Equitrans Midstream Corporation (NYSE:ETRN) disclosed its third quarter 2023 earnings results, reporting a net income of $130 million, adjusted EBITDA of $250 million, and deferred revenue of $83 million. The company also provided updates on the delayed MVP project, which is now set to be completed in Q1 2024 due to labor shortages and construction ramp-up challenges.
Key takeaways from the earnings call:
- The completion of the MVP project has been pushed to Q1 2024 from its initial timeline. The delay is attributed to difficulties in sourcing experienced workers and ramping up construction crews.
- The company expects to complete major boring activities and waterbody crossings in the next eight to nine weeks.
- Equitrans is making progress on incorporating an enterprise data collection framework for ESG reporting.
- The company also mentioned the potential for an expansion project after the mainline is completed, which would require about 24 months of regulatory processes and construction.
- Equitrans sees demand from both producers and customers for this expansion and may hold an open season when the time is right.
During the earnings call, Diana Charletta, a representative from Equitrans, stated that construction crews are on track to meet the revised completion date for the MVP project. The company has resolved its labor issues and is prioritizing difficult work while weather conditions are favorable. The majority of construction is expected to be completed by the end of the year, with some remaining work to be finished in January.
Charletta also discussed the contracts for the Mountain Valley Pipeline (MVP) as evidence of long-term demand in the Southeast. She believes that the Appalachian volumes will grow, displacing more expensive gas from the Northeast and providing Southeast customers with access to lower-cost gas.
Kirk Oliver, another company representative, mentioned that the company plans to reach a leverage target of four times two years after MVP is in service, opening up opportunities for return of capital. Charletta clarified that downstream contracts for MVP will not impact E-Train cash flows, and extending MVP into different areas could lead to further growth on the pipeline.
Equitrans also gave updates on its operations, including gathering growth, the Ohio Valley Connector Expansion Project, and the completion of the trunk line for its water system. The company incurred operating expenses related to the Rager Mountain Storage incident.
InvestingPro Insights
Drawing on real-time data from InvestingPro, Equitrans Midstream Corporation has exhibited impressive financial performance. With a market capitalization of $3870M, the company's revenue growth has accelerated, reaching 11.16% over the last twelve months as of Q3 2023. Furthermore, Equitrans has maintained robust gross profit margins at 86.64% in the same period.
The InvestingPro Tips highlight that despite the company's low earnings quality with free cash flow trailing net income, the stock generally trades with low price volatility. However, it's worth noting that the company is trading at a high revenue valuation multiple and a high Price/Book multiple of 4.06.
InvestingPro also notes that the company's profitability has been confirmed over the last twelve months, and analysts predict that this trend will continue throughout the year. This is supported by the company's P/E ratio of 12.02, indicating that investors are willing to pay a higher price for its earnings.
For more detailed insights and additional tips, consider exploring the InvestingPro platform, which offers a wealth of data and analysis on a range of companies, including Equitrans Midstream Corporation.
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