DT Midstream, Inc. Q2 FY2025 earnings call

• Commercial Activity: Reached FID on approximately $600 million of new organic growth projects, with ~90% of investment in pipeline segment. Included Guardian Pipeline expansion (15% capacity increase with 20-year negotiated rate contract) and first phase of interstate pipelines modernization program. Executed gathering agreements with private producers in basins operated. - Construction Activity: Placed 3 gathering projects into service, Haynesville LEAP Phase 4 expansion ahead of schedule with in-service date pulled to Q1 2026. - Natural Gas Fundamentals: Positive shift in Haynesville with LNG demand ramp, strong power demand growth in PJM and MISO regions. - Financials: Adjusted EBITDA $277 million in Q2. Confident in 2025 and 2026 adjusted EBITDA guidance. Committed capital in 2025 ($385M) and 2026 ($230M) increased. Upgraded to investment grade by Moody's and S&P. Approved second quarter dividend of $0.82 per share, aiming to grow 5-7% annually.

In the second quarter, the Pipeline segment had adjusted EBITDA $3 million lower than Q1 2025, driven by a planned rate step-down on Guardian Pipeline effective April 1 and seasonally lower EBITDA from interstate and joint venture pipelines, partially offset by an increase in short-term revenues on LEAP and Stonewall. The Gathering segment results were in line with Q1 2025, with Haynesville gathering volumes averaging 1.74 Bcf per day, an all-time record throughput for a quarter and a 16% increase over Q2 2024. Northeast gathering volumes averaged 1.17 Bcf per day, a decrease from Q1 due to maintenance and timing of producer activity, but remain in line with full-year plans for flat entry to exit volumes. Revenue contribution details: Pipeline segment had specific EBITDA changes, and Gathering segment had volume-based performance impacts.

• Reaffirmed 2025 adjusted EBITDA guidance range and 2026 adjusted EBITDA early outlook range. - Committed capital in 2025 increased to $385 million and in 2026 to $230 million, an increase of ~$150 million from Q1 disclosure. - Guardian expansion expects $345 million to $375 million investment, in-service Q4 2028. - Interstate pipeline modernization first phase planned to invest $130 million to $150 million, in-service H2 2027, with capital included in pipeline's next rate case for recovery.

Q: Just want to pick up on some of your last thoughts there. Winds have changed and changing views on natural gas. I want to dial in on New York a bit more, given the higher power prices, given some of the issues with de-voltages, what have you. I was wondering if you could talk a bit more what you're seeing in the state. And I guess, any line of sight you might have to specifically water permits there to be able to get comfort in moving forward with Millennium expansion.

A: Yes. Jeremy, I'll start with sort of our view on power generation in the state of New York. So Millennium directly serves 2 plants. And both those plants have been running at very high load factors, much higher than historic load factors. So I think that's just a data point that supports what you said in the question that there's clearly strong power demand in New York and the need for additional generation, just given how the existing fleet is operating right now. So that's a positive, encouraging signal that we see on the power generation side. If I flip to what I'll call the regulatory environment, we've been seeing incremental positive changes. A lot of it is caught up in the political dialogue, and I'm not going to get into the details on the call here. But what I would say is at a high level, we're seeing a positive shift and a recognition that there is a need, a legitimate need in the state for additional infrastructure. We're obviously working to -- in conjunction with the shippers that are interested in expansion capacity to sort of bring all those pieces together and have all the regulatory agencies and the state leadership sort of aligning around and recognizing the need. And I think as I said earlier on this topic is that, that's sort of a critical gating item for us is that we need to see state support for any project that we would FID on Millennium in terms of expansions.

Q: Wonder if you could expand on the comments you made on the potential data center lateral investments that I know you've been working on for a while. Just how are things progressing? What's going on there? And any best guess you have for timing of when some of these could actually move forward?

A: Yes. Maybe I'll start at the macro level and then kind of we'll double-click down into the details. But I'd say at the highest level, we're seeing strong power demand growth manifesting across both PJM and MISO, which is predominantly where our assets reside. To date, for us, that growth has manifested itself in, what I'll call, utility-scale expansions on our network serving -- directly serving the utilities that are serving these growing power demands. So the AES lateral that we announced on the Midwestern, the combined cycle plant in West Virginia and our Guardian expansion that we announced here today. All of those are driven by the power demand ramp. So that's currently how our portfolio has been experiencing, what I'll call, the data center power-driven growth across our footprint. Now we have a plethora of proposals in front of site-specific behind-the-meter development. And those just haven't commercialized yet. That's the bottom line. I think I've been saying this publicly for a while now is that we've been observing the utilities winning a disproportionate share of this market. I think DT announced yesterday a very bullish expectation of data centers in Michigan. I think they're very confident in 1 gigawatt of capacity with the potential to go to 3 gigawatts of capacity. That's significant. That's 2 to 3 combined cycle power plants. WEC has announced similar data center success. You could -- if you go through the whole utility segment, I won't name them all, but they've all been very successful in winning large percentages of this new power demand. And that's been fine for us. I mean we love our utilities on the network, and we want to serve them. And just like what we announced on Guardian, 20-year negotiated rate contract. We absolutely love that type of business. It's right down the center of the fairway, right in line with our strategy to grow our gas pipelines. So that's how it's been manifesting to date on the network. I fully expect we are going to get some laterals, more laterals, just like the AES lateral. Again, it's just a matter of when those sites commercialize. And what I am hearing directly from the underlying companies that are building these is that all things equal, they want to be directly connected to the grid. They would prefer to be connected to the utilities. There are significant reliability benefits and counterparty strength benefits that come with that. So there's a lot of things happening in the space right now. What I would just keep everybody focused on is that demand is real, and it is showing up. It will manifest itself in various ways across our network, and we're very excited about it. We're going to participate in this growth through this region, and that's a guarantee.