Hess Midstream LP(HESM) - 2025 Q2 - Quarterly Results

Q2 2025 Financial and Operational Highlights Hess Midstream achieved strong Q2 2025 financial and operational growth, completing repurchases, increasing distributions, and reaffirming full-year guidance Overview of Second Quarter 2025 Performance Hess Midstream reported strong operational and financial results for Q2 2025, with significant year-over-year growth in key metrics and throughput volumes Q2 2025 Key Financial Metrics (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $179.7 | $160.3 | | Net Income attributable to Hess Midstream | $90.3 | - | | Basic Earnings per Class A Share | $0.74 | $0.59 | | Adjusted EBITDA | $316.0 | $276.5 | | Net Cash from Operating Activities | $276.9 | $271.6 | | Adjusted Free Cash Flow | $193.8 | $156.4 | Q2 2025 vs Q2 2024 Throughput Volume Growth | System | YoY Growth | | :--- | :--- | | Gas Processing | 7% | | Oil Terminaling | 9% | | Water Gathering | 11% | - Completed a $190.0 million repurchase of Class B units and a $10.0 million repurchase of Class A shares, supporting an increased quarterly cash distribution to $0.7370 per Class A share[5][13] - The merger between Hess Corporation and Chevron Corporation was completed on July 18, 2025, resulting in Chevron indirectly owning an approximate 37.8% interest in Hess Midstream[6] Financial Performance Analysis Q2 2025 saw revenue growth driven by volumes and tariffs, increased operating costs, higher interest expense, and improved segment performance Consolidated Financial Results (Q2 2025) Q2 2025 revenues grew due to higher volumes and tariffs, while operating costs and net interest expense increased, leading to higher net income Q2 2025 vs Q2 2024 Financial Comparison (in millions) | Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues and other income | $414.2 | $365.5 | | Total operating costs and expenses | $154.0 | $143.2 | | Interest expense, net | $55.4 | $49.7 | | Net income | $179.7 | $160.3 | - Revenue growth was primarily attributed to higher physical volumes and increased tariff rates[8] - The increase in interest expense was mainly due to the $600.0 million 6.500% fixed-rate senior unsecured notes issued in May 2024[8] - On July 24, 2025, S&P upgraded Hess Midstream's senior unsecured debt to an investment grade rating of BBB-[10] Segment Performance (Q2 2025) All operating segments demonstrated year-over-year growth in Q2 2025, reflecting strong underlying volume growth across the business Segment Income from Operations (in millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gathering | $131.8 | $110.9 | | Processing and Storage | $110.6 | $96.6 | | Terminaling and Export | $20.6 | $16.5 | Operational Performance Q2 2025 operational performance was strong, with increased throughput volumes across all systems driven by higher upstream production Throughput Volumes Q2 2025 operational performance was strong, with throughput volumes increasing across all systems compared to the prior-year quarter Q2 2025 vs Q2 2024 Average Daily Throughput Volumes | System | Unit | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Gas gathering | Mcf/day | 464 | 440 | | Crude oil gathering | bopd | 127 | 116 | | Gas processing | Mcf/day | 449 | 419 | | Crude terminals | bopd | 137 | 126 | | Water gathering | blpd | 138 | 124 | - The increase in throughput volumes across systems was primarily attributed to higher production[11] Capital Management and Shareholder Returns Q2 2025 capital expenditures focused on infrastructure expansion, supported by accretive repurchases and increased quarterly cash distributions Capital Expenditures Q2 2025 capital expenditures totaled $70.0 million, primarily directed towards the expansion of gas compression and associated pipeline infrastructure - Q2 2025 capital expenditures totaled $70.0 million, mainly for the expansion of gas compression and pipeline infrastructure[12] Quarterly Cash Distributions and Repurchases Hess Midstream increased its quarterly cash distribution, supported by excess cash flow generated from accretive unit and share repurchases - The Board declared a quarterly cash distribution of $0.7370 per Class A share for Q2 2025, an increase of $0.0272 per share compared to Q1 2025[5][13] - The distribution increase is supported by excess Adjusted Free Cash Flow following accretive repurchases of Class A shares and Class B units in Q2 2025[13] Full Year 2025 Guidance and Future Outlook Hess Midstream updated its full-year 2025 financial guidance while reaffirming throughput, and provided a positive long-term outlook through 2027 Full Year 2025 Guidance Hess Midstream reaffirmed its full-year 2025 throughput and Adjusted EBITDA guidance, while updating net income and Adjusted Free Cash Flow forecasts Full Year 2025 Financial Guidance (in millions) | Metric | Guidance Range | | :--- | :--- | | Net income | $685 - $735 | | Adjusted EBITDA | $1,235 - $1,285 | | Capital expenditures | $300 | | Adjusted free cash flow | $725 - $775 | Full Year 2025 Throughput Guidance | System | Unit | Guidance Range | | :--- | :--- | :--- | | Gas gathering | MMcf/day | 475 - 485 | | Crude oil gathering | MBbl/day | 120 - 130 | | Gas processing | MMcf/day | 455 - 465 | | Crude terminals | MBbl/day | 130 - 140 | | Water gathering | MBbl/day | 125 - 135 | - The update to net income and Adjusted Free Cash Flow guidance is due to higher expected interest expense and income tax expense from ownership changes and repurchase transactions[14] Long-Term Outlook (2026-2027) The company projects continued organic throughput volume growth for 2026-2027, driving at least 5-10% growth in key financial metrics and distributions - Expects approximately 10% growth in gas throughput and 5% growth in oil throughput in 2026, followed by approximately 5% growth for both in 2027[15] - Projects at least 10% growth in Net Income, Adjusted EBITDA, and Adjusted Free Cash Flow in 2026, followed by at least 5% growth in 2027[16] - Continues to target at least 5% annual distribution growth per Class A share through 2027 and a long-term leverage target of 3x Adjusted EBITDA[17] Non-GAAP Financial Measures & Reconciliations This section defines and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Free Cash Flow, for Q2 2025 Definitions and Reconciliations This section defines and reconciles non-GAAP measures like Adjusted EBITDA and Adjusted Free Cash Flow, providing a clearer view of operating performance - The company defines "Adjusted EBITDA" as net income before interest, taxes, depreciation, and amortization, adjusted for certain non-recurring or non-indicative items; "Adjusted Free Cash Flow" is defined as Adjusted EBITDA less net interest, cash taxes, and capital expenditures[20] Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (in millions) | Line Item | Amount | | :--- | :--- | | Net income | $179.7 | | (+) Depreciation expense | $51.8 | | (+) Interest expense, net | $55.4 | | (+) Income tax expense | $29.1 | | Adjusted EBITDA | $316.0 | Q2 2025 Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow (in millions) | Line Item | Amount | | :--- | :--- | | Adjusted EBITDA | $316.0 | | (-) Interest, net | $52.2 | | (-) Capital expenditures | $70.0 | | Adjusted free cash flow | $193.8 | Supplemental Financial Data This section provides unaudited supplemental financial data, including consolidated and segmented statements of operations and operating data Consolidated Statements of Operations The supplemental data provides detailed consolidated statements of operations, showing total revenues and net income for Q2 and six months ended June 30 Statement of Operations - Quarterly Comparison (in millions) | | Q2 2025 | Q2 2024 | Q1 2025 | | :--- | :--- | :--- | :--- | | Total revenues | $414.2 | $365.5 | $382.0 | | Income from operations | $260.2 | $222.3 | $237.4 | | Net income | $179.7 | $160.3 | $161.4 | | Net income attributable to Hess Midstream LP | $90.3 | $49.5 | $71.6 | Statement of Operations - Six Months Ended June 30 (in millions) | | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $796.2 | $721.1 | | Income from operations | $497.6 | $444.3 | | Net income | $341.1 | $322.2 | | Net income attributable to Hess Midstream LP | $161.9 | $94.1 | Segmented Statements of Operations This section details revenues and costs by segment, highlighting the Gathering segment as the largest contributor to income from operations in Q2 2025 Q2 2025 Segmented Statement of Operations (in millions) | Segment | Total Revenues | Income from Operations | | :--- | :--- | :--- | | Gathering | $222.4 | $131.8 | | Processing and Storage | $157.9 | $110.6 | | Terminaling and Export | $33.9 | $20.6 | Supplemental Operating Data The supplemental operating data presents physical throughput volumes for the company's systems, showing consistent growth over the prior year Throughput Volumes - Six Months Ended June 30 | System | Unit | 2025 | 2024 | | :--- | :--- | :--- | :--- | | Gas gathering | Mcf/day | 448 | 422 | | Crude oil gathering | bopd | 122 | 110 | | Gas processing | Mcf/day | 437 | 406 | | Crude terminals | bopd | 131 | 121 | | Water gathering | blpd | 132 | 120 |