Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the DT Midstream Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you.

I would now like to turn the call over to Mr. Investor of Director Lohrmann, Relations. Todd ahead. Sir, please go

Todd Lohrmann

Good morning, welcome everyone. and

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

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

Jewell, President and CFO. me are Slater, David Vice Joining President and Executive this morning CEO; and Jeff

start I'll now the to turn David it call. over to

David Slater

your interest you Thanks for Todd, for everyone, thank good DT and joining in morning, and Midstream. and

During our highlight today's on our disclosure review accomplishments our over the that on. major new development and on results details. fundamentals update financial remarks executing we macro major it I'll to an I'll and call, Jeff recap some turn new in close are currently to disclosures XXXX, and our with projects provide then

very with adjusted XX% exceeded for our year guidance represents successful growth in had XXXX, exceptional of range, XXXX guidance. our We from their full we performance year. So I'd all million, original employees and which to of the $XXX delivered that, thank a revised like our and EBITDA throughout year

value organic we long-term and Commercially, that creation. will numerous opportunities growth deliver executed growth on

Class in these Storage complex gathering day, at attractive the Foremost, LEAP well and and Bcf XX for Washington VI terming our NEXUS permit CCS our by project. by our are out X.X among XX% expanding XX% to expanding system our Haynesville Appalachia asset a our contracts Louisiana filing on rates

makes asset. owner the closed on us acquisition, the a also Millennium majority which We pipeline in

Gathering Appalachia Conversion Union and our of expansion. Michigan front, Project, the our the we portion construction On executed expansions, Blue Stonewall successfully and a gathering

companies. receiving in and our customer inaugural for top midstream Service sustainability the ranking we the recognized Study exceptional we're for Customer published Finally, report, our MASTIO service,

and EBITDA beyond, our will five-year financial strength. XXXX increased capital outlook. highly dividend adjusted updated our on to confident for outlook and the ahead and strong XXXX provide increased new early disclosures, a future XXXX, our Jeff including guidance growth quarterly Looking in our details I'm financial and our

like natural address natural the Before pass fundamentals, gas it the off, I'd pullback I given to in prices. recent quickly gas

Firstly, in confident highly we our remain plan.

well portfolio drilling take-or-pay Tier agreements, have curve, areas no and that serve on resource X gathering with well-positioned our assets is are Our cost exposure. direct long-term contracted the we commodity

outlook grow Our and significantly to premium the assets which of decade. expected provide the capacity markets, between are now to end demand

customers have plus continue strong business expansion lower completion our Our to in and of a levels are highly we commodity downward confident the regions in even our high looking price the year durability track of of history, proven record both are XX price environment. our cycles our Over activity forward of and of across and this projects. performance

new financials our disclosure turn through Jeff it to walk to now our and I'll details. over

Jeff Jewell

fourth In higher XX David, a the across good Washington the that revenue were and levels optimization In from Storage from results assets. LEAP. is and everyone. which the at Thanks Pipeline wide EBITDA million, and we the XXXX, acquisition, resulted and of at ventures basis the total, optimization of short-term continued $X the approximately pipeline joint favorable of included differentials our high million segment short-term benefit many Pipeline of quarter $XX increase results fourth quarter. Millennium revenues Pipeline of delivered third $XXX quarter by short-term the driven segment adjusted morning, of million

a our in day, treating in-service driven Blue at by Operationally, gathering an revenue offset approximately partially Susquehanna lower of high cubic this and hit quarter averaged system, Union segment at lower projects were one a of outage regions planned the volumes by revenues total impact expansion in X.X billion gathered offset all-time Susquehanna. volumes, both which and by feet the driven at Gathering facilities. maintenance at Appalachia by results we higher gathering of

disclosures. Now onto our new

as We from our guidance our midpoint base that XX% to the XXXX, XXXX contribution our and EBITDA as reflects is be built growth Similar back for durability in our half in are EBITDA original expansion well which $XXX plan revise our XXXX expected and range on the business, the The projects. our strength volumes our growth execute $XXX we increasing XXXX the stronger guidance. of represents projects. as year to will million the to million, of adjusted expectation on from organic

the optimize on We will assets. also our capacity opportunities to uncontracted seek continue small of to amounts

million, $XXX Due we our guidance. to providing growth represents portfolio, an outlook adjusted to from a confidence $XXX which X% are also annual original our million of in early rate XXXX EBITDA our for XXXX

growth is exposure. take-or-pay expansion fully commodity and no by high underpinned contracted direct of with Our plan levels

to committed remain prior dividend have an dividend declared increase X% which per quarterly our durable a $X.XX to a and from growing quarterly We share, represents and dividend. increase

growth of million with investment construction on Our start contracted guidance a to $XXX period great projects project. schedule. budget $XXX a to is team this and XXXX The execute capital off our million on as we year all reflects heavier on

$X.X We flow billion. outlook backlog of a five-year contracted projects. billion providing and of new This are by new cash $X.X our strong outlook to capital also is attractive supported organic

issuances, further provide Our five-year naturally and delever sheet grows, outlook business optionality. additional the creation be with value will no balance and capacity which fully incremental we can expect updated debt self-funded as equity capital or to

investment and the financial leveraged. $XXX balance debt no of We are remain possess strategic our further with financing of our under to goal and million and until leverage flexibility maturities had joint project to at four which long-term nearly options available ceiling an ratio achieving delever strength committed as ultimate continues sheet times via to be we our grade year-end, priority, liquidity our pipeline XXXX. rating. of of Preserving And ventures, currently top

or deploying Our or organic dividends shareholder buybacks that debt. through decision deploying value including flow framework accretive cash our maximize return our projects is capital criteria, capital to of for to to shareholders investment designed with down paying growth option, fit distributable

on and closing set opportunity our more back remarks. it pass now David I'll over growth to for details

David Slater

Thanks Jeff.

on executed to day continue significant five-year a this opportunities support existing expansions continue of market asset its growth for LNG markets. connectivity pathway we water contract existing growing wellhead to to LEAP, footprint. across term discussions strong our Active This extension capacity. million see per XXX recently and the and demonstrates for extension further of We

We high. as also continue end-user pathways to see remains expansions momentum for for our of markets demand Appalachia across assets strong

plan the towards of towards hub near-term We contributor expect become a that advancing the our opportunities decision business final priority participation will hydrogen Appalachia. in our with meaningful CCS our energy and end investment a transition platform and the five-year of to project

in So, in summary, XXXX. we had an year exceptional

front us as execute strong enable beyond. on year growth and in We projects, which our we EBITDA growth exciting of have an XXXX will through

and customers Our to team looks of forward entire our performance for track record continuing shareholders. our

open up for now can questions. the We line

Operator

[Operator Instructions]

comes first Your the line question Fargo. of Blum Michael with from Wells

Your line is open.

Michael Blum

budget. Good Thanks. CapEx wanted morning, the everyone. on to start I

the provide there's I'm just can project, that? assuming, then, you just returns? wondering is more anything what And little XX just So, captures slide construction you also can period. wondering the detail. targeting for if more what on mentioned you're us a I'm if to but heavier kind of remind you

David Slater

This Good is Michael. morning. Yeah. David. Sure,

of many at we'll year, projects executing So, this the as time our CapEx year of be sort this of are year. ahead same

of and actually spending guidance the organic we these reduced when around may capital our years, as you the for recall, previous in new construction we're capital is this the Just assets. of timing

a for to lumpy year So, be this going year is us.

that sort year, committed million see that five-year can is look $XXX the that You is you you of of it guidance the CapEx organic investments. bulk $XXX at this And if revised deployed. million see being contracted can

So XXXX. that's just the the CapEx around background here disclosure for

to we organic forward, looking In terms opportunities. focus of continue on

look deploy those organic and projects, one in that We're to primary that have here, a different we capital the we for each of the we're any opportunities. Pipeline to well accretive the for aware thresholds and As accretive holders have gathering capital looking sort equity of sanction when sanction segments value around we of those deployment. two always businesses multiples

So, and a that here. capital regime maintain we're that constantly looking we allocation make disciplined sure at

Michael Blum

I helps. it. appreciate That Great.

just did be like deal. Second just M&A. seems more sale to question you in future. could for there assets your wanted was I near Obviously, Millennium Wondering ask backyard the it the on in

for appetite your M&A? yeah, And leave there. for it curious Just I'll

David Slater

Sure.

for been opportunities. opportunities the with team abundance more last over early is first blessed pursuing. that the opportunities is executing we're on. couple stage years think organic I an have focus is deployment we that our of many And of capital There

So number that our one will be priority capital for allocation.

of ensure accretion M&A way with we is I shareholder M&A, to option transaction. any The accretion per organic to M&A has have think for allocation unit for capital compete -- us, and value

about So that's how it. think I

about it can't really to come. presents think we time-to-time, opportunities The and these market value. going when they're predict from option I as

fits it consider thesis, But plan require creates allocation, line to laying maintain guidance here that our just activity. For today of it and not us, any with discipline M&A value it's clear it. it's makes if we're and capital if our sense We'll out that accretion. does of in shareholder investment consistent it a sight the really strategically,

Michael Blum

very Got it. Thank you much.

Operator

line Marc Barclays. Solecitto comes of Your question from with the next

open. is line Your

Marc Solecitto

MVCs years. Hi. show on the elaborate Blue expectations could couple outlook. if But and factors other or gathering acreage, Good on here helpful support the the just and morning. the embedded Maybe your your on there you I breakeven you could color obviously, of couple us you where over Haynesville growth slide be of give LEAP. basin have over on And years? you visibility, assumptions wonder then you indirect just have Union ramp it for start next to the you the volume a on contractual expected had the then, curious any in next whether on if the maybe

David Slater

for Good Marc. Yeah. question. Thanks Sure, the morning.

sort to commodity that just and fundamentals environment the a address I'm level with current high maybe just going of second So, seeing. step we're the price back

information way, say have our of the it this current most our from I'll customers. we that reflects guidance all So,

very fresh current. it's So, and very

to the continued amount quality price disciplined Haynesville the is producers. tremendous What we environment. price be They were in levels. $X North economic price the the basin of That resource There said, is is in observing the highly at in resource continue discipline $X sub disciplined that just very are America. environment. the $X They in by X being very Tier is

down when around public slowing you've heard the I So, what level, being the sitting that is disciplined, look They activity, growth recently. of of current XX-rig sort are said still which rig rate, producers volume have sure some are at lowering I of they the growth would basin. but -- I'm still some producer that reference everyone's the stock disclosures healthy projecting though comp in following. a still Even growth growing. rigs, is that the

in We shippers rig. when even growth -- the were were the have across price environment seeing XX-ish at months. our for our was XX that basin the pre seeing core we We what last assets from volume higher growth running

that resource the So, serve, to I'm and we highly confident the the quality of growth. we in expect resource see

Marc, on. we're that marry to most LEAP investors know, expansions the contracts, gathering in you our into and flight our flight on as alluded in that expansions were LEAP

As said based LEAP are all demand contracts. our previously, contracts we

there's for and fill and XXXX So, significant a economic reflected XXXX been our that's those contracts, exactly our to and that's what guidance. all we in expect, incentive shippers

Marc Solecitto

That's Gathering capacity made margin side you in up OpEx Union if volumes here? expansion Great. in we and EBITDA treating profile the what curious segment, I'm capacity XQ, margin on much treating decline sequential really a down your XQ. some that if how the on maintenance? the was versus the little, Gathering year XQ. helpful. in later on coming was have Can at and about And this treating you look referenced from you talk Blue EBITDA the of were Union does the Blue on in then growth planned for dilution

David Slater

Yeah.

two Marc. that So, in parts, I'll take

you first, said So was accurate. what

we the of North important think our In customers. important to number I terms the because of reasons reliability -- and one of assets. one is That's very company QX, us won of midstream our we why in the very to America

have maintenance in largest the in our planned treater at We QX. Haynesville

and very to you're planned exactly component right. there's retain that us for yes, to that it's important do planned revenue our that but So, is customers. a of a to cost for There maintenance, maintenance, reliability impact

will we ramp will those volumes facilities bringing in I'll XXXX yes, leave gathering and on and that. at terms treating XXXX just it and be come online. In forward, of looking -- And facilities as

Marc Solecitto

Got it. time. Appreciate the

David Slater

Thank Marc. you,

Operator

John of line Sachs. the from is question Goldman next with Mackay Your

line open. is Your

John Mackay

of to dividend how kind for the thinking new I outlook. guidance five-year go spending flow factors Good morning. kind on and at fair this free of back Hi. we're looking just XXXX if outspend top wanted Thanks Like the and time. of that, this into cash it and about year. a it's of to amount the then

comments XXXX plus or amount -- growth to your no fair outspend of is that this year, but no So, I'm a should incremental incremental reverse see the trying of that materially. that versus we'll I just of guess, message for equity? Thanks. on outspend kind think pretty debt

David Slater

over little start, then the going Jeff lumpiness best think of John. I Thanks to more way spend. way the the maybe and the I'll the and this But pass understand color. it to to I'm to of John, is CapEx timing provide a the business just

I in that. actually years, guidance than This previous our think when we've down year. projects And spend delaying of it's were the more heavy we CapEx I is a spend actually improves it year returns do we and help as no to think that. shifting backed the

contracted to on. a CapEx flight the have big organic that We executing all related the opportunities in bump we're here in

slide XX. actually, and deck, look at slide going I'm our XX XX you to If you slide slide it's and refer and -- to

that organic this getting majority the million can existing committed investment, that of You year. is vast $XXX see of spent

the you years. when what committed numbers, for two at difference between contracts that's those look the So, future

committed So, year we're be less right. than year. executing this exactly you're what What's much will today on next

truly, is So a this issue. timing

pass sheet it as to relates Jeff the to about over I'll talk ins and the to of outs balance this. it

JeffJewell

Jeff. morning, Yeah. Yeah. This And John. good is

with mid of very -- down JVs. So, our is Also, and into you flow to to follow is comfortable ceiling into very times And also this three again, we're what got and things are leverage, to that. line on us, some said, we continue deleveraging our we've XXXX that XXXX. move our on with as get that David as part just we before, at but communicating strong later line available the the in beyond, them of plan like, have contracted been this into then with cash four we low under we've that and as leverage see, in is our the

grade something the vehicles maintaining that again potential could we that be we're balance sheet posture think also -- our tools we that we strong so and available have various sort all are to would at because And investment those that's us looking that we again, as utilize have. of about the

of kind how it. viewing we're that's So

John Mackay

update that. an Maybe appreciate love to Thanks one, hear for on I I'd just Okay. color. NEXUS. the

to not particularly Just you've expansion kind on continue call how lag? with MVP or recontracting is going? progress made to the some let's it, any smaller of opportunities, Whether scale, of of kind seeming

David Slater

John. Yeah. Yeah. Great question,

sense all on sure leg the from you We in continue see to see put a market the the has details, XXXX. you'll NVP year NEXUS moved there sort had as my market. and as of And financial the through well. in the details, is, phenomenal I'm that And guys

happy we now. -- So, how we're we've that's of in this and right it been how us in asset front that with of contractually how market positioned new it has had very sort structure repositioned

So, this serve. Appalachia as out desire I see assets that my opening all said of we of continue where pathways in remarks, to strong to market centers very the our strong

activity lot a saw of pathway in that So XXXX.

forward and XXXX. We expect XXXX in more going

that more from around, execute going to I'll around before for the John, through and is talked to that right now team intensely this, I'm around those more NEXUS working provide we positive ask FERC a very just we NEXUS. the some more on optimistic about I how color we've can capacity we're we're doing But work without and creates the continuing past, a some to which say work have process. is are of I'm that in on And going time on results little what going efforts.

John Mackay

it. Appreciate All right.

Operator

question next JP Jeremy Tonet comes from of line with Your the Morgan.

open. Your is line

Jeremy Tonet

morning. Good Hi.

David Slater

morning, Good Jeremy.

Jeremy Tonet

could or the if what little kind CapEx a bucket just to be little transition or trying a the Appalachia where even size, Haynesville interstate is versus just wanted could. to bit, CapEx just want far more as I I you any dig specific energy us versus bit little going, it of more. to if for I project gathering scoping know detail sense or a in give as to bit And pivot

David Slater

try two break into capital. committed that answers. is Jeremy, to One I'll the

and So, Haynesville. what of the is committed we focused the have contractually currently today that on majority vast

were the it's at than is that. leave deployment, LEAP Pipeline And terms capital towards is it segment it the So, going expansions say to gathering LEAP. flight the of and in and Gathering segment probably the that on it's I'd weighting feed that towards in are the I'll heavier

look we If at the five-year look, the that so call $X the forward midpoint -- billion, it the I of guidance. there

of but towards expect that sort of fully in that's get chunk with plan, Class year. well maturing back the to VI opening In will I in terms of application filed progress project. deep We -- where comments, five-year think We're into our that the that as going a a go in of CCS is now right transition. agencies the I the end we project we're how we putting Louisiana. about And last energy the deployed, consultation

that where investors details, expect that, and very to about the the CapEx a project, we FID the some more optimistic. So, around provide but we'll When more it. good color we'll will we it, FID project very point progress that feeling of

of There's applications interesting various hub we're things in our in. Appalachia with happening especially and hydrogen Northern lots region, around that participating in

in footprint optimistic with to existing really lot It's feeling our and core correlation line of we're and tangential asset very base. customer competencies a our So, much there.

cycle deploy into again, So, projects, that I that those early chunk think but expect I segment. a are still do we'll

Jeremy Tonet

it scale thoughts seems this total a Maybe just economics regards specifically in really even helpful. it the or the help is want later of as Haynesville, more Got the to see With I it. the CCS like up That's to could decade, there. side market at you to point. date relates here. addressable but with picking appreciate economies this had

treaters a other of Haynesville. there's the And in number so,

focused -- emissions if like own unfolding? proximity, your do of work for be Just this So, but provide able Would you you JV them? that how would be provide to do any share the you time? sense see first, over in service them? with get you'd could to Or to partners? that develop how you you on might with there's others seems just It kind think they then look trying be

David Slater

great Yeah. a question. That's

So, you're right.

up or date color emissions. call, X our provided tons what formation. project been And of year this of on the around we're targeting that I'll to our cleaning metric million terms emissions the a own focus capacity storage some we and Our the, has in the sequestration own

much that has have develop go We to but the an and that your own have neighbors a thinking scale runway And that we they accurate not that important concentration neighborhood internal may in needs. extended very our are design our you're right, project are similar other in here. will COX, plans, that is have beyond statement very of there you're and

You economics for scale have tax have to box to the with the credit. out XXG

will That that opportunity view I potentially look opportunity a Phase as parties. come. our that So, take care we third once as like X be to at an of for will needs, us offering own

foresee a evolve, be whether think premature third-party potential JV a it it that would to how fee-for-service, would be it's whether I would business partner.

I around think the to market bit still a little evolve needs that.

our for for would the economical them the be with see, we it's clients that the we going opportunities most carbon around footprint, to exciting CCS, lots up mitigate here of footprint. conversations Any their where this probably in other But and to geographic emissions. stage Northern areas part particularly early have CCS of way part other transportable

in get project where economic have them this where export the replicate needs you concentrations this FID, and an jurisdictions have of region accommodate for is you care our customers, right of established to solution to it. the goal high to the take and other [indiscernible], and our again, So, that then decarbonize geology own

quite this, frankly. about excited very So,

others will this area an country and really navigate going think carbon that future. I to be to for emerging help the a pathway lower as we is us the

Jeremy Tonet

oil CCS customer -- within this outside it. last Got and footprint gas with that just as customer Is industry? industry internal? the conversations outreach gas concerned? If part up Or there. -- your is part I the is and in and could Or on this pick the is are this as there Northern oil far of

David Slater

of but the of and And of some above, this internal that's -- economical heavy COX. and again, a lot the you for viable the decarbonize It's when and industries a look materially pathway is Jeremy. all terms current in at up that It's lot have, capital tax both a sector, them there's operations. regime their of investments to very industry these here

sector, there's of the So, this of all sector, sectors chem conversations where the is sector, power lots in the very the industrial applicable. the sector ag economy,

what So, makes Jeremy. me excited yeah, about, so that's

Jeremy Tonet

And -- just sorry.

David Slater

ahead. go No,

Jeremy Tonet

when Michigan to saying up just are Appalachia you clarify, say or And Northeast? you here,

David Slater

Yeah. at My sitting apologies. I'm Detroit.

Northern up I'm So, footprint. referring to when here, the I say

to So, what assets are. York New of the all through from right I'll where call Midwest our

Jeremy Tonet

Got it. Thank Very helpful. you.

Operator

Kania from comes with Your Wolfe final Research. Alex question

Your line is open.

Alex Kania

Thanks. Good morning.

just development coincide the hearing talk the capacity thinking the decade? of may terminal could with in LNG be going right a have with that opportunity that the You earlier? maybe about back to Do you you think a there Would just that any active it's more you coming respect able would Or what respect if expansion. on something chance what be with that about assume LNG to half happen color be now? little then the to just could discussions play LEAP And bit mentioned timing? kind even you're incremental still is to of maybe is into fair with

David Slater

I'll earlier Thanks of a remarks, extended Bcf shippers, Well, of I for and that for what the with to X.X five anchor start contract that on kind contract for additional back Alex. makes just XX-year their just our said contract. the years, term be question, a maybe going of one day we

this asset corridor market of LNG to it's connectivity, just spoke that that do the wanted So, period the us I is North think us. in the the here that the America and to connecting to with of strength LNG -- that, really basin volumes where importance customer the

So, we're very by encouraged that.

in a remarks, lot We making conversations expansion of around with that. as last headway a of year we're of the said in in of LEAP, number over terms my were just wave opening the on next terms clients In expanding. of incrementally active I

big As you typically of commitments would our customers these assets. commitments match that with downstream expect, are up with

they are at we're and we're that by contracts it to connecting two ourselves liken in the always to partners long-term be asset. the So, together. and school finding high facilitating their counterparties together we're the And -- -- with put everyone's dance have I the dance

it So, takes time.

So, time I don't here. to predict want the

just I give the that a takes good think time business to it to there's and to we we're going that be that more for confident transact, rational come.

Our out versus asset expand is well-positioned. asset. And the the scale basin require right-size we they commitments can this I a distinctive out with that some we runway continue that large before is other way increments, we're have of FID. doing day And are the there the very a can Bcf in in X expansion, to to projects think which

We're really And our in and gas next ground. the we're So, encouraged expanding year. We're position. this about today. flowing we're incrementally year

do and now, where feel I the right said, -- LEAP we with I market timing. let sitting It's more. we're the really good about like expect we'll decide So, just

So.

Alex Kania

Great. Thank you.

Operator

There this at will Mr. are back further call the to David Slater. over time. I now no turn questions

David Slater

everybody. and your We a Midstream. great in you, and appreciate truly Thank attention day. interest Have time DT

Operator

today's thank participating. for This you conference call. gentlemen, and concludes Ladies

may You disconnect. now

DT Midstream (DTM) 16 Feb 232022 Q4 Earnings call transcript