Hess Midstream LP's Third Quarter 2024 Financial Results
Hess Midstream LP (NYSE: HESM) has announced its estimated financial results for the third quarter of 2024, reflecting a net income of $164.7 million. This shows a slight decrease from the $164.8 million reported in the same quarter of the previous year. After accounting for noncontrolling interests, the net income attributed to Hess Midstream stands at $58.6 million, resulting in a basic earnings per Class A share of $0.63, compared to $0.57 from the third quarter of 2023. The company recorded an Adjusted EBITDA of $286.9 million, with net cash provided by operating activities amounting to $224.9 million and an Adjusted Free Cash Flow of $141.4 million.
Leadership Commentary
John Gatling, President and Chief Operating Officer of Hess Midstream, expressed optimism about the company's performance, stating, "We delivered another strong quarter, thanks to robust operations and effective project execution. We are progressing with our multi-year gas gathering expansion initiatives, which will enhance our capacity for gas capture moving forward. We anticipate continued volume growth as we move into the next year, and we remain dedicated to increasing throughput across all systems for 2025 and 2026."
Enhanced Financial Results and Operational Highlights
During the third quarter of 2024, total revenues and other income increased to $378.5 million, up from $363.1 million in the prior year. The affiliate revenues for the quarter included $24.8 million from pass-through electricity and other associated costs, slightly declining from $25.1 million in Q3 2023. The increase in revenue primarily stems from a rise in physical volumes. Total operating expenses in this quarter amounted to $146.8 million, up from $143.1 million due to higher depreciation costs associated with newly placed assets.
Interest expenses, net of interest income, rose to $51.8 million compared to $45.8 million in the earlier quarter. This increase is mainly attributable to the issuance of new fixed-rate senior unsecured notes amounting to $600 million in May 2024, although it was somewhat mitigated by decreased interest expenses from lower borrowings on the revolving credit facility.
Adjustment of Free Cash Flow
Adjusted EBITDA for Q3 2024 reached $286.9 million while the Adjusted Free Cash Flow achieved $141.4 million. As of September 30, 2024, the drawn balance on Hess Midstream's revolving credit facility was noted at $30 million.
Growth Trajectory in Throughput Volumes
The operational performance revealed a 9% increase in throughput volumes for gas gathering, crude oil gathering, and gas processing when compared to Q3 2023. However, there was a 5% decline in terminaling throughput volumes, primarily due to reduced third-party volumes. Notably, water gathering volumes skyrocketed by 29%, indicative of a surge in crude oil production and better utilization of Hess Midstream’s water gathering infrastructure.
Strategic Capital Expenditures
For Q3 2024, capital expenditures totaled $96.3 million, predominantly aimed at supporting ongoing expansions of Hess Midstream's gas compression and associated pipeline infrastructure. This represented an increase from the $64.5 million in capital expenditures in the same quarter last year.
Quarterly Cash Distributions
On October 28, 2024, Hess Midstream’s General Partner Board announced a quarterly cash distribution of $0.6846 per Class A share for Q3 2024. This marked an increase of $0.0169 compared to the previous quarter. This growth is reflective of excess Adjusted Free Cash Flow set aside for distributions after a unit repurchase aimed at increasing shareholder value in September 2024. The distribution is projected to be disbursed on November 14, to shareholders on record as of November 7.
Future Guidance and Expectations
Looking ahead to the fourth quarter 2024, Hess Midstream anticipates net income between $170 million and $185 million, with an Adjusted EBITDA in the range of $295 to $310 million. This performance implies a full-year projected net income of $655 to $670 million and an Adjusted EBITDA between $1,135 to $1,150 million. The guidance for 2025 and 2026 reflects a commitment to at least 5% annual growth in distribution per Class A share through to 2026.
Frequently Asked Questions
1. What is Hess Midstream's net income for Q3 2024?
Hess Midstream reported a net income of $164.7 million for the third quarter of 2024.
2. How much was the Adjusted Free Cash Flow for Q3 2024?
The Adjusted Free Cash Flow for Q3 2024 was $141.4 million.
3. What factors contributed to the increase in revenues compared to Q3 2023?
The increase in revenues was primarily due to higher physical volumes and slightly lower affiliate revenues.
4. When will the cash distribution be paid to shareholders?
The cash distribution is set to be paid on November 14, 2024, to shareholders recorded by November 7, 2024.
5. What are Hess Midstream's future growth expectations?
Hess Midstream is targeting at least 5% annual growth in distributions per Class A share from 2024 through 2026.
