DT Midstream Reports Strong Second Quarter 2021 Results

Source: Nasdaq GlobeNewswire / 06 Aug 2021 06:30:00 America/Chicago

Reaffirms 2021 guidance with bias to high end of range
Announces inaugural dividend of $0.60 per share
Completed successful spinoff from DTE Energy
Solidly positioned DT Midstream as a premier independent midstream company

DETROIT, Aug. 06, 2021 (GLOBE NEWSWIRE) -- DT Midstream, Inc. (NYSE: DTM) today announced second quarter 2021 reported net income of $68 million, or $0.70 per diluted share. For the second quarter of 2021, operating earnings were $89 million and adjusted EBITDA was $191 million.

Reconciliations of operating earnings and adjusted EBITDA (non-GAAP measures) to reported net income are included at the end of this news release.

“Our successful transition to an independent company and today’s second quarter results reinforce our financial strength and position DT Midstream for continued growth as we work to drive value for investors,” said David Slater, president and CEO of DT Midstream.

Slater noted the following accomplishments:

Completed successful spinoff from DTE Energy: DTM began trading on the New York Stock Exchange under the symbol DTM on July 1.
Post-spinoff positioning: Now operating as a fully independent company, DTM is a premier midstream company with high-quality assets located in premium basins connected to major demand markets.
On target: Confidently executing on 2022 growth of 5-7%.
Environmental stewardship: DTM is committed to achieving net zero greenhouse gas emissions by 2050 and expects to attain a net 30% reduction in the next decade.

Dividend

The DT Midstream Board of Directors declared a $0.60 per share dividend on its common stock payable Oct. 15, 2021 to shareholders of record at the close of business Sept. 20, 2021. This represents DTM’s inaugural dividend payment as a standalone company.

DTM expects to maintain a durable and growing dividend that is competitive with its peers. The announced dividend, combined with the dividend of DTE Energy, represents a higher total dividend payment than what was forecasted to be paid to DTE shareholders prior to the spin transaction.

Outlook for 2021

DT Midstream reaffirmed its 2021 adjusted EBITDA guidance of $710 million to $750 million and operating earnings guidance of $296 million to $312 million, with a bias to the higher end of both ranges.

“Our second quarter results give us confidence in meeting our financial goals this year,” said Jeff Jewell, DTM CFO. “The spinoff of DTE's midstream business into an independent company was completed as planned. We believe the transaction unlocks significant value for investors of both companies. DT Midstream has become an independent, pure-play C-corp midstream company.”

Second Quarter Earnings Call

The company will conduct a conference call to discuss earnings results at 9 a.m. ET today. Investors, the news media and the public may listen to a live internet broadcast of the call at this link. The telephone dial-in number in the U.S. and Canada toll free is: 833.968.2209 or international toll: +1 778.560.2895. The passcode is 6455157.

About DT Midstream

DT Midstream (NYSE: DTM) is an owner, operator and developer of natural gas interstate and intrastate pipelines, storage and gathering systems, and compression, treatment and surface facilities. The Company transports clean, natural gas for gas and electric utilities, power plants, marketers, large industrial customers and energy producers across the Southern, Northeastern and Midwestern United States and Canada. The Detroit-based company offers a comprehensive, wellhead-to-market array of services, including natural gas transportation, storage and gathering. DT Midstream is transitioning towards net zero greenhouse gas emissions by 2050, including a target of achieving 30% of its carbon emissions reduction in the next decade. DT Midstream is among the first in the midstream sector to establish net zero goals.

Why DT Midstream Uses Operated Earnings and Adjusted EBITDA

Use of Operating Earnings Information – Operating earnings exclude non-recurring items, certain mark-to-market adjustments and discontinued operations. DT Midstream management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and investors. Internally, DT Midstream uses operating earnings to measure performance against budget and to report to the Board of Directors.

Adjusted EBITDA is defined as GAAP net income attributable to DT Midstream before expenses for interest, taxes, depreciation and amortization, further adjusted to include the proportional share of net income from equity method investees (excluding taxes, depreciation and amortization), and to exclude certain items the company considers non-routine. DT Midstream believes Adjusted EBITDA is useful to the company and external users of DTM’s financial statements in understanding operating results and the ongoing performance of the underlying business because it allows management and investors to have a better understanding of actual operating performance unaffected by the impact of interest, taxes, depreciation, amortization and non-routine charges noted in the table below. We believe the presentation of Adjusted EBITDA is meaningful to investors because it is frequently used by analysts, investors and other interested parties in the midstream industry to evaluate a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending on accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors. DTM uses Adjusted EBITDA to assess the company’s performance by reportable segment and as a basis for strategic planning and forecasting.

In this release, DT Midstream provides 2021 operating earnings guidance. It is likely that certain items that impact the company's 2021 reported results will be excluded from operating results. Reconciliations to the comparable 2021 reported earnings guidance are not provided because it is not possible to provide a reliable forecast of specific line items (i.e. future non-recurring items, certain mark-to-market adjustments and discontinued operations). These items may fluctuate significantly from period to period and may have a significant impact on reported earnings.

DT Midstream also provides 2021 Adjusted EBITDA guidance. The reconciliation of net income to Adjusted EBITDA as projected for full-year 2021 is not provided. DT Midstream does not forecast net income as it cannot, without unreasonable efforts, estimate or predict with certainty the components of net income. These components, net of tax, may include, but are not limited to, impairments of assets and other charges, divesture costs, acquisition costs, or changes in accounting principles. All of these components could significantly impact such financial measures. At this time, DT Midstream is not able to estimate the aggregate impact, if any, of these items on future period reported earnings. Accordingly, DT Midstream is not able to provide a corresponding GAAP equivalent for Adjusted EBITDA.

Forward Looking Statements

This release contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, business prospects, outcomes of regulatory proceedings, market conditions, and other matters, based on what we believe to be reasonable assumptions and on information currently available to us.

Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “intends,” “continues,” “forecasts,” “goals,” “strategy,” “prospects,” “estimate,” “project,” “scheduled,” “target,” “anticipate,” “could,” “may,” “might,” “will,” “should,” “see,” “guidance,” “outlook,” “confident” and other words of similar meaning. The absence of such words, expressions or statements, however, does not mean that the statements are not forward-looking. In particular, express or implied statements relating to future earnings, cash flow, results of operations, uses of cash, tax rates and other measures of financial performance, future actions, conditions or events, potential future plans, strategies or transactions of DT Midstream, and other statements that are not historical facts, are forward-looking statements.

Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks, and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated, or budgeted. Many of the factors that will determine these results are beyond our ability to control or accurately predict. Such assumptions, risks, uncertainties and other factors include, but are not limited to, the following: risks related to the Spin-Off, including that transition services provided by DTE Energy could adversely affect our business and that the transaction may not achieve some or all of the anticipated benefits; changes in general economic conditions; competitive conditions in our industry; actions taken by third-party operators, processors, transporters and gatherers; changes in expected production from Indigo Minerals, LLC and/or its affiliates, Southwestern Energy Company and/or its affiliates, Antero Resources Corporation and/or its affiliates and other third parties in our areas of operation; demand for natural gas gathering, transmission, storage, transportation and water services; the availability and price of natural gas to the consumer compared to the price of alternative and competing fuels; competition from the same and alternative energy sources; our ability to successfully implement our business plan; our ability to complete organic growth projects on time and on budget; our ability to complete acquisitions; the price and availability of debt and equity financing; restrictions in our existing and any future credit facilities; energy efficiency and technology trends; changing laws regarding cyber security and data privacy and any cyber security threat or event; operating hazards, environmental risks and other risks incidental to gathering, storing and transporting natural gas; changes in environmental laws, regulations or enforcement policies, including laws and regulations relating to climate change and greenhouse gas emissions; natural disasters, adverse weather conditions, casualty losses and other matters beyond our control; the impact of outbreaks of illnesses, epidemics and pandemics, including the COVID-19 pandemic and the economic effects of the pandemic; interest rates; labor relations; large customer defaults; changes in the availability and cost of capital; changes in tax status; the effects of existing and future laws and governmental regulations; changes in insurance markets impacting costs and the level and types of coverage available; the timing and extent of changes in commodity prices; the suspension, reduction or termination of our customers’ obligations under our commercial agreements; disruptions due to equipment interruption or failure at our facilities, or third-party facilities on which our business is dependent; the effects of future litigation; the qualification of the Spin-Off as a tax-free distribution; our ability to achieve the benefits that we expect to achieve as an independent publicly traded company; and our dependence on DTE Energy to provide us with certain services following the Spin-Off.

The above list of factors is not exhaustive. New factors emerge from time to time. DT Midstream cannot predict what factors may arise or how such factors may cause actual results to vary materially from those stated in forward-looking statements, see the discussion under the section entitled “Risk Factors” in our registration statement on Form 10 and any other reports filed with the SEC. Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, you should not put undue reliance on any forward-looking statements.

Any forward-looking statements speak only as of the date on which such statements are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events, changes in assumptions or otherwise, unless required by law.

Contact

Media

Michael Raveane, DT Midstream, 313.774.0690
michael.raveane@dtmidstream.com

Investors/Analysts

Todd Lohrmann, DT Midstream, 313.774.2424
investor_relations@dtmidstream.com

DT Midstream, Inc. Segmented Net Income (Unaudited)

			Three Months Ended June 30,
			2021										2020
			Reported Earnings		Pre-tax Adjustments			Income Taxes⁽¹⁾			Operating Earnings		Reported Earnings		Pre-tax Adjustments		Income Taxes⁽¹⁾		Operating Earnings
			(In millions)

		Pipeline	$	44	$	5	A	$	(1	)	$	48	$	37	$	-	$	-	$	37

		Gathering		24		4	A		(1	)		41		34		-		-		34
						19	B		(5	)

		Net Income Attributable to DT Midstream	$	68	$	28		$	(7	)	$	89	$	71	$	-	$	-	$	71


			Six Months Ended June 30,
			2021										2020
			Reported Earnings		Pre-tax Adjustments			Income Taxes⁽¹⁾			Operating Earnings		Reported Earnings		Pre-tax Adjustments		Income Taxes⁽¹⁾		Operating Earnings
			(In millions)

		Pipeline	$	86	$	10	A	$	(3	)	$	93	$	72	$	-	$	-	$	72

		Gathering		60		9	A		(2	)		81		70		-		-		70
						19	B		(5	)

		Net Income Attributable to DT Midstream	$	146	$	38		$	(10	)	$	174	$	142	$	-	$	-	$	142

(1	)	Excluding tax related adjustments, the amount of income taxes was calculated based on a combined federal and state income tax rate, considering the applicable jurisdictions of the respective segments and deductibility of specific operating adjustments.

Adjustments key
A		Transaction costs relating to the separation of DT Midstream — recorded in Operating Expenses — Operation and Maintenance
B		Loss on note receivable for an investment in certain assets in the Utica shale region — recorded in Operating Expenses — Assets (gains) losses and impairments, net

DT Midstream, Inc. Segmented Diluted Earnings Per Share⁽²⁾ (Unaudited)

			Three Months Ended June 30,
			2021										2020⁽³⁾
			Reported Earnings		Pre-tax Adjustments			Income Taxes⁽¹⁾			Operating Earnings		Reported Earnings		Pre-tax Adjustments		Income Taxes⁽¹⁾		Operating Earnings

		Transaction costs				0.09	A		(0.03	)
		Loss on note receivable				0.20	B		(0.05	)

		Net Income Attributable to DT Midstream	$	0.70	$	0.29		$	(0.08	)	$	0.91	$	0.73	$	-	$	-	$	0.73


			Six Months Ended June 30,
			2021										2020⁽³⁾
			Reported Earnings		Pre-tax Adjustments			Income Taxes⁽¹⁾			Operating Earnings		Reported Earnings		Pre-tax Adjustments		Income Taxes⁽¹⁾		Operating Earnings

		Transaction costs				0.19	A		(0.05	)
		Loss on note receivable				0.20	B		(0.05	)

		Net Income Attributable to DT Midstream	$	1.51	$	0.39		$	(0.10	)	$	1.80	$	1.47	$	-	$	-	$	1.47


(1	)	Excluding tax related adjustments, the amount of income taxes was calculated based on a combined federal and state income tax rate, considering the applicable jurisdictions of the respective segments and deductibility of specific operating adjustments
(2	)	Per share amounts are divided by Weighted Average Common Shares Outstanding — Diluted, as noted on the Consolidated Statements of Operations (Unaudited)
(3	)	Shares issued and outstanding as of June 30, 2021 were treated as issued and outstanding for purposes of calculating historical earnings per share

Adjustments Key
A)		Transaction costs relating to the separation of DT Midstream — recorded in Operating Expenses — Operation and Maintenance
B)		Loss on note receivable for an investment in certain assets in the Utica shale region — recorded in Operating Expenses — Assets (gains) losses and impairments, net

DT Midstream, Inc. Adjusted EBITDA (Unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021			2020
			(in millions)
		Net income attributable to DT Midstream	$	68		$	71		$	146		$	142
		Plus: Interest expense		24			26			50			53
		Plus: Income tax expense		21			26			50			52
		Plus: Depreciation and amortization		41			37			82			73
		Plus: EBTDA from equity method investees¹		39			36			84			79
		Plus: Adjustments for non-routine items²		28			-			38			-
		Less: Interest income		(1	)		(1	)		(4	)		(2	)
		Less: Earnings from equity method investees		(28	)		(24	)		(60	)		(54	)
		Less: Depreciation and amortization attributable to noncontrolling interests		(1	)		(1	)		(2	)		(2	)
		Adjusted EBITDA	$	191		$	170		$	384		$	341

(1	)	Includes share of our equity method investees' earnings before taxes, depreciation and amortization, which we refer to as "EBTDA." A reconciliation of earnings from equity method investees to EBTDA from equity method investees follows:

			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021			2020
			(in millions)
		Earnings from equity methods investees	$	28		$	24		$	60		$	54
		Plus: Depreciation and amortization attributable to noncontrolling interests		11			12			24			25
		EBTDA from equity method investees	$	39		$	36		$	84		$	79

(2	)	Adjusted EBITDA calculation excludes certain items we consider non-routine. For the three months ended—June 30, 2021, adjustments for non-routine items were comprised of: (i) $19 million loss on notes receivable and (ii) $9 million of separation related transaction costs. For the six months ended June 30, 2021, adjustments for non-routine items were comprised of: (i) $19 million loss on notes receivable and (ii) $19 million of separation related transaction costs.

DT Midstream Reports Strong Second Quarter 2021 Results

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