Hess Midstream LP (HESM) Cash Flow Statement

The consistently high OCF-to-net-income ratio suggests that reported earnings are substantially cash-backed, with large non-cash charges such as depreciation of roughly $51-58M per quarter explaining much of the gap. The ratio's gradual compression from the 5x-plus levels of 2024 toward the 2.6-2.9x range in 2025-2026 may indicate that net income is catching up as interest and other charges have grown. Investors should monitor whether this ratio stabilizes, as a sustained decline would warrant further investigation into the drivers of the earnings-to-cash gap.

Outside of the Q4 2025 spike, free cash flow margins have generally been robust, which suggests the underlying asset base generates substantial distributable cash on a steady basis. The Q4 2025 outlier appears to reflect a concentrated capital program rather than a structural decline in operating cash generation. The 2026 run-rate of roughly $224-256M in quarterly FCF implies coverage of the approximately $96-101M quarterly distributions, though the margin of coverage warrants monitoring.

The sharp variation in capex intensity suggests that most spending is discretionary expansion capital rather than maintenance, since maintenance needs for a relatively mature gathering and processing system would typically be smoother. Because the split between maintenance and growth capex is not provided in the supplied data, the true maintenance burden cannot be verified. Investors should note that management's categorization of these outlays could materially change the reported distributable cash flow figure.

Distributions appear to be the primary use of free cash flow, and in quarters where acquisition outflows were high alongside distributions, the combined spending exceeded free cash flow, suggesting reliance on balance sheet capacity or external financing at those points. The reported debt-to-equity ratio of 8.61 indicates limited balance sheet flexibility to absorb further shortfalls. Investors may wish to watch whether acquisition spending is scaled back to restore self-funding capacity.