DT Midstream, Inc.

and welcome to the DT Midstream third quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. I'd now like to turn the call over to Todd Lorman, Director of Investor Relations. You may begin.

Good morning and welcome everyone. Before we get started, I would like to remind you to read the Safe Harbor Statement on page two of the presentation, including the reference to forward-looking statements. Our presentation also includes references to non-GAAP financial measures. Please refer to the Reconciliations to GAAP contained in the appendix. Joining me this morning are David Slater, President and CEO and Jeff Jewell, Executive Vice President and CFO. I'll now turn it over to David to start the call.

Thanks, Todd, and good morning, everyone, and thank you for joining. During today's call, I'll touch on our financial results, provide an update on the latest commercial development activity, and progress on our growth initiatives. I'll then close with some observations on the overall gas market before turning it over to Jeff to review our financial performance and outlook. So starting off, we had another strong quarter operationally and the team continues to commercialize new organic projects that support our future growth. Our strong year-to-date performance is enabling us to increase our 2024 adjusted EBITDA guidance range to $950 to $980 million. We are also reaffirming our 2025 adjusted EBITDA early outlook range. By continuing to advance projects from our organic project backlog and leveraging the scale from our existing integrated asset platforms, we are well positioned for continued growth in 2025 and beyond. Our track record of strong performance was also recognized earlier this month by Finch Ratings, who upgraded us to investment grade, a strategic goal that we have had since we spun the company in 2021. This morning, we are excited to announce that we have reached a final investment decision on a LEAP Phase 4 expansion, which will increase capacity by 200 million cubic feet per day and further expand our integrated wellhead to water system to the LNG corridor. Our premier Haynesville system has established itself as the leader in both overall capacity and interconnectivity. This expansion, which we expect will be completed in the first half of 2026, increases total LEAP capacity from 1.9 to 2.1 BCF per day via incremental compression and looping, and is underpinned by long-term demand-based contracts with two new customers. This project highlights our Hainesville system's ability to quickly serve our customers' growing needs with right-sized, capital-efficient, and timely expansions. and also signals the demand for takeaway capacity out of the Hainesville to serve Gulf Coast and LNG markets as the basin shifts back into growth mode. This morning, we were also pleased to announce that we are upsizing our previously disclosed project connecting to the Mountain Valley pipeline on our Stonewall system, which will increase the capacity of the Strategic Appalachian Basin interconnect and provide our customers with additional access to the growing mid-Atlantic markets. This project, which is anchored by a long-term agreement with a large privately held producer, increases outlet capacity on Stonewall by 100 million cubic feet per day, is underpinned by a demand-based contract to protect project economics, and we expect to have this project in service in the first half of 2026. In addition to the projects that have reached FID, we remain in a number of active discussions to commercialize new power and data center opportunities across our network. And we will keep you updated as these opportunities advance. Turning to our carbon capture and sequestration projects in Louisiana, as we mentioned on our second quarter call, we have validated the storage formation structure and are confident in the geological suitability of the site. The team continues our pre-FID detailed engineering design of the storage well, CO2 pipeline, and related facilities. We are still awaiting regulatory clarification and guidance from the Louisiana DENR for our class 6 permit application, which we expect will be received prior to the end of the year. We continue to be disciplined in our execution of this project. minimizing capital deployment until we reach a final investment decision, a milestone that we now expect will come in the first half of 2025. Finally, I'd like to take a moment to address the natural gas market fundamentals. We've continued to see choppiness in the short-term market, but our portfolio has remained very durable. We are seeing supportive signals recently with the storage surplus beginning to work off and inventories moving towards the five-year average. and we expect that growing LNG demand beginning in 2025 will provide a more constructive environment for gas producers. In the long term, we expect natural gas demand to continue to grow, driven by the expanding LNG export market, increased power and data center demand, and from industrial and commercial onshoring, all of which will support high utilization and further development of natural gas infrastructure. with DTM's strategically located asset footprint being well-positioned to serve this growing demand. So in summary, I'm very pleased with the continued performance from our team as we continue to commercialize growth opportunities from our project backlog and prepare for the demand ramp in 2025 and beyond. I'll now pass it over to Jeff to walk you through our quarterly financials and outlook.

Thanks, David, and good morning, everyone. In the third quarter, we delivered overall adjusted EBITDA of $241 million, representing a $7 million decrease from the prior quarter. Our pipeline segment results were $3 million greater than the second quarter, reflecting a full quarter contribution from our LEAP Phase III expansion, which was placed in service in June. Gathering segment results decreased by $10 million compared to the second quarter. A result in line with the second quarter when adjusted for favorable one-time items of approximately 10 million that did not repeat in the third quarter. Operationally, total gathering volumes across both the Haynesville and the Northeast averaged approximately 2.9 billion cubic feet a day in the third quarter, with volumes up slightly in the Haynesville compared to the prior quarter, while lower in the Northeast primarily due to the lower volumes on our Appalachia gathering system. In the fourth quarter, we expect a ramp in gathering volumes compared to the third quarter, as well as incremental maintenance expense. As David mentioned in his opening remarks, following our strong year-to-date performance and considering our expectations for the fourth quarter, we are raising our 2024 adjusted EBITDA guidance range to $950 to $980 million. In addition, we are reaffirming our 2025 adjusted EBITDA early outlook and plan to provide our formal 2025 guidance on our year-end call. We are also raising our distributable cash flow guidance range to $670 to $700 million due to lower interest and cash taxes. Our 2024 committed growth capital remains unchanged, with approximately $330 million committed. And we are increasing our 2025 committed capital to reflect new projects reaching FID, with approximately $310 million committed. This increase in 2025 committed growth capital is driven by new projects reaching FID, including our new LEAP Phase 4 expansion, upsize of our stonewall mvp interconnect and build out of our clean fuels gathering facilities we are reducing our full year 2024 growth capital guidance range to 330 million to 350 million which represents a 25 million reduction in the high end of our range this reduction is driven by timing of growth projects and we continue to expect to spend within free cash flow in 2024 and 2025. We are committed to preserving the strength of our balance sheet, and we are very pleased to be upgraded to an investment-grade credit rating by Fitch Ratings earlier this month. In addition to the upgrade from Fitch, we also remain on positive outlook with Moody's. Within the quarter, we further optimized our balance sheet through the issuance of $800 million in new project-level debt at Millennium Pipeline. And we used the proceeds to pay off the full $400 million balance on our term loan. At the end of the quarter, our on-balance sheet leverage was 2.8 times, with our proportional leverage at 3.7 times. And we now have no debt maturities for five years. Finally, today we also announced the declaration of our third quarter dividend of 73.5 cents per share, unchanged from the prior quarter. We remain committed to growing the dividend at 5% to 7% per year in line with our long-term adjusted EBITDA growth. I'll now pass it back over to David for closing remarks.

Thanks, Jeff. So in summary, we are very pleased with how the year is continuing to progress and are feeling confident in our increased guidance for 2024 and early ELIC range for 2025. Our short cycle growth investments continue to track on budget and on schedule, which will contribute meaningful growth over the next two years. Our approach to capital allocation remains thoughtful and disciplined, with our focus on spending within cash flow over the balance of our five-year plan. and growing our dividend in line with our EBITDA. As we look across the portfolio, we continue to see significant growth opportunities enabled by the scale of our strategically located and integrated asset footprint and through the emergence of our energy transition platform. We can now open up the line for questions.