Hess Midstream LP Q4 FY2025 earnings call

• Jonathan Stein highlighted 2025 strong performance with completed multiyear projects, and projected lower capital spending in 2026 ($150M, 40% reduction from 2025) and further decreases in 2027-2028 to <$75M/year. - Michael Chadwick reviewed 2025 financials: full-year net income ~$685M, adjusted EBITDA $1.238B (9% growth from 2024). Fourth quarter net income $168M, adjusted EBITDA $309M, impacted by weather and maintenance. - Rate structures: ~85% of revenues are fixed fee with 3% inflation escalator; ~15% reset annually through 2033.

In 2025, Hess Midstream's gas processing volumes averaged 445 million cubic feet per day, crude terminaling volumes averaged 129,000 barrels of oil per day, and water gathering volumes averaged 131,000 barrels of water per day, resulting in full year adjusted EBITDA of $1.238 billion. For the fourth quarter, gas processing volumes averaged 444 million cubic feet per day, crude terminaling averaged 122,000 bbls/day, and water gathering averaged 124,000 bbls/day. Volumes were flat YOY but down QoQ due to severe weather in December.

• 2026 capital spending ~$150M, net income ~$150M-$160M, adjusted EBITDA ~$295M-$305M. - Full-year 2026 net income expected $650M-$700M, adjusted EBITDA $1.225B-$1.275B (flat midpoint vs 2025). - Long-term: 5% annual distribution growth through 2028, ~10% annualized adjusted free cash flow growth, leveraging gas volume growth, inflation tariffs, and lower spending.

• Weather impacts: Severe winter weather affected fourth quarter volumes and will impact 2026 first quarter. - Third-party activity variability: Fluctuations in third-party volumes, though average 10% expected. - Leverage: Natural deleveraging expected as EBITDA grows and debt is repaid with free cash flow.

Q: Doug Irwin asked about debt repayment and leverage target.

A: Michael Chadwick said they plan to use free cash flow after distributions for debt repayment, with natural deleveraging below 3x leverage as EBITDA grows.

Q: Jeremy Tonet inquired about growth drivers and CapEx flex.

A: Jonathan Stein mentioned growth driven by inflation escalators, gas volume growth, and lower CapEx as infrastructure build-out completes. Michael Chadwick detailed 2026 CapEx at $150M, with lower spending in 2027-2028.

Q: John Mackay asked about weather impact and leverage target.

A: Jonathan Stein discussed current weather effects and phased volume recovery, while Michael Chadwick stated no specific leverage target, but natural deleveraging with free cash flow use for debt repayment and shareholder returns