DT Midstream, Inc. (DTM) FY 2021 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 interstate pipelines, intrastate pipelines, storage systems, lateral pipelines and related treatment plants and compression and surface facilities, and gathering systems and related treatment plants and compression and surface facilities. We also own joint venture interests in equity method investees which own and operate interstate pipelines, many of which have connectivity to our wholly owned assets.

Our core assets connect demand centers in the Midwestern U.S., Eastern Canada, Northeastern U.S. and Gulf Coast regions to production areas of the Haynesville and Marcellus/Utica dry natural gas formations in the Gulf Coast and Appalachian Basins, respectively.

The Separation

On October 27, 2020, DTE Energy announced that its Board of Directors had authorized the separation of the DTE midstream business, formerly known as DTE Gas Enterprises, LLC, and its consolidated subsidiaries ("DT Midstream", "we", "our", "us") from DTE Energy.

In June 2021, in order to facilitate the Separation and settle short-term borrowings due to DTE Energy, we issued long-term debt in the form of $2.1 billion senior notes and a $1.0 billion term loan facility. Using the debt proceeds, net of discount and issuance costs of $53 million, we made the following cash payments:

•Settled Short-term borrowings due to DTE Energy as of June 30, 2021 of $2,537 million;

•Settled Accounts Receivable due from DTE Energy and Accounts Payable due to DTE Energy as of June 30, 2021 for net cash of $9 million; and

•Provided a one-time special dividend to DTE Energy of $501 million.

On July 1, 2021, DTE Energy completed the Separation through the distribution of 96,732,466 shares of DT Midstream common stock to DTE Energy shareholders of record as of 5:00 p.m. ET on June 18, 2021 (the "record date"). DTE Energy shareholders received one share of DT Midstream common stock for every two shares of DTE Energy common stock held at the close of business on the record date, with certain shareholders receiving cash in lieu of fractional shares of DT Midstream common stock.

Following the Separation on July 1, 2021, we became an independent public company listed under the symbol "DTM" on the NYSE. DTE Energy no longer retains any ownership in our company.

See Note 1, "Separation, Description of the Business, and Basis of Presentation" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

39

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 provide a detailed discussion of the operating performance and future outlook of our segments. Segment information, described below, 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 year ended December 31, 2021 to the year ended December 31, 2020, or the year ended December 31, 2020 to the year ended December 31, 2019.

The following table summarizes our consolidated financial results:

Operating revenues increased in the years ended December 31, 2021 and December 31, 2020 in both our Pipeline and Gathering segments.

Net income attributable to DT Midstream decreased $5 million in the year ended December 31, 2021 due to lower earnings at our Gathering segment, partially offset by higher earnings at our Pipeline segment. Net income attributable to DT Midstream increased in the year ended December 31, 2020 primarily due to the first full year of operations of Blue Union and a partial year of operations for LEAP.

See Note 4, "Acquisitions" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K, for discussion of the acquisition of Blue Union and LEAP in December 2019. See detailed explanations of segment performance in the sections below.

40

Pipeline

The Pipeline segment consists of our interstate pipelines, intrastate pipelines, storage systems, lateral pipelines and related treatment plants and compression and surface facilities. This segment also includes our equity method investments. Pipeline results and outlook are discussed below:

Operating revenues increased $41 million in the year ended December 31, 2021 primarily due to higher LEAP revenues of $51 million as a result of a full year of LEAP operations in 2021. LEAP was placed into service in the third quarter 2020. This increase was partially offset by lower storage revenues at the Washington 10 Storage Complex of $8 million due to lower market rates. Operating revenues increased $32 million in the year ended December 31, 2020 primarily due to the LEAP partial year of operations and higher storage and Stonewall Gas Gathering revenues, partially offset by lower services provided to our equity method investees and lower Bluestone volumes.

Operation and maintenance expense increased $6 million in the year ended December 31, 2021 primarily due to higher Separation related transaction costs, higher public company costs, and higher LEAP operating costs after it was placed into service in the third quarter 2020, partially offset by cost savings initiatives. Operation and maintenance expense decreased $11 million in the year ended December 31, 2020 primarily due to lower reserves for uncollectible accounts and cost savings initiatives.

Depreciation and amortization expense increased $11 million in the year ended December 31, 2021 primarily due to higher depreciation related to LEAP of $12 million after it was placed into service in the third quarter 2020, partially offset by lower depreciation of storage assets. Depreciation and amortization expense increased $6 million in the year ended December 31, 2020 primarily due to depreciation related to LEAP after it was placed in service, partially offset by increased useful lives of certain storage assets.

Taxes other than income expense increased $6 million in the year ended December 31, 2021 primarily due to LEAP after it was placed into service in the third quarter 2020.

Interest expense increased $8 million in the year ended December 31, 2021 primarily due to higher capitalized interest during 2020 related to LEAP construction, partially offset by lower interest on borrowings from DTE Energy in 2021. Interest expense decreased $13 million in the year ended December 31, 2020 primarily due to lower interest on borrowings from DTE Energy in 2020.

Earnings from equity method investees increased $18 million in the year ended December 31, 2021 primarily due to higher operating earnings of $12 million from NEXUS, $3 million from the Vector Pipeline and $2 million from the Millennium Pipeline. Earnings from equity method investees increased $10 million in the year ended December 31, 2020 primarily due to higher NEXUS earnings, including the first full year of operations of the Generation Pipeline.

41

Income tax expense increased $4 million in the year ended December 31, 2021 primarily due to an increase in Income before income taxes. Income tax expense increased $20 million in the year ended December 31, 2020 primarily due to an increase in Income before income taxes.

Net income attributable to noncontrolling interests decreased $4 million in the year ended December 31, 2020 primarily due to the May 2019 purchase of an additional 30% ownership interest in Stonewall Gas Gathering.

Outlook

We believe our long-term agreements with customers and the location and connectivity of our pipeline assets soundly 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 future Haynesville system expansion (LEAP), completion of a new customer interconnection at Stonewall Gas Gathering, and additional growth related to our equity method investees.

Gathering

The Gathering segment consists of our gathering systems and related treatment plants and compression and surface facilities. Gathering results and outlook are discussed below:

Operating revenues increased $45 million in the year ended December 31, 2021 primarily due to higher gathering revenues on Blue Union of $33 million and the Appalachia Gathering System of $17 million, partially offset by lower volumes on Susquehanna Gathering System of $4 million. Operating revenues increased $216 million in the year ended December 31, 2020 primarily due to the first full year of Blue Union operations.

Operation and maintenance expense increased $50 million in the year ended December 31, 2021 primarily due to an increase of $30 million related to increased Blue Union operations, higher activity on the Appalachia Gathering System, higher Separation related transaction costs, and higher public company costs. Operation and maintenance expense increased $43 million in the year ended December 31, 2020 primarily due to the first full year of Blue Union operations, partially offset by no direct acquisition costs in 2020, cost savings initiatives and lower physical purchases of gas from Appalachia Gathering System customers.

Depreciation and amortization expense increased $53 million in the year ended December 31, 2020 primarily due to the first full year of Blue Union operations.

Taxes other than income expense increased $6 million in the year ended December 31, 2020 primarily due to placing the Blue Union assets in service.

Asset (gains) losses and impairments, net increased $19 million in the year ended December 31, 2021 primarily due to the 2021 loss on notes receivable for an investment in certain assets in the Utica shale region.

Interest expense decreased $9 million in the year ended December 31, 2021, primarily due to a lower interest rate on outstanding borrowings from DTE Energy. Interest expense increased $48 million in the year ended December 31, 2020 primarily due to the first full year of financing Blue Union.

42

Other (income) and expense increased $21 million in the year ended December 31, 2021 and decreased $20 million in the year ended December 31, 2020. The variances were primarily due to a post Blue Union acquisition income settlement of $20 million in 2020.

Income tax expense decreased $16 million in the year ended December 31, 2021 primarily due to a decrease in Income before income taxes. Income tax expense increased $24 million in the year ended December 31, 2020 primarily due to an increase in Income before income taxes.

Outlook

We believe our long-term agreements with producers and the quality of the natural gas reserves in the Marcellus/Utica and Haynesville shale regions soundly 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 future Haynesville system expansion (Blue Union) and expansion opportunities at the Appalachia Gathering System.

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 greenhouse gas reducing technologies as part of our goal of being leading environmental stewards in the midstream industry and have announced a net zero carbon emissions goal by 2050. Our strategy is premised on the following principles:

•disciplined capital deployment in assets supported by strong fundamentals;

•capitalize on asset integration and utilization opportunities;

•pursue economically attractive opportunities;

•grow cash flows supported by long-term firm revenue contracts; and

•provide exceptional service to our customers.

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. We anticipate total capital expenditures, inclusive of contributions to equity method investees, in 2022 of approximately $350 million to $400 million.

ENVIRONMENTAL MATTERS

We are subject to extensive U.S. federal, state, and local environmental regulations. Additional compliance costs may result as the effects of various substances on the environment are studied and governmental regulations are developed and implemented. Actual costs to comply with such regulation 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 expenditures for environmental equipment, such as pollution control equipment, beyond what is currently planned, 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 13, "Commitments and Contingencies" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

43

CLIMATE CHANGE

We believe we have a responsibility to address climate change and have made consistent, effective environmental policies a priority. Our Board of Directors includes a committee focused on environmental, social and governance initiatives. Our strategy will focus on targeted growth from carbon-reducing technologies associated with our current platforms. We have announced our intent to employ carbon-reducing technologies as part of our goal of being leading environmental stewards in the midstream industry and have committed to a net zero carbon emissions goal by 2050. We expect to achieve a 30% reduction in the next decade.

During 2022, we will continue our exploration of early-stage development opportunities for energy transition advancements leveraging our existing assets, competencies and partnerships. These opportunities include the following:

•Our efforts to advance carbon capture projects across our geographic regions;

•Our "wellhead to water" expansion proposal of the Haynesville system which offers a carbon neutral pathway for supply to reach LNG markets;

•Our strategic joint development agreement with Mitsubishi Power Americas, Inc. to advance hydrogen development projects across the United States; and

•Our new partnership with Project Canary to monitor methane emissions.

Capital expenditure investments for these projects have been contemplated in our forecasted capital expenditures discussed in Capital Investments section.

DT Midstream plans to publish its inaugural Sustainability Report in the second quarter 2022. The information in our Sustainability Report is not incorporated by reference into this Form 10-K.

For discussion of various risks associated with climate change related laws and regulations, reputational risks of climate change, and the physical risks of climate change, see Part I, Item 1A. "Risk Factors" of this Form 10-K. For discussion of recent climate change related laws and regulations, see Part I, Item 1. and 2. "Business and Properties — Regulatory Environment" of this Form 10-K.

COVID-19 PANDEMIC

During the first quarter 2020, the COVID-19 pandemic began impacting the states in which we operate. We are actively monitoring the impact of the COVID-19 pandemic on supply chains, markets, counterparties and customers and any related impacts on operating costs, customer demand and recoverability of assets that could materially impact our financial results. To date, impacts from the COVID-19 pandemic have not had a material effect on our financial results.

44

CAPITAL RESOURCES AND LIQUIDITY

Cash Requirements

Our principal liquidity requirements are to finance our operations, fund capital expenditures, satisfy our indebtedness obligations, and pay dividends, as deemed appropriate. We believe we will have sufficient internal and external capital resources to fund anticipated capital and operating requirements. We expect that cash from operations in 2022 will be approximately $605 million to $655 million.

Operating Activities

Cash flows from our operations can be impacted in the short term by the volumes gathered or transported through our systems, changing commodity prices, seasonality, weather fluctuations, dividends from equity method investees and the financial condition of our customers. Our preference to enter into firm service contracts with firm reservation fees helps minimize our long-term exposure to commodity prices and its impact on the financial condition of our customers and provides us more stable operating performance and cash flows.

Net cash and cash equivalents from operating activities decreased $25 million in the year ended December 31, 2021 primarily due to net changes in working capital, and a decrease in other income driven by proceeds received from a nonrecurring settlement in 2020. These decreases were partially offset by an increase in operating income after adjustment for non-cash items including depreciation and amortization expense, amortization of operating lease right-of-use assets, and asset (gains) losses and impairments.

Net cash and cash equivalents from operating activities increased $207 million in the year ended December 31, 2020 primarily due to an increase in net income; adjusted for non-cash items, including depreciation and amortization expense and deferred income taxes; and a change in working capital items. The change in working capital items in 2020 compared to 2019 primarily related to other current and noncurrent assets and liabilities. These increases were partially offset by an increase in earnings from equity method investees and a decrease in dividends from equity method investees.

Investing Activities

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

Net cash and cash equivalents from investing activities increased $837 million in the year ended December 31, 2021 primarily due to the Separation related cash settlement of the Notes receivable due from DTE Energy, a decrease in cash used for plant and equipment expenditures, and a reduction in contributions to equity method investees.

Net cash and cash equivalents used for investing activities decreased $1.8 billion in the year ended December 31, 2020 primarily due to a decrease in acquisitions, net of cash acquired, which was driven by our acquisition of Blue Union and LEAP in 2019, and a reduction in contributions to equity method investees in 2020. These decreases were partially offset by an increase in cash used for plant and equipment expenditures and an increase in notes receivable due from DTE Energy.

45

Financing Activities

Prior to the Separation we relied on short-term borrowings and contributions from DTE Energy as a source of funding for capital requirements not satisfied by our operations. In June 2021, we issued senior notes in an aggregate principal amount of $2.1 billion and entered into a Credit Agreement providing for a $1.0 billion Term Loan Facility and a $750 million Revolving Credit Facility. See Note 11, "Debt" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Net cash and cash equivalents used for financing activities increased $718 million in the year ended December 31, 2021 primarily due to the Separation related repayment of short-term borrowings due to DTE Energy and payment of a one-time special dividend to DTE Energy, a decrease in contributions from DTE Energy, and dividends paid on common stock in 2021. These increases were partially offset by net proceeds received from the issuance of long-term debt in June 2021 and decreased acquisition-related deferred payments.

Net cash and cash equivalents from financing activities decreased by $2.1 billion in the year ended December 31, 2020 primarily due to reduced contributions from DTE Energy, lower cash from short-term borrowings due to DTE Energy and the Blue Union and LEAP acquisition related deferred payment. The decrease was partially offset by the purchase of noncontrolling interests in 2019.

During 2021, DT Midstream paid cash dividends on common stock of $0.60 per share related to the quarter ended September 30, 2021. See Note 9, "Earnings per Share and Dividends" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

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 Separation on our debt and equity capitalization, described further below, we are not aware of any trends or other demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing materially.

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

Historically, our sources of liquidity included cash generated from operations and, prior to the Separation, loans obtained through DTE Energy’s corporate-wide cash management program. After the Separation, our sources of liquidity include cash generated from operating activities and available borrowings under our Revolving Credit Facility. We began investing in money market cash equivalents in August 2021.

In June 2021, we issued long-term debt in the form of $2.1 billion Senior Notes and a $1.0 billion Term Loan Facility. Proceeds were used for the repayment of the Short-term borrowings due to DTE Energy as well as a one-time special dividend provided to DTE Energy. We also entered into a $750 million secured Revolving Credit Facility for general corporate purposes and letter of credit issuances to support our future operations and liquidity. The Credit Agreement covering the Term Loan Facility and Revolving Credit Facility includes financial covenants that DT Midstream must maintain. See Note 11, "Debt" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K for additional discussion on the financial covenants.

As of December 31, 2021, we had $8 million of letters of credit outstanding and no borrowings outstanding under our Revolving Credit Facility. We have approximately $874 million of available liquidity as of December 31, 2021, consisting of cash and cash equivalents and amounts available 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 consistent with cash flow growth and are targeting a payout ratio consistent with pure-play midstream companies.

46

We believe we will have sufficient operating flexibility, cash resources and funding sources to maintain adequate amounts of liquidity and to meet future operating cash, capital expenditure and debt servicing needs. However, virtually all of our businesses are capital intensive, or require access to capital, and the inability to access adequate capital could adversely impact future earnings and cash flows.

See Note 1, "Separation, Description of the Business, and Basis of Presentation", Note 11, "Debt" and Note 13, "Commitments and Contingencies" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Credit Ratings

Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not a recommendation to buy, sell, or hold securities. Our credit ratings affect our cost of capital and other terms of financing, as well as our ability to access the credit and commercial paper markets. Our management believes that the current credit ratings provide sufficient access to capital markets. However, disruptions in the banking and capital markets not specifically related to us may affect our ability to access these funding sources or cause an increase in the return required by investors.

Contractual Obligations

The following table details our contractual obligations due by year as of December 31, 2021:

_____________________________

(a) Excludes $4 million of unamortized debt discount and $15 million of unamortized debt issuance costs

(b) Excludes $30 million of unamortized debt issuance costs

(c) Interest Expense calculation related to the Term Loan Facility assumes the variable rate of LIBOR is 0.50% plus 2.00%

OFF-BALANCE SHEET ARRANGEMENTS

We are party to off-balance sheet arrangements, which include our equity method investments. See the section entitled "Principles of Consolidation" in Note 1, "Separation, Description of the Business, and Basis of Presentation" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K for further discussion of the nature, purpose and other details of such agreements.

Other off-balance sheet arrangements include the Vector Pipeline Line of Credit and our guarantees, which are discussed further in Note 13, "Commitments and Contingencies" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

INDEMNIFICATION OBLIGATIONS

We could have an indemnification obligation to DTE Energy pursuant to the Tax Matters Agreement and the Separation and Distribution Agreement. See the section titled "We could have an indemnification obligation to DTE Energy in accordance with the terms of the Tax Matters Agreement if the Distribution were determined not to qualify for non-recognition treatment for U.S. federal tax purposes, which could materially adversely affect our business, financial condition and results of operations" in Part I, Item 1A. "Risk Factors" of this Form 10-K.

47

CRITICAL ACCOUNTING ESTIMATES

The preparation of our Consolidated Financial Statements in conformity with GAAP requires that management applies accounting policies and makes estimates and assumptions that affect results of operations and the amounts of assets and liabilities reported in the Consolidated Financial Statements. Management believes that the areas described below require significant judgment in the application of the accounting policy or in making estimates and assumptions in matters that are inherently uncertain and that may change in subsequent periods. Additional discussion of our accounting policies can be found in the Notes to the Consolidated Financial Statements in Item 8 of this Form 10-K.

Goodwill

We have goodwill that resulted from business combinations. An impairment test for goodwill is performed annually as of October 1st, or whenever events or circumstances indicate that the value of goodwill may be impaired.

In performing the impairment test, we compare the fair value of each reporting unit to its carrying value including goodwill. If the carrying value including goodwill exceeds the fair value of a reporting unit, an impairment loss would be recognized. A goodwill impairment loss is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

We estimate each reporting unit’s fair value using standard valuation techniques, including techniques which use estimates of projected future results and cash flows to be generated by the reporting unit. The fair values for the reporting units were calculated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the Midstream industry.

The income approach includes a terminal value that utilizes an assumed long-term growth rate approach, which incorporates management’s assumptions regarding sustainable long-term growth of the reporting units. The income approach's cash flow valuations involve a number of estimates that require broad assumptions and significant judgment by management regarding future performance.

One of the most significant assumptions utilized in determining the fair value of reporting units under the market approach is implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of the test date. Management also compared the fair value of the reporting units to DT Midstream's market capitalization including an estimated control premium.

In between annual impairment tests, we monitor our estimates and assumptions regarding estimated future cash flows, including the impact of movements in market indicators in future quarters, and will update the impairment analyses if a triggering event occurs. While we believe the assumptions are reasonable, actual results may differ from projections. To the extent projected results or cash flows are revised downward, the reporting unit may be required to write down all or a portion of its goodwill, which would adversely impact our earnings.

48

We performed our annual impairment test as of October 1, 2021 and determined that the estimated fair value of each reporting unit exceeded its carrying value, and no impairment existed.

The results of the test and key estimates that were incorporated are as follows as of the October 1, 2021 valuation date:

__________________________________

(a) Percentage by which the fair value of equity of the reporting unit would need to decline to equal its carrying value, including goodwill. The fair value reduction percentage improved as compared to the October 1, 2020 annual impairment test, principally due to improvement in market multiples.

(b) Discounted cash flows (DCF) incorporated 2021-2025 projected cash flows plus a calculated terminal value. For each of the reporting units, DT Midstream capitalized the terminal year cash flows at the weighted average costs of capital (WACC) less an assumed long-term growth rate of 2.0%. Management applied equal weighting to the DCF and market multiples analysis to determine the fair value of the respective reporting units.

Assessment of Long-Lived Assets for Impairment

We evaluate the carrying value of long-lived assets, excluding goodwill, when circumstances indicate that the carrying value of those assets may not be recoverable. Conditions that could have an adverse impact on the cash flows and fair value of the long-lived assets are a deteriorating business climate, condition of the asset, or plans to dispose of or abandon the asset before the end of its useful life, which could result from the loss of or reduction in volume from our customers. The review of long-lived assets for impairment requires significant assumptions about operating strategies and estimates of future cash flows, which require assessments of current and projected market conditions and anticipated customer revenues. An impairment evaluation is based on an undiscounted cash flow analysis at the lowest level for which independent cash flows of long-lived assets can be identified from other groups of assets and liabilities. Impairment may occur when the carrying value of the asset exceeds the future undiscounted cash flows. When the undiscounted cash flow analysis indicates a long-lived asset is not recoverable, the amount of the impairment loss is determined by measuring the excess of the long-lived asset over its fair value. An impairment would require us to reduce both the long-lived asset and current period earnings by the amount of the impairment, which would adversely impact our earnings.

As part of our ongoing reviews of business operations and associated long-lived assets, we did not identify any indicators of impairment that existed during 2021.

Assessment of Equity Method Investments for Impairment

We assess at each balance sheet date whether there is objective evidence that the equity method investment is impaired by completing a quantitative or qualitative analysis of factors impacting the investment. If there is objective evidence of impairment, we determine whether the decline below carrying value is other than temporary. If the decline is determined to be other than temporary, an impairment charge is recorded in earnings with an offsetting reduction to the carrying value of the investment.

As part of our ongoing reviews of equity method investment operations, we did not identify any indicators of impairment that existed during 2021.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 3, "New Accounting Pronouncements" to the Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

49