Q2 2026 Hess Midstream LP Earnings Call Transcript
Key Points
- Hess Midstream LP (HESM) completed planned maintenance at TGP on time and under budget, demonstrating operational efficiency.
- The company captured additional third-party gas volumes, boosting processing throughput despite maintenance.
- Adjusted EBITDA margin remained strong at 85%, well above the 75% target, reflecting robust operating leverage.
- Hess Midstream LP (HESM) reiterated its 2026 adjusted free cash flow guidance of $910-$960 million, a 20% year-over-year increase at the midpoint.
- The company strengthened its balance sheet by reducing revolver draw by $87 million in Q2, with leverage expected to decline to ~2.5x by 2028.
- Hess Midstream LP (HESM) continues to prioritize shareholder returns through growing distributions and potential share repurchases, with $280 million in excess free cash flow expected in 2026.
- Q2 throughput volumes were flat to lower on crude terminaling and water gathering compared to Q1, indicating limited near-term growth.
- Adjusted free cash flow decreased approximately 2% quarter-over-quarter, reflecting higher capital expenditures and operational costs.
- Third-quarter 2026 adjusted EBITDA is expected to be flat at the midpoint, as higher revenues are offset by increased OpEx from deferred maintenance.
- Full-year 2026 adjusted EBITDA guidance remains flat at the midpoint compared to 2025, suggesting no significant earnings growth.
- The company did not execute share buybacks in Q2, and the pace of capital returns may be less ratable, subject to Board discretion.
- Potential weather disruptions and higher maintenance costs in the second half could negatively impact results, posing downside risks to guidance.
Good day, ladies and gentlemen, and welcome to the second quarter 2026 Hess Midstream conference Call. My name is Kevin, and I'll be your operator for today. (Operator Instructions)
Please be advised today's conference is being recorded for replay purposes. I would now like to turn the conference over to Jennifer Gordon, Vice President of Investor Relations. Please proceed.
Thank you, Kevin. Good morning, everyone, and thank you for participating in our second quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hessmidstream.com.
Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include
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