HESM — Hess Midstream LP

Summary of Hess Midstream LP Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $158 million, down from $168 million in Q4 2025.
• Adjusted EBITDA: $300 million, compared to $309 million in the previous quarter.
• Total Revenues: Decreased by approximately $15 million, with gathering revenues down by $14 million and processing revenues down by $6 million; terminaling revenues increased by $5 million.
• Adjusted Free Cash Flow: $237 million, a 14% increase from Q4 2025.
• Capital Expenditures: $10 million, significantly lower than in 2025 due to severe winter weather.
• Distribution Increase: 2% increase for Class A shares, reflecting an annualized growth of approximately 8%.

2. Strategic Updates and Business Highlights

• Successfully executed a $60 million share and unit repurchase.
• Achieved throughput volumes of 430 million cubic feet per day for gas processing, 119,000 barrels per day for crude terminaling, and 115,000 barrels per day for water gathering.
• Introduced a new compressor station, contributing to operational efficiency.
• Reduced 2026 estimated capital expenditures by a third to approximately $100 million, driven by upstream efficiencies and longer laterals.

3. Forward Guidance and Outlook

• Q2 2026 Guidance: Expected net income of $150 million to $160 million and adjusted EBITDA of $295 million to $305 million, impacted by planned maintenance at the Tioga Gas Plant.
• Full Year 2026 Guidance: Net income projected between $650 million and $700 million; adjusted EBITDA between $1.225 billion and $1.275 billion, with a significant increase in adjusted free cash flow expected, ranging from $910 million to $960 million.
• Anticipated volume growth in the second half of the year, with an 8% EBITDA growth expected.

4. Bad News, Challenges, or Points of Concern

• Weather Impact: Severe winter weather in January and February negatively affected throughput volumes and revenues.
• Maintenance Impact: Planned maintenance at the Tioga Gas Plant in Q2 is expected to reduce volumes by 5 million to 10 million cubic feet per day.
• Market Risks: Potential impacts from geopolitical events (e.g., Middle East conflict) on third-party volumes, although no immediate changes were reported.

5. Notable Q&A Insights

• CapEx Discussion: The reduction in capital expenditures is aligned with the completion of infrastructure buildout and reflects operational efficiencies, with expectations for increased spending in the latter half of the year.
• Third-Party Volume Outlook: No significant changes due to macroeconomic conditions, with a target of 10% third-party volumes incorporated into guidance.
• Long-Term Strategy: The company remains focused on shareholder returns, debt repayment, and maintaining a strong balance sheet, with no immediate plans for inorganic growth despite strong free cash flow generation.
• Terminal Revenue Structure: Terminal revenues are based on a cost-of-service model, with adjustments made annually; the first-quarter performance may not be fully indicative of future quarters due to weather impacts.

This summary encapsulates the key points from the earnings call, highlighting Hess Midstream's financial performance, strategic initiatives, and outlook while addressing potential challenges and insights from the Q&A session.