ETRN Announces Full-Year and Fourth Quarter 2020 Results
Equitrans Midstream Corporation (ETRN) reported a net income of $638 million and adjusted EBITDA of $1,215 million for 2020. The company generated 66% of its total operating revenue from firm reservation fees and increased total gathered volumes by approximately 5% year-over-year. Despite a challenging environment, ETRN simplified its corporate structure, achieving cost control, and announced plans for a Climate Policy aimed at reducing greenhouse gas emissions. The Q4 2020 net income was $117.8 million, impacted by unrealized losses on derivatives and non-recurring costs.
- Generated $638 million of net income in 2020.
- Achieved $1,215 million of adjusted EBITDA.
- Increased total gathered volumes by approximately 5% year-over-year.
- 66% of total operating revenue derived from firm reservation fees.
- Reduced gathering operating and maintenance expenses per volume by 14%.
- Q4 operating revenue declined by $58.7 million year-over-year due to deferred revenue.
- $21.3 million unrealized loss on derivatives in Q4 2020.
- Impairments and losses totaling over $100 million in non-recurring costs affected financials.
Equitrans Midstream Corporation (NYSE: ETRN), today, announced financial and operational results for the full-year and fourth quarter 2020. Included in the "Non-GAAP Disclosures" section of this news release are important disclosures regarding the use of non-GAAP supplemental financial measures, including information regarding their most comparable GAAP financial measure.
2020 Highlights:
-
Generated
$638 million of net income and achieved$1,215 million of adjusted EBITDA -
Recorded
66% of total operating revenue from firm reservation fees -
Increased total gathered volumes by approximately
5% year-over-year -
Reduced gathering operating and maintenance expense per gathered volume by
14% year-over-year
“The past year was transformational on many fronts,” said Thomas F. Karam, ETRN chairman and chief executive officer. “During 2020, our employees remained resilient – navigating the unprecedented times related to the pandemic and strengthening our company by delivering on our ability to generate predictable and stable revenue in any operating environment. We simplified our corporate structure, emerging as a single C-Corp entity; executed a gathering agreement that allows us to optimize our assets and realize meaningful capital savings; and acted with fiscal discipline by controlling costs and deploying capital efficiently in order to strengthen our balance sheet.”
“Looking ahead, we acknowledge the reality of climate change as one of the most critical issues of our time and we continue to embrace the importance of sustainability for future generations,” said Diana M. Charletta, ETRN president and chief operating officer. “Similar to our proactive safety culture, Equitrans’ ESG initiatives are becoming part of our DNA – from biodiversity considerations and the sourcing of our materials, to stakeholder engagement and transparent corporate governance.”
Charletta continued, “In January, we published our initial Climate Policy, which underscores a comprehensive commitment to environmental excellence in every aspect of our operations. As our society transitions to a lower-carbon economy, we will continue to take steps to reduce greenhouse gas emissions and build resiliency in our business to effectively manage the risks and opportunities. Every day must be a step in the right direction and as the journey continues, we will work to achieve our near-term actions, as well as our Net Zero Carbon Goals by 2050.”
2020 YEAR-END AND FOURTH QUARTER SUMMARY RESULTS
|
Three Months
|
|
Twelve Months
|
|||||
$ millions (except per share metrics) |
2020 |
|
2020 |
|||||
Net income attributable to ETRN common shareholders |
$ |
117.8 |
|
|
$ |
364.4 |
|
|
Adjusted net income attributable to ETRN common shareholders |
$ |
133.5 |
|
|
$ |
443.3 |
|
|
Earnings per diluted share attributable to ETRN common shareholders |
$ |
0.27 |
|
|
$ |
1.06 |
|
|
Adjusted earnings per diluted share attributable to ETRN common shareholders |
$ |
0.31 |
|
|
$ |
1.29 |
|
|
Net income |
$ |
136.6 |
|
|
$ |
638.0 |
|
|
Adjusted EBITDA |
$ |
286.4 |
|
|
$ |
1,214.6 |
|
|
Deferred revenue |
$ |
76.9 |
|
|
$ |
225.7 |
|
|
Net cash provided by operating activities |
$ |
316.7 |
|
|
$ |
1,140.9 |
|
|
Free cash flow |
$ |
86.6 |
|
|
$ |
317.4 |
|
|
Retained free cash flow |
$ |
21.8 |
|
|
$ |
(89.8 |
) |
|
Net income attributable to ETRN common shareholders was impacted by a
For the full-year 2020, net income attributable to ETRN common shareholders was impacted by several non-recurring items including a
As a result of the gathering agreement with EQT entered into in February 2020, revenue from the contracted minimum volume commitment (MVC) is recognized utilizing an average rate applied over the 15-year contract life. The difference between the cash received from the contracted MVC and the revenue recognized results in the deferral of revenue into future periods. For the fourth quarter 2020, deferred revenue was
Operating revenue for the fourth quarter was lower compared to the same quarter last year by
QUARTERLY DIVIDEND
For the fourth quarter 2020, ETRN paid a quarterly cash dividend of
TOTAL CAPITAL EXPENDITURES AND CAPITAL CONTRIBUTIONS
|
|
Three Months
|
|
Twelve Months
|
$ millions |
|
2020 |
|
2020 |
MVP |
|
|
|
|
Gathering(1) |
|
|
|
|
Transmission(2) |
|
|
|
|
Water |
|
|
|
|
Headquarters |
|
|
|
|
Total |
|
|
|
|
| (1) |
Excludes |
| (2) | Includes capital contributions to Mountain Valley Pipeline, LLC (MVP JV) for the MVP Southgate project. |
FINANCIAL OUTLOOK
$ millions |
Q1 2021 |
|
Net income |
|
|
Adjusted EBITDA |
|
|
Deferred revenue |
|
$ millions |
Full-Year 2021 |
|
Net income |
|
|
Adjusted EBITDA |
|
|
Deferred revenue |
|
|
Free cash flow |
|
|
Retained free cash flow |
|
CAPITAL EXPENDITURES AND CAPITAL CONTRIBUTIONS OUTLOOK
$ millions |
|
Full-Year 2021 |
MVP |
|
|
Gathering(1) |
|
|
Transmission(2) |
|
|
Water |
|
|
Total |
|
|
| (1) |
Includes approximately |
| (2) |
Includes capital contributions of approximately |
BUSINESS AND PROJECT UPDATES
Outstanding Debt and Liquidity
As of December 31, 2020, ETRN reported
Bond Offering
In January 2021, ETRN's wholly owned subsidiary, EQM, completed its issuance of
Mountain Valley Pipeline
On January 15, 2021, the U.S. Bureau of Land Management granted a right-of-way permit related to MVP’s crossing in the Jefferson National Forest. At present, the only major regulatory authorization outstanding is the approval to cross streams and wetlands. With total project work roughly
The MVP JV continues to target a full in-service date in late 2021. The total project cost estimate is
Climate Policy
In January 2021, ETRN published its initial Climate Policy, extending the Company’s commitment to environmental excellence and establishing a multi-faceted approach for evaluating and mitigating ETRN’s carbon footprint. ETRN is responding to the critical issues related to climate change by taking near-term actions to reduce its overall greenhouse gas (GHG) emissions. In 2021, ETRN will establish a foundation for future commitments and will work to assess practicability, costs, and timing to achieve interim targets of a
Full-Year and Fourth Quarter 2020 Earnings Conference Call Information
ETRN will host a conference call with security analysts today, February 23, 2021, at 10:30 a.m. (ET) to discuss full-year and fourth quarter 2020 financial results, operating results, and other business matters.
Call Access: All participants must pre-register online, in advance of the call. Upon completion, registered participants will receive a confirmation email that includes instructions for accessing the call, as well as a unique registration ID and passcode. Please pre-register using the appropriate online registration links below:
Security Analysts :: Audio Registration
Your email confirmation will contain dial-in information, along with your unique ID and passcode.
All Other Participants :: Webcast Registration
Your email confirmation will contain the webcast link, along with your unique ID and passcode.
Call Replay: For 14 days following the call, an audio replay will be available at (800) 585-8367 or (416) 621-4642. The ETRN conference ID: 4233629.
ETRN management speak to investors from time-to-time and the presentation for these discussions, which is updated periodically, is available via www.equitransmidstream.com.
NON-GAAP DISCLOSURES
Adjusted Net Income Attributable to ETRN Common Shareholders and Adjusted Earnings per Diluted Share Attributable to ETRN Common Shareholders
Adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders are non-GAAP supplemental financial measures that management and external users of ETRN’s consolidated financial statements, such as investors, may use to make period-to-period comparisons of earnings trends. Management believes that adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders as presented provide useful information for investors for evaluating period-over-period earnings. Adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders should not be considered as alternatives to net income attributable to ETRN common shareholders, earnings per diluted share attributable to ETRN common shareholders or any other measure of financial performance presented in accordance with GAAP. Adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders as presented have important limitations as analytical tools because they exclude some, but not all, items that affect net income attributable to ETRN common shareholders and earnings per diluted share attributable to ETRN common shareholders, including, as applicable, the premium on redemption of a portion of EQM’s Series A Perpetual Convertible Preferred Units (EQM Series A Preferred Units), transaction costs, impairments of long-lived assets, unrealized loss (gain) on derivative instruments and loss on early extinguishment of debt, which items affect the comparability of results period to period. The impact of noncontrolling interests is also excluded from the calculations of adjustment items to adjusted net income attributable to ETRN common shareholders, as is the tax impact of non-GAAP items. Additionally, because these non-GAAP metrics may be defined differently by other companies in ETRN's industry, ETRN's definitions of adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measures. Adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders should not be viewed as indicative of the actual amount of net income attributable to ETRN common shareholders or actual earnings of ETRN in any given period.
The table below reconciles adjusted net income attributable to ETRN common shareholders and adjusted earnings per diluted share attributable to ETRN common shareholders with net income attributable to ETRN common shareholders and earnings per diluted share attributable to ETRN common shareholders as derived from the statements of consolidated comprehensive income to be included in ETRN’s Annual Report on Form 10-K for the year ended December 31, 2020.
Reconciliation of Adjusted Net Income Attributable to ETRN Common Shareholders and Adjusted Earnings per Diluted Share Attributable to ETRN Common Shareholders
|
Three Months
|
|
Twelve Months
|
|||||
(Thousands, except per share information) |
2020 |
|
2020 |
|||||
Net income attributable to ETRN common shareholders |
$ |
117,812 |
|
|
$ |
364,372 |
|
|
Add back / (deduct): |
|
|
|
|||||
Premium on redemption of EQM Series A Preferred Units |
— |
|
|
27,253 |
|
|||
Transaction costs |
— |
|
|
23,797 |
|
|||
Impairments of long-lived assets |
— |
|
|
55,581 |
|
|||
Unrealized loss (gain) on derivative instruments |
21,269 |
|
|
(16,460 |
) |
|||
Loss on early extinguishment of debt |
— |
|
|
24,864 |
|
|||
Noncontrolling interest impact of non-GAAP items |
— |
|
|
(17,708 |
) |
|||
Tax impact of non-GAAP items(1) |
(5,577 |
) |
|
(18,373 |
) |
|||
Adjusted net income attributable to ETRN common shareholders |
$ |
133,504 |
|
|
$ |
443,326 |
|
|
Diluted weighted average common shares outstanding |
432,872 |
|
|
343,975 |
|
|||
Adjusted earnings per diluted share attributable to ETRN common shareholders |
$ |
0.31 |
|
|
$ |
1.29 |
|
|
| (1) | The adjustments were tax effected at the Company’s federal and state statutory tax rate for each period. |
Adjusted EBITDA
As used in this news release, Adjusted EBITDA means, as applicable, net income, plus income tax expense, net interest expense, loss on early extinguishment of debt (as applicable), depreciation, amortization of intangible assets, impairments of long-lived assets, payments on the preferred interest in EQT Energy Supply, LLC (Preferred Interest), non-cash long-term compensation expense (income), and transaction costs, less equity income, AFUDC-equity, unrealized loss (gain) on derivative instruments and adjusted EBITDA attributable to noncontrolling interest.
The table below reconciles adjusted EBITDA with net income as derived from the statements of consolidated comprehensive income to be included in ETRN's Annual Report on Form 10-K for the year ended December 31, 2020.
Reconciliation of Adjusted EBITDA
|
Three Months
|
|
Twelve Months
|
|||||
(Thousands) |
2020 |
|
2020 |
|||||
Net income |
$ |
136,587 |
|
|
$ |
638,044 |
|
|
Add: |
|
|
|
|||||
Income tax expense |
23,485 |
|
|
105,331 |
|
|||
Net interest expense |
87,420 |
|
|
307,380 |
|
|||
Loss on early extinguishment of debt |
— |
|
|
24,864 |
|
|||
Depreciation |
68,342 |
|
|
259,613 |
|
|||
Amortization of intangible assets |
16,205 |
|
|
63,195 |
|
|||
Impairments of long-lived assets |
— |
|
|
55,581 |
|
|||
Preferred Interest payments |
2,766 |
|
|
11,057 |
|
|||
Non-cash long-term compensation expense |
2,913 |
|
|
12,301 |
|
|||
Transaction costs |
— |
|
|
23,797 |
|
|||
Less: |
|
|
|
|||||
Equity income |
(62,600 |
) |
|
(233,833 |
) |
|||
AFUDC – equity |
(144 |
) |
|
(818 |
) |
|||
Unrealized loss (gain) on derivative instruments |
21,269 |
|
|
(16,460 |
) |
|||
Adjusted EBITDA attributable to noncontrolling interest(1) |
(9,854 |
) |
|
(35,424 |
) |
|||
Adjusted EBITDA |
$ |
286,389 |
|
|
$ |
1,214,628 |
|
|
| (1) |
Reflects adjusted EBITDA attributable to noncontrolling interest associated with the third-party ownership interest in Eureka. Adjusted EBITDA attributable to noncontrolling interest for the three months ended December 31, 2020 was calculated as net income of |
Free Cash Flow
As used in this news release, free cash flow means net cash provided by operating activities plus principal payments received on the Preferred Interest, and less net cash provided by operating activities attributable to noncontrolling interest, capital expenditures (excluding the noncontrolling interest share (
Retained Free Cash Flow
As used in this news release, retained free cash flow means free cash flow less dividends paid to common shareholders and distributions paid to noncontrolling interest EQM common unitholders (as applicable).
The table below reconciles free cash flow and retained free cash flow with net cash provided by operating activities as derived from the statements of consolidated cash flows to be included in ETRN's Annual Report on Form 10-K for the year ended December 31, 2020.
Reconciliation of Free Cash Flow and Retained Free Cash Flow
|
Three Months
|
|
Twelve Months
|
|||||
(Thousands) |
2020 |
|
2020 |
|||||
Net cash provided by operating activities |
$ |
316,691 |
|
|
$ |
1,140,886 |
|
|
Add back / (deduct): |
|
|
|
|||||
Principal payments received on the Preferred Interest |
1,277 |
|
|
5,003 |
|
|||
Net cash provided by operating activities attributable to noncontrolling interest(1) |
(9,934 |
) |
|
(39,568 |
) |
|||
ETRN Series A Preferred Shares dividends(2) |
(14,628 |
) |
|
(16,879 |
) |
|||
EQM Series A Preferred Unit distributions(3) |
— |
|
|
(51,002 |
) |
|||
Redemption of Series A Preferred Units(4) |
— |
|
|
(28,267 |
) |
|||
Capital expenditures(5)(6) |
(78,243 |
) |
|
(419,995 |
) |
|||
Capital contributions to MVP JV |
(128,537 |
) |
|
(272,801 |
) |
|||
Free cash flow |
$ |
86,626 |
|
|
$ |
317,377 |
|
|
Less: |
|
|
|
|||||
Dividends paid to common shareholders (7) |
(64,871 |
) |
|
(278,395 |
) |
|||
Distributions paid to noncontrolling interest EQM common unitholders |
— |
|
|
(128,770 |
) |
|||
Retained free cash flow |
$ |
21,755 |
|
|
$ |
(89,788 |
) |
|
| (1) |
Reflects |
| (2) |
Reflects cash dividends paid of |
| (3) |
Reflects cash distributions paid of |
| (4) |
Redemption of EQM Series A Preferred Units included approximately |
| (5) | Does not reflect amounts related to the noncontrolling interest share of Eureka. |
| (6) | ETRN accrues capital expenditures when the work has been completed but the associated bills have not yet been paid. Accrued capital expenditures are excluded from the statements of consolidated cash flows until they are paid. |
| (7) |
Third quarter 2020 dividend of |
Adjusted EBITDA, free cash flow and retained free cash flow are non-GAAP supplemental financial measures that management and external users of ETRN's consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies, may use to assess:
- ETRN’s operating performance as compared to other publicly traded companies in the midstream energy industry without regard to historical cost basis or, in the case of adjusted EBITDA, financing methods
- The ability of ETRN’s assets to generate sufficient cash flow to pay dividends to ETRN’s shareholders
- ETRN’s ability to incur and service debt and fund capital expenditures and capital contributions
- The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities
ETRN believes that adjusted EBITDA, free cash flow, and retained free cash flow provide useful information to investors in assessing ETRN's financial condition and results of operations. Adjusted EBITDA, free cash flow, and retained free cash flow should not be considered as alternatives to net income, operating income, net cash provided by operating activities, as applicable, or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA, free cash flow, and retained free cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income, operating income and net cash provided by operating activities. Additionally, because these non-GAAP metrics may be defined differently by other companies in ETRN's industry, ETRN's definitions of adjusted EBITDA, free cash flow, and retained free cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measures. Free cash flow and retained free cash flow should not be viewed as indicative of the actual amount of cash that ETRN has available for dividends or that ETRN plans to distribute and are not intended to be liquidity measures.
ETRN is unable to provide a reconciliation of projected adjusted EBITDA from projected net income (loss), the most comparable financial measure calculated in accordance with GAAP, or a reconciliation of projected free cash flow or retained free cash flow to net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP. ETRN has not provided a reconciliation of projected adjusted EBITDA to projected net income (loss), the most comparable financial measure calculated in accordance with GAAP, due to the inherent difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy. Net income (loss) includes the impact of depreciation expense, income tax expense, the revenue impact of changes in the projected fair value of derivative instruments prior to settlement, potential changes in estimates for certain contract liabilities and unbilled revenues and certain other items that impact comparability between periods and the tax effect of such items, which may be significant and difficult to project with a reasonable degree of accuracy. Therefore, a reconciliation of projected adjusted EBITDA to projected net income (loss) is not available without unreasonable effort.
ETRN is unable to project net cash provided by operating activities because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred. ETRN is unable to project these timing differences with any reasonable degree of accuracy to a specific day, three or more months in advance. Therefore, ETRN is unable to provide projected net cash provided by operating activities, or the related reconciliation of each of projected free cash flow and projected retained free cash flow to projected net cash provided by operating activities without unreasonable effort. ETRN provides a range for the forecasts of net income, adjusted EBITDA, free cash flow and retained free cash flow to allow for the inherent difficulty of predicting certain amounts and the variability in the timing of spending and the impact on the related reconciling items, many of which interplay with each other.
Water EBITDA
As used in this news release, water EBITDA means the earnings before interest, taxes, depreciation and amortization of ETRN’s water services business. Water EBITDA is a non-GAAP supplemental financial measure that management and external users of ETRN’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess the impact of ETRN’s water services business on ETRN’s operating performance and ETRN’s ability to incur and service debt and fund capital expenditures. Water EBITDA should not be considered as an alternative to ETRN’s net income, operating income or any other measure of financial performance presented in accordance with GAAP. Water EBITDA has important limitations as an analytical tool because the measure excludes some, but not all, items that affect net income and operating income. Additionally, because water EBITDA may be defined differently by other companies in ETRN’s industry, the definition of water EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measure. The table below reconciles water EBITDA from ETRN's water operating income as derived from ETRN's statements of consolidated comprehensive income to be included in ETRN's Annual Report on Form 10-K for the year ended December 31, 2020.
ETRN has not provided a reconciliation of projected water EBITDA from projected water operating income, the most comparable measure calculated in accordance with GAAP. ETRN does not allocate certain costs, such as interest expenses, to individual assets within its business segments. Therefore, the reconciliation of projected water EBITDA from projected water operating income is not available without unreasonable effort. ETRN has provided a range for the forecast of water EBITDA to allow for the variability in the timing of spending and the impact on the related reconciling items, many of which interplay with each other.
Reconciliation of Water EBITDA
|
Three Months
|
|
Twelve Months
|
|||||
($ Thousands) |
2020 |
|
2020 |
|||||
Water operating (loss) income |
$ |
(1,417 |
) |
|
$ |
38,756 |
|
|
Add: Depreciation |
8,160 |
|
|
30,880 |
|
|||
Water EBITDA |
$ |
6,743 |
|
|
$ |
69,636 |
|
|
About Equitrans Midstream Corporation:
Equitrans Midstream Corporation (ETRN) has a premier asset footprint in the Appalachian Basin and, as the parent company of EQM Midstream Partners, is one of the largest natural gas gatherers in the United States. Through its strategically located assets in the Marcellus and Utica regions, ETRN has an operational focus on gas transmission and storage systems, gas gathering systems, and water services that support natural gas development and production across the Basin. With a rich 135-year history in the energy industry, ETRN was launched as a standalone company in 2018 with the vision to be the premier midstream services provider in North America. ETRN is helping to meet America’s growing need for clean-burning energy, while also providing a rewarding workplace and enriching the communities where its employees live and work.
For more information on Equitrans Midstream Corporation, visit www.equitransmidstream.com; and to learn more about our environmental, social, and governance practices visit https://csr.equitransmidstream.com.
Cautionary Statements
This news release contains certain forward-looking statements within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the United States Securities Act of 1933, as amended (the Securities Act), concerning ETRN and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of ETRN, as well as assumptions made by, and information currently available to, such management. Words such as “could,” “will,” “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” “target,” "expect," "intend," "outlook" or “continue,” and similar expressions are used to identify forward-looking statements. These statements are subject to various risks and uncertainties, many of which are outside ETRN's control. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of ETRN and its affiliates, including guidance and any changes in such guidance regarding ETRN’s gathering, transmission and storage and water service revenue and volume growth, including the anticipated effects associated with the new Gas Gathering and Compression Agreement and related documents entered into with EQT Corporation (EQT) (collectively, the EQT Global GGA); projected revenue (including from firm reservation fees) and volumes, deferred revenues, expenses, and contract liabilities, and the effects on liquidity, projected revenue, deferred revenue and contract liabilities associated with the EQT Global GGA and the MVP project (including changes in the targeted full in-service date for such project); the ultimate gathering fee relief provided to EQT under the EQT Global GGA and related agreements, including the exercise by EQT of any cash-out option as an alternative to receiving a portion of such relief; ETRN’s ability to de-lever; forecasted adjusted EBITDA (and incremental adjusted EBITDA with MVP full in-service), water EBITDA, net income, free cash flow, retained free cash flow, leverage ratio, and deferred revenue; the weighted average contract life of gathering, transmission and storage contracts; infrastructure programs (including the timing, cost, capacity and sources of funding with respect to gathering, transmission and storage and water projects); the cost, capacity, shippers for, timing of regulatory approvals, final design (including expansions or extensions and capital and incremental adjusted EBITDA related thereto), ability to contract additional capacity on and targeted in-service dates of current or in-service projects or assets, in each case as applicable; the ultimate terms, partner relationships and structure of Mountain Valley Pipeline, LLC (MVP JV) and ownership interests therein; the impact of changes in the targeted full in-service date of the MVP project on, among other things, the fair value of the Henry Hub cash bonus provision of the EQT Global GGA; expansion projects in ETRN’s operating areas and in areas that would provide access to new markets; ETRN’s ability to provide produced water handling services and realize expansion opportunities and related capital avoidance; ETRN’s ability to identify and complete acquisitions and other strategic transactions, including joint ventures, effectively integrate transactions into ETRN’s operations, and achieve synergies, system optionality and accretion associated with transactions, including through increased scale; ETRN’s ability to access commercial opportunities and new customers for its water services business, and the timing and final terms of any definitive water services agreement or agreements between EQT and ETRN entered into pursuant to the letter agreement between the parties in respect of water services (Water Services Letter Agreement); any credit rating impacts associated with the MVP project, customer credit ratings changes, including EQT's, and defaults, acquisitions, dispositions and financings and any changes in EQM’s credit ratings; the impact of the dispute with EQT (or resolution thereof) regarding the Hammerhead gathering agreement and/or ownership of the Hammerhead pipeline on ETRN’s business and results of operations; the impact of such dispute (or resolution thereof) on investors’ perceptions of ETRN’s commercial relationship with EQT; the effect and outcome of future litigation and other proceedings, including regulatory proceedings; the effects of any consolidation of or effected by upstream gas producers, whether in or outside of the Appalachian Basin; the ability of ETRN’s contracts to survive a customer bankruptcy or restructuring, the outcome of any attempt to reject such contracts in such contexts (or related negotiations) and the impact on the Company’s results of operations and liquidity of a customer bankruptcy or restructuring; the timing and amount of future issuances or repurchases of ETRN’s securities; the effects of conversion, if at all, of ETRN’s preferred shares; the effects of seasonality; expected cash flows and MVCs, including those associated with the EQT Global GGA and any definitive agreement or agreements between EQT and the Company related to the Water Services Letter Agreement, and the potential impacts thereon of the commission timing and cost of the MVP project; projected capital contributions and capital and operating expenditures, including the amount and timing of reimbursable capital expenditures, capital budget and sources of funds for capital expenditures; dividend amounts, timing and rates; changes in commodity prices and the effect of commodity prices on ETRN's business, including future decisions of customers in respect of curtailing natural gas production, choke management, timing of turning wells in line, rig and completion activity and related impacts on ETRN’s business; liquidity and financing requirements, including sources and availability; interest rates; the ability of ETRN’s subsidiaries (some of which are not wholly owned) to service debt under, and comply with the covenants contained in, their respective credit agreements; the MVP JV’s ability to raise project-level debt; expectations regarding production, gathered and water volumes in ETRN’s areas of operations; ETRN’s ability to achieve anticipated benefits associated with the execution of the EQT Global GGA, the Water Services Letter Agreement and related agreements; the impact on ETRN and its subsidiaries of the coronavirus disease 2019 (COVID-19) pandemic, including, among other things, effects on demand for natural gas and ETRN’s services, levels of production of associated gas from basins such as the Permian basin, commodity prices and access to capital; ETRN’s ability to achieve its ESG goals (including goals set forth in its climate policy); the effects of government regulation; and tax status and position. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from projected results.
Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. ETRN has based these forward-looking statements on current expectations and assumptions about future events. While ETRN considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, judicial and other risks and uncertainties, many of which are difficult to predict and are beyond ETRN’s control. The risks and uncertainties that may affect the operations, performance and results of ETRN’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, "Risk Factors" in ETRN's Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (the SEC), as updated by the risk factors disclosed under Part II, Item 1A, "Risk Factors," of ETRN’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020 filed with the SEC and ETRN's subsequent filings. Any forward-looking statement speaks only as of the date on which such statement is made, and ETRN does not intend to correct or update any forward-looking statement, unless required by securities laws, whether as a result of new information, future events or otherwise. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
EQUITRANS MIDSTREAM CORPORATION |
||||||||||||||||
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME |
||||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
|
(Thousands, except per share amounts) |
|||||||||||||||
Operating revenues |
$ |
367,122 |
|
|
$ |
425,859 |
|
|
$ |
1,510,825 |
|
|
$ |
1,630,242 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Operating and maintenance |
40,119 |
|
|
47,907 |
|
|
154,109 |
|
|
165,367 |
|
|||||
Selling, general and administrative |
35,783 |
|
|
29,362 |
|
|
129,969 |
|
|
112,915 |
|
|||||
Separation and other transaction costs |
— |
|
|
1,474 |
|
|
23,797 |
|
|
26,080 |
|
|||||
Depreciation |
68,342 |
|
|
60,634 |
|
|
259,613 |
|
|
227,364 |
|
|||||
Amortization of intangible assets |
16,205 |
|
|
14,581 |
|
|
63,195 |
|
|
53,258 |
|
|||||
Impairments of long-lived assets |
— |
|
|
583,664 |
|
|
55,581 |
|
|
969,258 |
|
|||||
Total operating expenses |
160,449 |
|
|
737,622 |
|
|
686,264 |
|
|
1,554,242 |
|
|||||
Operating income (loss) |
206,673 |
|
|
(311,763 |
) |
|
824,561 |
|
|
76,000 |
|
|||||
Equity income |
62,600 |
|
|
50,986 |
|
|
233,833 |
|
|
163,279 |
|
|||||
Other (expense) income |
(21,781 |
) |
|
24 |
|
|
17,225 |
|
|
2,661 |
|
|||||
Loss on early extinguishment of debt |
— |
|
|
— |
|
|
24,864 |
|
|
— |
|
|||||
Net interest expense |
87,420 |
|
|
67,927 |
|
|
307,380 |
|
|
256,195 |
|
|||||
Income (loss) before income taxes |
160,072 |
|
|
(328,680 |
) |
|
743,375 |
|
|
(14,255 |
) |
|||||
Income tax expense |
23,485 |
|
|
4,836 |
|
|
105,331 |
|
|
50,704 |
|
|||||
Net income (loss) |
136,587 |
|
|
(333,516 |
) |
|
638,044 |
|
|
(64,959 |
) |
|||||
Net income (loss) attributable to noncontrolling interests |
4,147 |
|
|
(64,778 |
) |
|
214,912 |
|
|
138,784 |
|
|||||
Net income (loss) attributable to ETRN |
132,440 |
|
|
(268,738 |
) |
|
423,132 |
|
|
(203,743 |
) |
|||||
Preferred dividends |
14,628 |
|
|
— |
|
|
58,760 |
|
|
— |
|
|||||
Net income (loss) attributable to ETRN common shareholders |
$ |
117,812 |
|
|
$ |
(268,738 |
) |
|
$ |
364,372 |
|
|
$ |
(203,743 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Earnings (loss) per share of common stock attributable to ETRN common shareholders - basic |
$ |
0.27 |
|
|
$ |
(1.05 |
) |
|
$ |
1.06 |
|
|
$ |
(0.80 |
) |
|
Earnings (loss) per share of common stock attributable to ETRN common shareholders - diluted |
$ |
0.27 |
|
|
$ |
(1.05 |
) |
|
$ |
1.06 |
|
|
$ |
(0.80 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding - basic |
432,785 |
|
|
254,940 |
|
|
343,935 |
|
|
254,884 |
|
|||||
Weighted average common shares outstanding - diluted |
432,872 |
|
|
254,940 |
|
|
343,975 |
|
|
254,884 |
|
|||||
EQUITRANS MIDSTREAM CORPORATION |
||||||||||||||||
GATHERING RESULTS OF OPERATIONS |
||||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
FINANCIAL DATA |
(Thousands, except per day amounts) |
|||||||||||||||
Firm reservation fee revenues(1) |
$ |
148,999 |
|
|
$ |
149,598 |
|
|
$ |
595,720 |
|
|
$ |
581,118 |
|
|
Volumetric-based fee revenues |
99,053 |
|
|
163,295 |
|
|
416,561 |
|
|
578,813 |
|
|||||
Total operating revenues |
248,052 |
|
|
312,893 |
|
|
1,012,281 |
|
|
1,159,931 |
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Operating and maintenance |
25,082 |
|
|
28,880 |
|
|
87,388 |
|
|
96,740 |
|
|||||
Selling, general and administrative |
25,384 |
|
|
20,457 |
|
|
93,070 |
|
|
80,822 |
|
|||||
Separation and other transaction costs |
— |
|
|
217 |
|
|
4,104 |
|
|
19,344 |
|
|||||
Depreciation |
46,052 |
|
|
39,808 |
|
|
172,967 |
|
|
144,310 |
|
|||||
Amortization of intangible assets |
16,205 |
|
|
14,581 |
|
|
63,195 |
|
|
53,258 |
|
|||||
Impairments of long-lived assets |
— |
|
|
475,520 |
|
|
55,581 |
|
|
854,307 |
|
|||||
Total operating expenses |
112,723 |
|
|
579,463 |
|
|
476,305 |
|
|
1,248,781 |
|
|||||
Operating income (loss) |
$ |
135,329 |
|
|
$ |
(266,570 |
) |
|
$ |
535,976 |
|
|
$ |
(88,850 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Unrealized (loss) gain on derivative instruments(2) |
$ |
(21,269 |
) |
|
$ |
— |
|
|
$ |
16,460 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|||||||||
OPERATIONAL DATA |
|
|
|
|
|
|
|
|||||||||
Gathering volumes (BBtu per day): |
|
|
|
|
|
|
|
|||||||||
Firm capacity reservation(1) |
5,154 |
|
|
3,438 |
|
|
4,652 |
|
|
3,351 |
|
|||||
Volumetric-based services |
3,490 |
|
|
5,016 |
|
|
3,553 |
|
|
4,493 |
|
|||||
Total gathered volumes |
8,644 |
|
|
8,454 |
|
|
8,205 |
|
|
7,844 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Capital expenditures(3) |
$ |
41,810 |
|
|
$ |
148,534 |
|
|
$ |
344,873 |
|
|
$ |
834,712 |
|
|
| (1) | Includes revenues and volumes, as applicable, from contracts with MVCs. |
| (2) | Other income in the Company's statements of consolidated comprehensive income includes the unrealized (loss) gain on derivative instruments associated with the Henry Hub cash bonus payment provision. |
| (3) |
Includes approximately |
EQUITRANS MIDSTREAM CORPORATION |
||||||||||||||||
TRANSMISSION RESULTS OF OPERATIONS |
||||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
FINANCIAL DATA |
(Thousands, except per day amounts) |
|||||||||||||||
Firm reservation fee revenues |
$ |
96,560 |
|
|
$ |
93,518 |
|
|
$ |
364,533 |
|
|
$ |
356,569 |
|
|
Volumetric-based fee revenues |
8,407 |
|
|
7,076 |
|
|
29,303 |
|
|
33,951 |
|
|||||
Total operating revenues |
104,967 |
|
|
100,594 |
|
|
393,836 |
|
|
390,520 |
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Operating and maintenance |
9,911 |
|
|
10,847 |
|
|
37,635 |
|
|
33,989 |
|
|||||
Selling, general and administrative |
7,648 |
|
|
6,239 |
|
|
26,292 |
|
|
26,865 |
|
|||||
Depreciation |
13,753 |
|
|
13,461 |
|
|
54,540 |
|
|
51,935 |
|
|||||
Total operating expenses |
31,312 |
|
|
30,547 |
|
|
118,467 |
|
|
112,789 |
|
|||||
Operating income |
$ |
73,655 |
|
|
$ |
70,047 |
|
|
$ |
275,369 |
|
|
$ |
277,731 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity income |
$ |
62,600 |
|
|
$ |
50,986 |
|
|
$ |
233,833 |
|
|
$ |
163,279 |
|
|
|
|
|
|
|
|
|
|
|||||||||
OPERATIONAL DATA |
|
|
|
|
|
|
|
|||||||||
Transmission pipeline throughput (BBtu per day): |
|
|
|
|
|
|
|
|||||||||
Firm capacity reservation |
3,034 |
|
|
2,901 |
|
|
2,932 |
|
|
2,823 |
|
|||||
Volumetric-based services |
13 |
|
|
17 |
|
|
16 |
|
|
90 |
|
|||||
Total transmission pipeline throughput |
3,047 |
|
|
2,918 |
|
|
2,948 |
|
|
2,913 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Average contracted firm transmission reservation commitments (BBtu per day) |
4,270 |
|
|
4,125 |
|
|
4,087 |
|
|
3,966 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Capital expenditures(1) |
$ |
12,236 |
|
|
$ |
13,026 |
|
|
$ |
45,219 |
|
|
$ |
59,313 |
|
|
| (1) |
Transmission capital expenditures do not include capital contributions made to the MVP JV for the MVP and MVP Southgate projects of approximately |
EQUITRANS MIDSTREAM CORPORATION |
||||||||||||||||
WATER RESULTS OF OPERATIONS |
||||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
FINANCIAL DATA |
(Thousands) |
|||||||||||||||
Firm reservation fee revenues(1) |
$ |
9,010 |
|
|
$ |
6,659 |
|
|
$ |
41,798 |
|
|
$ |
11,190 |
|
|
Volumetric based fee revenues |
5,093 |
|
|
5,713 |
|
|
62,910 |
|
|
68,601 |
|
|||||
Water services revenues |
14,103 |
|
|
12,372 |
|
|
104,708 |
|
|
79,791 |
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|||||||||
Operating and maintenance |
5,171 |
|
|
8,180 |
|
|
29,131 |
|
|
34,638 |
|
|||||
Selling, general and administrative |
2,189 |
|
|
753 |
|
|
5,941 |
|
|
2,933 |
|
|||||
Depreciation |
8,160 |
|
|
7,114 |
|
|
30,880 |
|
|
26,915 |
|
|||||
Total operating expenses |
15,520 |
|
|
16,047 |
|
|
65,952 |
|
|
64,486 |
|
|||||
Operating (loss) income |
$ |
(1,417 |
) |
|
$ |
(3,675 |
) |
|
$ |
38,756 |
|
|
$ |
15,305 |
|
|
|
|
|
|
|
|
|
|
|||||||||
OPERATIONAL DATA |
|
|
|
|
|
|
|
|||||||||
Water volumes (MMgal) |
|
|
|
|
|
|
|
|||||||||
Firm capacity reservation(1) |
210 |
|
|
89 |
|
|
697 |
|
|
249 |
|
|||||
Volumetric based services |
95 |
|
|
207 |
|
|
1,219 |
|
|
1,559 |
|
|||||
Total water volumes |
305 |
|
|
296 |
|
|
1,916 |
|
|
1,808 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Capital expenditures |
$ |
3,528 |
|
|
$ |
5,967 |
|
|
$ |
11,905 |
|
|
$ |
37,457 |
|
|
| (1) | Includes revenues and volumes, as applicable, from contracts with MVCs. |
Source: Equitrans Midstream Corporation
View source version on businesswire.com: https://www.businesswire.com/news/home/20210223005287/en/
FAQ
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