Hess Midstream (HESM) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $160.3 million, up $12.4 million year-over-year, with net income attributable to Hess Midstream LP at $49.5 million, or $0.59 per Class A share.

• Revenues increased to $365.5 million from $324.0 million year-over-year, driven by higher throughput volumes across all segments.

• Adjusted EBITDA reached $276.5 million, up $29.7 million year-over-year, and Adjusted Free Cash Flow was $156.4 million for the quarter.

• Throughput volumes saw double-digit growth: gas gathering up 19%, gas processing up 17%, crude oil gathering up 23%, and water gathering up 43% year-over-year.

• Completed a $100 million unit repurchase in June 2024, contributing to a 25% reduction in total unit count since 2021.

Financial highlights

• Q2 2024 revenues: $365.5 million (Q2 2023: $324.0 million); six months ended June 30, 2024: $721.1 million (2023: $629.0 million).

• Q2 2024 net income: $160.3 million (Q2 2023: $147.9 million); six months: $322.2 million (2023: $290.1 million).

• Adjusted EBITDA for Q2 2024: $276.5 million (Q2 2023: $246.8 million); six months: $551.0 million (2023: $484.5 million).

• Gross Adjusted EBITDA margin held at 80–81%, above the 75% target.

• Adjusted free cash flow for Q2 was approximately $156 million.

Outlook and guidance

• Full-year 2024 net income guidance updated to $650–$700 million, with Adjusted EBITDA guidance at $1,125–$1,175 million.

• Gas gathering and processing throughput guidance for 2024 raised, with organic growth expected through 2026.

• Q3 net income expected at $160–$170 million; Adjusted EBITDA at $280–$290 million.

• At least 5% annual distribution growth per Class A share targeted through 2026.

• Free cash flow expected to remain positive after distributions, with leverage targeted to fall below 2.5x by end of 2025.