Hess Midstream (HESM) Q4 2023 earnings summary

Executive summary

• Q4 throughput growth across gas, oil and water services supported by higher production, gas capture and third-party volumes; adjusted EBITDA reached $264.1 million.

• Full-year net income was $607.7 million and adjusted EBITDA was $1,022.2 million; management emphasized reliable operations and visible throughput growth underpinned by minimum volume commitments.

Financial highlights

• Q4 revenue and other income was $356.5 million vs. $314.6 million YoY; higher volumes and tariff rates more than offset lower MVC shortfall fees.

• Q4 net income was $152.8 million vs. $149.8 million YoY; net income attributable to LP was $37.5 million and basic EPS was $0.55 vs. $0.49.

• Q4 operating costs and expenses were $146.4 million vs. $118.2 million; interest expense was $47.8 million vs. $40.7 million.

• Q4 net cash from operating activities was $247.6 million, adjusted EBITDA $264.1 million and adjusted free cash flow $146.6 million.

• FY net income was $607.7 million vs. $620.6 million in 2022; revenue was $1,348.6 million vs. $1,275.2 million and adjusted EBITDA was $1,022.2 million vs. $982.9 million.

Outlook and guidance

• Management said visible, sustained throughput growth is supported by minimum volume commitments and focused on reliable operating performance.

• Distribution policy targets at least 5% annual growth per Class A share through 2025.

• Two completed compressor stations are expected to add ~100 MMcf/d of installed capacity, expandable by a further ~30 MMcf/d.