Hess Midstream LP (HESM) Reports Strong Q3 2023 Earnings and Raises Full Year Guidance
Hess Midstream LP (NYSE:HESM) completed a $100 million repurchase of Class B units and increased quarterly cash distribution to $0.6175 per Class A share
Net income for Q3 2023 was $164.8 million, with net cash provided by operating activities at $215.5 million
Throughput volumes increased by 9% for gas gathering and processing, 17% for terminaling, and 19% for water gathering
Hess Midstream LP (NYSE:HESM) raises its full year 2023 guidance for gas gathering and processing throughput volumes, net income, and Adjusted EBITDA
On October 25, 2023, Hess Midstream LP (NYSE:HESM) reported its estimated results for the third quarter of 2023. The company completed an accretive $100 million repurchase of Class B units of Hess Midstream Operations LP in September 2023. This was the third repurchase transaction during 2023. The company also increased its quarterly cash distribution to $0.6175 per Class A share for Q3 2023, marking an approximate 2.7% increase compared with Q2 2023.
Financial Performance
The net income for the quarter was $164.8 million, with net cash provided by operating activities amounting to $215.5 million. The net income attributable to Hess Midstream LP was $35.3 million, or $0.57 basic earnings per Class A share, after deduction for noncontrolling interests. Adjusted EBITDA was $271.0 million, Distributable Cash Flow was $224.1 million, and Adjusted Free Cash Flow was $162.7 million.
Operational Highlights
Throughput volumes increased by 9% for gas gathering and processing, 17% for terminaling, and 19% for water gathering compared with the prior-year quarter. This was primarily due to increased Hess drilling activity, higher gas capture, and higher third-party volumes.
Updated Full Year 2023 Guidance
Following strong year-to-date operational performance, Hess Midstream LP is raising its full year 2023 guidance for gas gathering and gas processing throughput volumes compared with the midpoint of the prior guidance range. The company is also raising its full year 2023 guidance for net income and Adjusted EBITDA to approximately $615 million and $1,030 million, respectively.
Future Outlook
Hess Midstream LP continues to target at least 5% annual distribution growth per Class A share through 2025, covered by already-established minimum volume commitments (MVCs), and continues to prioritize financial strength with a long-term leverage target of 3x Adjusted EBITDA. The company expects to continue to have more than $1 billion of financial flexibility through 2025 that can be used to support its return of capital framework.
This article first appeared on GuruFocus.
