DT Midstream (DTM) Q1 FY26 earnings call: guidance and Q&A

DT Midstream is actively advancing its $3.4 billion project backlog, with two new projects approved: a Vector Pipeline mainline expansion adding 400 MMcf/d capacity by Q4 2028, and the Millennium R2R project adding 70 MMcf/d by Q1 2027. These investments are anchored by long-term contracts with investment-grade utility customers, serving growing demand in the Upper Midwest and New York/New England markets. The company also secured a new lateral to serve a 900-megawatt power plant off Midwestern Pipeline, contingent on customer FID in 2026, with an expected in-service date in H1 2028.

The company experienced significant market interest, with nonbinding open seasons for both Midwestern and Vector pipelines being oversubscribed. Midwestern's expansion could increase capacity by up to 1.5 Bcf/d, while Vector's 2030 expansion targets 300-500 MMcf/d westbound capacity into Chicago. These results reinforce the strong fundamentals driven by power demand growth, particularly from data centers and large load customers in the Midwest and Northeast.

DT Midstream highlights the rapid growth in power demand, especially from data centers, with utilities converting opportunities into signed load faster than anticipated. The company has attached 565 MMcf/d of power generation load to Midwestern in the last 12 months and commercialized a new 250 MMcf/d NEXUS interconnect to power a data center in Ohio. Management notes that these developments are framed to ensure affordability for retail customers, addressing local community concerns.

Geopolitical events have underscored the value of U.S. LNG as a stable supply source, favoring increased exports from the U.S. Gulf Coast. DT Midstream's LEAP pipeline, currently running at its design capacity of 2.1 Bcf/d, is strategically positioned to serve this demand and has the ability to expand to 4 Bcf/d. The company is seeing renewed interest and active commercial dialogues in the Haynesville basin, driven by the strong fundamentals for LNG.

The company maintains a strong, investment-grade balance sheet with significant dry powder to fund its growth agenda. Management emphasized that the balance sheet is not a constraint, and projects with investment-grade customers and 20-year demand-based contracts could attract additional capital if needed. Moody's recently increased the off-balance sheet threshold to 4.25x, providing further headroom. The company also recontracted 30% of Midwestern's capacity for 5-25 years, demonstrating durability and value.

While the Millennium R2R project was approved, the larger Millennium Pro project requires specific support from New York and regional governments, or at least a lack of opposition, before capital deployment. Management acknowledges the clear demand need in the region due to infrastructure constraints but emphasizes a cautious and patient approach given the regulatory backdrop.