Summit Midstream Partners, LP(SMC) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed consolidated financial statements for the six months ended June 30, 2025, show total revenues of $272.9 million, a significant increase from $220.2 million in the prior year period, with net income sharply decreasing to $0.4 million from $109.1 million due to large asset sale gains in 2024 Unaudited Condensed Consolidated Balance Sheets Total assets increased to $2.42 billion as of June 30, 2025, from $2.36 billion at year-end 2024, driven by property, plant, and equipment, while total liabilities grew to $1.33 billion primarily due to long-term debt Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $116,071 | $118,271 | | Property, plant and equipment, net | $1,853,154 | $1,785,029 | | TOTAL ASSETS | $2,423,043 | $2,359,484 | | Total Current Liabilities | $157,386 | $174,801 | | Long-term debt, net | $1,058,663 | $976,995 | | TOTAL LIABILITIES | $1,327,057 | $1,261,413 | | Total Equity | $959,026 | $965,125 | | TOTAL LIABILITIES AND EQUITY | $2,423,043 | $2,359,484 | Unaudited Condensed Consolidated Statements of Operations For Q2 2025, the company reported a net loss of $4.2 million on revenues of $140.2 million, while H1 2025 net income was $0.4 million on $272.9 million in revenues, significantly lower than H1 2024 due to substantial gains on asset sales in the prior year Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $140,217 | $101,315 | $272,914 | $220,186 | | Total Costs and Expenses | $126,013 | $94,465 | $244,131 | $268,031 | | Interest Expense | ($23,864) | ($31,457) | ($46,401) | ($69,303) | | Gain on Sale of Business/Investment | $0 | ($2,192) | ($43) | $210,271 | | Net Income (Loss) | ($4,228) | ($23,778) | $406 | $109,149 | | EPS (Basic) | ($0.66) | ($2.91) | ($0.83) | $9.00 | Unaudited Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $53.2 million in H1 2025, while investing activities shifted from providing $672.0 million in H1 2024 to using $120.1 million in H1 2025 due to acquisitions and capital expenditures, and financing activities provided $67.1 million from new debt issuances Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $53,243 | $30,973 | | Net cash provided by (used in) investing activities | ($120,056) | $672,038 | | Net cash provided by (used in) financing activities | $67,118 | ($559,440) | | Net change in cash, cash equivalents and restricted cash | $305 | $143,571 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail significant corporate events like the Moonrise Acquisition for $90.0 million and the Corporate Reorganization, along with accounting policies, revenue breakdowns, debt structure, and equity changes - On March 10, 2025, the Company completed the Moonrise Acquisition for total consideration of approximately $90.0 million, consisting of $70.0 million in cash and 462,265 shares of common stock[34] - The Company divested its Summit Utica assets on March 22, 2024, for $625.0 million, recognizing a total gain of $212.5 million, and sold its Mountaineer Midstream system on May 1, 2024, for $70.0 million after a $68.0 million impairment charge[44][47][48] - As of June 30, 2025, total debt was approximately $1.075 billion, primarily comprising the Amended and Restated ABL Facility ($140.0 million outstanding), the Permian Transmission Term Loan ($121.2 million), and the 8.625% 2029 Secured Notes ($825.0 million)[61] - The company reinstated cash dividends on its Series A Preferred Stock on March 14, 2025, paying $6.7 million during the first six months of 2025, with accrued and unpaid dividends totaling $46.7 million as of June 30, 2025[108][121] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant revenue increase in Q2 and H1 2025 to the Tall Oak and Moonrise acquisitions, which boosted the Mid-Con and Rockies segments, while H1 2025 net income was minimal compared to H1 2024 due to prior-year asset sale gains Results of Operations Consolidated revenues for Q2 2025 increased by 38% year-over-year to $140.2 million, primarily driven by acquisitions in the Mid-Con and Rockies segments, while the Piceance segment declined and the Northeast segment was divested Reportable Segment Adjusted EBITDA (in thousands) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Rockies | $25,235 | $22,858 | $50,104 | $45,732 | | Permian | $8,300 | $7,697 | $16,570 | $14,962 | | Piceance | $10,474 | $12,848 | $22,260 | $28,081 | | Mid-Con | $24,900 | $5,420 | $47,357 | $10,520 | | Northeast | $0 | $1,613 | $0 | $30,634 | - The Mid-Con segment's volume throughput increased by 149% in Q2 2025 and 160% in H1 2025 year-over-year, primarily due to the Tall Oak Acquisition[204] - Interest expense decreased by $7.6 million in Q2 2025 and $22.9 million in H1 2025 compared to the same periods in 2024, due to debt refinancing activities that replaced higher-cost notes with the new 2029 Secured Notes[181][182] Liquidity and Capital Resources The company's liquidity is supported by internally generated cash flow, its Amended and Restated ABL Facility with $359.2 million available capacity, and access to capital markets, deemed sufficient for the next twelve months - As of June 30, 2025, the company had $140.0 million outstanding under its $500.0 million Amended and Restated ABL Facility, with an available borrowing capacity of $359.2 million[226] - The company was in compliance with all debt covenants as of June 30, 2025, with a First Lien Net Leverage Ratio of 0.53:1.00 (covenant limit of 2.50:1.00) and an Interest Coverage Ratio of 2.76:1.00 (covenant floor of 2.00:1.00)[225] - Cash paid for capital expenditures totaled $47.0 million for the six months ended June 30, 2025, which included $8.0 million for maintenance[233] Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure remains largely unchanged, primarily encompassing interest rate risk on $261.2 million of variable-rate debt and limited commodity price risk from percentage-of-proceeds arrangements - As of June 30, 2025, the company had approximately $825.0 million of fixed-rate debt and $261.2 million of variable-rate debt ($140.0 million ABL Facility and $121.2 million Permian Term Loan)[250] - A hypothetical 1% increase in interest rates on variable-rate debt would have increased interest expense by approximately $1.3 million for the six months ended June 30, 2025[250] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed effective as of the end of the period, June 30, 2025[252] PART II - OTHER INFORMATION Legal Proceedings The company is involved in a lawsuit with Fiberspar Corporation for over $5.0 million and is managing the $36.3 million 'Global Settlement' from the 2015 Blacktail Release, of which $21.3 million has been paid - A lawsuit filed by Fiberspar Corporation, alleging over $5.0 million in unpaid orders, is pending with a trial date set for January 2026[254] - The Global Settlement for the 2015 Blacktail Release resulted in total losses of $36.3 million; as of June 30, 2025, the company has paid $21.3 million of this amount[259] Risk Factors This section incorporates by reference the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K and the Quarterly Report for the period ended March 31, 2025, with no new significant risk factors detailed - The risk factors from the 2024 Annual Report and the Q1 2025 report are incorporated by reference[260] Other Information There is no other information to report for this period - None[264] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, updated executive compensation letters, and required CEO/CFO certifications - Exhibits filed include corporate governance documents, updated executive compensation letters, and required CEO/CFO certifications[265]