Summit Midstream 2025 Q1 Earnings Misses Targets as Net Income Drops 96.5%

Summit Midstream (SMC) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The results showed a significant decline in net income, which fell 96.5% from the previous year, missing expectations. Summit Midstream reaffirmed its full-year 2025 financial guidance, maintaining projections for adjusted EBITDA and capital expenditures within previously stated ranges. The company remains optimistic about its natural gas segment, despite market challenges and reduced crude oil prices.

Revenue

Summit Midstream reported a total revenue increase of 11.2% for Q1 2025, reaching $123.49 million, compared to $111.08 million in Q1 2024. Within its business segments, the gathering services and related fees generated $64.17 million, while natural gas, NGLs, and condensate sales contributed $59.33 million. Meanwhile, other revenues accounted for $9.21 million, culminating in overall revenues of $132.70 million for the quarter.

Earnings/Net Income

Summit Midstream experienced a shift from a profit of $12.05 per share in Q1 2024 to a loss of $0.16 per share in Q1 2025, reflecting a 101.3% negative change. Additionally, net income fell sharply to $4.63 million, down from $132.93 million in the same quarter of the previous year. The EPS results indicate a challenging financial performance for the quarter.

Post Earnings Price Action Review

The investment strategy of acquiring Summit Midstream shares following a quarter-over-quarter revenue drop and holding them for 30 days has historically resulted in poor outcomes over the last five years. This approach yielded a return of -23.03%, significantly underperforming compared to a benchmark return of 7.66%. The strategy's excess return was -30.69%, with a compound annual growth rate (CAGR) of -29.08%. Additionally, the strategy demonstrated a high maximum drawdown of -41.64% and a negative Sharpe ratio of -0.67, highlighting the significant risk and negative returns associated with it.

CEO Commentary

Heath Deneke, President, Chief Executive Officer, and Chairman, noted that Summit's Q1 2025 financial and operating results aligned with management's expectations, generating $57.5 million of adjusted EBITDA. He emphasized continued customer engagement, with 41 new wells turned in line during the quarter, and expressed optimism about the natural gas segment's future prospects despite softened crude oil prices.

Guidance

For the full year 2025, Summit Midstream reaffirmed its financial guidance, projecting adjusted EBITDA between $245 million and $280 million, and total capital expenditures of $65 million to $75 million. The guidance accounts for anticipated well connections ranging from 125 to 185, focusing on maintaining robust operational performance amid potential market fluctuations.

Additional News

In recent developments, Summit Midstream completed the acquisition of Moonrise Midstream in the DJ Basin on March 10, 2025, as part of its strategic growth initiatives. The acquisition is expected to enhance operational capacity and flexibility. In addition, Summit Midstream reinstated cash dividends on its Series A Preferred Stock, beginning March 15, 2025, marking a significant step in improving shareholder returns. The company also raised $250 million through the issuance of additional 8.625% Senior Secured Second Lien Notes due 2029, aimed at strengthening its financial position and supporting ongoing growth initiatives.