Hess Midstream Partners Lp ((HESM)) has held its Q3 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Hess Midstream Partners LP’s recent earnings call conveyed a positive sentiment, underscored by robust operational performance and strategic capital management. The company emphasized its commitment to shareholder returns and financial flexibility. However, challenges such as a slight decline in net income and the suspension of the Capa gas plant were noted, which could potentially impact future growth.
Operational Performance and Shareholder Returns
The earnings call highlighted Hess Midstream’s strong operational performance, with gas throughputs on the rise. The company executed a $100 million share and unit repurchase in the third quarter. Additionally, there was a 2.4% increase in distribution, translating to approximately 10% on an annualized basis for Class A shares, demonstrating a solid commitment to enhancing shareholder value.
Adjusted EBITDA and Free Cash Flow Growth
Hess Midstream reported an adjusted EBITDA of $321 million for Q3 2025, up from $316 million in Q2. The adjusted free cash flow was approximately $187 million, with expectations for continued growth through 2027, indicating a strong financial position and future growth potential.
Capital Expenditure Reduction
The company announced a significant reduction in future capital expenditures, projecting approximately $270 million for 2025. This reduction is largely due to the removal of the Capa gas plant project, which reflects a strategic shift in capital allocation.
Financial Flexibility
Hess Midstream maintains an impressive adjusted EBITDA margin of approximately 80%, surpassing its 75% target. This highlights the company’s strong operating leverage and financial flexibility, positioning it well for future opportunities.
Net Income Decrease
The earnings call revealed a slight decrease in net income for Q3 2025, which stood at $176 million, down from $180 million in Q2. This decline is a point of concern, although the overall financial health remains robust.
Winter Weather and Maintenance Impact
The company anticipates flat throughput volumes for Q4, attributed to lower third-party volumes, winter weather contingencies, and planned maintenance at the Little Missouri 4 gas plant. This is expected to temporarily affect operational performance.
Suspension of Capa Gas Plant
Hess Midstream announced the suspension of activities at the Capa gas plant, which has been removed from forward plans. This decision impacts the company’s future growth potential but aligns with its strategic capital management approach.
Forward-Looking Guidance
Looking ahead, Hess Midstream provided guidance for the fourth quarter and the full year. The company expects Q4 net income to range between $170 million and $180 million, with adjusted EBITDA projected at $315 million to $325 million. Full-year net income guidance has been narrowed to $685 million to $695 million, with adjusted EBITDA expected to range from $1.245 billion to $1.255 billion, representing approximately 10% year-over-year growth at the midpoint. Capital expenditures are anticipated to total around $270 million, following the suspension of the Capa gas plant. The company remains committed to a 5% annual distribution growth per Class A share through 2027.
In summary, Hess Midstream Partners LP’s earnings call reflected a strong operational and financial performance, with strategic capital management aimed at enhancing shareholder returns. Despite challenges such as a slight decline in net income and the suspension of the Capa gas plant, the company remains optimistic about its future growth prospects, supported by robust financial flexibility and forward-looking guidance.