Hess Midstream Partners LP (NYSE:HESM) Q2 2020 Earnings Conference Call - Final Transcript
Jul 29, 2020 • 12:00 pm ET
Jonathan C. Stein
$78 million. At quarter end, debt was approximately $1.8 billion, representing leverage of approximately 3 times adjusted EBITDA on a trailing twelve months basis.
Turning to guidance for the balance of the year. In the third quarter of 2020, we expect net income to be approximately $90 million to $100 million and adjusted EBITDA to be approximately $155 million to $165 million. Third quarter maintenance capital expenditures and net interest, excluding amortization of deferred finance costs, are expected to be approximately $25 million, resulting in expected distributable cash flow of approximately$130 million to $140 million, delivering distribution coverage of approximately 1.1 time with approximately 97% of projected revenues protected by MVCs.
Our third quarter guidance includes updated costs based on the deferral of the TGP turnaround which reduces expected operating costs by approximately $12 million and maintenance capital by approximately $8 million. We expect to spend approximately $8 million across operating costs and maintenance capital related to the turnaround in the third quarter including work completed before the deferral, demobilization
Of the workforce and preservation of materials. In addition, the third quarter guidance includes higher seasonal maintenance activity that, together with lower expected volumes as our throughputs decrease to MVC levels, decreases expected adjusted EBITDA by $5 million to $10 million relative to the second quarter.
In the fourth quarter, with expected revenues at MVC levels and seasonally lower operating costs, we expect distribution coverage to be approximately 1.2 times with revenues that continue to be approximately 97% protected by MVCs. Even in periods of great uncertainty the strength of our business model is clear. With revenues that are approximately 95% protected by MVCs for the next 2.5 years, and our annual rate redetermination mechanism that adjusts our rates for changes in volume and capital, we have differentiated visibility to our financial metrics including: approximately 25%adjusted EBITDA growth in 2020 and 2021; conservative leverage of 3 times adjusted EBITDA or less; distributions per share targeted to increase 5% annually; and expected free cash flow of $750 million in 2021 and 2022.
This concludes my remarks. We will be happy to answer any questions. I will now turn the call over to the operator.