Did Kinder Morgan's Q2 2024 earnings grow?

Not on a GAAP basis. Net income attributable to KMI was $575 million versus $586 million in Q2 2023, and GAAP EPS was flat at $0.26. On an adjusted basis, which excludes Certain Items such as derivative mark-to-market changes and divestiture gains, Adjusted Net Income rose 1% to $548 million and Adjusted EPS rose 4% to $0.25.

Is the dividend safe, and is it growing?

The board approved a $0.2875 quarterly dividend ($1.15 annualized), up 2% year over year. Dividends paid in the quarter were $641 million, against FCF of $1.106 billion, so dividend coverage by free cash flow appears comfortable. FCF after dividends was $465 million for the quarter, up from $378 million in Q2 2023.

Is KMI on track to meet its 2024 guidance?

Management said results should be roughly in line with the 2024 budget, on budget or within 1-2% below. Headwinds include lower-than-budgeted commodity prices, winter weather, RNG facility start-up delays and lower gathering volumes. These are expected to be offset or mostly offset by stronger natural gas transport and storage, better Terminals performance and lower pension costs. The budget assumes WTI at $82/bbl and Henry Hub at $3.50/MMBtu.

What are the main growth drivers behind the project backlog?

Backlog rose to $5.2 billion, led by the proposed South System Expansion 4 (~$3 billion, in service from late 2028), which secured a successful binding open season. Other projects include the Evangeline Pass expansion ($670 million, phase 1 in service July 1, 2024), the Altamont Green River pipeline (~$263 million) and the Double H conversion (~$150 million). Management expects the remaining $3.8 billion of non-CO2/G&P backlog projects to generate an average Project EBITDA multiple of about 5.4x.

What are the main risks flagged in the release?

The release cites declining CO2 segment volumes (SACROC outage recovery timing and lower NGL and CO2 sales), lower natural gas prices, RNG start-up delays and softer gathering volumes. Forward-looking risks also include the timing and extent of changes in supply and demand, commodity prices and counterparty financial risk. Because the figures are preliminary and unaudited, final reported results could differ.

KMI/EP-PC 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 17, 2024. Cited figures are marked; the original filing is the authoritative source.

Kinder Morgan (KMI) reported preliminary second quarter 2024 results that were essentially flat on headline earnings but improved on cash-flow and adjusted measures.

GAAP EPS was $0.26^a, flat year over year, and net income attributable to KMI was $575 million versus $586 million. Adjusted EBITDA rose 3% to $1.858 billion, adjusted EPS rose 4% to $0.25, and DCF per share rose 2% to $0.49, with DCF of $1.100 billion. The board approved a quarterly dividend of $0.2875 per share ($1.15 annualized), up 2% from the year-earlier quarter, payable August 15, 2024.

Management reiterated its 2024 budget, targeting net income attributable to KMI of $2.7 billion^b ($1.22 per share), DCF of $5 billion ($2.26 per share), and Adjusted EBITDA of $8.16 billion. Management said results should land roughly in line with budget, within 1-2% below, as lower commodity prices, winter weather, RNG start-up delays and lower gathering volumes are largely offset by stronger transport and storage, Terminals and lower pension costs. Net Debt-to-Adjusted EBITDA was 4.1x at June 30, 2024, versus 4.2x at year-end 2023, with a year-end 2024 target of 3.9x.

Project backlog rose to $5.2 billion^c from $3.3 billion in the prior quarter, led by the approximately $3 billion South System Expansion 4 project. The main operational weak spot was the CO2 segment, where Adjusted Segment EBDA fell to $164 million from $175 million, driven by lower crude, CO2 and NGL volumes.

Free cash flow was $1.106 billion^d for the quarter, but FCF after dividends was $465 million, up from $378 million a year earlier. Note that this is a press release furnished under Item 2.02 and reports preliminary, unaudited results, and that many headline figures are non-GAAP.

02—Key points

Key Highlights

Adjusted EBITDA up 3% to $1.858 billion; Adjusted EPS up 4% to $0.25, while GAAP EPS was flat at $0.26
Net income attributable to KMI declined 2% to $575 million, but DCF rose 2% to $1.100 billion ($0.49 per share)
Quarterly dividend of $0.2875 per share ($1.15 annualized) approved, a 2% increase over Q2 2023
Project backlog increased to $5.2 billion from $3.3 billion in Q1 2024, including the ~$3 billion SSE4 expansion on Southern Natural Gas (≈1.2 Bcf/d)
Net Debt-to-Adjusted EBITDA of 4.1x at June 30, 2024, improved from 4.2x at year-end 2023; full-year target of 3.9x
CO2 segment weakness: Adjusted Segment EBDA down to $164 million from $175 million on lower crude (-13%), CO2 sales (-8%) and NGL (-17%) volumes
2024 budget reiterated (net income $2.7B, DCF $5B, Adjusted EBITDA $8.16B), with management guiding to results roughly in line with budget (within 1-2% below)

03—Questions

Frequently Asked Questions

Did Kinder Morgan's Q2 2024 earnings grow?
Not on a GAAP basis. Net income attributable to KMI was $575 million versus $586 million in Q2 2023, and GAAP EPS was flat at $0.26. On an adjusted basis, which excludes Certain Items such as derivative mark-to-market changes and divestiture gains, Adjusted Net Income rose 1% to $548 million and Adjusted EPS rose 4% to $0.25.
Is the dividend safe, and is it growing?
The board approved a $0.2875 quarterly dividend ($1.15 annualized), up 2% year over year. Dividends paid in the quarter were $641 million, against FCF of $1.106 billion, so dividend coverage by free cash flow appears comfortable. FCF after dividends was $465 million for the quarter, up from $378 million in Q2 2023.
Is KMI on track to meet its 2024 guidance?
Management said results should be roughly in line with the 2024 budget, on budget or within 1-2% below. Headwinds include lower-than-budgeted commodity prices, winter weather, RNG facility start-up delays and lower gathering volumes. These are expected to be offset or mostly offset by stronger natural gas transport and storage, better Terminals performance and lower pension costs. The budget assumes WTI at $82/bbl and Henry Hub at $3.50/MMBtu.
What are the main growth drivers behind the project backlog?
Backlog rose to $5.2 billion, led by the proposed South System Expansion 4 (~$3 billion, in service from late 2028), which secured a successful binding open season. Other projects include the Evangeline Pass expansion ($670 million, phase 1 in service July 1, 2024), the Altamont Green River pipeline (~$263 million) and the Double H conversion (~$150 million). Management expects the remaining $3.8 billion of non-CO2/G&P backlog projects to generate an average Project EBITDA multiple of about 5.4x.
What are the main risks flagged in the release?
The release cites declining CO2 segment volumes (SACROC outage recovery timing and lower NGL and CO2 sales), lower natural gas prices, RNG start-up delays and softer gathering volumes. Forward-looking risks also include the timing and extent of changes in supply and demand, commodity prices and counterparty financial risk. Because the figures are preliminary and unaudited, final reported results could differ.

04—Continue

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