Welcome to the DT Midstream third Quarter 2023 Earnings Call. I will now turn it over to our speaker today, Todd Lohrmann, Director of Investor Relations. Thank you. Please go ahead.

Good morning, and welcome, everyone. Before we get started, I would like to remind you to read the safe harbor on page 2 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 containing these. 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 construction of our growth projects, and our latest commercial activity. I'll then close with some commentary on fundamentals before turning it over to Jeff to review our financial performance and outlook. So with that, we had another strong quarter and the business continues to perform in line with our full year plan, giving us confidence in our full year adjusted EBITDA guidance for 2023 and early outlook for 2024. We are reaffirming our 2023 adjusted EBITDA guidance midpoint of $915 million and narrowing the range to $905 million to $925 million reflecting the solid business performance to date. Our construction team continues to make great progress on our growth projects, and I wanted to commend them for all their hard work this year, as they overcame many supply chain and weather challenges. In late August, we placed our LEAP Phase 1 expansion in service, which was well ahead of schedule and on budget. The expansion capacity immediately filled up and has been running flat out since the in-service date. The team has quickly turned its attention to our Phase 2 expansion, which remains on track for a Q1 2024 in service and will be followed by our Phase 3 expansion in Q3 2024. We remain in active discussions for LEAP Phase 4 expansion and the recent successful completion of our Phase 1 expansion demonstrates our ability to serve our customers in a timely and efficient manner, an important consideration for producers seeking to reach the attractive Gulf Coast LNG markets, as well as those customers seeking fee gas supply certainty. As you know, LEAP is strategically located to serve growing demand on the Gulf Coast, and we are excited to announce that we are building a new one Bcf a day interconnect with the Gillis Access project. This will provide further direct access to the Louisiana industrial and LNG corridor. Following the expected Q1 2024 in service of our new Gillis Access interconnect, LEAP will be directly connected to approximately 6 Bcf a day of expected new LNG export demand growth, further strengthening our competitive position. Upstream of LEAP on Blue Union, we are building a new 400 million cubic feet per day supply interconnect with a third-party processing plant in the Carthage area, which will add incremental supply to our network and continue to diversify our customer base. Last quarter, we announced a final investment decision on a new greenfield gathering opportunity in the Ohio and Utica. Construction is progressing on budget and ahead of schedule, with the project now expected to go in service in early Q1 2024. As a reminder, we expect volumes to ramp over an 18- to 24-month period as our customer executes on its development plan and delineates this emerging play. Our revenues are fully protected under a take-or-pay contract structure. This is another great example of the excellent work from our construction team and their ability to execute on short-cycle investments. On NEXUS, we've recently added 50 million cubic feet a day of new capacity through an amendment to our Texas Eastern lease, which feeds the NEXUS mainline. NEXUS volumes have been running near all-time highs and we continue to see a strong demand pull for pipeline takeaway capacity from Appalachia. Our expansion of the Appalachia Gathering system is expected to be in service by the end of the year, which also directly feeds NEXUS. So there is definitely a lot of positive momentum building for this asset, as it offers critical egress capacity to strong, growing, and durable markets in the Midwest and Eastern Canada. Turning to our energy transition platform and our CCS project in Louisiana. We are currently working through our Class V well permit with the Louisiana DNR, which will allow us to drill a characterization well. Assuming the test well results confirm our favorable view on the geology, we would seek to reach the final investment decision in the first half of 2024. Finally, I want to take a moment to address the natural gas market fundamentals and producer activity across our assets. There has been a lot of focus on the short-term price of natural gas this year, which has certainly impacted producer activity and a portion of our asset portfolio. The resulting impact, however, is one of timing, a deferral of drilling and completion activity. Not if but when decisions by producers, waiting on the right price signal. Storage surplus, which has fueled weak cash prices, experienced a steady decline this summer, driven by strong power generation demand, and has resulted in a more balanced market in the short term. Long-term forward pricing in the $3.50 to $4 range in 2024 and 2025 is supportive of US domestic production activity and growth. Domestic natural gas demand continues to grow and demonstrate its durability and importance to our economy, especially in the power generation sector, and we are seeing this firsthand across our pipeline portfolio. Stable and reliable US-sourced LNG is also in high demand across the world, as the US continues to grow its export capabilities primarily on the Gulf Coast. These long-term fundamentals are very supportive of our assets and the future growth prospects for the company. This is reflected in our deep backlog of organic growth investment opportunities, enabling us to deliver distinctive growth for many years to come. 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 $236 million, representing a $12 million increase from the prior quarter. Our Pipeline segment results were up $6 million from the second quarter, reflecting the impact of the early in-service of our LEAP Phase one expansion. Gathering segment results were $6 million greater than the second quarter, reflecting higher revenues on Blue Union and lower overall O&M. Operationally, total gathering volumes across the Haynesville and Northeast averaged approximately three billion cubic feet a day in the third quarter, up close to 100 million cubic feet a day from the prior quarter. In the Haynesville, volumes were up compared to the prior quarter driven by the return to full operational capacity following the maintenance outages observed in the second quarter. In the Northeast, volumes were in line with the second quarter. As David previously mentioned, we are reaffirming our 2023 adjusted EBITDA guidance midpoint of $915 million and narrowing the range to the $905 million to $925 million reflecting the strong year-to-date business performance. We are also raising our distributable cash flow guidance range to $650 million to $675 million, a midpoint increase of approximately $13 million due to favorable distributions from our pipeline joint ventures. Our committed capital over 2023 and 2024 of approximately $800 million remains unchanged, with approximately $100 million committed in 2024, providing the opportunity for excess free cash flow allocation next year. If growth investments do not reach FID for 2024, we will evaluate the most accretive options for excess cash flow with our current view that it will likely be deployed towards debt reduction. We are committed to preserving the strength of our balance sheet and achieving an investment-grade credit rating. We expect to end 2024 with an on-balance sheet leverage ratio of 3.6 times or below and 4 times or below including our proportional share of debt at our joint ventures. Over the course of the five-year plan, we expect to deleverage to the low 3's with our on-balance sheet debt and to the mid-3's assuming proportional consolidation. Finally, today we also announced the declaration of our fourth quarter dividend of $0.69 per share and we are committed to growing the dividend in line with cash flow. I'll now pass it back over to David for closing remarks.

Thanks, Jeff. So in summary, we are feeling confident in our full year guidance for 2023 and early outlook range for 2024. Our short-cycle growth investments continue to track on budget and on schedule, with some projects running ahead of schedule resulting in meaningful growth contributions in 2024 and 2025. 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 achieving an investment-grade credit rating. As we look across the portfolio, we continue to see significant growth opportunity with our integrated and strategically located asset footprint, building torque and our capital investment program laying a strong foundation to build upon. We can now open up the line for questions.

Thank you. The first question is from Jeremy Tonet from JPMorgan. Your line is open.

Hi. Good morning, guys. This is Vrathan Reddy on for Jeremy. For my first one I just wanted to ask on the project backlog, are you guys able to provide any color on the incremental interconnects announced this quarter and maybe just kind of what that means for CapEx going forward?

Good morning. This is David. That CapEx related to those interconnects was contemplated in our current committed capital guidance. So there's no incremental capital associated with that in our capital guidance.

Got it. For my next question, I would like to hear your thoughts on DTM's competitive positioning within the Haynesville and its ability to secure new volumes. If you could share your insights on this, that would be great.

Sure. So both of those items that we just talked about further enhance our competitive position. I think as I look at what's coming in the next two to three years, clarity on project execution and timing is critical for new customers. Obviously, a competitive rate is important and price transparency is also important. So as I think about LEAP's competitive position, we score very well on all those criteria. And as this new Gillis Access project is built and in service, Venture Global is the primary underwriter of that expansion. As we all know, they are growing their LNG export capacity significantly in the next couple of years. So LEAP is now very well connected and will be even better connected to all the LNG export facilities by the time that project is complete. So we're in a very strong competitive position. Just like the earlier round of expansions, we did very well. I fully expect in the next round of expansion, we're in a really good spot to deliver high-quality service for any shipper looking to egress the Haynesville and serve these markets, as well as providing supply security and certainty to these new export facilities that need to reach back and procure supply out of the Haynesville.

Great. Thanks for all the color.

The next question is from Michael Blum with Wells Fargo. Your line is open.

Thanks. Good morning, everyone. I understand that you're not providing guidance for 2024 capital expenditures yet, but I want to clarify what you've mentioned so far. You have approximately $100 million committed for 2024, and you're indicating that you will achieve 3.6 times leverage or better by the end of 2024. Does this mean that the CapEx figure remains unchanged for 2024, or will you still reach that leverage regardless?

Great question. As we stand today, the committed capital for 2024 remains as we've indicated. We expect to generate between $400 million and $450 million in free cash flow after dividends, which leaves us with a considerable amount of uncommitted capital for the year. We're currently working on various projects and anticipate success in some of them. We'll give a more detailed update at the year-end call regarding how much of that will be committed in 2024. However, at this moment, I expect there will be some excess free cash flow, as mentioned by Jeff. This excess is likely to be directed towards debt reduction in 2024.

Okay. Got it. And then I'm sure you're well aware of the recent press articles talking about Millennium Pipeline, the piece you don't own being in the mix for sale. So I hate to beat a dead horse, but since it's back in the news figured I'd ask you to just comment again how you're thinking about that since it seems like maybe it's back in play.

Yeah. Thanks for that question. I don't really have any comment on that. I mean we've talked about this for many quarters and most of the year. From our perspective, nothing has changed. I think our partner has a very full plate of activities that are in front of them and I wish them the best with that, but our view hasn't changed. We're very happy with the asset. We're very happy that we're the majority owner of the asset. The asset has performed exceptionally well this year, beyond pro forma when we acquired Grid's interest a year ago. And again, I'm not going to add any comments that I've made previously on this topic, and I think this is probably a question really for TC.

Got it. Understood. Thank you.

The next question is from John Mackay with Goldman Sachs. Your line is open.

Good morning, everyone. Thank you for your time. I wanted to address a couple of points regarding the EBITDA guidance for 2023 and 2024. The third quarter exceeded our expectations, but although you narrowed the range, you did not raise the guidance for 2023. Are there any factors for the fourth quarter that we should consider in relation to your current run rate? Additionally, for 2024, while you've added and advanced a few projects, that figure remains unchanged. Could you help clarify both of these points? Thank you.

Sure. Good morning, John, great question. I'll discuss 2023. We had a really strong quarter in Q3, which gives us high confidence for delivering this year's results. We've narrowed the range based on what has happened so far this year. We aim to deliver strong performance. Regarding Q4, you asked about the gathering side of the business. I'll refer back to my initial comments on fundamentals. Many public producers have experienced deferrals and delays in completion activities due to the low prices from this summer and earlier fall. This will have an impact, but it is a short-term issue that doesn’t alter their long-term plans for using the system. It’s primarily a timing issue. For next year, we typically refresh the forecast on our year-end call, considering all factors affecting the portfolio for 2024 and 2025. We always provide an early outlook for the upcoming year to ensure we have high confidence in our guidance. We wait for more information from our customers, which becomes more accurate as we reach the end of the year and the start of January when they finalize their plans. This gives us strong confidence in our guidance for the immediate year and the year following. A major focus for 2024 will be on the gathering side of our business and the pipeline side, which has shown outstanding performance. As you know, the pipeline segment constitutes about two-thirds of our business. We’ve observed strong fundamentals in both the south around our LEAP asset and across our northern pipeline assets, which gives us great confidence for this year and the future.

That's great. I appreciate all that detail there. Maybe just looking in quickly on the interconnect following-up with an earlier question. I'm just curious from our side, are you expecting this to bring on kind of material incremental volumes onto LEAP above what you were expecting, or is this kind of more about adding flexibility for your existing shippers and kind of existing flows?

I believe it encompasses all aspects, John. The interconnect with the Gillis Access project is strategically important for the long term and positions us competitively to meet the growing demand. By adding supply to the Blue Union system, we increase the amount of product available, attract more customers, and diversify our customer base. This overall enhances the competitive stance of the entire Haynesville asset footprint and provides us significant flexibility to offer a variety of services to different customers. I anticipate that this will have positive impacts in the short term, and it will also be very beneficial in the long term by making our network an appealing option for those who have choices regarding how they wish to process and transport their gas to various market hub delivery points out of the basin.

That’s great. Appreciate the time today.

The next question is from Spiro Dounis with Citi. Your line is open.

Thank you. Good morning David, good morning Jeff. Wanted to just go back quickly to the Haynesville Gathering volumes. You've addressed a little bit of this I want to put a finer point on it. Saw them kind of bounce back in 3Q versus the maintenance in 2Q. Just curious as we go forward, your thinking about that cadence from here as these lead phases come online, is that going to draw incremental gathering volumes in, or are you sort of moving them off other systems onto LEAP?

Yes, great question. It's going to be both. It's going to draw in incremental volumes onto the network, and it's going to have volumes that are currently being delivered to other third-party pipes likely stay on the network in the future. So, it actually does both, Spiro.

Okay. And I think you had mentioned that Phase 1 kind of came on and filled quickly based on what you just said. It sounds like these next phases you're expecting something similar there as well?

We're highly optimistic, so the answer is yes. The speed at which the first phase filled surprised us a little bit due to the strong demand. If you examine market pricing, it reflects the need for more gas at Gillis. This is very encouraging for Phases 2 and 3.

Great. And then just a second question. David, you talked about the right price signal for producers. And I'm sure there's no magic number, but you also talked about this range looking forward in kind of the $3.50 to $4.25 range is supportive. I guess is that kind of the pricing range that we should be thinking about? And if that's already prevalent, I guess what are we waiting for to see producers start to mobilize here?

Yes, I think that is the price band that is going to trigger what I'll say producers are kind of getting back on the gas pedal so to speak. All of that is premised on a balanced market fundamentally supporting that price. But I'd say just like there was a delay on producer reaction to that low $2 price that showed up in February, I expect there will also be a delay on the uptick in the pickup. I think producers are going to want to see the durability of the current pricing. And this is just my opinion, and I'm sure I would ask this question to the public producers, as well. But I suspect they're going to want to see a couple of months of that price sticking in the market before they sort of pour more capital into the drill bit. But that's just my opinion. I think there will be a bit of a lag before we see that ramp up and the pickup of activity. And like I said in my opening comments, I think this is a very short-term phenomenon. It's not an if question, it's a when question. And whether that pickup happens in November or in January, it doesn't have a material impact on our long-term view and our long-term outlook.

Helpful colors always. Thanks for the time, guys.

You’re welcome.

The next question is from Keith Stanley with Wolfe Research. Your line is open.

Hi, good morning. Just some questions on the CCS project. If you were to FID the project, would the bulk of the capital spending be in 2024 or more likely in 2025, on the current plan? And then, can you remind us on how this ties to eventually paying more in cash taxes when you would expect to start paying more in cash taxes and how that aligns with the start-up of the CCS project?

Sure, Keith. Good question. So, assuming the FID, CCS in 2024, you're correct. The capital will be spread out over likely a multiyear time frame like 2024 and 2025. So it will not all hit in one year, which again is I think why we're telegraphing our early view that we likely will have uncommitted free cash flow in 2024 again, based on the information that we have today. Jeff, do you want to address the other part of that question?

Yes, sure. Our thought is around the cash taxes will start increasing probably around the back part of the five-year plan we're talking 2026, 2027. And then depending on final rulings around how the 45Qs is going to get played out as the direct pay or various other things that will factor into our cash taxes also. But again, our increase in cash taxes is not going to be material for us. So, that's our current view around that.

Thank you.

We have no further questions. At this time, we'll turn it over to David Slater for any closing remarks.

Well, thank you very much for your interest in DTM, and we appreciate all the support. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.