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01/11 08:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: while the company has strong financial flexibility and shareholder return plans, recent financial metrics show a decline in net income and revenues due to weather-related issues. The Q&A session indicates stability in operations but also highlights management's cautious stance on market volatility. The market cap suggests a moderate reaction to these mixed signals, leading to a neutral stock price movement prediction.
Net Income $161,000,000 (decreased from $172,000,000 in Q4 2024) due to lower throughput volumes and revenues.
Adjusted EBITDA $292,000,000 (decreased from $298,000,000 in Q4 2024) primarily attributable to low volumes and revenues, partially offset by lower costs and annual rate increases due to inflation.
Total Revenues (excluding pass-through revenues) Decreased by approximately $13,000,000, primarily driven by lower throughput volumes from severe winter weather.
Processing Revenues Decreased by approximately $7,000,000 due to lower throughput volumes.
Gathering Revenues Decreased by approximately $6,000,000 due to lower throughput volumes.
Total Costs and Expenses (excluding depreciation and amortization) Decreased by approximately $7,000,000 primarily from lower third-party processing fees and lower G&A allocations.
Gross Adjusted EBITDA Margin Maintained at approximately 80%, above the 75% target, indicating strong operating leverage.
Capital Expenditures Approximately $50,000,000 for Q1 2025.
Net Interest (excluding amortization of deferred finance costs) Approximately $51,000,000.
Adjusted Free Cash Flow Approximately $191,000,000.
Drawn Balance on Revolving Credit Facility $128,000,000 at quarter end.
Financial Flexibility Expected to generate greater than $1,250,000,000 through 2027 for incremental shareholder returns.
Distribution per Class A Share Growth Increased by approximately 57% since 2021, with a targeted annual growth of at least 5% through 2027.
Bakken Production Outlook: Hess reported first quarter net production for the Bakken averaged 195,000 barrels of oil equivalent per day, with plans to continue running a four rig drilling program in 2025.
Volume Growth Expectations: In the second quarter, Hess Midstream expects volume growth across oil and gas systems, partially offset by higher seasonal maintenance activity.
Gas Processing Volumes: Gas processing volumes averaged 424,000,000 cubic feet per day, down from guidance due to severe winter weather, but a strong recovery is anticipated.
Capital Expenditures: Full year 2025 capital expenditures are expected to total approximately $300,000,000, with ongoing projects including two new compressor stations and the Capa gas plant.
Adjusted Free Cash Flow: For the full year 2025, adjusted free cash flow is expected to be between $735,000,000 and $785,000,000.
Shareholder Returns: Since 2021, Hess Midstream has returned $1,950,000,000 to shareholders through repurchases and increased distributions per Class A share by approximately 57%.
Financial Flexibility: Hess Midstream expects to generate greater than $1,250,000,000 of financial flexibility through 2027 for incremental shareholder returns.
Weather Challenges: Severe winter weather in January and February impacted throughput volumes, leading to lower production from Hess.
Regulatory and Contractual Risks: The company relies on Minimum Volume Commitments (MVCs) which provide some protection against market volatility but are subject to renewal and renegotiation.
Economic Factors: Ongoing macroeconomic volatility could affect the Bakken outlook and overall production levels.
Supply Chain Challenges: The company faces potential challenges in maintaining throughput volumes due to fluctuations in operator activity and maintenance schedules.
Competitive Pressures: The company must navigate competitive pressures in the midstream sector, particularly as it relates to capturing third-party volumes.
Capital Expenditure Risks: The capital expenditure program is subject to changes based on market conditions and operational needs, which could impact financial flexibility.
Leverage and Financial Stability: While the company maintains a low leverage ratio, any significant changes in market conditions could necessitate adjustments to its financial strategy.
Capital Expenditures (CapEx): Full year 2025 capital expenditures are expected to total approximately $300,000,000.
Distribution Growth: Targeting annual distribution per Class A share growth of at least 5% through 2027.
Shareholder Returns: Returned $1,950,000,000 to shareholders since the beginning of 2021 through accretive repurchases.
Financial Flexibility: Expect to generate greater than $1,250,000,000 of financial flexibility through 2027 for incremental shareholder returns.
Growth Strategy: Focused on executing a strategy of disciplined, low-risk investments to meet basin demand while maintaining reliable operations.
Net Income Guidance Q2 2025: Expected net income to be approximately $170,000,000 to $180,000,000.
Adjusted EBITDA Guidance Q2 2025: Expected adjusted EBITDA to be approximately $300,000,000 to $310,000,000.
Full Year 2025 Net Income Guidance: Expected net income of $715,000,000 to $765,000,000.
Full Year 2025 Adjusted EBITDA Guidance: Expected adjusted EBITDA of $1,235,000,000 to $1,285,000,000.
Adjusted Free Cash Flow Guidance 2025: Expected adjusted free cash flow of $735,000,000 to $785,000,000.
Total Shareholder Return: Since the beginning of 2021, Hess Midstream has returned $1,950,000,000 to shareholders through accretive repurchases.
Distribution Growth: Targeted annual distribution growth of at least 5% through 2027, with a first quarter distribution increase consistent with this target.
Distribution Increase: Increased distribution per Class A share by approximately 57% since 2021.
Financial Flexibility: Expected to generate greater than $1,250,000,000 of financial flexibility through 2027 for incremental shareholder returns.
Share Repurchase Program: Expect to conduct multiple unit repurchases per year through 2027, with a historical average of about $100,000,000 per quarter.
The earnings call presents a mixed outlook. Financial performance shows slight improvements in EBITDA and revenues, but net income decreased slightly. The Q&A section reveals uncertainties about future rig activity and flat EBITDA in 2026 despite higher gas volumes, which tempers optimism. Positive aspects include strong operating leverage, cash flow, and shareholder returns. However, the lack of detailed guidance and potential rig reductions introduce caution. Given the company's market cap, the stock is likely to remain stable, with a neutral prediction for stock price movement over the next two weeks.
The earnings call reveals strong financial performance with increased net income and EBITDA, alongside positive guidance for future growth. The Q&A session confirmed continued growth in gas processing volumes and a robust buyback program, reinforcing positive sentiment. The company's strategic plans and financial flexibility support further shareholder returns, enhancing the outlook. Despite some uncertainties in management responses, the overall sentiment is positive, with expected stock price movement in the 2% to 8% range over the next two weeks.
The earnings call presents mixed signals: while the company has strong financial flexibility and shareholder return plans, recent financial metrics show a decline in net income and revenues due to weather-related issues. The Q&A session indicates stability in operations but also highlights management's cautious stance on market volatility. The market cap suggests a moderate reaction to these mixed signals, leading to a neutral stock price movement prediction.
The earnings call highlights several concerns: decreased financial metrics due to weather, increased capital expenditures, and competitive and regulatory risks. Although there is a positive shareholder return plan, the Q&A section reveals management's vague responses on critical issues like oil rig activity and pipeline implications. The market might react negatively to the decreased financial performance and management's lack of clarity, despite optimistic future guidance and distribution growth targets.
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