HESS MIDSTREAM LP - CLASS A (NYSE:HESM) Q3 2025 Earnings Beat Estimates, Raises Distribution

HESS MIDSTREAM LP - CLASS A (NYSE:HESM) has reported its financial results for the third quarter of 2025, delivering a performance that surpassed analyst expectations on profitability while navigating a slight revenue shortfall. The market's initial reaction appears cautiously optimistic as investors digest the mixed outcome against a backdrop of solid operational execution and a reaffirmed capital return strategy.

Earnings and Revenue Performance

The midstream energy company reported earnings per share of $0.75 for the quarter, comfortably exceeding the analyst consensus estimate of $0.6815. This represents a significant 19% beat on bottom-line expectations and a notable improvement from the $0.63 per share reported in the same quarter last year.

However, the company's revenue picture was more nuanced. Total revenues and other income reached $420.9 million, falling short of the $429.4 million analysts had projected. Despite this quarterly miss, the topline figure represents a substantial year-over-year increase from $378.5 million in Q3 2024.

Key financial highlights from the quarter include:

• Net income of $175.5 million, up from $164.7 million in Q3 2024
• Adjusted EBITDA of $320.7 million
• Adjusted Free Cash Flow of $186.8 million
• Net cash provided by operating activities of $258.9 million

Market Reaction and Price Action

The stock has shown positive momentum in pre-market trading, suggesting investors are focusing on the earnings beat and strong operational cash flow generation rather than the revenue miss. This initial positive sentiment follows a period of relative stability for the stock in recent weeks.

Operational Highlights and Strategic Developments

The quarter featured several important operational and corporate developments. Throughput volumes showed healthy growth across all major segments, with gas processing up 10%, oil terminaling increasing 7%, and water gathering also rising 7% compared to the prior-year quarter. The company also completed construction of a new compressor station providing 35 MMcf/d of installed capacity, with potential for future expansion.

Significantly, the company navigated major ownership changes following the completion of the Hess-Chevron merger in July 2025. Chevron now indirectly owns approximately 37.9% of Hess Midstream, while Global Infrastructure Partners sold its entire stake in the partnership on May 30, 2025.

Capital Allocation and Shareholder Returns

Demonstrating confidence in its financial position, Hess Midstream increased its quarterly cash distribution to $0.7548 per Class A share, up $0.0178 from the previous quarter. The company attributed this increase to excess Adjusted Free Cash Flow following accretive repurchases in the third quarter.

Capital expenditures for the quarter totaled $79.8 million, down from $96.3 million in the prior-year period, primarily related to continued expansion of gas compression and associated pipeline infrastructure.

Forward Guidance and Analyst Expectations

Looking ahead, management provided fourth-quarter 2025 guidance projecting net income of $170-$180 million and Adjusted EBITDA of $315-$325 million. For the full year, this implies net income of $685-$695 million and Adjusted EBITDA of $1,245-$1,255 million.

The company also updated its full-year 2025 capital expenditure guidance to approximately $270 million, citing the suspension of the Capa gas plant project. While maintaining its throughput guidance, the Q4 outlook reflects expected impacts from scheduled maintenance activities and lower third-party volumes.

When compared to analyst estimates for the full year 2025, which project sales of $1.691 billion, the company's performance and guidance suggest a trajectory that aligns with market expectations, though specific revenue guidance was not provided in the release.

The company's financial position received a boost during the quarter when S&P upgraded Hess Midstream's senior unsecured debt to an investment grade rating of BBB- in July 2025.

For detailed historical earnings data and future estimates, readers can review the earnings and estimates page for HESM.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.