DT Midstream, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the provided filing text does not give a separate set of fourth-quarter-only results.
Business context
DT Midstream owns and operates natural gas gathering, pipeline and storage assets serving the Midwest, Eastern Canada, Northeast and Gulf Coast. Its two reporting segments are Pipeline and Gathering. The company became independent of DTE Energy on July 1, 2021; 2021 comparative results include pre-Separation carve-out reporting and therefore are not fully comparable to a full year as an independent company.
Key financial results
| Metric | 2022 | 2021 |
|---|---|---|
| Operating revenue | $920 million | $840 million |
| Operating income | $478 million | $402 million |
| Net income attributable to DT Midstream | $370 million | $307 million |
| Diluted earnings per share | $3.81 | $3.16 |
| Cash from operating activities | $725 million | $572 million |
| Plant and equipment expenditures | $338 million | $140 million |
| Cash and cash equivalents at year end | $61 million | $132 million |
Revenue rose about 10%, and attributable net income rose about 21%. Operating margin was approximately 52% and attributable net margin approximately 40% in 2022. Operating cash flow less plant and equipment expenditures was approximately $387 million; this simple measure excludes acquisitions and other investing activity.
Pipeline revenue was $339 million, up from $307 million; attributable segment income was $228 million, versus $178 million. Gathering revenue was $581 million, up from $534 million; attributable segment income was $142 million, versus $129 million. Gathering average throughput increased to 3.1 Bcf/d from 2.8 Bcf/d.
Debt, liquidity and distributions
- Year-end principal debt was approximately $3.43 billion: $2.1 billion of senior notes, $600 million of senior secured notes, $399 million under the term loan and $330 million drawn on the revolver.
- The revolver was expanded to $1.0 billion and extended to October 2027. Net undrawn revolver availability was $631 million; reported available liquidity, including cash, was approximately $692 million.
- Management reported compliance with financial covenants at year end: debt service coverage of 6.9x, net leverage of 3.8x and interest coverage of 6.3x.
- Cash dividends declared were $2.56 per share for 2022. The Board declared a subsequent quarterly dividend of $0.69 per share in February 2023; future dividends remain subject to Board approval, cash needs and debt restrictions.
Material developments, outlook and unusual items
- DT Midstream acquired an additional 26.25% interest in Millennium Pipeline for $552 million in October 2022, bringing its ownership to 52.5%; it continues to account for Millennium under the equity method.
- The company continued the LEAP expansion and reached final investment decision on phases 2 and 3, which are expected to raise capacity to 1.9 Bcf/d and provide access to LNG export terminals. Stonewall and Appalachia gathering expansions also advanced. Management forecast 2023 capital expenditures, including equity-method contributions, of approximately $605–$690 million.
- 2022 results included a $17 million gain on sale of Utica-region assets, a $6 million Pipeline legal-settlement gain, and $13 million of financing losses associated with partial term-loan repayment and debt modification/extinguishment.
- Management emphasized disciplined investment, long-term firm-service contracts and cash-flow growth. It stated a goal to reduce emissions 30% by 2030 and reach net-zero carbon emissions by 2050; carbon capture, hydrogen and methane-monitoring opportunities are under development. No specific 2023 earnings or revenue guidance is provided in the filing text.
- Key risks include customer concentration—Southwestern Energy represented approximately 65% of operating revenue—customer credit and production levels, interest-rate exposure, financing and covenant constraints, project execution, pipeline safety and environmental regulation, climate-transition and physical risks, and cyber or operational disruptions. The filing says reasonably possible losses from legal matters are not expected to be material; it records $19 million for future slope-restoration work and describes a $52 million maximum potential exposure under a Vector Pipeline credit facility, with funding considered remote.
Important facts for investors to verify
- Southwestern Energy’s financial condition, contract terms and share of revenue, alongside contract renewal and volume commitments.
- Millennium acquisition economics and contribution, plus execution, cost and demand assumptions for LEAP, Blue Union and other expansion projects.
- Debt-service costs and floating-rate exposure, covenant headroom, revolver availability and dividend capacity.
- Whether 2023 capital spending and emissions-reduction projects remain within stated plans, and how evolving pipeline-safety, environmental and climate rules could affect costs or permits.
- Equity-method investment valuation and earnings: these investments were a critical audit matter, and the filing reports $150 million of 2022 equity-method earnings.