DTM - Earnings call transcript Q4 2021

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Operator

Good morning. My name is Chris and I'll be your Conference Operator today. At this time, I'd like to welcome everyone to the DT Midstream Fourth Quarter 2021 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

to question like [Operator this would Instructions]. you ask during a time, If you. Thank of Todd Relations. Lohrmann, Investor Director

You may begin.

Todd Lohrmann

and morning Good welcome, everyone.

X harbor Before like we statements. on safe to to would presentation, Page statement remind you the get to read forward-looking started, reference of the I including the

the also presentation to to GAAP contained measures. Please non-GAAP Our to financial in references refer includes reconciliation the appendix.

President David turn are David and start Executive Vice CEO, it call. Slater, Jeff now will to and morning and President this I me to Joining the over CFO. Jewell,

David Slater

Good morning. to new an a marked Todd. X. start And Thanks, which taking thanks to had the join on independent everyone public time excellent We I'll XXXX, transition for year company. in us today. our Slide

not to proud I'd Looking team, and them the thank be more they've back accomplishments I on the done. like of the throughout for job the could year,

Spin-Off exceeded with equity performance First, DTE our has growth trading we guidance shareholder investors. distinctive return We for total successful and with delivered debut. from executed strong financial ranges and our debt organic raise delivered the Energy revised industry-leading a

year, before advancing end to did where commercial water and job X-year just investment segments. added Our wellhead we executed pipeline for great new agreements the customers first Then our a We've plan. the in team of new Haynesville both gathering our the phase, system expansion.

has to organic committed been growth today, of plan our our XX% approximately asset across investment As portfolio. X-year of opportunities

opportunity of we're offer separated our new ESG with best-in-class partnership strong advancing independently to DTE and year governance under We and Mitsubishi. a a is new and great DTM hydrogen expansion. advance our Louisiana the system fully America strategic development capture company framework. and pipeline made C-Corp advance from to a operating carbon initiatives, continue now projects the also storage as carbon-neutral announced in first We North to in progress

X. Slide to turn Let's

company is for continued well Moving forward, the positioned success.

X% guidance, growth XXXX guidance original from increasing strong midpoint. performance. We And our delivering our EBITDA expect to adjusted are XXXX our financial maintain

focus beyond. Our on 'XX primary and now is

which So we're businesses. organic providing our and growth 'XX EBITDA, in core early confidence for reflects continued adjusted outlook our

are with We performance strong line long quarterly to and our cash term. in by our reflecting X%, continue increasing flows financial to dividend we our grow plan dividend

XX% value. disciplined $X.X returns. million to we'll to investment As organic and earlier, plan in X-year that remain attractive I is of criteria investment mentioned focused projects billion our projects our on $X.X only create achieve We shareholder that invest committed

continue our forward zero Looking at will ESG by we initiatives, net executing on goals. our XXXX

carbon offering include and carbon our Here servers and low is us focus storage, hydrogen, a customers capture options. for

integrate operations to ESG was goal into everyday initiatives Our all company. the our aspects of of the

and we results inaugural now look will report financial to quarter who pass of in will guidance. year. Jeff, cover forward sustainability our our this it publishing I to second over the Finally,

Jeff Jewell

Slide start Thanks, Good on morning, David. I'll X. everyone.

marks the both midpoint. guidance which Our contracts in a XX% higher and year guidance prior well-positioned $XXX was higher exceeding XXXX operating to million, second premium million the representing and XXXX, versus original which million earnings year, assets XXXX, deliver $XX EBITDA $XX Operating for than the strong prior million continue than XXXX year. adjusted growth. our in EBITDA $XXX was growth earnings. In of row was were adjusted

to X turn talk our Let's to Slide about XXXX results. more

in the In benefit of year our from were in and joint the the primarily of XXXX. growth full a from ventures. increase earnings XX% of LEAP comprised driven increased earnings operating segment pipeline An in adjusted XXXX, includes pipeline segment. our our EBITDA interstate service and in Which business Pipeline XXXX Our by both XX% mix. performance

in performance growth the throughout the gathering year. our Additionally, XXXX strong volume segment volumes XX% with of in to contributed approximately

to to Slide turn discuss our updated guidance. now XXXX X Let's

adjusted earnings is midpoint. EBITDA operating and million, guidance over EBITDA adjusted $XXX original to our and XXXX the increased million both growth represents XXXX increasing guidance our midpoint for range X% The are We guidance $XXX XXXX.

guidance range public full costs. to and interest operating million of ranges XXXX expense increased is $XXX year Our $XXX company includes earnings new impact the and million, these of a guidance

discuss Let's to turn our to dividend X increase. Slide

to cash we're our In floor an our addition to dividend support quarterly which a delivering our maintaining we stands This cash X line times share, current least $X.XX flows $X.XX. of were in flows, X.X able continue is dividend of our and X% strong to in ratio policy Due increase ratio to grow earnings durable by and contracted equates also line coverage growth, increasing per to approximately a at dividend coverage our plan with long-term. to at dividend annualized times. dividend to long-term with financial we

Let's turn outlook. discuss our Slide XXXX to and I'll X early

underpinned is given David future high which million. business for more the we organic are our As long-term the discussed, expect these growth coming early we in our Haynesville providing that call. across our to on and Appalachia confidence segment's. supported Gathering detail later by both between will from growth are David in its by investments outlook opportunities XXXX growth, provide outlook accretive EBITDA, adjusted and million and $XXX $XXX investment and This an be both and contracts pipeline in

about flow shareholders. talk Let's maximize value cash Slide turn Midstream multiple now strong to to DT provides XX, cash our strong generation. pathways our for to flow

flow in between the create believe to XXXX, cash through investments our for and effective most that million we growth organic align distributable highly value. $XXX ways million expect business. the to We value is $XXX significant way We with provides create accretive which be core flexibility

which they in our criteria. front investment set substantial of disciplined meet evaluate we will We ensure to have opportunities us, of a growth

value value of with durable that to in and cash piece is shareholders that changing creation positioned And with component balance of a respect plans our dividend and reliable our is grows our line final cycles. key creation for ensuring delivering is Another the plan flows. well investment sheet market our

to our times, adjusted growth less ratio back to deleveraging self-funded that investment David four natural EBITDA now a to over occurs as growth I'll maintain more grows. the to debt plan of and by policy on for provide EBITDA investments. our details than financial our turn adjusted Our enabled is leverage is it which

David Slater

Thanks, Jeff.

year, Over of the investment the past made our we solidifying growth have plan. significant course progress,

Our In between XXXX towards $XXX In Vector service executed projects. growth are this investing on a investments. of surveyors $XXX a progress by million capex we placed in we reflects contract. our executed some growing lateral. in portion expansion Energy centered Blue-water included a We the Stonewall million we which Union recently to accretive plant on new an to Appalachian deployed we upcoming System. and the connections pipeline, supported converting significant and expansion system guidance Haynesville, into With Gathering the expect Gathering XX-year in the treating In and $XXX and utility customers. intrastate total which being are be $XXX including of Michigan, Appalachia of million. to over the with production, system Blue XXXX, capital growth is to three million Touching XXXX, expansions our Pipeline

Haynesville Finally, growing multiyear and connecting our will expansion investment Phase we agreements to export to new a Haynesville executed have increasing demand. to X Gathering in which of supply result LNG System, our

Haynesville option announced LEAP expand have additional timeline. exports. executed I'm Haynesville and newly around and includes carbon-neutral Energy largest that of capacity a million day Slide strong XX, expected of XXX expansion This be in detail million for day that to day the with of we XXX I'll a treating, water of system utilize certified with for over million growth compression. system producer, our wellhead will multiyear to discuss our system pathway excited announce continue our and a customer. to XXX a will LNG electric the agreements turn The The preserves expansion. a to Haynesville gathering, both greater the expansion in incremental Southwestern Let's fundamentals production that

multiple currently phase the discussions development Second counter and active are we an parties. is advanced of in with expansion

as We will evolves. Phase on II update you it

to XX now. Slide turn Let's

approximately Looking recent organic focused segment, discussions the to season. in we In continued highly we're highly growth set, Millennium, open In we're to with advancing capacity our renewing build Blue had and we we Union commercial look expansion Phase projects. participants we II the continue to $XXX shipper with a ahead And of party remain on new add system. customers. segment, success grow our in recently renewals on at and NEXUS and continue pipeline executed Gathering long-term confident the focused million ability anchor the store these commercial upon our our contracts. day Haynesville third On opportunity

Gathering We opportunities working also Systems. our Gathering Appalachia new Haynesville and on are Appalachia in on

in we accretive are developments platform, energy transition very represents which excited our emerging about Finally, investments. third

opportunities. our advancing on with advance and to carbon EPA filing multiple our and Louisiana the VI application partner continue towards Class storage and project evaluating capture project continue hydrogen to development work permanent strategic We

focus addressed DTM ESG I'd and in XX, Slide governance our so industry developing on discuss of leading touch an focus, our detail. environmental to to to turn to more dimensions. already I've program and aspects on like social Let's I'd like ESG continues program.

companies. we've On across operational the partner along social a We successful volunteerism engaged our community fund. footprint. charitable highly our will enable million be of is DTM $X to a believe program, with established This employee community front, hallmark a this entire

improves practices. we program our we And safety management talent talent. attract leveraging industry-leading way to implemented that retain new continue best the diverse a culture, we strengthen Additionally, and

Out forward and by our the long team's management success with success with governance, -term shareholder and plan governance tied firmly linked. is subcommittee. led DTM the shareholders’ independent, On is setup side, to our strong our ESG so C-Corp diverse return, engaged, total are a observant established highly

mentioned this sustainability will complete That publishing of these of Finally, earlier, second provide picture I year. in we inaugural elements. our important be all the of as quarter will report a

to firmly a wrap-up Slide growth great had in I'll and XXXX. year presentation. the first we and to track XXXX In Let's turn a now and accretive summary, on deliver XX,

focused long-term. line with strategy performance now set positions robust can distinctive and open the over for up development questions. that the we have We that, us for a opportunities of a And

Operator

[Operator Instructions].

with question JP first Tonet from Morgan. Our Jeremy is

Your line is open.

Jeremy Tonet

good Hi, morning.

David Slater

Morning, Jeremy.

Jeremy Tonet

Just bottlenecks potential with the production seen With projects new off Haynesville want we've a to the announced there, here. in there. on egress in think could. announced there's focus I if And I the growth -- projects all start industry

I'm And announcements that what's capacity issues, some to or fully path LEAP. of this if are on, So any newer compression seen? there. could maximized I with looking if project timeline How we've touch how you and just the the guess there compare offering it could fruit expansion could the wondering just potential be low-hanging could wondering much play

David Slater

Jeremy. Sure,

we So about this mentioned that past be think in to up we've a day. expanded I [Indiscernible] the can X

a So which, now. right about runway that here we're contemplated what on there's we're and expansion today, II multiple in our that's that parties shared really work significant Phase still to we working talking

in to that competitors is that, a extent, a be assets expansion the simpler have to look to the us this allows competitive leg very when needs are we as little competitive And we we've in done up a our think and asset that our positioned And So allows a us work It execute carbon have I also quicker. us, many compression. on ground at landscape, primarily neutral. for offering. to of

is SWN, energy and cargos. natural mentioned, objectives I our for customers source biggest one for our nears responsibly with As with their carbon very long-term gas, desires of aligned strategic low

believe there. in really asset in to competitive basin, to bring footprint we is now good the So we're focus commercial more and position a customers really our right our

Jeremy Tonet

I could That's Phase helpful. Slide you how what to or here this marketplace you've environment wells similar was in different do I what provide to at XX Are point? to on concludes in expect the your there. it signed any out And Haynesville, rates, you turning to wondering commercial on what a it. past past. just is project it color, for if the the was the Got that. guess Thanks I today

David Slater

Yes. rates my we're right again, the word, flowing we kind because I generally have gap demonstrated a a consistent we for projects is it's mean, optimistic this market wave. realizing go that of, be us. I'll earlier call to to gas the the that it's already rates competitive. say, Indigo into LNG the it's of as what flowing the -- you some able on again, back for ground competitive we're we pipe pathway a the and have a number that lack I but the competitors And comment, to announced. It's that And original of in our I pretty wave well here, today, Phase do regard carbon-neutral service. in our are another in But way we're can anchor market. better with with, now would expect, of environment do complex speaking, the And received are going II that agreement, being differentiator

Jeremy Tonet

one path hurdle lot It another questions forward. last could. a around one best I of here NBP and Just the like faced if seems is

how egress, just impact what specifically, materialize. to As on could the it this on how to far high DTA based that days, how production how the Appalachia provide as guess thoughts relates more in and means wondering left for -- I that as expand the quickly to what part, much could of NEXUS in

David Slater

in be and price basin it It's tight. Yeah. delivered say, into a weeks signal being generally production. grow at will a run tight. the over feels to be It'll Appalachia That's headwinds. hot here the least just been couple is I'd another a topic is speaking, continues There like tight, year. that -- continue the been project delayed keep strong of it to basin additional drill it last into is to

favorability rates. we about seen we've the from And I've some interstate past longer-term the in to been out came that we've of seeing and them able our contracts as discussed, been push favorability on those that some results -- shorter-term just to higher the in and talked take we've that firm that NEXUS our pipelines. So of

link out we're the Pipeline also that that tighten Stonewall continues our in Atlantic seeing a lot see and asset could in see to continue interest as playing market it We Mid of you serves also up, and market. the to in

with So into market. connects our system the Stonewall is system a pathway mid-Atlantic Teco and

right we're result that So Valley across generally our with seeing dealing portfolio these Mountain a speaking, construction now. constraints as is of the favorability

Jeremy Tonet

those markets. for outlook It's on could different an serving update the commercial could just that that's to capacity the timeline -- remaining specifically us and moving give be Yeah, how Parana-type be? and

David Slater

season related the on season. continue that on to to remind Toledo we work just the to open to NEXUS call, in were there we interconnect. key open to generation that access One Well, pipeline, that two to everybody the is asset parties to with elements participated the that that serves really directly want and And supply the which expanding Tennessee greater was market. connect other our the

David Slater

the that firm with node. at shorter-term and lot very at work agreements through from lot those said work of continue, to to of I interested interest as in rates -- our are continue details the seeing perspective. and again, we And and looking a favorable interest a So there taking we parties, we're earlier, just parties that extending

and just And environment working NEXUS. positive some of a it it's in. around So right lock now to capture commercially we value that are

Jeremy Tonet

sense. it there. been I'll Got makes helpful. That's it leave Thanks.

David Slater

Jerry. Thanks,

Operator

question Sachs. next The is from Goldman John Mackay with

Your open. line is

John Mackay

those. good me morning. after guys, Hey, Thanks squeezing in for

Just what context or shipper on expansion. then this interest the maybe demand of on CCS wanted on maybe LNG as to about follow more is up in you on you get producer X, to Phase are And it it the take talk this in those, seeing you're seeing the side of well? Can both for and coming done? LEAP, what will

David Slater

Yeah, on LEAP touch first. maybe I'll

the coast. And broad-based corridor to to down continue get along LNG to its interest. interest strong So we see the

environment strong it's a we right too Again, are in in So want seeing just it strong of really it's the to and are that. leave fundamentals, get that don't interest, I indications we competitive now at operating production so driven growth. details. many to But by I'll

LNG XX I what months. foreshadowing think LNG base to in going X at look rig is And happen the what's to it's the you utilization, next the around additional -- we're counts, if in growth. hearing that the it likewise, an

through to fundamentals interest both through that the operating in LNG And job so those asset lots and southern our lots different the from commercially just work systems well interconnected of sides strong our of assets, So, ground with on there's get of the parties. is on have systems end We're details. the we pipes footprint. great today. in a We're all spot, of

working believe competitive we advantage of through have just we that a here, So matter commercially. a it

John Mackay

gears. shifting maybe And

pieces Is So we think of of NBC growth kind the Just still slightly. how that volumes was there 'XX? a up some Can trying items? quarter, were pressure competitive and into a gathering looking about in really EBITDA thing? about talk balance difference any at moving the we going time, that on just rates? you rates. up Are one-off to here, should that Are seeing

David Slater

to across there are that two there get two Sure. reconcile things one. business segments, are that. some that John, just we carrying reminder the I'd incremental be that'd costs One a help say is allocated so

The second primarily the we're item that Haynesville or hauls had brought fairly side of system, to down gathering on focused the on corridor LEAP some of we the the incremental on. and south. third-parties They the short

skewed side was So side. pipeline the Gathering was from LEAP perspective, it the recognition a than heavier probably to revenue to

So helps. hopefully that

John Mackay

makes I sense. one today. time it. for That Thanks Yes. the appreciate

David Slater

problem. No

Operator

next with Wells Fargo. Blum Michael question from is The

Your line is open.

Michael Blum

Thanks. everyone. Haynesville of to Maybe Gathering on volumes. just stay Good morning, topic that

mentioned, quite As was bit sequentially. those just were up a

new is get from that that that's be number a wanted sustainable sense a there Just onetime? to is of continued various of and to or level grow that would anything

David Slater

Yeah. Michael. Good question,

activity So what we was a fourth in a what described full the we as from lot 'XX. forward of of saw quarter

streaming we'll to beginning about earlier So -- I came into forward pull of completed the originally able be also on had planned was were there. was year and the the and that customers we that to came we the at and end our on scheduled of talking treatment fourth completed John They than quarter. just to facility

amount significant So pull there forward. is of a

fourth quite what So when to you volumes the I ramps, related a look ramp just how at we the in quarter had described.

And that's we'll That be today. from that'll So be there. is there. expect growing I that there would

Michael Blum

amount versus What segments? your to it just think was the helps go energy ultimately basically question yet that's and pipeline to will to transition Gathering then committed. you capex, traditional the Great, about wanted the of of XX% X.X ask that remaining do second a lot. I not And X.X

David Slater

that line deploying stirred a got we're really over the sight I to We're saying X pleased program. pleased. really that capital of in we're months. by last we've of half so Yeah, XX on really

on to done or come in team's we plan, new. the that will us. energy it's commercial capitalizing and likely emerging And just market's I the towards going likely and job presented have a still of our later So what transition capital believe significant back portion that it portion does a because amazing do of programs. it's

we of details the art. we now as that now forward in file X those when have I are of A Louisiana as successful confidence but land to in. see sure closer advancing a we'll stable the of detailed which phase the the through phase lot of class work And everyone permit, we're projects everyone capture and right right wants to say on have we lot that permit Let where focus the section carbon we knows, in maybe wealth applications. I'm get very discussions going and sequestration because nature

working We're a on hard diligently, step we're time just doing with high So that. very it confidence. at one

investor apprised on approach the us as key we project. application. for be keep So That a we'll milestone base that that will

Michael Blum

Great, thanks so much.

David Slater

You are welcome.

Operator

is The open. from Kania is with line next Alex Wolfe your question Research,

Alex Kania

Thanks. Good morning.

of -- maybe couple questions. a to Just

is DOE mind on are maybe maybe other mind? and the I things keep little more working one Thanks. maybe in a process there off variables terms hydrogen there maybe sort And on second see your just XXXX a sense on or maybe terms the keep in is the evolution of with of that's integrate sense a the do in you broader little the on and you in talked two risks with if on of terms maybe of of more bit outlook the or that rolls on maybe partners to the that broad having upsides kind more hub timing that. When like First a just 'XX suppose to of expansion. there, Can about then any I plan kick And Phase there. you to us in just trying business. just give how in Haynesville about beginning hydrogen that

David Slater

at you with around some for to tried QX 'XX X, to deck. I'll dates new Slide that's investments in XX Alex, on the the in-service Phase We've there. service. in I of Haynesville. Well, point provide Sure. color some the start And

sense work the that that other timing of helpful, a So of but tried we lot you guys page. -- to laid as we've gives through hopefully, details. a there that you on Hopefully out projects the that's

describe at just especially for of the handle for interest now CCS. with hydrogen this and opportunities, very can terms would with looking they feels We're In a consumer. us. if of in on up a hydrogen our perspective Mitsubishi, to way -- cost the partnership lot It right it blue a economic, it, particularly feels more easier ultimate -- pair very focused little there's from right there's I now,

that and want Here play just that are hub the nature being But are that tax I to very focused very details we're center in that -- our out developments those that. matrix process we're because for that is of of And that the year, proposed again, a we're of for The interested and very interesting program. in into credits of aspect don't of around hydrogen. and this very in And competitive get the front interested hydrogen really that. on hydrogen. involved

Alex Kania

Great. Thanks.

David Slater

welcome, Alex. You're

Operator

no further have I'll the Mr. over closing at remarks. this call Slater questions We to turn any for time.

David Slater

ask very that like everyone and for you just much, I'd Certainly appreciate thank to and to today. have the us in safe weekend. you a questions stay appreciate your interest had. joining DTM Well, everybody great

Operator

call. concludes conference Ladies today's you participating. Thank gentlemen, this for

may now disconnect. You

DT Midstream (DTM) 25 Feb 222021 Q4 Earnings call transcript