Equitrans Midstream Announces First Quarter 2024 Results
Q1 2024 Highlights:
- Announced proposed acquisition by EQT Corporation in an all-stock transaction
-
Reported
$111.9 million of net income and$271.8 million of Adjusted EBITDA -
Generated
$177.5 million of net cash from operating activities - Recorded 67% of total operating revenue from firm reservation fees
“With all of the waterbody and wetland crossings complete and less than one mile of pipeline to install, we are nearing completion of MVP’s forward construction activities,”said
2024 FIRST QUARTER SUMMARY RESULTS
|
Three Months Ended |
||
$ millions (except per share metrics) |
2024 |
||
Net income attributable to ETRN common shareholders |
$ |
94.4 |
|
Adjusted net income attributable to ETRN common shareholders |
$ |
102.1 |
|
Earnings per diluted share attributable to ETRN common shareholders |
$ |
0.21 |
|
Adjusted earnings per diluted share attributable to ETRN common shareholders |
$ |
0.23 |
|
Net income |
$ |
111.9 |
|
Adjusted EBITDA |
$ |
271.8 |
|
Deferred revenue |
$ |
61.0 |
|
Net cash provided by operating activities |
$ |
177.5 |
|
Free cash flow |
$ |
(346.5 |
) |
Retained free cash flow |
$ |
(411.6 |
) |
Net income attributable to ETRN common shareholders for the first quarter 2024 was impacted by several items, including one-time transaction expenses of
As a result of the gathering agreement entered into with EQT in
Operating revenue for the first quarter 2024 decreased by
QUARTERLY DIVIDEND
For the first quarter 2024, ETRN will pay a quarterly cash dividend of
TOTAL CAPITAL EXPENDITURES AND CAPITAL CONTRIBUTIONS
|
|
Three Months Ended |
$ millions |
|
2024 |
MVP |
|
|
Gathering(1) |
|
|
Transmission(2) |
|
|
Water |
|
|
Total |
|
|
(1) |
Excludes approximately |
|
(2) |
Includes capital contributions to |
2024 GUIDANCE
Due to the pending transaction with EQT, ETRN has discontinued providing quarterly and annual financial guidance. Accordingly, investors should not rely on any previously disclosed financial guidance and are cautioned not to rely on historical forward-looking statements as those forward-looking statements were the estimates of management only as of the date provided and were subject to the specific risks and uncertainties that accompanied such forward-looking statements.
Full-Year 2024 Capital Expenditures and Capital Contribution Outlook
$ millions |
|
|
MVP(1) |
|
|
Gathering(2) |
|
|
Transmission(3) |
|
|
Water |
|
|
Total |
|
|
(1) |
Assumes, among other things, MVP construction completion on or about 5/31/2024. |
|
(2) |
Excludes approximately |
|
(3) |
Includes capital contributions to MVP JV for the Southgate project. |
All guidance items exclude the impact of the proposed acquisition by EQT.
BUSINESS AND PROJECT UPDATES
Proposed EQT Acquisition of
On
Mountain Valley Pipeline
As of
- approximately 303 miles of pipeline installed (less than one mile remaining to install);
- all waterbody and wetland crossing work;
- the hydrotesting of approximately 269 miles (approximately 35 miles of testing remains, inclusive of interconnect piping);
- the purging and packing of the pipeline through to the second compressor station (total of approximately 77 miles);
- the commissioning of two of three MVP compressor stations; and
- restoration of a substantial portion of the pipeline right-of-way, with the majority of remaining pipeline restoration to occur following MVP in-service.
Remaining forward construction includes the tying in of a completed bore, the installation of pipe on a steep slope, and the tying together of the final pipeline segments after completing testing and commissioning activities.
In
While the MVP project has made substantial progress toward completion, the total estimated project cost was adversely affected by a number of factors, including that the pace of forward construction and workforce draw down realized through
Through
Senior Notes Offering
On
Volume Curtailment Update
First quarter 2024 gathered volumes and revenue were negatively impacted by the approximately one Bcf per day of gross production curtailments announced in
Outstanding Debt and Liquidity
As of
NON-GAAP DISCLOSURES
Adjusted Net Income Attributable to ETRN Common Shareholders and Adjusted Earnings per Diluted Share Attributable to ETRN Common Shareholders
Adjusted net income (loss) attributable to ETRN common shareholders and adjusted earnings (loss) per diluted share attributable to ETRN common shareholders are non-GAAP supplemental financial measures that management and external users of ETRN’s consolidated financial statements, such as industry analysts and investors, may use to make period-to-period comparisons of earnings trends. Management believes that adjusted net income (loss) attributable to ETRN common shareholders and adjusted earnings (loss) per diluted share attributable to ETRN common shareholders as presented provide useful information for investors for evaluating period-over-period earnings. Adjusted net income (loss) attributable to ETRN common shareholders and adjusted earnings (loss) per diluted share attributable to ETRN common shareholders should not be considered as alternatives to net income (loss) attributable to ETRN common shareholders, earnings (loss) per diluted share attributable to ETRN common shareholders or any other measure of financial performance presented in accordance with GAAP. Adjusted net income (loss) attributable to ETRN common shareholders and adjusted earnings (loss) per diluted share attributable to ETRN common shareholders have important limitations as analytical tools because they exclude some, but not all, items that affect net income (loss) attributable to ETRN common shareholders and earnings (loss) per diluted share attributable to ETRN common shareholders, including as applicable, unrealized gain (loss) on derivative instruments, expenses for the
The table below reconciles adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders with net income (loss) attributable to ETRN common shareholders and earnings (loss) per diluted share attributable to ETRN common shareholders as derived from the statements of consolidated comprehensive income to be included in ETRN’s Quarterly Report on Form 10-Q for the three months ended
Reconciliation of Adjusted Net Income Attributable to ETRN Common Shareholders and Adjusted Earnings per Diluted Share Attributable to ETRN Common Shareholders
|
Three Months Ended |
||||||
(Thousands, except per share information) |
2024 |
|
2023 |
||||
Net income attributable to ETRN common shareholders |
$ |
94,371 |
|
|
$ |
87,054 |
|
Add back (deduct): |
|
|
|
||||
Unrealized loss on derivative instruments |
|
4,672 |
|
|
|
8,494 |
|
|
|
— |
|
|
|
4,122 |
|
Transaction costs |
|
5,684 |
|
|
|
— |
|
Tax impact of non-GAAP items(1) |
|
(2,580 |
) |
|
|
(3,272 |
) |
Adjusted net income attributable to ETRN common shareholders |
$ |
102,147 |
|
|
$ |
96,398 |
|
Diluted weighted average common shares outstanding, assuming dilution |
|
440,561 |
|
|
|
434,254 |
|
Adjusted earnings per diluted share attributable to ETRN common shareholders |
$ |
0.23 |
|
|
$ |
0.22 |
|
(1) |
|
The adjustments were tax effected at ETRN’s federal and state statutory tax rate for each period including certain discrete valuation allowance adjustments as necessary. |
Adjusted EBITDA
Adjusted EBITDA excludes the impact of certain non-operating income and expenses, non-cash items, and other items that ETRN believes are not indicative of ETRN's ongoing operations or affect the comparability of results period to period. As used in this news release, Adjusted EBITDA means, as applicable, net income (loss), plus income tax expense (benefit), net interest expense, depreciation, amortization of intangible assets, payments on the preferred interest in
The table below reconciles adjusted EBITDA with net income as derived from the statements of consolidated comprehensive income to be included in ETRN's Quarterly Report on Form 10-Q for the three months ended
Reconciliation of Adjusted EBITDA
|
Three Months Ended |
||||||
(Thousands) |
2024 |
|
2023 |
||||
Net income: |
$ |
111,889 |
|
|
$ |
106,091 |
|
Add (deduct): |
|
|
|
||||
Income tax expense (benefit) |
|
19,400 |
|
|
|
(3,784 |
) |
Net interest expense |
|
118,896 |
|
|
|
104,957 |
|
Depreciation |
|
71,672 |
|
|
|
69,404 |
|
Amortization of intangible assets |
|
16,205 |
|
|
|
16,205 |
|
Preferred Interest payments |
|
2,764 |
|
|
|
2,746 |
|
Non-cash long-term compensation expense |
|
4,904 |
|
|
|
3,468 |
|
|
|
— |
|
|
|
4,122 |
|
Transaction costs |
|
5,684 |
|
|
|
— |
|
Equity income |
|
(73,005 |
) |
|
|
(122 |
) |
AFUDC – equity |
|
(438 |
) |
|
|
(206 |
) |
Unrealized loss on derivative instruments |
|
4,672 |
|
|
|
8,494 |
|
Adjusted EBITDA attributable to noncontrolling interest(1) |
|
(10,873 |
) |
|
|
(11,819 |
) |
Adjusted EBITDA |
$ |
271,770 |
|
|
$ |
299,556 |
|
(1) |
|
Reflects adjusted EBITDA attributable to noncontrolling interest associated with the third-party ownership interest in Eureka. Adjusted EBITDA attributable to noncontrolling interest for the three months ended |
Free Cash Flow
As used in this news release, free cash flow means, as applicable, net cash provided by operating activities plus principal payments received on the Preferred Interest, distributions received from the MVP JV included in net cash provided by (used in) investing activities, and less net cash provided by operating activities attributable to noncontrolling interest, dividends paid to Series A Preferred Shareholders, capital expenditures (excluding the noncontrolling interest share (40%) of Eureka capital expenditures), capital contributions to MVP JV and distributions received from the MVP JV associated with MVP financing activities.
Retained Free Cash Flow
As used in this news release, retained free cash flow means free cash flow less dividends paid to common shareholders.
The table below reconciles free cash flow and retained free cash flow with net cash provided by operating activities as derived from the statements of consolidated cash flows to be included in ETRN's Quarterly Report on Form 10-Q for the three months ended
Reconciliation of Free Cash Flow and Retained Free Cash Flow
|
Three Months Ended |
||||||
(Thousands) |
2024 |
|
2023 |
||||
Net cash provided by operating activities |
$ |
177,491 |
|
|
$ |
224,720 |
|
Add (deduct): |
|
|
|
||||
Principal payments received on the Preferred Interest |
|
1,529 |
|
|
|
1,429 |
|
Net cash provided by operating activities attributable to noncontrolling interest(1) |
|
(7,754 |
) |
|
|
(9,528 |
) |
ETRN Series A Preferred Shares dividends(2) |
|
(14,628 |
) |
|
|
(14,628 |
) |
Capital expenditures(3)(4) |
|
(80,155 |
) |
|
|
(73,259 |
) |
Capital contributions to MVP JV |
|
(422,985 |
) |
|
|
(34,513 |
) |
Free cash flow |
$ |
(346,502 |
) |
|
$ |
94,221 |
|
Less: |
|
|
|
||||
Dividends paid to common shareholders(5) |
|
(65,050 |
) |
|
|
(64,964 |
) |
Retained free cash flow |
$ |
(411,552 |
) |
|
$ |
29,257 |
|
(1) |
Reflects 40% of |
|
(2) |
Reflects cash dividends paid of |
|
(3) |
Does not reflect amounts related to the noncontrolling interest share of Eureka. |
|
(4) |
ETRN accrues capital expenditures when the work has been completed but the associated bills have not yet been paid. Accrued capital expenditures are excluded from the statements of consolidated cash flows until they are paid. |
|
(5) |
Fourth quarter 2023 dividend of |
Adjusted EBITDA, free cash flow and retained free cash flow are non-GAAP supplemental financial measures that management and external users of ETRN's consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies, may use to assess:
- ETRN’s operating performance as compared to other publicly traded companies in the midstream energy industry without regard to historical cost basis or, in the case of adjusted EBITDA, financing methods
- The ability of ETRN’s assets to generate sufficient cash flow to pay dividends to ETRN’s shareholders
- ETRN’s ability to incur and service debt and fund capital expenditures and capital contributions
- The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
ETRN believes that adjusted EBITDA, free cash flow, and retained free cash flow provide useful information to investors in assessing ETRN's financial condition and results of operations. Adjusted EBITDA, free cash flow, and retained free cash flow should not be considered as alternatives to net income (loss), operating income, or net cash provided by operating activities, as applicable, or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA, free cash flow, and retained free cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income (loss), operating income and net cash provided by operating activities. Additionally, because these non-GAAP metrics may be defined differently by other companies in ETRN's industry, ETRN's definitions of adjusted EBITDA, free cash flow, and retained free cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measures. Free cash flow and retained free cash flow should not be viewed as indicative of the actual amount of cash that ETRN has available for dividends or that ETRN plans to distribute and are not intended to be liquidity measures.
About
Visit www.equitransmidstream.com; and to learn more about our ESG practices visit www.equitransmidstream.com/sustainability-reporting/
Cautionary Statements
This news release contains certain forward-looking statements within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the United States Securities Act of 1933, as amended (the Securities Act), concerning ETRN and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of ETRN, as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be identified by words such as “aim,” “anticipate,” “approximate,” “aspire,” “assume,” “believe,” “budget,” “cause,” “continue,” “could,” “depend,” “develop,” “design,” “estimate,” “expect,” “focused,” “forecast,” “goal,” “guidance,” “impact,” “implement,” “increase,” “intend,” “lead,” “maintain,” “may,” “might,” “objective,” “opportunity,” “outlook,” “plan,” “position,” “possible,” “potential,” “predict,” “project,” “pursue,” “reduce,” “remain,” “result,” “scheduled,” “seek,” “should,” “strategy,” “strive,” “target,” “view,” “will,” or “would” and other similar words or expressions . The absence of such words or expressions does not necessarily mean the statements are not forward-looking statements. These statements are subject to various risks and uncertainties, many of which are outside ETRN's control. Without limiting the generality of the foregoing, forward-looking statements contained in this communication may include the following and/or statements with respect thereto, as applicable: statements regarding (i) the proposed EQT acquisition of ETRN, including the ability to consummate the Mergers (as defined in Note 2 of ETRN’s Quarterly Report on Form 10-Q for the period ended
Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. ETRN has based these forward-looking statements on management’s current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, judicial, construction and other risks and uncertainties, many of which are difficult to predict and are beyond the Company's control, including, as it pertains to the MVP project and its total cost and timing, risks and uncertainties such as the physical construction and restoration conditions, including steep slopes and any further unexpected geological impediments, equipment issues, weather which could affect forward construction and restoration, including the amount and severity of pipeline slips, testing, commissioning, continued crew availability, ability to meet workforce draw down plans, productivity ultimately realized, assumptions related to, and the realizability of, bids provided or to be provided and/or claims which could be made by or against contractors, including relating to materials or subcontractors, project opposition, and the receipt of any necessary approvals, including in-service authorization. Further, the commencement of MVP and MVP-related long-term firm capacity contractual obligations, and certain MVC step ups, more significant gathering MVC fee declines and potential
Important Information For Investors And Shareholders; Additional Information And Where To Find It
In connection with the proposed transaction between EQT and
Participants In Solicitation
EQT and
No Offer Or Solicitation
This news release relates to the proposed transaction between EQT and
|
|||||||
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED) |
|||||||
|
Three Months Ended |
||||||
|
2024 |
|
2023 |
||||
|
|
|
|
||||
|
(Thousands, except per share amounts) |
||||||
Operating revenues |
$ |
364,274 |
|
|
$ |
376,337 |
|
Operating expenses: |
|
|
|
||||
Operating and maintenance |
|
45,228 |
|
|
|
42,862 |
|
Selling, general and administrative |
|
44,329 |
|
|
|
32,622 |
|
Transaction costs |
|
5,684 |
|
|
|
— |
|
Depreciation |
|
71,672 |
|
|
|
69,404 |
|
Amortization of intangible assets |
|
16,205 |
|
|
|
16,205 |
|
Total operating expenses |
|
183,118 |
|
|
|
161,093 |
|
Operating income |
|
181,156 |
|
|
|
215,244 |
|
Equity income |
|
73,005 |
|
|
|
122 |
|
Other (expense) income, net |
|
(3,976 |
) |
|
|
(8,102 |
) |
Net interest expense |
|
(118,896 |
) |
|
|
(104,957 |
) |
Income before income taxes |
|
131,289 |
|
|
|
102,307 |
|
Income tax expense (benefit) |
|
19,400 |
|
|
|
(3,784 |
) |
Net income |
|
111,889 |
|
|
|
106,091 |
|
Net income attributable to noncontrolling interests |
|
2,890 |
|
|
|
4,409 |
|
Net income attributable to ETRN |
|
108,999 |
|
|
|
101,682 |
|
Preferred dividends |
|
14,628 |
|
|
|
14,628 |
|
Net income attributable to ETRN common shareholders |
$ |
94,371 |
|
|
$ |
87,054 |
|
|
|
|
|
||||
Earnings per share of common stock attributable to ETRN common shareholders - basic |
$ |
0.22 |
|
|
$ |
0.20 |
|
Earnings per share of common stock attributable to ETRN common shareholders - diluted |
$ |
0.21 |
|
|
$ |
0.20 |
|
|
|
|
|
||||
Weighted average common shares outstanding - basic |
|
434,497 |
|
|
|
433,707 |
|
Weighted average common shares outstanding - diluted |
|
440,561 |
|
|
|
434,254 |
|
|
|||||||
GATHERING RESULTS OF OPERATIONS (UNAUDITED) |
|||||||
|
Three Months Ended |
||||||
|
2024 |
|
2023 |
||||
|
|
|
|
||||
FINANCIAL DATA |
(Thousands, except per day amounts) |
||||||
Firm reservation fee revenues(1) |
$ |
135,676 |
|
|
$ |
140,071 |
|
Volumetric-based fee revenues |
|
88,964 |
|
|
|
70,681 |
|
Total operating revenues |
|
224,640 |
|
|
|
210,752 |
|
Operating expenses: |
|
|
|
||||
Operating and maintenance |
|
24,760 |
|
|
|
21,396 |
|
Selling, general and administrative |
|
28,464 |
|
|
|
19,508 |
|
Depreciation |
|
50,152 |
|
|
|
49,349 |
|
Amortization of intangible assets |
|
16,205 |
|
|
|
16,205 |
|
Total operating expenses |
|
119,581 |
|
|
|
106,458 |
|
Operating income |
$ |
105,059 |
|
|
$ |
104,294 |
|
|
|
|
|
||||
Other (expense) income, net(2) |
$ |
(4,672 |
) |
|
$ |
(8,494 |
) |
|
|
|
|
||||
OPERATIONAL DATA |
|
|
|
||||
Gathered volumes (BBtu per day) |
|
|
|
||||
Firm capacity(1) |
|
4,777 |
|
|
|
5,292 |
|
Volumetric-based services |
|
2,603 |
|
|
|
2,088 |
|
Total gathered volumes |
|
7,380 |
|
|
|
7,380 |
|
|
|
|
|
||||
Capital expenditures(3) |
$ |
54,256 |
|
|
$ |
59,713 |
|
(1) |
Includes revenues and volumes, as applicable, from contracts with MVCs. |
|
(2) |
Other (expense) income, net, includes the unrealized loss on derivative instruments associated with the Henry Hub cash bonus payment provision. |
|
(3) |
Includes approximately |
|
|||||
TRANSMISSION RESULTS OF OPERATIONS (UNAUDITED) |
|||||
|
Three Months Ended |
||||
|
2024 |
|
2023 |
||
|
|
|
|
||
FINANCIAL DATA |
(Thousands, except per day amounts) |
||||
Firm reservation fee revenues |
$ |
100,323 |
|
$ |
101,722 |
Volumetric-based fee revenues |
|
16,571 |
|
|
37,184 |
Total operating revenues |
|
116,894 |
|
|
138,906 |
Operating expenses: |
|
|
|
||
Operating and maintenance |
|
11,753 |
|
|
14,390 |
Selling, general and administrative |
|
13,676 |
|
|
11,706 |
Depreciation |
|
14,383 |
|
|
13,888 |
Total operating expenses |
|
39,812 |
|
|
39,984 |
Operating income |
$ |
77,082 |
|
$ |
98,922 |
|
|
|
|
||
Equity income |
$ |
73,005 |
|
$ |
122 |
|
|
|
|
||
OPERATIONAL DATA |
|
|
|
||
Transmission pipeline throughput (BBtu per day) |
|
|
|
||
Firm capacity(1) |
|
3,370 |
|
|
3,345 |
Interruptible capacity |
|
49 |
|
|
3 |
Total transmission pipeline throughput |
|
3,419 |
|
|
3,348 |
|
|
|
|
||
Average contracted firm transmission reservation commitments (BBtu per day) |
|
4,157 |
|
|
4,239 |
|
|
|
|
||
Capital expenditures(2) |
$ |
17,704 |
|
$ |
9,189 |
(1) |
Firm capacity includes volumes associated with firm capacity contracts including volumes in excess of firm capacity. |
|
(2) |
Transmission capital expenditures do not include aggregate capital contributions made to the MVP JV of approximately |
|
|||||
WATER RESULTS OF OPERATIONS (UNAUDITED) |
|||||
|
Three Months Ended |
||||
|
2024 |
|
2023 |
||
|
|
|
|
||
FINANCIAL DATA |
(Thousands, except MMgal amounts) |
||||
Firm reservation fee revenues(1) |
$ |
9,375 |
|
$ |
9,375 |
Volumetric-based fee revenues |
|
13,365 |
|
|
17,304 |
Total operating revenues |
|
22,740 |
|
|
26,679 |
Operating expenses: |
|
|
|
||
Operating and maintenance |
|
8,693 |
|
|
7,045 |
Selling, general and administrative |
|
2,025 |
|
|
1,398 |
Depreciation |
|
7,034 |
|
|
5,863 |
Total operating expenses |
|
17,752 |
|
|
14,306 |
Operating income |
$ |
4,988 |
|
$ |
12,373 |
|
|
|
|
||
OPERATIONAL DATA |
|
|
|
||
Water services volumes (MMgal) |
|
|
|
||
Firm capacity(1) |
|
127 |
|
|
108 |
Volumetric-based services |
|
282 |
|
|
351 |
Total water volumes |
|
409 |
|
|
459 |
|
|
|
|
||
Capital expenditures |
$ |
10,047 |
|
$ |
11,076 |
(1) |
Includes revenues and volumes from contracts with MVCs or Annual Revenue Commitments (ARCs), as applicable. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240430332176/en/
Analyst inquiries:
412-518-7193
adefabio@equitransmidstream.com
Media inquiries:
ncox@equitransmidstream.com
Source: