Summit Midstream Partners, LP (SMLP)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 results were generally in line with management expectations; the quarter featured major portfolio pruning (Utica and Mountaineer sales) and a material deleveraging to ~3.9x from 5.4x in Q4, reframing FY24 guidance on a pro forma basis .
• GAAP net income spiked to $132.9M on large gains from the Utica and Mountaineer divestitures, while Adjusted EBITDA was $70.1M; Rockies held resilient on product margins, while Permian and natural gas–oriented segments saw mixed trends due to weather and customer activity shifts .
• Pro forma FY24 Adjusted EBITDA guidance reset to $170–$200M (post-Northeast exits) versus prior FY24 guide of $260–$300M; management emphasized ample liquidity ($344.6M cash, $400M undrawn revolver) to pursue organic and bolt-on growth in Rockies and Permian while targeting 3.5x leverage over time .
• Commercial progress at Double E accelerated: 75 MMcf/d 10-year take-or-pay awarded (Matador), 150 MMcf/d non-binding bids, and a new max-rate interruptible agreement up to 150 MMcf/d; weather negatively impacted DJ volumes in January, partially offset by POP margin uplift .

What Went Well and What Went Wrong

What Went Well

• Portfolio simplification and deleveraging: “We have now fully exited the Northeast segment... Pro forma... reduced net leverage to approximately 3.9x, a 1.5x reduction from the fourth quarter of 2023,” positioning SMLP to pursue Rockies/Permian growth while progressing toward 3.5x leverage target .
• Double E commercialization momentum: successful open season (75 MMcf/d 10-year take-or-pay, 150 MMcf/d non-binding bids) and an additional interruptible agreement up to 150 MMcf/d, supporting further volume ramp and 2025+ growth visibility .
• Rockies execution: Segment Adj. EBITDA increased q/q on higher product margins from POP contracts despite volume pressure; 57 wells connected in the quarter (39 DJ, 18 Williston) underpins near-term growth .

What Went Wrong

• Weather-driven volume headwinds: Severe winter weather and operational downtime in the DJ reduced gas volumes by ~9 MMcf/d in Q1; liquids volumes declined 8.6% q/q; total operated gas throughput fell 6.5% q/q to 1,327 MMcf/d .
• Permian softness q/q: Permian segment Adj. EBITDA declined by ~$0.7M q/q, tied to JV revenue mix; however, contracting progress supports improved 2H24/2025 trajectory .
• Barnett pressure: Ongoing curtailments from a customer and modest volume declines weighed on segment Adj. EBITDA (down ~$0.7M q/q), partly offset by new wells from the anchor customer .

Financial Results

Summary P&L, Cash Flow and Non-GAAP (units as shown)

Notes: Q1 2024 GAAP net income included $86.2M gain on sale of business and $126.3M gain on sale of equity method investment, offset by $67.9M impairment; these items drove the disparity between GAAP net income and Adjusted EBITDA .

Year-over-Year (Q1 2024 vs Q1 2023)

Segment Adjusted EBITDA ($USD Thousands)

Operating KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Pro forma for the Utica and Mountaineer transactions, we have dramatically reduced net leverage to approximately 3.9x... We have significant liquidity with a $400 million undrawn revolver and more than $350 million of unrestricted cash to pursue... growth and bolt-on acquisition opportunities, while continuing to de-lever... and progress toward achieving our 3.5x net leverage target.” — Heath Deneke, CEO .
• “We’ve continued to make great progress commercializing the available firm capacity on the Double E Pipeline... 75 MMcf/d of incremental take-or-pay commitments... plus... 150 MMcf/d of non-binding 10-year take-or-pay bids... [and] a new max-rate interruptible agreement for up to 150 MMcf/d...” .
• “Our new Revised 2024 Adjusted EBITDA guidance range of $170 million to $200 million remains generally in-line with our original guidance for the year as adjusted to remove full year contributions of the Northeast segment divestitures.” .

Q&A Highlights

• Strategy and capital allocation: Management emphasized shifting from asset pruning to targeted M&A in Rockies and Permian, supported by liquidity and a 3.9x leverage profile, with a medium-term target of ~3.5x leverage .
• Permian/Double E outlook: New Matador 10-year TOP and an interruptible agreement should begin contributing incrementally from Q2, with larger benefits expected in 2025 as new plant connections ramp .
• Potential JV and refinancing: Management discussed possible JV structures around 2026 and using cash/liquidity for debt paydown and refinancing to optimize maturities and financial flexibility .
• Participants included Bank of America’s Gregg Brody; call logistics and materials were posted on SMLP’s IR site .

Estimates Context

• Wall Street consensus (S&P Global) for Q1 2024 EPS, Revenue, and EBITDA was unavailable for SMLP in SPGI’s mapping during this review; therefore, a versus-consensus comparison is not presented [SpgiEstimatesError].
• Management noted Q1 results were “generally in line with management expectations,” and revised FY24 Adj. EBITDA to $170–$200M on a pro forma basis after asset sales .

Key Takeaways for Investors

• Balance sheet reset is the story: exiting Northeast plus divestiture gains drove a step-change in leverage to ~3.9x; cash and revolver availability provide dry powder for opportunistic M&A and organic projects while targeting ~3.5x .
• Core growth vectors: Rockies (volume adds and POP margin uplift) and Permian (Double E commercialization and plant connections) should be the main EBITDA engines into 2025+ .
• FY24 guidance rebased, not deteriorated: The $170–$200M Adj. EBITDA range is a structural reset for a smaller footprint; underlying momentum, especially at Double E, supports medium-term upside if contracting converts to volumes .
• Near-term watch items: weather/operational risks in DJ, Barnett customer curtailments, timing of additional Double E contracting/plant tie-ins, and cadence of well connects vs plan .
• Cash returns remain paused: distribution suspension continues while preferred accruals build; deleveraging and capital allocation discipline remain priorities before any distribution reinstatement .
• Trading setup: catalysts include additional Double E contracts, M&A execution in Rockies/Permian, and continued leverage progress; any guidance updates or plant in-service milestones could reset expectations .

Sources:

• Q1 2024 8-K (Item 2.02) and EX-99.1 press release, financials, KPIs, segment detail, liquidity, and guidance .
• Q4 2023 8-K press release, financials, segment detail, KPIs, and FY24 guidance (pre-divestitures) .
• Q3 2023 8-K press release, financials, segment detail, KPIs .
• Q1 2024 earnings call transcript references and highlights .
• Q1 2024 earnings call scheduling and ECF notes press release .
• Additional PR distribution of Q1 2024 results .