DT Midstream Inc.

10/30/2025 | Press release | Distributed by Public on 10/30/2025 12:27

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our results of operations and financial condition should be read in conjunction with our unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements, which are included under Part I, Item 1 of this quarterly report, and the historical consolidated financial statements and notes thereto, which are included in the DT Midstream 2024 Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the midstream industry and our business and financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections entitled "Forward-Looking Statements" and "Risk Factors."
OVERVIEW
Our Business
We are an owner, operator, and developer of an integrated portfolio of natural gas midstream assets. We provide multiple, integrated natural gas services to customers through our Pipeline segment, which includes interstate pipelines, intrastate pipelines, storage systems, and gathering lateral pipelines, and through our Gathering segment. We also own joint venture interests in equity method investees which own and operate interstate pipelines that connect to our wholly owned assets. On
December 31, 2024, we closed on the Midwest Pipeline Acquisition of three FERC-regulated natural gas transmission
pipelines. See Note 12, "Acquisition" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
Our core assets strategically connect key demand centers in the Midwestern U.S., Eastern Canada and Northeastern U.S. regions to the premium production areas of the Marcellus/Utica natural gas formation in the Appalachian Basin and connect key demand centers and LNG export terminals in the Gulf Coast region to premium production areas of the Haynesville natural gas formation.
We have an established history of stable, long-term growth with contractual cash flows from customers that include natural gas producers, local distribution companies, electric power generators, industrials, and national marketers.
STRATEGY
Our principal business objective is to safely and reliably operate and develop natural gas assets across our premier footprint. Our proven leadership and highly engaged employees have an excellent track record. Prospectively, we intend to continue this track record by executing on our natural gas-centric business strategy focused on disciplined capital deployment and supported by a flexible, well capitalized balance sheet. Additionally, we intend to develop low carbon business opportunities and deploy GHG reducing technologies as part of our goal of being leading environmental stewards in the midstream industry. We are executing on a plan to achieve net zero carbon emissions by 2050.
Our strategy is premised on the following principles:
•operate our assets in a sustainable and responsible manner;
•provide exceptional service to our customers;
•disciplined capital deployment in assets supported by strong fundamentals;
•capitalize on asset integration and utilization opportunities;
•pursue economically attractive opportunities; and
•grow cash flows supported by long-term firm revenue contracts.
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations includes financial information prepared in accordance with GAAP. The following sections discuss the operating performance and future outlook of our segments. Segment information includes intercompany revenues and expenses, as well as other income and deductions that are eliminated in the Consolidated Financial Statements.
For purposes of the following discussion, any increases or decreases refer to the comparison of the three months ended September 30, 2025 to the three months ended June 30, 2025, and the nine months ended September 30, 2025 to the nine months ended September 30, 2024, as applicable. The following table summarizes our consolidated financial results:
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2025 2025 2025 2024
(millions, except per share amounts)
Operating revenues $ 314 $ 309 $ 926 $ 732
Net Income Attributable to DT Midstream 115 107 330 281
Diluted Earnings per Common Share $ 1.13 $ 1.04 $ 3.22 $ 2.87
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2025 2025 2025 2024
(millions)
Net Income Attributable to DT Midstream
Pipeline $ 92 $ 93 $ 277 $ 216
Gathering 23 14 53 65
Total $ 115 $ 107 $ 330 $ 281
Pipeline
The Pipeline segment consists of our interstate pipelines, intrastate pipelines, storage systems, gathering lateral pipelines including related treatment plants and compression and surface facilities. This segment also includes our equity method investments. The Midwest Pipeline Acquisition assets and results of operations after the December 31, 2024 acquisition date are presented in our Pipeline segment. Pipeline results and outlook are discussed below:
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2025 2025 2025 2024
(millions)
Operating revenues $ 169 $ 176 $ 514 $ 328
Operation and maintenance 32 34 98 48
Depreciation and amortization 27 28 83 55
Taxes other than income 7 7 23 16
Operating Income 103 107 310 209
Interest expense 14 11 38 37
Interest income - - (1) (1)
Earnings from equity method investees (34) (30) (101) (125)
Loss from financing activities - - - 2
Other income - - - (2)
Income tax expense 28 29 87 72
Net Income 95 97 287 226
Less: Net Income Attributable to Noncontrolling Interests 3 4 10 10
Net Income Attributable to DT Midstream $ 92 $ 93 $ 277 $ 216
Operating revenuesdecreased $7 million for the three months ended September 30, 2025 primarily due to lower volumes on Stonewall of $4 million and lower LEAP short-term contract revenues of $1 million. Operating revenuesincreased $186 million for the nine months ended September 30, 2025 primarily due to activity from the interstate pipelines acquired in the Midwest Pipeline Acquisition of $159 million, new LEAP contracts of $25 million and higher long-term storage revenue at Washington 10 Storage Complex of $7 million, partially offset by lower Bluestone revenue of $6 million.
Operation and maintenanceexpense increased $50 million for the nine months ended September 30, 2025 primarily due to effects from the Midwest Pipeline Acquisition, including increases in direct operations, increases in corporate overhead and the acquisition's impact on corporate overhead segment mix of $46 million, as well as production-related operating expenses from the LEAP expansion of $8 million.
Depreciation and amortizationexpense increased $28 million for the nine months ended September 30, 2025 primarily due to the Midwest Pipeline Acquisition.
Taxes other than income increased $7 million for the nine months ended September 30, 2025 primarily due to the Midwest Pipeline Acquisition.
Earnings from equity method investees increased $4 million for the three months ended September 30, 2025 primarily due to higher seasonal short-term contract revenues of $2 million at Nexus and timing of maintenance projects at Millennium of $2 million. Earnings from equity method investeesdecreased $24 million for the nine months ended September 30, 2025 primarily due to higher interest expense from senior unsecured notes issued in the three months ended September 30, 2024 of $17 million and higher property taxes, lower short-term revenue and higher maintenance expenses in 2025 at Millennium of $7 million.
Income tax expenseincreased $15 million for the nine months ended September 30, 2025 due to an increase in income before income taxes. See Note 7, "Income Taxes" to the Consolidated Financial Statements under Part I, Item 1. of this Form 10-Q.
Pipeline Outlook
We believe our long-term agreements with customers and the location and connectivity of our pipeline assets position the business for future growth. We will continue to pursue economically attractive expansion opportunities that leverage our current asset footprint and strategic relationships. These growth opportunities include expansion opportunities on the DTM Interstate Transportation assets, further expansion at LEAP and Stonewall, new contracts at the Washington 10 Storage Complex and additional growth related to our equity method investments.
Gathering
The Gathering segment includes gathering systems, related treatment plants and compression and surface facilities. The Clean Fuels Gathering assets and results of operations after the July 1, 2024 acquisition date are presented in our Gathering segment. Gathering results and outlook are discussed below:
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
2025 2025 2025 2024
(millions)
Operating revenues $ 145 $ 133 $ 412 $ 404
Operation and maintenance 52 46 144 121
Depreciation and amortization 38 35 108 101
Taxes other than income 3 4 12 15
Operating Income 52 48 148 167
Interest expense 26 29 82 80
Interest income (1) - (1) (1)
Loss from financing activities - - - 2
Other income (3) - (3) (1)
Income tax expense 7 5 17 22
Net Income Attributable to DT Midstream $ 23 $ 14 $ 53 $ 65
Operating revenues increased $12 million for the three months ended September 30, 2025 primarily due to higher Blue Union Gathering volumes. Operating revenues increased $8 million for the nine months ended September 30, 2025 primarily due to higher Blue Union Gathering volumes of $22 million and operations at Ohio Utica Gathering of $12 million, partially offset by lower volumes at Susquehanna Gathering of $18 million and Appalachia Gathering of $6 million.
Operation and maintenanceexpense increased $6 million for the three months ended September 30, 2025 primarily due to higher production-related expenses at Blue Union Gathering of $4 million and higher operating expenses at Appalachia Gathering of $2 million. Operation and maintenance expense increased $23 million for the nine months ended September 30, 2025 primarily due to new assets placed into service and higher production-related operating expenses at Blue Union Gathering of $12 million, a reduction in environmental contingent liabilities of $9 million in the three months ended June 30, 2024 at Appalachia Gathering, and Clean Fuels Gathering operations of $3 million, partially offset by the Midwest Pipeline Acquisition's impact on corporate overhead segment mix.
Depreciation and amortizationexpense increased $7 million for the nine months ended September 30, 2025 primarily due to assets placed in service at Blue Union Gathering, Ohio Utica Gathering and Clean Fuels Gathering.
Other income increased $3 million for the three months ended September 30, 2025 primarily due to right-of-way income at Blue Union Gathering.
Income tax expense decreased $5 million for the nine months ended September 30, 2025 primarily due to a decrease in income before income taxes. See Note 7, "Income Taxes" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
Gathering Outlook
We believe our long-term agreements with producers and the quality of the natural gas reserves in the Marcellus/Utica and Haynesville formations position the business for future growth. We will continue to pursue economically attractive expansion opportunities that leverage our current asset footprint and strategic relationships. These growth opportunities include further expansions at Blue Union Gathering, Appalachia Gathering, Ohio Utica Gathering, and Tioga Gathering.
ENVIRONMENTAL MATTERS
We are subject to U.S. federal, state, and local laws and environmental regulations, including laws and regulations relating to pipeline safety, climate change and GHG emissions. Additional compliance costs may result as the effects of various substances on the environment and human health are studied and governmental regulations are developed and implemented. Actual costs to comply with such laws and regulations could vary substantially from our expectations. Pending or future legislation or regulation could have a material impact on our operations and financial position. Potential impacts include unplanned expenditures for environmental equipment, such as pollution control equipment, financing costs related to additional capital expenditures, and the replacement costs of aging pipelines and other facilities.
For further discussion of environmental matters, see Note 10, "Commitments and Contingencies" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
CAPITAL RESOURCES AND LIQUIDITY
Cash Requirements
Our principal liquidity requirements are to finance our operations, fund capital expenditures, satisfy our indebtedness obligations, and pay approved dividends. We believe we will have sufficient internal and external capital resources to fund anticipated capital and operating requirements.
Nine Months Ended
September 30,
2025 2024
(millions)
Cash and Cash Equivalents at Beginning of Period $ 68 $ 56
Net cash and cash equivalents from operating activities 706 611
Net cash and cash equivalents from (used for) investing activities (254) 203
Net cash and cash equivalents used for financing activities (422) (793)
Net Increase in Cash and Cash Equivalents 30 21
Cash and Cash Equivalents at End of Period $ 98 $ 77
For purposes of the following discussion, any increases or decreases refer to the comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024.
Operating Activities
Cash flows from our operating activities can be impacted in the short term by the natural gas volumes gathered or transported through our systems under interruptible service revenue contracts, changing natural gas prices, seasonality, weather fluctuations, dividends received from equity method investees, working capital changes and the financial condition of our customers. Our preference to enter into firm service revenue contracts leads to more stable operating performance, revenues and cash flows and limits our exposure to natural gas price fluctuations.
Net cash and cash equivalents from operating activitiesincreased $95 million for the nine months ended September 30, 2025 primarily due to an increase in operating income of $119 million after adjustment for non-cash items including depreciation and amortization expense, stock-based compensation, and amortization of operating lease right-of-use assets, and a decrease in cash paid for income taxes, net of refunds received, of $4 million, partially offset by a decrease in dividends received from equity method investees of $18 million, a decrease of $7 million due to changes in net working capital and higher interest expense of $3 million.
Investing Activities
Cash outflows associated with our investing activities are primarily the result of plant and equipment expenditures, acquisitions, and contributions to equity method investees. Cash inflows from our investing activities are generated from proceeds from sale or collection of notes receivable, distributions received from equity method investees, and proceeds from asset sales.
Net cash and cash equivalents used for investing activitiesincreased $457 million for the nine months ended September 30, 2025 primarily due to lower distributions received from equity method investees of $433 million, due to the Millennium distribution in 2024 of $416 million, and an increase in cash used for plant and equipment expenditures of $35 million, partially offset by a purchase price adjustment for the Midwest Pipeline Acquisition of $10 million.
Financing Activities
DT Midstream paid cash dividends on common stock of $241 million and $209 million during the nine months ended September 30, 2025 and 2024, respectively. See Note 6, "Earnings Per Share and Dividends" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
Net cash and cash equivalents used for financing activitiesdecreased $371 million for the nine months ended September 30, 2025 primarily due to lower repayments on long-term debt of $399 million and higher net borrowings under the Revolving Credit Facility of $15 million, partially offset by higher dividends paid on common stock of $32 million and higher payroll taxes paid related to vested stock-based compensation of $17 million.
Outlook
We expect to continue executing on our natural gas-centric business strategy focused on disciplined capital deployment and supported by a flexible, well capitalized balance sheet. Other than the impact of the items discussed below on our debt and equity capitalization, we are not aware of any trends, other demands, commitments, events or uncertainties that are reasonably likely to materially impact our liquidity position.
Our working capital requirements will be primarily driven by changes in accounts receivable, accounts payable and taxes payable. We continue our efforts to identify opportunities to improve cash flows through working capital initiatives and obtaining long-term firm service revenue contracts from customers.
Our sources of liquidity include cash and cash equivalents generated from operating activities and available borrowings under our Revolving Credit Facility. As of September 30, 2025, we had $17 million of letters of credit outstanding and no borrowings outstanding under our Revolving Credit Facility. We had approximately $1.1 billion of available liquidity as of September 30, 2025, consisting of cash and cash equivalents and available borrowings under our Revolving Credit Facility.
We expect to pay regular cash dividends to DT Midstream common stockholders in the future. Any payment of future dividends is subject to approval by the Board of Directors and may depend on our future earnings, cash flows, capital requirements, financial condition, and the effect a dividend payment would have on our compliance with relevant financial covenants. Over the long-term, we expect to grow our dividend with cash flow growth.
We believe we will have sufficient operating flexibility, cash resources and funding sources to maintain adequate liquidity amounts and to meet foreseeable future operating cash, capital expenditure and debt servicing requirements. However, our business is capital intensive, and the inability to access adequate capital could adversely impact future earnings and cash flows.
The Credit Agreement covering the Revolving Credit Facility includes a maximum consolidated net leverage ratio covenant that DT Midstream must maintain. An Investment Grade Event under the Credit Agreement occurred on May 16, 2025. See Note 9, "Debt" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
CAPITAL INVESTMENTS
Capital spending within our Company is primarily for ongoing maintenance and expansion of our existing assets, and if identified, attractive growth opportunities. We have been disciplined in our capital deployment and make growth investments that meet our criteria in terms of strategy, management skills, and identified risks and expected returns. All potential investments are analyzed for their rates of return and cash payback on a risk-adjusted basis. Our total capital expenditures, inclusive of $3 million in contributions to equity method investees, were $298 million for the nine months ended September 30, 2025 primarily for expansions on Blue Union Gathering, Appalachia Gathering, LEAP, Clean Fuels Gathering and Stonewall. We anticipate total capital expenditures, inclusive of contributions to equity method investees, for the year ended December 31, 2025 of approximately $445 million to $485 million.
OFF-BALANCE SHEET ARRANGEMENTS
We are party to off-balance sheet arrangements, which include our equity method investments. See Note 1, "Description of the Business and Basis of Presentation-Principles of Consolidation" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for further discussion of the nature, purpose and other details of such agreements.
Other off-balance sheet arrangements include the Vector line of credit and our surety bonds, which are discussed in Note 10, "Commitments and Contingencies" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 3, "New Accounting Pronouncements" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
DT Midstream Inc. published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 18:27 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]