DT Midstream, Inc.: Form 10-Q for the period ended Mar 31, 2025

The following discussion of our results of operations and financial condition should be read in conjunction with our unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements, which are included under Part I, Item 1 of this quarterly report, and the historical consolidated financial statements and notes thereto, which are included in the DT Midstream 2024 Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the midstream industry and our business and financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections entitled "Forward-Looking Statements" and "Risk Factors."

OVERVIEW

Our Business

We are an owner, operator, and developer of an integrated portfolio of natural gas midstream assets. We provide multiple, integrated natural gas services to customers through our Pipeline segment, which includes interstate pipelines, intrastate pipelines, storage systems, and gathering lateral pipelines, and through our Gathering segment. We also own joint venture interests in equity method investees which own and operate interstate pipelines that connect to our wholly owned assets. On

December 31, 2024, we closed on the Midwest Pipeline Acquisition of three FERC-regulated natural gas transmission

pipelines. See Note 12, "Acquisition" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Our core assets strategically connect key demand centers in the Midwestern U.S., Eastern Canada and Northeastern U.S. regions to the premium production areas of the Marcellus/Utica natural gas formation in the Appalachian Basin and connect key demand centers and LNG export terminals in the Gulf Coast region to premium production areas of the Haynesville natural gas formation.

We have an established history of stable, long-term growth with contractual cash flows from customers that include natural gas producers, local distribution companies, electric power generators, industrials, and national marketers.

STRATEGY

Our principal business objective is to safely and reliably operate and develop natural gas assets across our premier footprint. Our proven leadership and highly engaged employees have an excellent track record. Prospectively, we intend to continue this track record by executing on our natural gas-centric business strategy focused on disciplined capital deployment and supported by a flexible, well capitalized balance sheet. Additionally, we intend to develop low carbon business opportunities and deploy GHG reducing technologies as part of our goal of being leading environmental stewards in the midstream industry. We are executing on a plan to achieve net zero carbon emissions by 2050.

Our strategy is premised on the following principles:

• operate our assets in a sustainable and responsible manner;
• provide exceptional service to our customers;
• disciplined capital deployment in assets supported by strong fundamentals;
• capitalize on asset integration and utilization opportunities;
• pursue economically attractive opportunities; and
• grow cash flows supported by long-term firm revenue contracts.

RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes financial information prepared in accordance with GAAP. The following sections discuss the operating performance and future outlook of our segments. Segment information includes intercompany revenues and expenses, as well as other income and deductions that are eliminated in the Consolidated Financial Statements.

For purposes of the following discussion, any increases or decreases refer to the comparison of the three months ended March 31, 2025 to the three months ended December 31, 2024, and the three months ended March 31, 2025 to the three months ended March 31, 2024, as applicable. The following table summarizes our consolidated financial results:

(millions, except per share amounts)

Pipeline

The Pipeline segment consists of our interstate pipelines, intrastate pipelines, storage systems, gathering lateral pipelines including related treatment plants and compression and surface facilities. This segment also includes our equity method investments. The Midwest Pipeline Acquisition assets and results of operations after the December 31, 2024 acquisition date are presented in our Pipeline segment. Pipeline results and outlook are discussed below:

28

Operating revenues increased $54 million compared to the three months ended December 31, 2024 primarily due to activity from the interstate pipelines acquired in the Midwest Pipeline Acquisition. Operating revenues increased $62 million compared to the three months ended March 31, 2024 primarily due to activity from the interstate pipelines acquired in the Midwest Pipeline Acquisition and new LEAP long-term firm service revenue contracts.

Operation and maintenance expense increased $12 million compared to the three months ended December 31, 2024 primarily due to activity from the interstate pipelines acquired in the Midwest Pipeline Acquisition and the impact of a change in segment mix on corporate overhead allocated to the Pipeline segment. Operation and maintenance expense increased $16 million compared to the three months ended March 31, 2024 primarily due to activity from the interstate pipelines acquired in the Midwest Pipeline Acquisition, production-related operating expenses from the LEAP expansion, and the impact of a change in segment mix on corporate overhead allocated to the Pipeline segment.

Depreciation and amortization expense increased $9 million compared to the three months ended December 31, 2024 primarily due to the Midwest Pipeline Acquisition. Depreciation and amortization expense increased $10 million compared to the three months ended March 31, 2024 primarily due to the Midwest Pipeline Acquisition.

Taxes other than income increased $3 million compared to the three months ended December 31, 2024 primarily due to the Midwest Pipeline Acquisition. Taxes other than income increased $3 million compared to the three months ended March 31, 2024 primarily due to the Midwest Pipeline Acquisition.

Interest expense increased $3 million compared to the three months ended December 31, 2024 primarily due to a full quarter of interest related to the 2034 Notes and higher borrowings under the Revolving Credit Facility, partially offset by lower Bridge Facility interest than in 2024. Interest expense was unchanged compared to the three months ended March 31, 2024 primarily due to a full quarter of interest related to the 2034 Notes offset by repayment of the Term Loan Facility during 2024.

Earnings from equity method investees decreased $9 million compared to the three months ended March 31, 2024 primarily due to higher interest expense from senior unsecured notes issued in the third quarter of 2024 at Millennium.

Income tax expense decreased $5 million compared to the three months ended December 31, 2024 primarily due to deferred tax remeasurement adjustments for changes in state tax rates and apportionment factors due to the Midwest Pipeline Acquisition and enacted state legislation in the fourth quarter of 2024, partially offset by higher income before income taxes. Income tax expense increased $6 million compared to the three months ended March 31, 2024 primarily due to higher income before income taxes.

Pipeline Outlook

We believe our long-term agreements with customers and the location and connectivity of our pipeline assets position the business for future growth. We will continue to pursue economically attractive expansion opportunities that leverage our current asset footprint and strategic relationships. These growth opportunities include expansion opportunities on the DTM Interstate Transportation assets, further expansion at LEAP and Stonewall, new contracts at the Washington 10 Storage Complex and additional growth related to our equity method investments.

Gathering

The Gathering segment includes gathering systems, related treatment plants and compression and surface facilities. The Clean Fuels Gathering assets and results of operations after the July 1, 2024 acquisition date are presented in our Gathering segment. Gathering results and outlook are discussed below:

Operating revenues increased $1 million compared to the three months ended March 31, 2024 primarily due to higher Ohio Utica Gathering volumes of $5 million and higher Blue Union Gathering revenues of $2 million, partially offset lower Susquehanna Gathering volumes of $6 million.

Operation and maintenance expense decreased $9 million compared to the three months ended December 31, 2024 primarily due to the impact of a change in segment mix on corporate overhead allocated to the Gathering segment, lower planned maintenance and production-related operating expenses on Blue Union Gathering of $1 million, lower planned maintenance at Susquehanna Gathering of $1 million and timing of planned maintenance at Appalachia Gathering of $2 million. Operation and maintenance expense increased $8 million compared to the three months ended March 31, 2024 primarily due to new assets placed into service and higher production-related operating expenses on Blue Union Gathering of $4 million and Ohio Utica Gathering operations of $1 million, partially offset by the impact of a change in segment mix on corporate overhead allocated to the Gathering segment.

Depreciation and amortization expense increased $3 million compared to the three months ended March 31, 2024 primarily due to assets placed into service at Ohio Utica Gathering during the second quarter of 2024.

Taxes other than income increased $3 million compared to the three months ended December 31, 2024 primarily due to timing of property taxes related to assets placed into service at Blue Union Gathering.

Interest expense increased $1 million compared to the three months ended December 31, 2024 primarily due to a full quarter of interest related to the 2034 Notes and higher borrowings under the Revolving Credit Facility, partially offset by lower Bridge Facility interest than in 2024. Interest expense was unchanged compared to the three months ended March 31, 2024 primarily due to a full quarter of interest related to the 2034 Notes offset by repayment of the Term Loan Facility during 2024.

Income tax expense decreased $3 million compared to the three months ended December 31, 2024 primarily due to deferred tax remeasurement adjustments for changes in state tax rates and apportionment factors due to the Midwest Pipeline Acquisition and enacted state legislation in the fourth quarter of 2024. Income tax expense decreased $2 million compared to the three months ended March 31, 2024 primarily due to lower income before income taxes.

Gathering Outlook

We believe our long-term agreements with producers and the quality of the natural gas reserves in the Marcellus/Utica and Haynesville formations position the business for future growth. We will continue to pursue economically attractive expansion opportunities that leverage our current asset footprint and strategic relationships. These growth opportunities include further expansions at Blue Union Gathering, Appalachia Gathering, Ohio Utica Gathering, Tioga Gathering and Clean Fuels Gathering.

ENVIRONMENTAL MATTERS

We are subject to U.S. federal, state, and local laws and environmental regulations, including laws and regulations relating to pipeline safety, climate change and GHG emissions. Additional compliance costs may result as the effects of various substances on the environment and human health are studied and governmental regulations are developed and implemented. Actual costs to comply with such laws and regulations could vary substantially from our expectations. Pending or future legislation or regulation could have a material impact on our operations and financial position. Potential impacts include unplanned expenditures for environmental equipment, such as pollution control equipment, financing costs related to additional capital expenditures, and the replacement costs of aging pipelines and other facilities.

For further discussion of environmental matters, see Note 10, "Commitments and Contingencies" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

CAPITAL RESOURCES AND LIQUIDITY

Cash Requirements

Our principal liquidity requirements are to finance our operations, fund capital expenditures, satisfy our indebtedness obligations, and pay approved dividends. We believe we will have sufficient internal and external capital resources to fund anticipated capital and operating requirements.

For purposes of the following discussion, any increases or decreases refer to the comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024.

Operating Activities

Cash flows from our operating activities can be impacted in the short term by the natural gas volumes gathered or transported through our systems under interruptible service revenue contracts, changing natural gas prices, seasonality, weather fluctuations, dividends received from equity method investees, working capital changes and the financial condition of our customers. Our preference to enter into firm service revenue contracts leads to more stable operating performance, revenues and cash flows and limits our exposure to natural gas price fluctuations.

Net cash and cash equivalents from operating activities increased $6 million for the three months ended March 31, 2025 primarily due to an increase in operating income after adjustment for non-cash items including depreciation and amortization expense, stock-based compensation, and amortization of operating lease right-of-use assets, a decrease in cash paid for income taxes, partially offset by decreases in net working capital changes and dividends received from equity method investees.

Investing Activities

Cash outflows associated with our investing activities are primarily the result of plant and equipment expenditures, acquisitions, and contributions to equity method investees. Cash inflows from our investing activities are generated from proceeds from sale or collection of notes receivable, distributions received from equity method investees, and proceeds from asset sales.

Net cash and cash equivalents used for investing activities decreased $17 million for the three months ended March 31, 2025 primarily due to a decrease in cash used for plant and equipment expenditures, partially offset by lower distributions received from equity method investees.

Financing Activities

DT Midstream paid cash dividends on common stock of $75 million and $67 million during the three months ended March 31, 2025 and 2024, respectively. See Note 6, "Earnings Per Share and Dividends" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Net cash and cash equivalents used for financing activities decreased $7 million for the three months ended March 31, 2025 primarily due to lower net repayments of borrowings under the Revolving Credit Facility, partially offset by higher payroll taxes paid related to vested stock-based compensation and higher dividends paid on common stock.

Outlook

We expect to continue executing on our natural gas-centric business strategy focused on disciplined capital deployment and supported by a flexible, well capitalized balance sheet. Other than the impact of the items discussed below on our debt and equity capitalization, we are not aware of any trends, other demands, commitments, events or uncertainties that are reasonably likely to materially impact our liquidity position.

Our working capital requirements will be primarily driven by changes in accounts receivable, accounts payable and taxes payable. We continue our efforts to identify opportunities to improve cash flows through working capital initiatives and obtaining long-term firm service revenue contracts from customers.

Our sources of liquidity include cash and cash equivalents generated from operating activities and available borrowings under our Revolving Credit Facility. As of March 31, 2025, we had $16 million of letters of credit outstanding and $65 million borrowings outstanding under our Revolving Credit Facility. We had approximately $1.0 billion of available liquidity as of March 31, 2025, consisting of cash and cash equivalents and available borrowings under our Revolving Credit Facility.

We expect to pay regular cash dividends to DT Midstream common stockholders in the future. Any payment of future dividends is subject to approval by the Board of Directors and may depend on our future earnings, cash flows, capital requirements, financial condition, and the effect a dividend payment would have on our compliance with relevant financial covenants. Over the long-term, we expect to grow our dividend with cash flow growth.

We believe we will have sufficient operating flexibility, cash resources and funding sources to maintain adequate liquidity amounts and to meet future operating cash, capital expenditure and debt servicing requirements. However, our business is capital intensive, and the inability to access adequate capital could adversely impact future earnings and cash flows.

The Credit Agreement covering the Revolving Credit Facility includes financial covenants that DT Midstream must maintain. See Note 9, "Debt" and Note 10, "Commitments and Contingencies" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

CAPITAL INVESTMENTS

Capital spending within our Company is primarily for ongoing maintenance and expansion of our existing assets, and if identified, attractive growth opportunities. We have been disciplined in our capital deployment and make growth investments that meet our criteria in terms of strategy, management skills, and identified risks and expected returns. All potential investments are analyzed for their rates of return and cash payback on a risk-adjusted basis. Our total capital expenditures, inclusive of $1 million in contributions to equity method investees, were $72 million for the three months ended March 31, 2025 primarily for expansions on Blue Union Gathering, Appalachia Gathering, Stonewall, LEAP and Clean Fuels Gathering. We anticipate total capital expenditures, inclusive of contributions to equity method investees, for the year ended December 31, 2025 of approximately $470 million to $550 million.

OFF-BALANCE SHEET ARRANGEMENTS

We are party to off-balance sheet arrangements, which include our equity method investments. See Note 1, "Description of the Business and Basis of Presentation—Principles of Consolidation" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for further discussion of the nature, purpose and other details of such agreements.

Other off-balance sheet arrangements include the Vector line of credit and our surety bonds, which are discussed in Note 10, "Commitments and Contingencies" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 3, "New Accounting Pronouncements" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Market Price Risk

Our gathering business is dependent on the continued availability of natural gas production and reserves in our geographical areas of operation. Low prices for natural gas, including those resulting from regional basis differentials, could adversely affect development of additional reserves and future natural gas production that is accessible by our pipeline and storage assets. We manage our exposure through the use of short, medium, and long-term transportation, gathering, and storage contracts. Consequently, our existing operations and cash flows have limited direct exposure to natural gas price risk.

Credit Risk

We are exposed to credit risk, which is the risk of loss resulting from nonpayment or nonperformance under a contract. We manage our exposure to credit risk associated with customers through credit analysis, credit approval, credit limits and monitoring procedures. For certain transactions, we may request letters of credit, cash collateral, prepayments or guarantees as forms of credit support. Our FERC tariffs require tariff customers that do not meet specified credit standards to provide three months of credit support, however, we are exposed to credit risk beyond this three-month period when our tariffs do not require our customers to provide additional credit support. For some long-term contracts with associated system construction or expansion, we have entered into negotiated credit agreements that provide for enhanced forms of credit support if certain customer credit standards are not met.

We depend on a key customer, Expand Energy, in the Haynesville formation in the Gulf Coast and in the Marcellus formation in the Northeastern U.S. for a significant portion of our revenues. The loss of, or reduction in volumes from, this key customer could result in a decline in demand for our services and materially adversely affect our business, financial condition and results of operations.

Our key customer, Expand Energy, is investment grade. We engage with other customers that are sub-investment grade. These customers are otherwise considered creditworthy or are required to make prepayments or provide security to satisfy credit concerns. We regularly monitor for bankruptcy proceedings that may impact our customers and had no bankruptcy proceedings during the three months ended March 31, 2025.

Interest Rate Risk

We are subject to interest rate risk in connection with floating rate debt borrowings under our Revolving Credit Facility. Our exposure to interest rate risk arises primarily from changes in SOFR. As of March 31, 2025, we had floating rate debt of $65 million related to borrowings outstanding under our Revolving Credit Facility, and a floating rate debt-to-total debt ratio of 2%. See Note 9, "Debt" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

We are subject to interest rate risk in connection with our goodwill impairment assessment. See "Critical Accounting Estimates" under Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2024.

International Markets Risk

While the majority of our business is in the United States, we also have a minor equity method investment in Canada. Rapidly changing global trade policies, such as tariffs, may increase operating costs and uncertainty. We continue to monitor regulatory developments.

Summary of Sensitivity Analysis

A sensitivity analysis was performed on the fair values of our long-term debt obligations. The sensitivity analysis involved increasing and decreasing interest rates as of March 31, 2025 by a hypothetical 10% and calculating the resulting change in the fair values. We have no debt maturing until 2029, as described in Note 9, "Debt" to the Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q. The hypothetical losses related to long-term debt would be realized only if we transferred all of our fixed-rate long-term debt to other creditors. The results of the sensitivity analysis are as follows:

(a) Evaluation of disclosure controls and procedures

Management of DT Midstream carried out an evaluation, under the supervision and with the participation of DT Midstream's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DT Midstream's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2025, which is the end of the period covered by this report. Based on this evaluation, DT Midstream's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DT Midstream in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to DT Midstream's management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of our disclosure controls and procedures will be attained.

(b) Changes in internal control over financial reporting

DT Midstream is in the process of integrating its internal controls over financial reporting with those of the entities acquired in the Midwest Pipeline Acquisition. As part of the acquisition’s transition services agreement, DT Midstream utilized the seller’s systems and processes this quarter and certain controls have been added or modified. We will continue to analyze, evaluate, and where necessary, make changes in controls and procedures related to the entities acquired in the Midwest Pipeline Acquisition. Except as noted above, there have been no changes in DT Midstream's internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, DT Midstream's internal control over financial reporting.

There are various risks associated with the operations of DT Midstream's businesses. To provide a framework to understand the operating environment of DT Midstream, a brief explanation of the more significant risks associated with DT Midstream's businesses is provided in Part I, Item 1A. "Risk Factors" in DT Midstream's 2024 Annual Report on Form 10-K. Although DT Midstream has identified and disclosed key risk factors, others could emerge in the future.