SMLP - Summit Midstream Partners: Trying To Spend Their Way Out Of Overleverage

Summary

• Summit Midstream Partners has been struggling with an overleveraged financial position for years.
• Their cash flow performance was weak during the first quarter of 2022 and this continued during the second quarter.
• Surprisingly, they have just announced a $305m acquisition that management hopes will help.
• When reviewing their accompanying guidance, I am skeptical it will significantly help expedite deleveraging given the cost of the additional debt they will have to issue.
• When combined with the increasingly concerning economic outlook on the horizon, I continue to believe that my sell rating is appropriate.

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