Yahoo Finance Hess Midstream LP (HESM) Q1 2024 Earnings: Misses EPS Estimates, Sees Revenue Growth
Net Income: Reported at $161.9 million for Q1 2024, significantly exceeding the estimated $45.04 million.
Revenue: Reached $355.6 million in Q1 2024, surpassing the estimated $351.86 million.
Earnings Per Share (EPS): Achieved $0.60 per Class A share, falling slightly below the estimated $0.63.
Adjusted EBITDA: Amounted to $275.8 million, indicating robust operational efficiency.
Free Cash Flow: Adjusted Free Cash Flow was $194.2 million, demonstrating strong liquidity and financial health.
Operational Highlights: Throughput volumes saw significant increases across all segments, supporting revenue growth.
Quarterly Cash Distribution: Increased to $0.6516 per Class A share, reflecting a commitment to returning value to shareholders.
Hess Midstream LP (NYSE:HESM) disclosed its financial results for the first quarter of 2024 on April 25, 2024, through its 8-K filing. The company reported a net income of $161.9 million with a net income attributable to HESM of $44.6 million, or $0.60 per Class A share, missing the analyst estimate of $0.63 per share. However, revenues saw a significant increase, amounting to $355.6 million, surpassing the expected $351.86 million.
Company Overview
Hess Midstream LP operates as a growth-oriented, fee-based company engaged in midstream operations. It owns, operates, develops, and acquires a variety of assets including those involved in gathering, processing, and storing oil and gas. The company's primary revenue generation comes from its gathering segment, which includes Natural Gas Gathering and Compression, Crude Oil Gathering, and Produced Water Gathering and Disposal.
Performance Highlights and Challenges
During the quarter, Hess Midstream experienced a 16% increase in gas processing throughput volumes and a 13% increase in oil terminaling, driven by higher production and enhanced gas capture. Despite these operational successes, the company faced challenges such as increased operating costs and expenses, which rose to $133.6 million from $116.3 million in the prior-year quarter, primarily due to higher maintenance and depreciation expenses.
Financial Achievements and Strategic Moves
The company's strategic initiatives, including a $100 million repurchase of Class B units and an increased quarterly cash distribution to $0.6516 per Class A share, underscore its commitment to growth and shareholder returns. These financial maneuvers are crucial for maintaining investor confidence and funding future expansion.
Detailed Financial Analysis
Hess Midstream reported a robust increase in revenues, primarily due to higher physical volumes, which offset lower shortfall fees. The Adjusted EBITDA stood at $275.8 million, with Adjusted Free Cash Flow reaching $194.2 million. The company also highlighted a significant capital expenditure of $35.2 million, focused mainly on expanding gas compression capacity.
Operational efficiency was evident with throughput volumes witnessing substantial growth across all segments. This operational uptick is pivotal for Hess Midstream as it seeks to maximize asset utilization and efficiency.
Future Outlook and Guidance
Looking ahead, Hess Midstream has reaffirmed its full-year 2024 guidance, projecting significant growth in net income and Adjusted EBITDA. The company continues to target at least 5% annual distribution growth per Class A share through 2026, emphasizing its stable financial strategy and commitment to delivering shareholder value.
In conclusion, while Hess Midstream's earnings per share fell short of analyst expectations, its revenue growth and strategic financial management position it well for sustained growth. The company's focus on operational efficiency and shareholder returns, coupled with robust guidance for the future, reflect its resilient business model in the dynamic energy sector.
Explore the complete 8-K earnings release (here) from Hess Midstream LP for further details.
This article first appeared on GuruFocus.
