Revenue growth has decelerated to 2.4% as of 2026Q1, while gross margins experienced a sharp contraction from 87.5% in 2025Q2 to 63.1% in the most recent quarter.
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 |
|---|
| Sales/Revenue | 1.63B | 1.62B | 1.49B | 1.35B | 1.27B | 1.2B | 1.09B | 847.6M | 712M | 579.5M | 509.8M | 565.1M | 254.8M | 269.7M | 169.7M |
| Revenue Growth % | 7.28% | 8.67% | 10.83% | 5.73% | 5.77% | 10.28% | 28.79% | 19.04% | 22.86% | 13.67% | -9.79% | 121.78% | -5.52% | 58.93% | - |
| Cost of Goods Sold | 497.6M | 584.7M | 203.1M | 192.5M | 181.3M | 165.6M | 156.9M | 142.5M | 126.9M | 116.5M | 99.7M | 86.1M | 44.4M | 202.8M | 101.7M |
| COGS % of Revenue | - | 36.06% | 13.61% | 14.3% | 14.24% | 13.76% | 14.37% | 16.81% | 17.82% | 20.1% | 19.56% | 15.24% | 17.43% | 75.19% | 59.93% |
| Gross Profit | 1.13B | 1.04B | 1.29B | 1.15B | 1.09B | 1.04B | 934.7M | 705.1M | 585.1M | 463M | 410.1M | 479M | 210.4M | 66.9M | 68M |
| Gross Margin % | 69.45% | 63.94% | 86.39% | 85.7% | 85.76% | 86.24% | 85.63% | 83.19% | 82.18% | 79.9% | 80.44% | 84.76% | 82.57% | 24.81% | 40.07% |
| Gross Profit Growth % | - | -19.57% | 11.72% | 5.65% | 5.17% | 11.07% | 32.56% | 20.51% | 26.37% | 12.9% | -14.38% | 127.66% | 214.5% | -1.62% | - |
| Operating Expenses | 122.3M | 28.5M | 369.8M | 336.7M | 300.7M | 311M | 358.2M | 328.5M | 206.9M | 199.9M | 203.8M | 284.1M | 175.6M | 230.7M | 141.9M |
| OpEx % of Revenue | - | 1.76% | 24.79% | 25.01% | 23.62% | 25.83% | 32.81% | 38.76% | 29.06% | 34.5% | 39.98% | 50.27% | 68.92% | 85.54% | 83.62% |
| Selling, General & Admin | 28.9M | 28.5M | 26.1M | 26.2M | 23.1M | 22.7M | 21.1M | 52.4M | 14.1M | 13.9M | 10.4M | 9.3M | 4.9M | 13M | 11.6M |
| SG&A % of Revenue | - | 1.76% | 1.75% | 1.95% | 1.81% | 1.89% | 1.93% | 6.18% | 1.98% | 2.4% | 2.04% | 1.65% | 1.92% | 4.82% | 6.84% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 1000K | 0 | 343.7M | 310.5M | 277.6M | 288.3M | 337.1M | 276.1M | 192.8M | 186M | 193.4M | 274.8M | 170.7M | 217.7M | 130.3M |
| Operating Income | 1.01B | 1.01B | 919M | 816.9M | 791.2M | 727.2M | 576.5M | 376.6M | 378.2M | 263.1M | 206.3M | 194.9M | 34.8M | -163.8M | -73.9M |
| Operating Margin % | 61.94% | 62.18% | 61.6% | 60.69% | 62.14% | 60.41% | 52.81% | 44.43% | 53.12% | 45.4% | 40.47% | 34.49% | 13.66% | -60.73% | -43.55% |
| Operating Income Growth % | - | 9.7% | 12.5% | 3.25% | 8.8% | 26.14% | 53.08% | -0.42% | 43.75% | 27.53% | 5.85% | 460.06% | 121.25% | -121.65% | - |
| EBITDA | 1.23B | 1.22B | 1.12B | 1.01B | 972.5M | 892.8M | 733.4M | 519.1M | 505.1M | 379.6M | 306M | 281M | 79.2M | -151.3M | -59.6M |
| EBITDA Margin % | 75.51% | 75.38% | 75.21% | 74.99% | 76.38% | 74.17% | 67.19% | 61.24% | 70.94% | 65.5% | 60.02% | 49.73% | 31.08% | -56.1% | -35.12% |
| EBITDA Growth % | 7.96% | 8.92% | 11.16% | 3.79% | 8.93% | 21.73% | 41.28% | 2.77% | 33.06% | 24.05% | 8.9% | 254.8% | 152.35% | -153.86% | - |
| D&A (Non-Cash Add-back) | 221.1M | 214.1M | 203.1M | 192.5M | 181.3M | 165.6M | 156.9M | 142.5M | 126.9M | 116.5M | 99.7M | 86.1M | 44.4M | 12.5M | 14.3M |
| EBIT | 1.02B | 1.02B | 933M | 824.6M | 796.5M | 737.8M | 586.7M | 380M | 378.8M | 267.8M | 206.3M | 194.9M | 34.8M | -163.8M | -73.9M |
| Net Interest Income | -224.6M | -225.6M | -202.2M | -179M | -149.3M | -105.4M | -94.7M | -62.4M | -53.3M | -25.8M | -1.4M | -1.5M | -1.9M | 0 | 0 |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 224.6M | 225.6M | 202.2M | 179M | 149.3M | 105.4M | 94.7M | 62.4M | 53.3M | 25.8M | 1.4M | 1.5M | 1.9M | 0 | 0 |
| Other Income/Expense | -208.9M | -209.7M | -188.2M | -171.3M | -144M | -94.8M | -84.5M | -59M | -52.7M | -21.1M | -1.4M | -1.5M | -1.9M | 0 | 0 |
| Pretax Income | 799.9M | 798.4M | 730.8M | 645.6M | 647.2M | 632.4M | 492M | 317.6M | 325.5M | 242M | 204.9M | 193.4M | 32.9M | -163.8M | -73.9M |
| Pretax Margin % | 49.11% | 49.24% | 48.98% | 47.96% | 50.83% | 52.53% | 45.07% | 37.47% | 45.72% | 41.76% | 40.19% | 34.22% | 12.91% | -60.73% | -43.55% |
| Income Tax | 119M | 113.8M | 71.8M | 37.9M | 26.6M | 14.6M | 7.1M | -100K | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Effective Tax Rate % | 14.88% | 14.25% | 9.82% | 5.87% | 4.11% | 2.31% | 1.44% | -0.03% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Net Income | 368.9M | 352.9M | 223.1M | 118.6M | 83.9M | 46.4M | 24M | 70.1M | 69.1M | 41.2M | 204.9M | 193.4M | 32.9M | -163.8M | -73.9M |
| Net Margin % | 22.65% | 21.77% | 14.95% | 8.81% | 6.59% | 3.85% | 2.2% | 8.27% | 9.71% | 7.11% | 40.19% | 34.22% | 12.91% | -60.73% | -43.55% |
| Net Income Growth % | 47.5% | 58.18% | 88.11% | 41.36% | 80.82% | 93.33% | -65.76% | 1.45% | 67.72% | -79.89% | 5.95% | 487.84% | 120.09% | -121.65% | - |
| Net Income (Continuing) | 680.9M | 684.6M | 659M | 607.7M | 620.6M | 617.8M | 484.9M | 317.7M | 325.5M | 242M | 204.9M | 193.4M | 32.9M | -163.8M | -73.9M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | -143.2M | -130.4M | -65.4M | 23M | 283.9M | 549M | 1.2B | 1.2B | 1.36B | 2.03B | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 2.86 | 2.86 | 2.49 | 2.08 | 2.01 | 1.76 | 1.31 | 1.22 | 1.27 | 0.75 | 3.76 | 3.54 | 0.60 | -3.00 | -1.35 |
| EPS Growth % | 13.33% | 14.86% | 19.71% | 3.48% | 14.2% | 34.35% | 7.38% | -3.94% | 69.33% | -80.05% | 6.21% | 490% | 120% | -122.22% | - |
| EPS (Basic) | - | 2.87 | 2.51 | 2.11 | 2.03 | 1.81 | 1.33 | 1.22 | 1.27 | 0.75 | 3.76 | 3.54 | 0.60 | -3.00 | -1.35 |
| Diluted Shares Outstanding | 129.2M | 123.1M | 89M | 56.3M | 41.4M | 25.7M | 18.1M | 54.8M | 54.7M | 53.8M | 54.56M | 54.56M | 54.56M | 54.56M | 54.56M |
| Basic Shares Outstanding | 129.2M | 123.1M | 89M | 56.2M | 41.3M | 26.36M | 18M | 54.6M | 54.6M | 53.8M | 54.56M | 54.56M | 54.56M | 54.56M | 54.56M |
| Dividend Payout Ratio | - | 99.23% | 105.47% | 107.5% | 108.46% | 106.47% | 131.67% | 121.83% | 116.06% | 1158.01% | 149.78% | 175.34% | 83.89% | - | - |
Sponsor integration dependency
According to recent financial disclosures, HESM's year-over-year revenue growth has decelerated significantly, falling to 2.4% in 2026Q1 from double-digit expansion observed in early 2025, suggesting that the company's organic growth phase is maturing as it faces a more challenging volume environment in the Williston Basin.
The transition from double-digit growth to low single digits indicates that the company is increasingly reliant on contractual price escalators rather than volume-driven throughput expansion. Investors should monitor whether this deceleration reflects a structural plateau in sponsor drilling activity or merely a temporary lull in the development cycle.
As reported in quarterly filings, gross margins experienced a sharp contraction from approximately 87% in mid-2025 to 63.1% by 2026Q1, a shift that appears to stem from changes in cost recognition or operational expenses that may challenge the company's historical profile as a high-margin toll-road operator.
The sudden drop in gross margin suggests that the underlying cost structure may be less fixed than previously assumed, or that the company is absorbing higher operational costs that were previously mitigated. This compression warrants further investigation into whether these costs are recurring maintenance requirements or anomalous expenses that could persist.
Based on the provided income statement data, HESM has maintained an operating margin consistently above 60% throughout the last ten quarters, demonstrating that the company successfully scales its operating income despite the recent volatility in top-line revenue growth and the observed fluctuations in gross profit margins.
The ability to sustain operating margins near 61% even as revenue growth slows implies a high degree of operational discipline and a lean SG&A structure. This suggests that the company's cost base is well-aligned with its fee-based revenue model, providing a buffer against potential volume-related revenue shortfalls.
While HESM's fee-based structure is often cited as a defensive moat, the reliance on shortfall payments to bolster revenue, as evidenced by the divergence between physical volume trends and reported income, suggests that the quality of earnings may be more sensitive to sponsor credit risk than anticipated.
Short-sellers might focus on the fact that reported revenue is increasingly decoupled from actual asset utilization, potentially masking a decline in the underlying utility of the gathering infrastructure. If the sponsor were to renegotiate terms, the lack of third-party volume could leave the company vulnerable to significant cash flow volatility.
Quick answers to the most common questions about buying HESM stock.
For fiscal year 2025, Hess Midstream LP (HESM) reported total revenue of $1.62B. This represents a 855.4% increase compared to $169.7M in 2012.
Hess Midstream LP (HESM) is profitable, generating $352.9M in net income for the fiscal year ending 2025 with a net profit margin of 21.8%.
Hess Midstream LP (HESM) reported an operating income of $1.01B, resulting in an operating profit margin of 62.2%. This margin reflects the operational efficiency of the business before interest and taxes.
Hess Midstream LP (HESM) generated $1.04B in gross profit for the year, representing a gross profit margin of 63.9%. This demonstrates the company's core pricing power and production efficiency.