CANONSBURG, Pa.--(BUSINESS WIRE)--Equitrans Midstream Corporation (NYSE: ETRN), today, announced financial and operational results for the full-year and fourth quarter 2020. Included in the "Non-GAAP Disclosures" section of this news release are important disclosures regarding the use of non-GAAP supplemental financial measures, including information regarding their most comparable GAAP financial measure.
2020 Highlights:
- Generated $638 million of net income and achieved $1,215 million of adjusted EBITDA
- Recorded 66% of total operating revenue from firm reservation fees
- Increased total gathered volumes by approximately 5% year-over-year
- Reduced gathering operating and maintenance expense per gathered volume by 14% year-over-year
“The past year was transformational on many fronts,” said Thomas F. Karam, ETRN chairman and chief executive officer. “During 2020, our employees remained resilient – navigating the unprecedented times related to the pandemic and strengthening our company by delivering on our ability to generate predictable and stable revenue in any operating environment. We simplified our corporate structure, emerging as a single C-Corp entity; executed a gathering agreement that allows us to optimize our assets and realize meaningful capital savings; and acted with fiscal discipline by controlling costs and deploying capital efficiently in order to strengthen our balance sheet.”
“Looking ahead, we acknowledge the reality of climate change as one of the most critical issues of our time and we continue to embrace the importance of sustainability for future generations,” said Diana M. Charletta, ETRN president and chief operating officer. “Similar to our proactive safety culture, Equitrans’ ESG initiatives are becoming part of our DNA – from biodiversity considerations and the sourcing of our materials, to stakeholder engagement and transparent corporate governance.”
Charletta continued, “In January, we published our initial Climate Policy, which underscores a comprehensive commitment to environmental excellence in every aspect of our operations. As our society transitions to a lower-carbon economy, we will continue to take steps to reduce greenhouse gas emissions and build resiliency in our business to effectively manage the risks and opportunities. Every day must be a step in the right direction and as the journey continues, we will work to achieve our near-term actions, as well as our Net Zero Carbon Goals by 2050.”
2020 YEAR-END AND FOURTH QUARTER SUMMARY RESULTS
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||
| $ millions (except per share metrics) | 2020 | 2020 | ||||
| Net income attributable to ETRN common shareholders | $ | 117.8 | $ | 364.4 | ||
| Adjusted net income attributable to ETRN common shareholders | $ | 133.5 | $ | 443.3 | ||
| Earnings per diluted share attributable to ETRN common shareholders | $ | 0.27 | $ | 1.06 | ||
| Adjusted earnings per diluted share attributable to ETRN common shareholders | $ | 0.31 | $ | 1.29 | ||
| Net income | $ | 136.6 | $ | 638.0 | ||
| Adjusted EBITDA | $ | 286.4 | $ | 1,214.6 | ||
| Deferred revenue | $ | 76.9 | $ | 225.7 | ||
| Net cash provided by operating activities | $ | 316.7 | $ | 1,140.9 | ||
| Free cash flow | $ | 86.6 | $ | 317.4 | ||
| Retained free cash flow | $ | 21.8 | $ | (89.8 | ) | |
As a result of the gathering agreement with EQT entered into in February 2020, revenue from the contracted minimum volume commitment (MVC) is recognized utilizing an average rate applied over the 15-year contract life. The difference between the cash received from the contracted MVC and the revenue recognized results in the deferral of revenue into future periods. For the fourth quarter 2020, deferred revenue was $76.9 million and for the full-year 2020, deferred revenue was $225.7 million.
Operating revenue for the fourth quarter was lower compared to the same quarter last year by $58.7 million, primarily from the impact of deferred revenue. The reduction in operating revenue was partially offset by increased revenue from higher MVCs. Operating expenses decreased by $577.2 million compared to the fourth quarter 2019, primarily as a result of a $583.7 million impairment of goodwill in the fourth quarter 2019. Additionally, operating and maintenance expense decreased versus the prior year quarter while selling, general and administrative and depreciation expense increased.
QUARTERLY DIVIDEND
For the fourth quarter 2020, ETRN paid a quarterly cash dividend of $0.15 per common share on February 12, 2021 to common shareholders of record at the close of business on February 3, 2021.
TOTAL CAPITAL EXPENDITURES AND CAPITAL CONTRIBUTIONS
| Three Months Ended December 31, | Twelve Months Ended December 31, | |
| $ millions | 2020 | 2020 |
| MVP | $126 | $268 |
| Gathering(1) | $37 | $303 |
| Transmission(2) | $14 | $50 |
| Water | $4 | $12 |
| Headquarters | $1 | $4 |
| Total | $182 | $637 |
| (1) | Excludes $4.5 million and $41.6 million of capital expenditures related to noncontrolling interests in Eureka Midstream Holdings, LLC (Eureka) for the three and twelve months ended December 31, 2020, respectively. |
| (2) | Includes capital contributions to Mountain Valley Pipeline, LLC (MVP JV) for the MVP Southgate project. |
| $ millions | Q1 2021 |
| Net income | $45 - $65 |
| Adjusted EBITDA | $280 - $300 |
| Deferred revenue | $72 |
| $ millions | Full-Year 2021 |
| Net income | $335 - $405 |
| Adjusted EBITDA | $1,035 - $1,105 |
| Deferred revenue | $295 |
| Free cash flow | $(180) - $(110) |
| Retained free cash flow | $(440) - $(370) |
| $ millions | Full-Year 2021 |
| MVP | $670 - $720 |
| Gathering(1) | $305 - $335 |
| Transmission(2) | $45 - $65 |
| Water | $20 |
| Total | $1,040 - $1,140 |
| (1) | Includes approximately $30 million from ETRN’s 60% interest in Eureka. |
| (2) | Includes capital contributions of approximately $20 million to MVP JV for the MVP Southgate project. |
BUSINESS AND PROJECT UPDATES
Outstanding Debt and Liquidity
As of December 31, 2020, ETRN reported $6.4 billion of consolidated long-term debt; $485 million of borrowings and $246 million of letters of credit outstanding under the $3 billion revolving credit facility; and $208 million of cash.
Bond Offering
In January 2021, ETRN's wholly owned subsidiary, EQM, completed its issuance of $800 million of 4.50% senior notes due 2029 and $1,100 million of 4.75% senior notes due 2031. Proceeds from the offering were used to repay $1.4 billion of term loan borrowings and to complete a tender of $500 million of aggregate principal of EQM's 4.75% senior notes due 2023.
Mountain Valley Pipeline
On January 15, 2021, the U.S. Bureau of Land Management granted a right-of-way permit related to MVP’s crossing in the Jefferson National Forest. At present, the only major regulatory authorization outstanding is the approval to cross streams and wetlands. With total project work roughly 92% complete, the MVP JV has applied for a U.S. Army Corps of Engineers’ Individual Permit for certain waterbody crossings that will utilize the open-cut method and, through a Certificate Amendment application to the Federal Energy Regulatory Commission, is seeking authorization to use trenchless construction methods for the remainder of the crossings that were previously approved as open-cut.
The MVP JV continues to target a full in-service date in late 2021. The total project cost estimate is $5.8 - $6.0 billion, of which ETRN expects to fund approximately $2.9 billion based on the midpoint. As of December 31, 2020, ETRN had funded approximately $2.2 billion. ETRN will operate the pipeline and, based on the midpoint of the total project cost estimate, expects to have an approximate 47.6% ownership interest in MVP.
Climate Policy
In January 2021, ETRN published its initial Climate Policy, extending the Company’s commitment to environmental excellence and establishing a multi-faceted approach for evaluating and mitigating ETRN’s carbon footprint. ETRN is responding to the critical issues related to climate change by taking near-term actions to reduce its overall greenhouse gas (GHG) emissions. In 2021, ETRN will establish a foundation for future commitments and will work to assess practicability, costs, and timing to achieve interim targets of a 50% reduction in methane by 2030 and a 50% reduction in total GHG by 2040, with a net zero carbon goal for 2050. The climate policy is available under the Sustainability section of the Company's website at www.equitransmidstream.com.
About Equitrans Midstream Corporation:
Equitrans Midstream Corporation (ETRN) has a premier asset footprint in the Appalachian Basin and, as the parent company of EQM Midstream Partners, is one of the largest natural gas gatherers in the United States. Through its strategically located assets in the Marcellus and Utica regions, ETRN has an operational focus on gas transmission and storage systems, gas gathering systems, and water services that support natural gas development and production across the Basin. With a rich 135-year history in the energy industry, ETRN was launched as a standalone company in 2018 with the vision to be the premier midstream services provider in North America. ETRN is helping to meet America’s growing need for clean-burning energy, while also providing a rewarding workplace and enriching the communities where its employees live and work.
For more information on Equitrans Midstream Corporation, visit www.equitransmidstream.com; and to learn more about our environmental, social, and governance practices visit https://csr.equitransmidstream.com.
