Hess Midstream (HESM) Q4 2024 earnings summary

Executive summary

• Achieved strong operational and financial performance in 2024, with significant volume growth and execution on multi-year infrastructure projects, operating a high-quality, integrated midstream platform serving both Hess and third parties.

• Extended growth outlook through 2027, underpinned by Hess's development activity, increasing third-party volumes, and long-term commercial contracts through 2033 with a 100% fee-based structure.

• Focused on disciplined, low-cost investments, maintaining reliable operations, and prioritizing shareholder returns, including targeted annual distribution per share growth of at least 5% through 2027.

• Cash flow stability and visible growth supported by minimum volume commitments covering ~80% of 2025 revenues.

• Fourth quarter 2024 net income rose to $172.1 million, with net income attributable to Hess Midstream LP at $70.4 million, or $0.68 per Class A share.

Financial highlights

• Full-year 2024 net income was $659 million and Adjusted EBITDA reached $1.136 billion, up 12% year-over-year; Q4 2024 net income was $172 million and Adjusted EBITDA was $298 million.

• 2025 guidance: Net income of $715–$765 million, Adjusted EBITDA of $1.235–$1.285 billion (11% growth at midpoint), and Adjusted Free Cash Flow of $735–$785 million.

• Gross Adjusted EBITDA margin for Q4 2024 was 81%, above the 75% target; full year 2024 margin was also 81%.

• Returned $1.95 billion to shareholders since 2021 through repurchases, with distribution per Class A Share up 55% since 2021 and over 10% in 2024.

• Capital expenditures for Q4 2024 were $84.3 million, with 2025 CapEx expected at $300 million, focused on maintenance and growth projects.

Outlook and guidance

• 2025 guidance: Net income of $715–$765 million, Adjusted EBITDA of $1.235–$1.285 billion, and Adjusted Free Cash Flow of $735–$785 million.

• Projected 10% volume growth in 2025 across oil and gas systems, with gas processing volumes expected to average 455–465 million cu ft/day.

• Anticipates >10% growth in net income, Adjusted EBITDA, and Adjusted Free Cash Flow in 2025 and 2026, and >5% in 2027.

• Annual distribution per Class A Share growth target of at least 5% extended through 2027.

• Expects leverage to fall below 3x Adjusted EBITDA in 2025 and below 2.5x by end of 2026.