Executive Summary

Q3 results were solid operationally with net income of $129.7M and adjusted EBITDA of $249.9M; 71% of revenue came from firm reservation fees, and transmission throughput rose 12% YoY, underscoring base-business strength despite MVP delays .
The quarter’s major negative was the revised Mountain Valley Pipeline (MVP) schedule and cost: completion pushed to Q1 2024 at ~$7.2B total cost, citing workforce ramp, challenging terrain/geology, and heightened environmental protocols; FY23 guidance was updated accordingly .
Management highlighted system flexibility and volume ramps (≈8 Bcf/d gathered; 6% YoY growth) and reiterated the strategic value of MVP once in service, while confirming a $0.15 dividend; leadership transition to Diana Charletta as CEO on Jan 1, 2024 was reiterated .
Key stock catalysts: narrowing of FY23 guidance with higher net income midpoint, confirmation of firm-fee revenue base, and transparency on MVP timing/costs; near-term sentiment hinges on winter construction productivity and MVP in-service authorization .

What Went Well and What Went Wrong

What Went Well
- “Operations continue to deliver,” with integrated gathering/transmission assets handling significant volume ramps; gathered volumes ~8 Bcf/d (+6% YoY) and transmission throughput +12% YoY; 71% of revenue from firm reservation fees reinforced cash flow stability .
- Adjusted EBITDA of $249.9M and net cash from operations of $201.6M; transmission usage volumes higher and water volumes up YoY supported revenue growth .
- Management reiterated strategic linkage to MVP and mid-single-digit annual volume growth outlook given system connectivity and available capacity, framing MVP as “one of the most valuable pipelines in the U.S.” once in service .
What Went Wrong
- MVP cost/schedule revised to Q1 2024 and ~$7.2B total cost, citing slower-than-expected crew ramp, difficult terrain/geology, and heightened environmental protocols; 2023 capex/contributions outlook raised accordingly .
- Operating expenses +$30.8M YoY, including a $7.8M water contract-asset write-down, a $7.5M one-time CEO bonus (MVP legislative support), and $2.3M Rager Mountain incident costs; unrealized derivative loss of $3.4M also impacted results .
- Water segment recorded an operating loss (-$2.3M) despite higher revenue, reflecting depreciation and the contract asset write-down (adjusted water EBITDA $12.2M) .

Financial Results

Quarterly results (sequential trend)

Metric	Q1 2023	Q2 2023	Q3 2023
Operating Revenues ($MM)	$376.3	$318.5	$338.5
Net Income ($MM)	$106.1	$68.9	$129.7
Diluted EPS ($)	$0.20	$0.12	$0.26
Adjusted EPS ($)	$0.22	$0.09	$0.28
Adjusted EBITDA ($MM)	$299.6	$234.7	$249.9
Deferred Revenue ($MM)	$77.1	$82.0	$82.6

Year-over-year (Q3 2023 vs Q3 2022)

Metric	Q3 2022	Q3 2023
Operating Revenues ($MM)	$331.8	$338.5
Net Income (Loss) ($MM)	$(502.9)	$129.7
Diluted EPS ($)	$(1.20)	$0.26
Adjusted EPS ($)	$0.09	$0.28
Adjusted EBITDA ($MM)	$259.4	$249.9

Segment breakdown (Q3 2023)

Segment	Firm Reservation Fee Revenue ($000s)	Volumetric Fee Revenue ($000s)	Total Operating Revenue ($000s)	Operating Income ($000s)	Key Volumes
Gathering	$147,137	$72,950	$220,087	$101,134	Total gathered 7,984 BBtu/d
Transmission	$82,508	$16,067	$98,575	$55,808	Throughput 3,510 BBtu/d
Water	$11,029	$8,823	$19,852	$(2,251)	Water volumes 358 MMgal

KPIs and cash metrics (Q1–Q3 2023)

KPI	Q1 2023	Q2 2023	Q3 2023
% Revenue from Firm Reservation Fees	67%	73%	71%
Gathered Volumes (BBtu/d)	7,380	7,420	7,984
Transmission Throughput (BBtu/d)	3,348	3,238	3,510
Water Volumes (MMgal)	459	282	358
Net Cash from Operating Activities ($MM)	$224.7	$298.6	$201.6
Free Cash Flow ($MM)	$94.2	$150.7	$(132.9)

Notes:

Q3 operating revenue increased YoY by $6.8M driven by higher transmission usage volumes and water volumes, partially offset by lower gathering revenue .
Operating expenses rose YoY by $30.8M (one-time CEO bonus, water contract asset write-down, prior-year favorable gas sales, Rager incident costs, and higher O&M/SG&A) .

Guidance Changes

Metric	Period	Previous Guidance (as of Q2 8-K)	Current Guidance (Q3 8-K)	Change
Net Income ($MM)	FY 2023	$420–$470	$425–$445	Narrowed; midpoint modestly lower
Adjusted EBITDA ($MM)	FY 2023	$1,000–$1,050	$1,020–$1,040	Narrowed; midpoint +$5M
Deferred Revenue ($MM)	FY 2023	$330–$335	$325–$330	Slightly lower
Free Cash Flow ($MM)	FY 2023	$(135)–$(85)	$(200)–$(180)	Lowered
Retained Free Cash Flow ($MM)	FY 2023	$(395)–$(345)	$(460)–$(440)	Lowered
Total Capex + Contributions ($MM)	FY 2023	$975–$1,065	$1,090–$1,140	Raised
MVP Capex/Contrib. ($MM)	FY 2023	$610–$650	$725–$745	Raised
MVP Completion Assumption	Timing	YE 2023	Q1 2024	Deferred

Context: MVP JV revised completion to Q1 2024 at ~$7.2B (incl. ~$120M contingency) due to workforce ramp challenges, terrain/geology, and heightened environmental protocols; management expects contractual obligations to commence by April 1, 2024, post FERC in‑service authorization .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
MVP timing and cost	Targeted 2023 completion at ~$6.6B; FRA law enabled resumption; Supreme Court vacated stays; construction resumed late July .	Revised to Q1 2024; total cost ~$7.2B; drivers: crew ramp delays, challenging terrain, heightened environmental protocols .	Slower, costlier; transparency improved.
Workforce/productivity	Not a key prior focus in disclosures.	Explicitly cited as reason for delay (crew availability, experience; winter productivity risks) .	New headwind disclosed.
OVCX project	Approvals expected; Notice to Proceed received; construction imminent; in‑service 1H24 .	Construction commenced; in‑service 1H24; ~$160M project; 330 MMcf/d firm support .	Executing to plan.
Rager Mountain	Ongoing investigations; ~$8–10M FY23 expense estimate .	Root cause submitted to PHMSA; injections resumed Oct 5, 2023; ~$2.3M Q3 cost; ~$10M FY23 expenses .	Remediation progress.
Water business	System build‑out; water EBITDA ~$45M 2023 guide .	Adjusted water EBITDA $12.2M in Q3; FY23 ~ $45M reiterated .	Steady growth; one‑time write‑down.
Leadership	No change prior.	CEO transition: Charletta to succeed Karam Jan 1, 2024; Karam to Executive Chair .	Governance transition.
Operations/volumes	Mixed; lower gathered volumes Q1/Q2 YoY .	System handled significant ramps; ~8 Bcf/d gathered (+6% YoY), throughput +12% YoY; 71% firm fees .	Positive volume momentum.

Select management remarks:

“Once in‑service, there is little doubt MVP will be one of the most valuable pipelines in the U.S.” — Tom Karam, CEO .
“Our integrated gathering and transmission assets [provide] flexibility to take on significant ramps in volume…” — Diana Charletta, President & COO .
On the call, management reiterated Q3 results (net income ~$130M, adj. EBITDA ~$$250M) and noted updated 2023 guidance reflecting MVP timing/cost; CFO referenced liquidity and dividend .

Management Commentary

Strategic positioning: Management emphasized direct connections to MVP and available system capacity supporting “several years of mid‑single‑digit annual volume growth,” alongside assertions of MVP’s high strategic value post in‑service .
MVP execution: The team highlighted obligations to “unprecedented environmental protocols” and safety as key factors in schedule/cost revisions; they intend to continue winter construction while prioritizing safety/compliance .
Leadership/tone: Karam praised organizational resilience and endorsed Charletta’s operational and strategic leadership ahead of the CEO transition .
Quote highlights:
- “The revised guidance on cost and completion for MVP are certainly more than we would prefer. However, we must deliver on our commitments of deploying unprecedented environmental protocols…” — Tom Karam .
- “We anticipate several years of mid‑single digit annual volume growth… based primarily on possessing the direct connections to MVP [and] currently available capacity…” — Diana Charletta .

Q&A Highlights

Themes: MVP schedule and cost escalation (drivers, winter construction productivity, path to FERC in‑service); liquidity/debt and revolver capacity; sequencing of contractual obligations post in‑service (target April 1, 2024); base business throughput/gathering ramps and water growth .
Notable responses: Management detailed workforce ramp challenges and terrain/geology as primary drivers of the MVP revision and underscored adherence to environmental protocols; reiterated dividend policy and revolver availability, and updated FY23 guidance to reflect MVP timing/cost assumptions .
Tone vs prior quarters: More granular color on execution risks (crew availability, winter work), but constructive on operational performance and MVP’s eventual value creation .

Estimates Context

S&P Global (Capital IQ) Wall Street consensus for Q3 2023 (EPS, revenue, EBITDA) was unavailable via our tool integration during this review; therefore, we do not present vs‑consensus comparisons here.
Where relevant, we compare against the company’s prior Q3 guidance issued with the Q2 release: Q3 adj. EBITDA delivered above the high end ($249.9M vs $225–$245), net income landed near the high end ($129.7M vs $115–$135), and deferred revenue was in‑line ($82.6M vs $82–$87) .

Key Takeaways for Investors

Base business is resilient: Firm-fee mix (71%) and throughput strength (transmission +12% YoY) reinforce stable cash generation even amid MVP delays .
Q3 execution beat internal guardrails: adj. EBITDA above the Q3 guidance range; strong sequential volumes point to operating leverage as new pads tie-in .
MVP is the swing factor: Transparent reset to Q1 2024 and ~$7.2B cost; winter productivity and timely FERC in‑service authorization are critical near-term de‑risking catalysts .
FY23 guidance narrowed: Net income range tightened (midpoint slightly higher vs Q2), adj. EBITDA narrowed with a higher midpoint; FCF/retained FCF lower reflecting MVP timing/capex — estimate models likely shift lower on FY23 FCF and higher on MVP contributions/capex .
Watch liquidity and capex cadence: Consolidated debt $6.3B, revolvers utilized at EQM/Eureka, and 2023 capex+contributions guide raised; monitor project-level MVP financing progress and contributions pace .
Water business momentum with caveats: Higher volumes and adjusted water EBITDA, but Q3 operating loss due to depreciation and a one-time contract asset write-down; FY23 ~ $45M adjusted water EBITDA reiterated .
Leadership transition: CEO handoff to Charletta on Jan 1, 2024 expected to sustain operational execution; call tone suggests confidence in delivering MVP within updated parameters .

Appendix: Additional Disclosures

Dividend: $0.15 per common share payable Nov 14, 2023 (record date Nov 3, 2023) .
Outstanding debt & liquidity as of Sept 30, 2023: $6.3B consolidated debt; EQM revolver borrowings $525.0M and LCs $220.7M; Eureka revolver borrowings $315.0M; cash $180.6M .
Non‑GAAP reconciliations and definitions for adjusted EPS, adjusted EBITDA, free cash flow, and adjusted water EBITDA are provided in the Q3 8‑K news release .

Equitrans Midstream Corp (ETRN)·Q3 2023 Earnings Summary