HOUSTON - Hess (NYSE:HES) Midstream LP (NYSE: HESM) reported mixed financial results for the first quarter of 2024, with earnings per share (EPS) falling short of analyst expectations while revenue slightly exceeded forecasts.
The company announced a first-quarter EPS of $0.59, which was $0.05 below the analyst consensus of $0.64. However, revenue for the quarter was $355.6 million, marginally surpassing the consensus estimate of $351.86 million.
The company's first-quarter results reflect a significant increase in throughput volumes across its operations, with gas processing up 16%, oil terminaling up 13%, and water gathering up a remarkable 47% compared to the same quarter last year. This growth is primarily attributed to higher production and improved gas capture.
Net income for the quarter stood at $161.9 million, a substantial increase from the $142.2 million reported in the first quarter of the previous year. Adjusted EBITDA reached $275.8 million, and the company generated an adjusted free cash flow of $194.2 million.
John Gatling, President and Chief Operating Officer, commented on the quarter's performance, stating, "We delivered a solid first quarter, underpinned by strong operational performance and continued focus on gas capture." He emphasized the company's commitment to executing its operational priorities and driving sustainable cash flow generation.
In terms of capital allocation, Hess Midstream increased its quarterly cash distribution to $0.6516 per Class A share, marking an approximate 2.7% increase from the previous quarter. The company also completed an accretive $100 million repurchase of Class B units of Hess Midstream Operations LP in March 2024.
Looking ahead, Hess Midstream has reaffirmed its full-year 2024 guidance, targeting a net income range of $670 to $720 million, adjusted EBITDA between $1,125 and $1,175 million, and adjusted free cash flow of $685 to $735 million. The company continues to aim for at least 5% annual distribution growth per Class A share through 2026 and maintains its long-term leverage target of 3x adjusted EBITDA.
The company's financial strength is further underscored by its capital expenditure strategy, with $35.2 million spent in the first quarter of 2024, primarily for the expansion of gas compression capacity.
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