DTM - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to DT Midstream's Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Todd Lohrmann, Director of Investor Relations. Thank you. Please go ahead.

Todd Lohrmann

everyone. welcome, and morning, Good

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

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

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

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

David Slater

joining. and good and morning, for Todd, Thanks, thank everyone, you

financial results, on today's an I'll I'll call, turning on our to to activity on progress During the it on construction then commentary Jeff outlook. commercial before review our provide latest market some touch update initiatives. fundamentals our gas over and close financial and with growth performance

another business we and with quarter line in that, continues perform full with year the our So had plan. to strong

guidance our our range. EBITDA We early are adjusted adjusted outlook range reaffirming EBITDA and XXXX XXXX

making growth for our commercial advancing great Our in teams success. continued positioning construction projects, are and strides organic the of backlog company

that expanding to and X.X are expansion service into This morning, the placed was Systems Haynesville and to early X Phase our budget, day further per from pleased X.X LEAP Bcf capacity water increasing to connectivity. our wellhead on we announce

demand. expansion LNG a compression leverages incremental providing long-term As looping this was Coast take-or-pay reminder, and growing to reliable, by underpinned contracts Gulf and timely access

by active producers be to to value next in Coast access for strong long-term discussions coming of and the Gulf LEAP expansion demand recognition production continue for We the X year Phase with markets. starting

all supply of contracts underpinned the system, producers in are delivery access flexibility with agreements including the and connect System. our X potential include with expanding system. point of LEAP. with dedications agreements are that access executed These the to further Texas, Haynesville to and acreage long-term our Sticking diversifying East of sizable by located We've also private producers

energy platform. our transition to Turning

as Louisiana sequestration carbon continues project and to in capture planned. progress Our

a test X final the and and well the design for Class results confirm the Louisiana from Class suitability of evaluation detailed the formations requirements injection the are well commenced permit DENR. VI completed, of was third-party awaiting The more recently engineering We've the and sequestration. site system COX

the it track are second progressing very project of remains is on how XXXX for half and with happy a We FID.

we acreage morning, which this environmental the that and This advance experience right an the we producers' to This gather tax leveraging by coal wheelhouse new our new and mine significant to credit credit and project. existing treating, gathering, also project and producer. expertise. plant benefits, from excited a clean This dedicated new an gathering will fuels a were tax is development of and the to consists expected methane fugitive in and earlier announce build-out agreement project acquisition our of system, gathering month, of provide is treating gas the reached operational

excited entry as into and are and you backlog, this our opportunity of our fuel keep it we'll project about space growing through We advancement clean updated the progresses. from this emerging

market fundamentals. natural to continue gas spite in is be to which short-term durable the moment In the remained the natural our has weather, market, to need and bullish want infrastructure term. on address the a I of on Finally, we portfolio the long in for very take choppiness trading gas

system. directly via demand our gas LNG be underpin will fully increase expect gas will And the feed some especially of pleased to can in gas next corridor, the wave over are nearing which next that growing the new to market demand the these production the natural call Gulf We are decade, Haynesville along starting. XXXX. on LNG new We growth, which deliveries already Coast facilities see served

power across opportunities as foremost focused considerations on from such being We to this natural will pipeline this growth demand new across highly growth reliability industrial LNG, as and and commercial these predictable fired data gas for continue demand large energy. generation we storage of potential emerge. infrastructure, anticipate speed needed X provide Beyond gas require to market centers infrastructure we power With footprint be many our new facilities, demand-related gas loads, advancing currently incremental to engaged baseload power for natural stable network. will with and creating discussions are our in opportunities early-stage DTM and be projects

to are excited all not this may opportunities growth. these While prospect serve demand emerging about of we advance, the

So project growth with team commercialize as how our market challenged we from performed commodity in summary, continue pleased very our backlog. I opportunities short-term to am has in this

walk pass it and now outlook. I'll financials quarterly you over to our to through Jeff

Jeffrey Jewell

Thanks, David, adjusted EBITDA the a of delivered prior million second In quarter. and overall good increase representing million from quarter, we $XXX the morning, $X everyone.

lower producer million, plants, our base of ventures. treating greater Our one million offset XX results Washington our our complex approximately were first initially recorded which first EBITDA quarter, expected were below to in the pipeline revenue million from business storage reflecting reflecting higher the of Gathering Haynesville by were results segment and joint than outage favorable planned quarter. by segment firm a timing $X LEAP and at $X of the lower seasonal from quarter, revenues the pipeline $XX fourth maintenance to offset due items be plans onetime

in the day Northeast, averaged second timing Haynesville of reflected impact the Operationally, producer by continued were total to to of cubic the both Gathering second Northeast In volumes activity system. outage. volumes Haynesville, the curtailments in quarter, impact compared due down on lower the planned producer and and maintenance offset treating regions plant production feet the of partially planned a approximately volumes ramp-up the the second billion prior volumes in quarter. the quarter X.X And quarter both in Utica the Ohio across with the

fourth expected and volumes market XXXX and more for third driven lower a from gathering EBITDA the business plan base contributions and our noted, previously in be constructive assumes producers. quarter, guidance we've adjusted with environment incremental the a would new by As that second in projects, our quarters, and ramp

several We early in strong EBITDA FID approximately reaching outlook, our are spend and associated are in the guidance XXXX reaffirming in project, capital the build project in capital in and $XXX XXXX payments be committed our year. balance projects XXXX year confidence adjusted XXXX. seller to of outlook million to our as there range clean EBITDA We project achievement the potential facilities of fuels This next subject forthcoming XXXX new million will in the to reflect our over expectation XXXX approximately with committed and includes to reflecting confident milestones. due contingent payments the initial gathering growth committed our adjusted full and and with additional as XXXX our incremental with $XXX increased well new years, that and start XXXX the committed

We project. on to detail works provide and advance in will project the the coming additional scope the finalizes as quarters team the

to our new successful free to high our unchanged, commitment our $XXX and million. XXXX range guidance and growth and commercialization XXXX. updating we projects, XXXX range in we million end guidance The Following within cash spend capital continue are expect is flow of $XXX to to to

with receive positive productive upgrade an to this investment-grade grade credit meetings our preserving We investment an May recent agencies, from balance And very to positioning later and actions of agencies achieving in are had X rating. year. with we of to the the potentially the rating sheet strength committed us

growth. the growing quarter EBITDA in our unchanged declaration our of the adjusted We also to with long-term X% remain we of today, Finally, second year $X.XXX announced dividend X% dividend prior from line to share, quarter. per committed the per

I'll now pass it for back David closing over remarks. to

David Slater

Thanks, Jeff.

year this So in confident we our our and are summary, range in are XXXX. pleased progress for year for and early guidance with full very outlook XXXX feeling

contribute schedule, growth years. and over track the next on Our will continue short-cycle meaningful growth which investments to budget on X

to over X-year on within approach with remains credit and thoughtful plan and Our investment-grade disciplined an our our rating. allocation the achieving flow balance capital cash spending focus of

As demand new we of platform. across transition opportunities portfolio, the located and look the strategically LNG through power and on towards energy natural growth increase our significant we call with continue to see footprint, the emergence asset building gas our

open We can up line for the now questions.

Operator

[Operator first Our Tonet from comes question Jeremy JPMorgan. Instructions] from

Jeremy Tonet

more, I could, want bit to a projects. little potential in if to I regards dive with

that opportunities, there. if could right have X that think I that about data I talking center for support logistics you're

what as timing far the you to a is if more provide is wondering scope there? as come if bit scope that any potential this or details online process this size Ohio. could on and scale incremental of like on or the wondering I'm online? detail you Just of share might look in projects FERC can assuming Just a these

David Slater

is that also in by development. predominantly they're now. growing really were question, the for But number this just And commercial that Thanks opportunities a Yes. for think correct, Jeremy. a excited there's of driven about data by all generation. actually gas-fired power demand I dialogue incremental on demand right the you're center We're underpinned

conversations data power gas-fired of I but strength growth been think and power an these in lot underlying just a have the demand the So demand, in centers regions. around there's recently,

Jeremy, lot I'd these under some with into agreements but more So of detail, we are get to love a confidentiality conversations.

to keep level. So to at I'm just have going it high a

into in infrastructure. these incremental think There view it lateral could all But say to from span whole very I'm to opportunity would that and in locations. some be I the network there of connecting are lines just disclosure of the going type building terms now. of this. that the this right I these terms to just stop predominantly supportive new as on opportunities we current demand the But main

feel in all batting our in conversations As commercialization. of not of on Like my always, commercial lots remarks, I I confident commercialize, going really opening team's them will said average but on.

more they provide can be certainly color. progress as and as we'll we So that transparent,

Jeremy Tonet

Just fuels adjacent share Is business or makes this await imagine, to Is time? mine methane? if how to this able this new scale more you be project. it, Or details there. was looks kind for of see Pennsylvania, any the clean sense. might your coal existing this like. could wondering on Pivoting be west? I curious, to fugitive you the this guess, more just We out potential I I on Got over eagerly in of what gathering footprint?

David Slater

Sure, Jeremy.

damaging at the start think just highest methane fugitive the let's capture. most This And all I bed level. gas. greenhouse is coal we methane know, is So as

environmental a positive it benefit. very So has

just a just And having we're locationally, right closed we So call in for our it existing event leave this I'll quarter. This around there. again, that transaction. subsequent the conversation and footprint now is it's I'll and what

third in clean development growing out the at the detail for But just country, a complete So we'll I'd quarter provide specifics the highest we say at or out the scope demand for as lay very level, is details probably fuels rapid believe, year-end plan and you. can of and the we more more pace.

Many states fuel clean standards. developing are

kind in this of competencies. And product, So our in how lands we have believe, of of in high treat, we demand forward. to our this how be to the experience We terms tax understand lot we monetization a core in right will company. understand in going and wheelhouse gather,

So a of runway two will incremental and growth work in be good we is found to is to this. number one there Step complementary with opportunities that to future is this. to really we for Step number believe of beyond skill set, this. a opportunities front our partner commercialize look

Operator

comes question Wells from from next Michael Our Fargo. Blum

Michael Blum

expecting to I'm wanted year? to Haynesville activity just hearing messaging past -- fourth we was producer year, commentary rest sort quarter. the the that you're you of for rebound as expectations you're any hear of go to by producer if a levels of I the change midpoint on yet back in either now in or if your the wondering the

David Slater

summer. seem Sure. in I'll seeing dip double short-term call quite were of the their and there a publicly back We bit Michael, ago very price and said earlier. the recovery in trough EQT question. month It at good having or feels a so to if we're down moment. the a attuned address this it a what that, Certainly, here to nice has as be on

we just year next see So given is the of this around this how and being really cautious now just balance we're market year. taking QX to that I sensitive up later price incremental think -- pick year demand approach right and the we're until a very

new in facilities. As early feed good said I opening gas remarks, signals of on these we're showing my really seeing some up

as think, short-term But choppy the going word, a up are running again, this that in of forecast be I demand be those locked seems in, to day to trading that lack and changes and until for better market facilities we're on weather to is day. it

how demands get these need we the incremental see of where much quarter into into sort environment that's to a through then more And into picking a see get the guiding America. see and price and and constructive we're our summer, fourth beyond. the So we line clear the North that in here in winter of on we ourselves XXXX results system getting up sight as fall pickup

Michael Blum

And I interest Mountain project that. spurring if you additional any want Valley it access all appreciate producers Valley believe project into to does wanted last I like from to then have announced who project -- you updates this Great. quarter, your there, Mountain pipeline. interconnect other any maybe you a ask I via wondering I'm about -- that that system? this

David Slater

Yes.

as shippers I once anchor to extent network on which the that an an in point those up a in we group working but to opened they the there. upsizing the to So customer Michael, anchored, expect, And customers. If announced we've opportunity we're to with We're we're think other do, of that an announce underpinning which of existing active was it, at project. result would participate. our yet, transaction, with shippers that had want dialogue you'd our Appalachia actively it that not they that

Operator

Our next question Mackay comes Goldman from from Sachs. John

John Mackay

I the and year wanted of then to into comments volumes kind around back your to half into back David, the of 'XX. go

more in year remind broadly, support of of of of then guess, looks And unchanged the you the on. into watching there position curious your just year. just the I else contracting that guess for kind have I is us well? the can guidance much that in remaining how Is EBITDA half portfolio kind you're MVC We sensitivity? back as of what anything that range gathering the terms range, like

David Slater

Great John. Yes. question,

just start I'll now and really halfway to position back reflect by in around I'm So going year, terms the we're in the right saying good of achieving through in, we're guidance. price. comments a on I halfway our previous made And

phenomenon taking I time. happening double-dip it's We think a happening this approach. cautious price real we're and see

of the So year. we're taking balance approach for the a cautious

which or I going downside. that likely the structure for that of the underpin think our as And molecule all rest is the you're segment. aware about significant incremental out is all investors -- MVCs think that are is that price driven aware, I Gathering be the the as we have lays protects really year around in for And us, year. for taken I of sitting incremental hitting balance But just the the year. approach second of molecule, it's tight guidance to with half range out. terms be, confident cautious think, guidance. We're the price just the going our incremental that revenue, highly a driven the of as we've in to the laid really again, to

John Mackay

into All elsewhere the Maybe and into this that state? next being see XXXX I we make demand that do fair. to right. supply step to you of start from comes how way Haynesville call much as incremental the That's finally think from guess, up, its then taking able step versus

David Slater

Yes.

demand directly interconnectivity the that [indiscernible]. procures that the with us, we we're connected demand, for supply think which locations that, predominantly is I that have connected, incremental from, to

in demand is to bring going feel show at say That them some be being real that Those I'd we year, service. proof that work good online and that timely. the ability producers, directly do think our incremental XXXX. And are serving fundamentals So new I some described. today we've going items built, for have And We're serve I the announced that would I points going to to we're that will up. confident producers, think, advantage, that of to X in to being to really private the be just our and about incremental system next looking feel confidence. same that we and about demand

Operator

comes Stanley Research. question next from Wolfe Keith from Our

Keith Stanley

up line that follow on thought. of last want I question's to

get more demand seeing big to the likely coming projects lot demand [indiscernible]. some you forward? even with reduced now all driving connectivity LEAP seeing filled that still system Are some you and on for a looking incremental near-term at moving term are competitors competing near the expansions have You with likely or of of

David Slater

I those 'XX. think think early I I in-service moving is, forward late timing as projects Keith, Yes. think, their

there think again, demand of this of next market capacity available. through the their I being So in will washes wave front be

advantage. that Phase system think to confident feel we I going gives an Again, that recognize think the us we're with to producers Obviously, commercialize what X expansion do LEAP X announced So that today our accessing highly I and new advantage. those working we're that. I

service of trying situation constructed into we're and another brought market schedules. projects and advantage of again, expansion capturing 'XX, in to the on other in and late that's their take X that So out playing being in perhaps right completed beyond depending wave now of front those

Keith Stanley

helpful. That's

just want back. Second go question, I to

through over to in $X.X point you XXXX. of billion backlog projects the So

like progress you XXXX targets on to period. seems good your hit making that. that growth have through It You're visibility

given you even to burner boost as maybe these you viewing days what that, further few Is because M&A growth? in it next years? the how maybe you? So a of front enhance do as are organically over back rate have of you growth the acquisitions a to tool the on way Or see

David Slater

is way describe growth since require deliver M&A midpoint. to call record of our growth the backlog projects Yes, we and I Keith, kind We X%, it growth it's so guide track long-term that organic that the our of of fuels not spun. That would a rate to look at at growth X% do rate. rate it X%

through fueling type been growth have a We spun that organic rate of since consistently opportunities. we

activities. growth we So in ability our to rate confident with feel highly hit organic purely that

and we it to would for at us growth at -- kind that's about So make you M&A is sense it the clearly of how and be underlying alluded and option highest to level. it themselves those make really rate to has think potential economic to accelerant value, opportunities the that have end the kind of your present question. of if an

Operator

Our Citi. from next Spiro Dounis question comes Instructions] from [Operator

Spiro Dounis

backlog. to the billion back Maybe $X.X go

where data of more maybe think here? nice power you any Just demand that state from and directionally you hope Is broadly. kind that if of a maintain? [indiscernible] have curious to goes you centers steady Obviously, sense

curious if start an even actually think higher fill over kind projects there's from gets to So acceleration And time? that of and you what backlog here?

David Slater

Spiro, Yes, an interesting that's question.

in for infrastructure. market is a to over the in demand right the of midstream has fundamentals robust last incremental the expects now, think the ability months persists gas this investments. I of that to sort that robust X way time the forecast the has certainly drive create more going power with driving. us Everyone market in environment it's That evolved if more front

tend could here point that making, with So to the over agree you're tailwinds that market potential that that I are make that there could, time, in be robust. developing more backlog that

I think days. it's early

of we a talked about around we're opportunities space. pretty robust win sets pretty moderate-sized that's mean the in been we a that have other and pursuing. that long a We've opportunities. the suspect midstream know that company, all to But you opportunity have similar enough they're opportunity the that pursuing. don't we're I companies all I emerging set --

could in So space robust does a the that's be it now. feel underpinning right entering like there more fundamentally

that's like really lot think existing base. certainly in. on. we're I asset something months skill spending our our again, the you and us them next as of some these to a of and But this over time companies X to complementary focusing it's persist. XX an opportunities And it's Few that area and set to So lock to commercialize watch others start

Spiro. area very focused now, a us it's right So for

Spiro Dounis

Got it. Understood.

the new gathering. to back going Texas question, East Second

potential the mention did come on LEAP. to You to

it space X price just there Curious, those they us does here. what your locally, the walk I Phase that get for of is would so eventually support a of just volumes? accommodate sort I on these a dynamics customers to curious, two-part but the And now other maybe through to have? And guess expansion? line enough further question volumes the make o Or sense guess maybe options that LEAP? could why more all

David Slater

great a question. that's Yes,

would of they're words, So local ended LEAP the contracts to delivery they on volume System. delivery day, LEAP. using, the flexibility structured, up access a access your delivery are primary current entire way underpin the have an delivery those LEAP if point Predominantly, in to all it delivery have or full in Haynesville million on points in-basin That potentially as would also they points. expansion but ramps, $XXX points, it points, this our

Operator

Global comes question Sunil from Seaport from Sibal Securities. Next

Sunil Sibal

wanted to So better. clean I a the on dwell little just bit opportunity fuels

XXXX. payment clients it the help in in, little bit years, if going project quantify could how region, in I like forward we So opportunity? could initial their also this the curious this then on a other or you was the set? really forward think this Is get you should XXXX resulting about second discussions grow and in seems with an which half kicks in

David Slater

Yes.

again, Let me touch a subsequent activity describing we're on that. here. And event

clarity in comments So I'll reiterate to earlier probably able as provide rapidly or fuels clean as fuel be in I'm and jurisdictions different that would growing more seeing standards like my country more the We're for here. in and discussed much you But step clean implemented not maybe is is now. going this back some being to implemented just of the right demand future. either be to

as a this demand perspective. lot viewing segment of a not the market we're very supply. a there's of And days emerging segments from early So

looking of So a on supply of market. lot side to the bring the what opportunity areas we at, to this are all product okay, spent time

terms skill to portfolio. this execute that set well is methane their within terms This with problematic wheelhouse looking a inside geography, our particular our emissions is of nicely opportunity ability fit and very of fugitive partner, producer in in very at a

for it parties the a lot lot a things doing good of of So all boxes checks of in terms involved. strategically

pause were that, like just quarter. probably a to to in come we'll that opportunity we on that you will we'd asking refine answers provide in more but and scope, I'm commercialize me which, So some able you ask the just this to particular the to going to as specifics, be questions

other And around into more similar with there's as entree but the opportunities looking companies. broadly, to of this lots country at this we're So nice work a segment. do

tuned kind And be pursuing that of And identified advance have we're as could project that in. If backlog you backlog, we as point as viewing the project I development, clean we've this everybody or think X-year capital that of in very organic days. over a It's area to keeping we'll that an been fuels I plan. area. we early growth allocation

we capture portion So into to going about to another project and fully going expect it Part energy this go clean this XX% it storage the of go space. our fuels into in is We talk of into of capital transition carbon segment. Louisiana.

very more So It's and can for investors, do just excited. this really we as early we intend put around that. definition days, fully the to

Sunil Sibal

to regard Okay. clarify And on just your then I to one thing wanted moves. credit with discussions with rating agencies

So put and I happen, whole both, once these IG moves on so the will i.e., unsecured structure the capital that basically footing, the secured presume?

Jeffrey Jewell

capital Sunil, what we've so in got got right, Yes, provisions we've structure. fall-away -- you're our

right. of there Chesapeake-SWN that there the again, the intentionally of yes, be X so to And going And a around outlook, that's the that get for that what excuse is positive And when got of capital S&P to to sort of positive tied set structure able merger then on the you're that's be part like But me, occurs. merger that occurring. or based some Moody's the path. has natural do sort sort takes start there agencies to because big that with triggering. Fitch that cleanly is we've It again, And rating which for to is, watch.

Sunil Sibal

more strategic like about broadly expect significant a in helps goal? DTM? cost, talk you is how terms You move IG savings the bit could of your does little And financing Understood.

Jeffrey Jewell

areas. covers several it of sort Yes,

things. see You're and around debt. you right. financing our costs those can is But The obvious

of up of to your for And a portfolio indexes that. also we've then on -- investment grade. -- the potential halo equity strategically, pretty to that of investors also trading to sort are helps able you from relate close there's reclaim now, provides to entities. you it for still out investment-grade to commercial some investment-grade a bit sort up then allows It looking standpoint, is It IG is are then debt it you're there's around money collateral, also side. focused little opens also with but Our on the What opens also that It portfolio. a got it that. us there

a as commercial of And an part a get also so again, halo positive grade. by negotiating there's and investment being kind things, you activity those the that of

So why that those that it's across we the fronts positive we've several for all been a see pursuing and that's years. that move as of last

Operator

comes Our Mosca next Securities. from from Robert Mizuho question

Robert Mosca

I only have one.

at? the closer coming we maybe just you've incremental U.S. could as get get Gulf might to for you we Coast, Just thoughts these on along need opportunities online. some if projects something of that latest been and maybe your related Is demand storage looking LNG wondering broadly, gas your at on storage looking the gas some be power footprint? And these of what to type more that

David Slater

Sure Not good Robert. a problem morning, squeezing thing and, you in.

the There's portfolio. us it opportunities through a storage that of So for view we multiple really lens hits. storage

year asset. So first in with off, here done this in Michigan, we've been really happy the recontracting we've that that

of those terms in again, in which today. When that country, in market, extending we've the of rates, a in you under-investing we is terms lagging had in I'd ratio storage. the say have is storage what been level the at the contracts is demand really from higher strong highest behind of investments. making front longer country the and renewing thing, us to So working the look we capacity in that been at other

As side, the exasperate back the that drive more start gas-fired fundamental generation here in half and electric come on, will the view, that I renewables my decade. think of value and in the of disparity storage on to

price portfolio what We're yet, at growth So in Haynesville our greenfield looking clear I'd opportunities. about Gulf, kind market then many existing the opportunities. looking to partner incremental at the of of close. not and in seeing that the with or in terms level System storage sort of for codevelop storage we're on here inquiring have but getting fundamentally that been of opportunities And the quite obviously to closely that's say storage in Michigan. we're that we're customers

So there's -- support for need occurred in the that's a need perceived to very clear more storage Gulf. LNG down expansion the

again, geology that's included have and it's that, finding hard location And lot companies on are companies. with for right now So other think the the trifecta. of on we're a And got know price. file active hard And companies we're the right working in I right a you to at I right and too. very working the that, those

So stay come. tuned, more to

It's forward. there's projects more a the think of and general -- consensus the we market commercially in I right clearing clearing that move need can finding matter a storage. just the market,

Operator

We have turn David I for over back remarks. like to would the no further closing Slater call questions. to

David Slater

enjoy of certainly rest appreciate today you us for thank your Well, joining your and questions. We great interest day. Thank Midstream, the very DT and you. much in

Operator

concludes Thank you conference participation. today's for call. This your

now may You disconnect.

DT Midstream (DTM) 30 Jul 242024 Q2 Earnings call transcript