenue contracts[112] - DT Midstream is executing on its goal to achieve net zero carbon emissions by 2050 and intends to develop low carbon business opportunities[111] Results of Operations Operating revenues and net income grew year-over-year, driven primarily by the Pipeline segment's performance Consolidated Financial Results Summary | | Six Months Ended June 30, | | :--- | :--- | | (millions, except per share amounts) | 2024 | 2023 | | Operating revenues | $484 | $444 | | Net Income Attributable to DT Midstream | $193 | $172 | | Diluted Earnings per Common Share | $1.97 | $1.76 | Net Income by Segment (Six Months Ended) | Segment | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | (millions) | | | | Pipeline | $145 | $121 | | Gathering | $48 | $51 | | Total | $193 | $172 | Pipeline Segment Analysis The Pipeline segment's revenue and income increased significantly due to new contracts and system expansions Pipeline Segment Financials (Six Months Ended) | | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | (millions) | | | | Operating revenues | $216 | $175 | | Operating Income | $137 | $113 | | Net Income Attributable to DT Midstream | $145 | $121 | - Revenue growth for the six months ended June 30, 2024 was driven by new contracts and expansion of the Haynesville System (LEAP) ($30 million), higher Stonewall volumes ($6 million), and higher storage rates at Washington 10 Storage Complex ($5 million)[115] Gathering Segment Analysis The Gathering segment's revenues were flat, while net income slightly decreased due to higher expenses Gathering Segment Financials (Six Months Ended) | | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | (millions) | | | | Operating revenues | $268 | $269 | | Operating Income | $117 | $114 | | Net Income Attributable to DT Midstream | $48 | $51 | - Operation and maintenance expense for the six months ended June 30, 2024 decreased by $18 million, primarily due to a $9 million reduction in Appalachia Gathering environmental contingent liabilities and $10 million in lower costs at Blue Union Gathering[122] - Depreciation and amortization expense increased by $12 million for the six months ended June 30, 2024, due to new assets placed into service at Blue Union Gathering and Ohio Utica Gathering[123] Capital Resources and Liquidity The company maintains a strong liquidity position and expects to continue its annual dividend growth of 5% to 7% - As of June 30, 2024, the company had approximately $987 million of available liquidity, comprising cash and cash equivalents and available borrowings under its Revolving Credit Facility[138] - The company has a long-term dividend growth target of 5% to 7% annually[139] - Net cash from operating activities increased by $17 million to $406 million for the six months ended June 30, 2024, compared to the prior year period[131] Capital Investments Capital expenditures totaled $180 million for H1 2024, with a full-year forecast of $380 million to $435 million - Total capital expenditures for the six months ended June 30, 2024, were $180 million[142] - The company forecasts total capital expenditures for the full year 2024 to be approximately $380 million to $435 million[142] Quantitative and Qualitative Disclosures About Market Risk The company has limited commodity price risk but faces credit risk from a key customer and interest rate risk - The company's operations have limited direct exposure to natural gas price risk due to the use of long-term transportation, gathering, and storage contracts[153] - A significant portion of revenues comes from a key customer, Southwestern Energy, creating credit risk concentration[155] - As of June 30, 2024, the company had $469 million in floating-rate debt, exposing it to interest rate risk from changes in SOFR[157] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[160] - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, these controls[161] PART II — OTHER INFORMATION Legal Proceedings Pending legal matters are not expected to have a material adverse effect on the company's financial condition - For details on legal proceedings, the report refers to Note 10, 'Commitments and Contingencies' in the financial statements[162] Risk Factors This section refers to the detailed risk factor discussion in the company's 2023 Annual Report on Form 10-K - The report refers readers to the 'Risk Factors' section in the company's 2023 Annual Report on Form 10-K for a discussion of significant risks[163] Mine Safety Disclosure Disclosures for the company's sand mining facility are filed as Exhibit 95.1 to this Form 10-Q - Information regarding mine safety violations and other regulatory matters for the company's sand mining facility is filed as Exhibit 95.1[164] Other Information No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading plans during the quarter - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1(c) trading plans during the three months ended June 30, 2024[165] Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files - A list of all exhibits filed or furnished with the Form 10-Q is provided, including certifications under Sections 302 and 906, and Mine Safety Disclosures[166]