Approves Cash Dividend of $0.2875 Per Share
($1.15 Annualized)
Earnings per Share Flat to Second
Quarter 2023; Adjusted Earnings per Share Up 4%
Kinder Morgan, Inc.’s (NYSE: KMI) board of directors today
approved a cash dividend of $0.2875 per share for the second
quarter ($1.15 annualized), payable on August 15, 2024 to
stockholders of record as of the close of business on July 31,
2024. This dividend is a 2% increase over the second quarter of
2023.
The company is reporting:
- Second quarter earnings per share (EPS) of $0.26 and
distributable cash flow (DCF) per share of $0.49, flat and up 2%,
respectively, compared to the second quarter of 2023.
- Net income attributable to KMI of $575 million, compared to
$586 million in the second quarter of 2023.
- DCF of $1,100 million for the quarter, compared to $1,076
million in the second quarter of 2023.
“In the second quarter we enjoyed another solid quarter of
strong operational and financial performance. We continued to
internally fund high-quality capital projects while generating cash
flow from operations of $1.7 billion and $1.1 billion in free cash
flow (FCF) after capital expenditures. In addition, we were pleased
to welcome Amy Chronis to her first KMI board of directors meeting.
I am thrilled to have Amy join our talented board as we look
forward to gaining the benefit of her financial acumen and robust
knowledge of the energy industry,” said Executive Chairman Richard
D. Kinder.
“As a leader in the midstream sector with an extensive,
interconnected network of fee-based assets in the energy
infrastructure space, we are proud to play a significant role in
maintaining energy security for the United States. Furthermore,
through our large and growing support to the liquified natural gas
(LNG) sector, including our own export facility at Elba Island, we
are also playing a key role in providing energy security to
countries around the world,” Kinder concluded.
“The company had a solid second quarter on increased financial
contributions from our Natural Gas Pipelines, Products Pipelines
and Terminals business segments, with Adjusted EBITDA up 3% versus
the second quarter of 2023,” said Chief Executive Officer Kim
Dang.
“KMI’s balance sheet remains very strong, as we ended the
quarter with a Net Debt-to-Adjusted EBITDA ratio of 4.1 times,”
continued Dang.
“Notwithstanding the current low-price environment for natural
gas, the future looks very bright for our Natural Gas Pipelines
business segment. As I noted last quarter, we expect demand for
natural gas to grow substantially between now and 2030, led by more
than a doubling of demand for LNG exports and an almost 50%
increase in natural gas exports to Mexico. We are also anticipating
significant new natural gas demand for electric generation
associated with artificial intelligence operations, cryptocurrency
mining, data centers and industrial re-shoring, which would be
additive to the growth discussed above,” continued Dang. “One
example of opportunities to meet this demand growth is our
announcement today of a successful binding open season on the
proposed South System Expansion 4 Project designed to increase
Southern Natural Gas (SNG) Pipeline’s South Line capacity by
approximately 1.2 billion cubic feet per day (Bcf/d). Once
completed following receipt of all required approvals, the project
will help meet growing power generation and local distribution
company demand in the Southeast markets.
“Our project backlog at the end of the second quarter was $5.2
billion, up from $3.3 billion in the first quarter of 2024. In
calculating backlog Project EBITDA multiples, we exclude both the
capital and EBITDA from our CO2 enhanced oil recovery projects and
our gathering and processing (G&P) projects, where the earnings
are more uneven than with our other business segments. To
compensate for those uneven earnings profiles, we require higher
return thresholds for those projects. We expect the remaining $3.8
billion of projects in the backlog to generate an average Project
EBITDA multiple of approximately 5.4 times.
“We are devoting approximately 80% of our project backlog to
lower-carbon energy investments, including conventional natural
gas, renewable natural gas (RNG), renewable diesel (RD), feedstocks
associated with RD and sustainable aviation fuel (SAF), as well as
carbon capture and sequestration,” Dang concluded.
2024 Outlook
For 2024, including contributions from the acquired STX
Midstream assets, KMI budgeted net income attributable to KMI of
$2.7 billion ($1.22 per share), up 15% versus 2023, and expects to
declare dividends of $1.15 per share for 2024, a 2% increase from
the dividends declared for 2023. The company also budgeted 2024 DCF
of $5 billion ($2.26 per share), and Adjusted EBITDA of $8.16
billion, both up 8% versus 2023, and to end 2024 with a Net
Debt-to-Adjusted EBITDA ratio of 3.9 times.
The budget assumes average annual prices for West Texas
Intermediate (WTI) crude oil and Henry Hub natural gas of $82 per
barrel and $3.50 per million British thermal unit (MMBtu),
respectively, consistent with the published forward curve available
during the company’s annual budget process.
“We expect to be roughly in-line with our budget for the full
year (on budget or within 1-2% below). Lower than budgeted
commodity prices, winter weather impacts and start-up delays on our
RNG facilities as well as lower G&P volumes are expected to be
offset or mostly offset by better than budgeted natural gas
transport and storage contributions, better than expected
contributions from our Terminals segment, and lower pension costs,”
said Dang.
This press release includes Adjusted Net income attributable to
KMI and DCF, in each case in the aggregate and per share, Adjusted
Segment EBDA, Adjusted EBITDA, Net Debt, FCF, and Project EBITDA,
all of which are non-GAAP financial measures. For descriptions of
these non-GAAP financial measures and reconciliations to the most
comparable measures prepared in accordance with generally accepted
accounting principles, please see “Non-GAAP Financial Measures” and
the tables accompanying our preliminary financial statements.
Overview of Business
Segments
“The Natural Gas Pipelines business segment’s financial
performance in the second quarter of 2024 relative to the second
quarter of 2023 benefited from higher contributions from our Texas
Intrastate system as well as additional contributions from our STX
Midstream acquisition, partially offset by lower contributions from
our gathering systems due to asset divestitures and lower commodity
prices,” said KMI President Tom Martin.
“Natural gas transport volumes were up slightly compared to the
second quarter of 2023. Natural gas gathering volumes were up 10%
from the second quarter of 2023, primarily from our Haynesville and
Eagle Ford gathering systems.
“Contributions from the Products Pipelines business
segment were up compared to the second quarter of 2023 due to
higher rates on existing assets and contributions from new capital
projects. Total refined products volumes were up slightly and crude
and condensate volumes were flat compared to the second quarter of
2023,” Martin said.
“Terminals business segment earnings were up compared to
the second quarter of 2023. Our liquids terminals benefited from
expansion projects placed in-service as well as higher rates and
utilization at our New York Harbor hub facilities. Our bulk
business benefited from increased coal, petroleum coke and soda ash
volumes. Higher rates on our Jones Act tankers, which remain fully
contracted under term charter agreements, also contributed to the
segment’s performance for the quarter,” continued Martin.
“CO2 business segment earnings, excluding the gain from a
divestiture, were down compared to the second quarter of 2023, due
to lower crude volumes, CO2 sales, and NGL volumes, down 13%, 8%,
and 17% respectively, on a net-to-KMI basis compared to the second
quarter of 2023. Crude volumes were down partially due to timing of
the recovery of production at SACROC after an outage in 2023.
Year-to-date crude volumes were down 8%. Price movements across the
segment’s three primary commodities netted out positively for the
quarter versus the second quarter of 2023. The segment benefited
from increased contributions from the Wink Pipeline, primarily due
to a refinery outage in 2023. KMI’s ETV contributions were higher
due to RNG facilities being placed in service after the second
quarter of 2023,” said Martin.
Other News
Corporate
- KMI is moving from an annual to a biennial in-person investor
day presentation. Therefore, there will be no in-person investor
day presentation in 2025 but the company expects to hold one in the
first quarter of 2026. KMI will continue to release its detailed
annual budget early in the first quarter of each year, consistent
with prior practice.
Natural Gas Pipelines
- SNG held a successful binding open season on the proposed South
System Expansion 4 (SSE4) Project designed to increase SNG’s South
Line capacity by approximately 1.2 Bcf/d. Upon completion, the
approximately $3 billion project will help meet growing power
generation and local distribution company demand in the Southeast
markets. SSE4 will be almost entirely comprised of brownfield
looping and horsepower compression additions on the SNG and Elba
Express pipeline systems. Subject to all required approvals, KMI
expects the project to be in service beginning in late 2028.
- In early July, the company executed definitive agreements
necessary to proceed with its approximately $263 million Altamont
Green River Pipeline project. This project will provide additional
natural gas egress to relieve existing production constraints in
the Uinta Basin. The Green River Pipeline will consist of
approximately 43 miles of 20-inch pipeline and associated
compression, providing approximately 150 million cubic feet per day
(MMcf/d) of capacity from the basin to the Western Chipeta
processing plant. Interim facilities will be constructed for
immediate natural gas takeaway until the new pipeline is in
service, projected for mid-2025.
- Construction activities are well underway for the Kinder Morgan
Tejas Pipeline’s (Tejas) approximately $94 million South Texas to
Houston Market expansion project. The project will add compression
on Tejas’ mainline to increase natural gas deliveries by
approximately 350 MMcf/d to Houston markets. The target in-service
date is the first quarter of 2025.
- Construction is ongoing on an approximately $168 million
expansion of the Kinder Morgan Texas Pipeline (KMTP) system to
provide transportation and treating services to lean gas Eagle Ford
producers in Webb County. The expansion project, supported by a
long-term contract, is designed to deliver up to 400 MMcf/d of
Eagle Ford natural gas supply into the company’s Texas Intrastate
network. The project is currently on track to be placed in service
in November 2024.
- The first phase of the $670 million Evangeline Pass project was
placed in service on July 1, 2024. Construction continues on the
second phase of the project, which has an expected in-service date
of July 1, 2025. The two-phase project involves modifications and
enhancements to portions of the Tennessee Gas Pipeline (TGP) and
Southern Natural Gas (SNG) systems in Mississippi and Louisiana,
which will result in the delivery of approximately 2 Bcf/d of
natural gas to Venture Global’s Plaquemines LNG facility.
Terminals
- Construction activities continue on KMI’s latest expansion of
its industry-leading RD and SAF feedstock storage and logistics
offering at its lower Mississippi River hub. The scope of work at
its Geismar River Terminal in Geismar, Louisiana includes
construction of multiple tanks totaling approximately 250,000
barrels of heated storage capacity as well as various marine, rail
and pipeline infrastructure improvements. The approximately $54
million Geismar River Terminal project, which is supported by a
long-term commercial commitment, is expected to be in service by
the fourth quarter of 2024.
Products
- With definitive agreements signed, the company plans to convert
its Double H Pipeline system from crude oil to natural gas liquids
(NGL) service, providing Williston Basin producers and midstream
companies with pipeline capacity to key market hubs. The
approximately $150 million project is anticipated to be in service
in the first quarter of 2026. The pipe will remain in crude service
well into 2025 and shippers will be notified in advance of it going
out of crude service. Future phases could provide incremental
pipeline capacity, including out of the Powder River Basin.
- With the completion of KMI’s Southern California RD hub and
phase 2 of its Northern California RD hub, the company is scoping a
phase 3 expansion at its Northern California RD hub. This expansion
will involve commencing RD service to Chico and Sacramento and
expanding RD service to multiple locations including Fresno, San
Jose, Colton and Mission Valley, while adding between 10,000 and
20,000 barrels per day (Bbl/d) of incremental RD capacity across
those locations. In-service dates will depend on permit
requirements and customer support.
- On June 10, 2024, SFPP, L.P., a subsidiary of KMI, launched an
open season for up to 10,000 Bbl/d of additional capacity on its
East Line system for transportation service from El Paso, Texas to
Tucson, Arizona. Interested customers will be able to make
take-or-pay volume commitments for Mexican grade diesel as well as
domestic grade products (gasoline, diesel and jet fuel). The open
season is scheduled to run through August 9, 2024.
CO2
- During the quarter, Kinder Morgan CO2 optimized its asset
portfolio through two transactions in the Permian Basin for a net
outlay of approximately $40 million. The segment divested its
interests in the Katz Unit, Goldsmith Landreth San Andres Unit,
Tall Cotton Field and Reinecke Unit, along with certain shallow
interests in the Diamond M Field and acquired AVAD Energy Partners’
interest in the North McElroy Unit (NMU) and a leasehold interest
in an undeveloped leasehold directly adjacent to SACROC. NMU is an
existing waterflood that currently produces approximately 1,250
Bbl/d of crude oil. Kinder Morgan’s analysis suggests that NMU
could be an excellent candidate for CO2 flooding. The impact of
these two transactions is to replace fields with high production
decline rates and limited CO2 flood opportunities with fields that
have attractive potential CO2 flood projects.
Energy Transition Ventures
- Construction is nearly complete on the previously announced
conversion of the Autumn Hills, Michigan landfill gas-to-electric
facility to an RNG facility. The RNG facility is expected to be
placed in service in the fourth quarter of 2024 with a capacity of
0.8 Bcf of RNG annually. Once complete and in service, this
additional facility will bring KMI’s total RNG generation capacity
to 6.9 Bcf per year.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy
infrastructure companies in North America. Access to reliable,
affordable energy is a critical component for improving lives
around the world. We are committed to providing energy
transportation and storage services in a safe, efficient and
environmentally responsible manner for the benefit of the people,
communities and businesses we serve. We own an interest in or
operate approximately 79,000 miles of pipelines, 139 terminals, 702
billion cubic feet of working natural gas storage capacity and have
renewable natural gas generation capacity of approximately 6.1 Bcf
per year with an additional 0.8 Bcf in development. Our pipelines
transport natural gas, refined petroleum products, crude oil,
condensate, CO2, renewable fuels and other products, and our
terminals store and handle various commodities including gasoline,
diesel fuel, jet fuel, chemicals, metals, petroleum coke, and
ethanol and other renewable fuels and feedstocks. Learn more about
our work advancing energy solutions on the lower carbon initiatives
page at www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. ET on Wednesday,
July 17, at www.kindermorgan.com for a LIVE webcast conference call
on the company’s second quarter earnings.
Non-GAAP Financial
Measures
As described in further detail below, our management evaluates
our performance primarily using Net income attributable to Kinder
Morgan, Inc. and Segment earnings before DD&A expenses,
including amortization of excess cost of equity investments, (EBDA)
along with the non-GAAP financial measures of Adjusted Net income
attributable to Common Stock, and distributable cash flow (DCF),
both in the aggregate and per share for each, Adjusted Segment
EBDA, Adjusted Net income attributable to Kinder Morgan, Inc.,
Adjusted earnings before interest, income taxes, DD&A expenses,
including amortization of excess cost of equity investments,
(EBITDA) and Net Debt.
Our non-GAAP financial measures described below should not be
considered alternatives to GAAP net income attributable to Kinder
Morgan, Inc. or other GAAP measures and have important limitations
as analytical tools. Our computations of these non-GAAP financial
measures may differ from similarly titled measures used by others.
You should not consider these non-GAAP financial measures in
isolation or as substitutes for an analysis of our results as
reported under GAAP. Management compensates for the limitations of
our consolidated non-GAAP financial measures by reviewing our
comparable GAAP measures identified in the descriptions of
consolidated non-GAAP measures below, understanding the differences
between the measures and taking this information into account in
its analysis and its decision-making processes.
Certain Items, as adjustments used
to calculate our non-GAAP financial measures, are items that are
required by GAAP to be reflected in net income attributable to
Kinder Morgan, Inc., but typically either (1) do not have a cash
impact (for example, unsettled commodity hedges and asset
impairments), or (2) by their nature are separately identifiable
from our normal business operations and in most cases are likely to
occur only sporadically (for example, certain legal settlements,
enactment of new tax legislation and casualty losses). (See the
accompanying Tables 2, 3, 4, and 6.) We also include adjustments
related to joint ventures (see “Amounts from
Joint Ventures” below).
The following table summarizes our Certain Items for the three
and six months ended June 30, 2024 and 2023.
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
(In millions)
Certain Items
Fair value amortization
$
—
$
4
$
—
$
—
Change in fair value of derivative
contracts (1)
2
(62
)
52
(130
)
(Gain) loss on divestitures and
impairment, net
(41
)
—
(70
)
67
Income tax Certain Items (2)
10
12
1
13
Other
2
—
2
—
Total Certain Items (3)(4)
$
(27
)
$
(46
)
$
(15
)
$
(50
)
Notes
(1)
Gains or losses are reflected
when realized.
(2)
Represents the income tax
provision on Certain Items plus discrete income tax items. Includes
the impact of KMI’s income tax provision on Certain Items affecting
earnings from equity investments and is separate from the related
tax provision recognized at the investees by the joint ventures
which are also taxable entities.
(3)
Amounts for the periods ending
June 30, 2023 include the following amounts reported within
“Earnings from equity investments” on the accompanying Preliminary
Consolidated Statements of Income: (i) $1 million and $(1) million
for the three and six months ended, respectively, included within
“Change in fair value of derivative contracts” and (ii) $67 million
for the six-month period only included within “(Gain) loss on
divestitures and impairment, net” for a non-cash impairment related
to our investment in Double Eagle Pipeline LLC in our Products
Pipelines business segment.
(4)
Amounts for the periods ending
June 30, 2024 and 2023 include, in aggregate, $(1) million and $(5)
million for the three-month periods, respectively, and $1 million
and $(13) million for the six-month periods, respectively, included
within “Interest, net” on the accompanying Preliminary Consolidated
Statements of Income which consist of (i) $4 million for the
three-month period in 2023 only of “Fair value amortization” and
(ii) $(1) million and $(9) million for the three-month periods,
respectively, and $1 million and $(13) million for the six-month
periods, respectively, of “Change in fair value of derivative
contracts.”
Adjusted Net Income Attributable to Kinder
Morgan, Inc. is calculated by adjusting net income
attributable to Kinder Morgan, Inc. for Certain Items. Adjusted Net
Income Attributable to Kinder Morgan, Inc. is used by us, investors
and other external users of our financial statements as a
supplemental measure that provides decision-useful information
regarding our period-over-period performance and ability to
generate earnings that are core to our ongoing operations. We
believe the GAAP measure most directly comparable to Adjusted Net
Income Attributable to Kinder Morgan, Inc. is net income
attributable to Kinder Morgan, Inc. (See the accompanying Tables 1
and 2.)
Adjusted Net Income Attributable to Common
Stock and Adjusted EPS is calculated by adjusting Net income
attributable to Kinder Morgan, Inc., the most comparable GAAP
measure, for Certain Items, and further for net income allocated to
participating securities and adjusted net income in excess of
distributions for participating securities. We believe Adjusted Net
Income Attributable to Common Stock allows for calculation of
adjusted earnings per share (Adjusted EPS) on the most comparable
basis with earnings per share, the most comparable GAAP measure to
Adjusted EPS. Adjusted EPS is calculated as Adjusted Net Income
Attributable to Common Stock divided by our weighted average shares
outstanding. Adjusted EPS applies the same two-class method used in
arriving at basic earnings per share. Adjusted EPS is used by us,
investors and other external users of our financial statements as a
per-share supplemental measure that provides decision-useful
information regarding our period-over-period performance and
ability to generate earnings that are core to our ongoing
operations. (See the accompanying Table 2.)
DCF is calculated by adjusting net
income attributable to Kinder Morgan, Inc. for Certain Items, and
further for DD&A and amortization of excess cost of equity
investments, income tax expense, cash taxes, sustaining capital
expenditures and other items. We also adjust amounts from joint
ventures for income taxes, DD&A, cash taxes and sustaining
capital expenditures (see “Amounts from Joint
Ventures” below). DCF is a significant performance measure
used by us, investors and other external users of our financial
statements to evaluate our performance and to measure and estimate
the ability of our assets to generate economic earnings after
paying interest expense, paying cash taxes and expending sustaining
capital. DCF provides additional insight into the specific costs
associated with our assets in the current period and facilitates
period-to-period comparisons of our performance from ongoing
business activities. DCF is also used by us, investors, and other
external users to compare the performance of companies across our
industry. DCF per share serves as the primary financial performance
target for purposes of annual bonuses under our annual incentive
compensation program and for performance-based vesting of equity
compensation grants under our long-term incentive compensation
program. DCF should not be used as an alternative to net cash
provided by operating activities computed under GAAP. We believe
the GAAP measure most directly comparable to DCF is net income
attributable to Kinder Morgan, Inc. DCF per share is DCF divided by
average outstanding shares, including restricted stock awards that
participate in dividends. (See the accompanying Table 2.)
Adjusted Segment EBDA is calculated
by adjusting segment earnings before DD&A and amortization of
excess cost of equity investments, general and administrative
expenses and corporate charges, interest expense, and income taxes
(Segment EBDA) for Certain Items attributable to the segment.
Adjusted Segment EBDA is used by management in its analysis of
segment performance and management of our business. We believe
Adjusted Segment EBDA is a useful performance metric because it
provides management, investors and other external users of our
financial statements additional insight into performance trends
across our business segments, our segments’ relative contributions
to our consolidated performance and the ability of our segments to
generate earnings on an ongoing basis. Adjusted Segment EBDA is
also used as a factor in determining compensation under our annual
incentive compensation program for our business segment presidents
and other business segment employees. We believe it is useful to
investors because it is a measure that management uses to allocate
resources to our segments and assess each segment’s performance.
(See the accompanying Table 4.)
Adjusted EBITDA is calculated by
adjusting net income attributable to Kinder Morgan, Inc. for
Certain Items and further for DD&A and amortization of excess
cost of equity investments, income tax expense and interest. We
also include amounts from joint ventures for income taxes and
DD&A (see “Amounts from Joint
Ventures” below). Adjusted EBITDA (on a rolling 12-months
basis) is used by management, investors and other external users,
in conjunction with our Net Debt (as described further below), to
evaluate our leverage. Management and external users also use
Adjusted EBITDA as an important metric to compare the valuations of
companies across our industry. Our ratio of Net Debt-to-Adjusted
EBITDA is used as a supplemental performance target for purposes of
our annual incentive compensation program. We believe the GAAP
measure most directly comparable to Adjusted EBITDA is net income
attributable to Kinder Morgan, Inc. (See the accompanying Tables 3
and 6.)
Amounts from Joint Ventures -
Certain Items, DCF and Adjusted EBITDA reflect amounts from
unconsolidated joint ventures (JVs) and consolidated JVs utilizing
the same recognition and measurement methods used to record
“Earnings from equity investments” and “Noncontrolling interests
(NCI),” respectively. The calculations of DCF and Adjusted EBITDA
related to our unconsolidated and consolidated JVs include the same
items (DD&A and income tax expense, and for DCF only, also cash
taxes and sustaining capital expenditures) with respect to the JVs
as those included in the calculations of DCF and Adjusted EBITDA
for our wholly-owned consolidated subsidiaries; further, we remove
the portion of these adjustments attributable to non-controlling
interests. (See Tables 2, 3, and 6.) Although these amounts related
to our unconsolidated JVs are included in the calculations of DCF
and Adjusted EBITDA, such inclusion should not be understood to
imply that we have control over the operations and resulting
revenues, expenses or cash flows of such unconsolidated JVs.
Net Debt is calculated by
subtracting from debt (1) cash and cash equivalents, (2) debt fair
value adjustments, and (3) the foreign exchange impact on
Euro-denominated bonds for which we have entered into currency
swaps to convert that debt to U.S. dollars. Net Debt, on its own
and in conjunction with our Adjusted EBITDA (on a rolling 12-months
basis) as part of a ratio of Net Debt-to-Adjusted EBITDA, is a
non-GAAP financial measure that is used by management, investors
and other external users of our financial information to evaluate
our leverage. Our ratio of Net Debt-to-Adjusted EBITDA is also used
as a supplemental performance target for purposes of our annual
incentive compensation program. We believe the most comparable
measure to Net Debt is total debt as reconciled in the notes to the
accompanying Preliminary Consolidated Balance Sheets in Table
6.
Project EBITDA is calculated for an
individual capital project as earnings before interest expense,
taxes, DD&A and general and administrative expenses
attributable to such project, or for JV projects, consistent with
the methods described above under “Amounts from Joint Ventures,”
and in conjunction with capital expenditures for the project, is
the basis for our Project EBITDA multiple. Management, investors
and others use Project EBITDA to evaluate our return on investment
for capital projects before expenses that are generally not
controllable by operating managers in our business segments. We
believe the GAAP measure most directly comparable to Project EBITDA
is the portion of net income attributable to a capital project. We
do not provide the portion of budgeted net income attributable to
individual capital projects (the GAAP financial measure most
directly comparable to Project EBITDA) due to the impracticality of
predicting, on a project-by-project basis through the second full
year of operations, certain amounts required by GAAP, such as
projected commodity prices, unrealized gains and losses on
derivatives marked to market, and potential estimates for certain
contingent liabilities associated with the project completion.
FCF is calculated by reducing cash
flow from operations for capital expenditures (sustaining and
expansion), and FCF after dividends is calculated by further
reducing FCF for dividends paid during the period. FCF is used by
management, investors and other external users as an additional
leverage metric, and FCF after dividends provides additional
insight into cash flow generation. Therefore, we believe FCF is
useful to our investors. We believe the GAAP measure most directly
comparable to FCF is cash flow from operations. (See the
accompanying Table 7.)
Important Information Relating to
Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities Exchange Act of 1934.
Generally the words “expects,” “believes,” “anticipates,” “plans,”
“will,” “shall,” “estimates,” “projects,” and similar expressions
identify forward-looking statements, which are generally not
historical in nature. Forward-looking statements in this news
release include, among others, express or implied statements
pertaining to: the long-term demand for KMI’s assets and services;
energy evolution-related opportunities; KMI’s 2024 expectations;
anticipated dividends; and KMI’s capital projects, including
expected costs, completion timing and benefits of those projects.
Forward-looking statements are subject to risks and uncertainties
and are based on the beliefs and assumptions of management, based
on information currently available to them. Although KMI believes
that these forward-looking statements are based on reasonable
assumptions, it can give no assurance as to when or if any such
forward-looking statements will materialize nor their ultimate
impact on our operations or financial condition. Important factors
that could cause actual results to differ materially from those
expressed in or implied by these forward-looking statements
include: the timing and extent of changes in the supply of and
demand for the products we transport and handle; commodity prices;
counterparty financial risk; and the other risks and uncertainties
described in KMI’s reports filed with the Securities and Exchange
Commission (SEC), including its Annual Report on Form 10-K for the
year-ended December 31, 2023 (under the headings “Risk Factors” and
“Information Regarding Forward-Looking Statements” and elsewhere),
and its subsequent reports, which are available through the SEC’s
EDGAR system at www.sec.gov and on our website at
ir.kindermorgan.com. Forward-looking statements speak only as of
the date they were made, and except to the extent required by law,
KMI undertakes no obligation to update any forward-looking
statement because of new information, future events or other
factors. Because of these risks and uncertainties, readers should
not place undue reliance on these forward-looking statements.
Table 1
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Statements of Income
(In millions, except per share
amounts, unaudited)
Three Months Ended
June 30,
% change
Six Months Ended
June 30,
% change
2024
2023
2024
2023
Revenues
$
3,572
$
3,501
$
7,414
$
7,389
Operating costs, expenses and other
Costs of sales (exclusive of items shown
separately below)
967
971
2,074
2,186
Operations and maintenance
741
685
1,421
1,324
Depreciation, depletion and
amortization
584
557
1,171
1,122
General and administrative
179
169
354
335
Taxes, other than income taxes
109
103
220
213
Gain on divestitures, net
(45
)
(13
)
(77
)
(13
)
Other income, net
(1
)
(1
)
(10
)
(2
)
Total operating costs, expenses and
other
2,534
2,471
5,153
5,165
Operating income
1,038
1,030
2,261
2,224
Other income (expense)
Earnings from equity investments
208
208
451
373
Amortization of excess cost of equity
investments
(13
)
(19
)
(25
)
(36
)
Interest, net
(464
)
(443
)
(936
)
(888
)
Other, net
1
2
1
4
Income before income taxes
770
778
1,752
1,677
Income tax expense
(168
)
(168
)
(377
)
(364
)
Net income
602
610
1,375
1,313
Net income attributable to NCI
(27
)
(24
)
(54
)
(48
)
Net income attributable to Kinder
Morgan, Inc.
$
575
$
586
$
1,321
$
1,265
Class P Shares
Basic and diluted earnings per share
$
0.26
$
0.26
—
%
$
0.59
$
0.56
5
%
Basic and diluted weighted average shares
outstanding
2,219
2,237
(1
)%
2,219
2,242
(1
)%
Declared dividends per share
$
0.2875
$
0.2825
2
%
$
0.575
$
0.565
2
%
Adjusted Net Income Attributable to
Kinder Morgan, Inc. (1)
$
548
$
540
1
%
$
1,306
$
1,215
7
%
Adjusted EPS (1)
$
0.25
$
0.24
4
%
$
0.59
$
0.54
9
%
Notes
(1)
Adjusted Net Income Attributable to Kinder
Morgan, Inc. is Net income attributable to Kinder Morgan, Inc.
adjusted for Certain Items. Adjusted EPS calculation uses Adjusted
Net Income Attributable to Common Stock. See Table 2 for
reconciliations.
Table 2
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income
Attributable to Kinder Morgan, Inc. to Adjusted Net Income
Attributable to Kinder Morgan, Inc., to Adjusted Net Income
Attributable to Common Stock and to DCF Reconciliations
(In millions, except per share
amounts, unaudited)
Three Months Ended
June 30,
% change
Six Months Ended
June 30,
% change
2024
2023
2024
2023
Net income attributable to Kinder
Morgan, Inc.
$
575
$
586
(2
)%
$
1,321
$
1,265
4
%
Certain Items (1)
Fair value amortization
—
4
—
—
Change in fair value of derivative
contracts
2
(62
)
52
(130
)
(Gain) loss on divestitures and
impairment, net
(41
)
—
(70
)
67
Income tax Certain Items
10
12
1
13
Other
2
—
2
—
Total Certain Items
(27
)
(46
)
41
%
(15
)
(50
)
70
%
Adjusted Net Income Attributable to
Kinder Morgan, Inc.
$
548
$
540
1
%
$
1,306
$
1,215
7
%
Net income attributable to Kinder
Morgan, Inc.
$
575
$
586
(2
)%
$
1,321
$
1,265
4
%
Total Certain Items (2)
(27
)
(46
)
(15
)
(50
)
Net income allocated to participating
securities (3)
(3
)
(4
)
(7
)
(7
)
Other (4)
—
1
—
—
Adjusted Net Income Attributable to
Common Stock
$
545
$
537
1
%
$
1,299
$
1,208
8
%
Net income attributable to Kinder
Morgan, Inc.
$
575
$
586
(2
)%
$
1,321
$
1,265
4
%
Total Certain Items (2)
(27
)
(46
)
41
%
(15
)
(50
)
70
%
DD&A
584
557
1,171
1,122
Amortization of excess cost of equity
investments
13
19
25
36
Income tax expense (5)
158
156
376
351
Cash taxes
(13
)
(8
)
(11
)
(9
)
Sustaining capital expenditures
(241
)
(195
)
(410
)
(351
)
Amounts from joint ventures
Unconsolidated JV DD&A
86
80
172
161
Remove consolidated JV partners'
DD&A
(15
)
(15
)
(31
)
(31
)
Unconsolidated JV income tax expense
(6)(7)
19
20
41
46
Unconsolidated JV cash taxes (6)
4
(52
)
(53
)
(52
)
Unconsolidated JV sustaining capital
expenditures
(55
)
(46
)
(89
)
(75
)
Remove consolidated JV partners'
sustaining capital expenditures
2
2
5
4
Other items (8)
10
18
20
33
DCF
$
1,100
$
1,076
2
%
$
2,522
$
2,450
3
%
Weighted average shares outstanding for
dividends (9)
2,232
2,250
2,232
2,255
DCF per share
$
0.49
$
0.48
2
%
$
1.13
$
1.09
4
%
Declared dividends per share
$
0.2875
$
0.2825
$
0.575
$
0.565
Notes
(1)
See table included in “Non-GAAP Financial
Measures—Certain Items.”
(2)
For a detailed listing, see the above
reconciliation of Net Income Attributable to Kinder Morgan, Inc. to
Adjusted Net Income Attributable to Kinder Morgan, Inc.
(3)
Net income allocated to common stock and
participating securities is based on the amount of dividends paid
in the current period plus an allocation of the undistributed
earnings or excess distributions over earnings to the extent that
each security participates in earnings or excess distributions over
earnings, as applicable.
(4)
Adjusted net income in excess of
distributions for participating securities.
(5)
To avoid duplication, adjustments for
income tax expense for the periods ended June 30, 2024 and 2023
exclude $10 million and $12 million for the three-month periods,
respectively, and $1 million and $13 million for the six-month
periods, respectively, which amounts are already included within
“Certain Items.” See table included in “Non-GAAP Financial
Measures—Certain Items.”
(6)
Associated with our Citrus, NGPL and
Products (SE) Pipe Line equity investments.
(7)
Includes the tax provision on Certain
Items recognized by the investees that are taxable entities. The
impact of KMI’s income tax provision on Certain Items affecting
earnings from equity investments is included within “Certain Items”
above. See table included in “Non-GAAP Financial Measures—Certain
Items.”
(8)
Includes non-cash pension expense,
non-cash compensation associated with our restricted stock program
and pension contributions.
(9)
Includes restricted stock awards that
participate in dividends.
Table 3
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
Reconciliation
(In millions,
unaudited)
Three Months Ended
June 30,
% change
Six Months Ended
June 30,
% change
2024
2023
2024
2023
Net income attributable to Kinder
Morgan, Inc.
$
575
$
586
(2
)%
$
1,321
$
1,265
4
%
Certain Items (1)
Fair value amortization
—
4
—
—
Change in fair value of derivative
contracts
2
(62
)
52
(130
)
(Gain) loss on divestitures and
impairment, net
(41
)
—
(70
)
67
Income tax Certain Items
10
12
1
13
Other
2
—
2
—
Total Certain Items
(27
)
(46
)
(15
)
(50
)
DD&A
584
557
1,171
1,122
Amortization of excess cost of equity
investments
13
19
25
36
Income tax expense (2)
158
156
376
351
Interest, net (3)
465
448
935
901
Amounts from joint ventures
Unconsolidated JV DD&A
86
80
172
161
Remove consolidated JV partners'
DD&A
(15
)
(15
)
(31
)
(31
)
Unconsolidated JV income tax expense
(4)
19
20
41
46
Adjusted EBITDA
$
1,858
$
1,805
3
%
$
3,995
$
3,801
5
%
Notes
(1)
See table included in “Non-GAAP Financial
Measures—Certain Items.”
(2)
To avoid duplication, adjustments for
income tax expense for the periods ended June 30, 2024 and 2023
exclude $10 million and $12 million for the three-month periods,
respectively, and $1 million and $13 million for the six-month
periods, respectively, which amounts are already included within
“Certain Items.” See table included in “Non-GAAP Financial
Measures—Certain Items.”
(3)
To avoid duplication, adjustments for
interest, net for the periods ended June 30, 2024 and 2023 exclude
$(1) million and $(5) million for the three-month periods,
respectively, and $1 million and $(13) million for the six-month
periods, respectively, which amounts are already included within
“Certain Items.” See table included in “Non-GAAP Financial
Measures—Certain Items.”
(4)
Includes the tax provision on Certain
Items recognized by the investees that are taxable entities
associated with our Citrus, NGPL and Products (SE) Pipe Line equity
investments. The impact of KMI’s income tax provision on Certain
Items affecting earnings from equity investments is included within
“Certain Items” above.
Table 4
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Reconciliation of
Segment EBDA to Adjusted Segment EBDA
(In millions,
unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Segment EBDA (1)
Natural Gas Pipelines Segment EBDA
$
1,227
$
1,255
$
2,741
$
2,750
Certain Items (2)
Change in fair value of derivative
contracts
4
(54
)
43
(119
)
Gain on divestiture
—
—
(29
)
—
Natural Gas Pipelines Adjusted Segment
EBDA
$
1,231
$
1,201
$
2,755
$
2,631
Products Pipelines Segment EBDA
$
301
$
285
$
593
$
469
Certain Items (2)
Change in fair value of derivative
contracts
—
1
1
1
Loss on impairment
—
—
—
67
Products Pipelines Adjusted Segment
EBDA
$
301
$
286
$
594
$
537
Terminals Segment EBDA
$
281
$
261
$
550
$
515
CO2 Segment EBDA
$
206
$
175
$
364
$
347
Certain Items (2)
Change in fair value of derivative
contracts
(1
)
—
7
1
Gain on divestitures
(41
)
—
(41
)
—
CO2 Adjusted Segment EBDA
$
164
$
175
$
330
$
348
Notes
(1)
Includes revenues, earnings from
equity investments, operating expenses, gain on divestitures, net,
other income, net, and other, net. Operating expenses include costs
of sales, operations and maintenance expenses, and taxes, other
than income taxes. The composition of Segment EBDA is not addressed
nor prescribed by generally accepted accounting principles.
(2)
See “Non-GAAP Financial
Measures—Certain Items.”
Table 5
Segment Volume and CO2 Segment
Hedges Highlights
(Historical data is pro forma
for acquired and divested assets, JV volumes at KMI share
(1))
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Natural Gas Pipelines
Transport volumes (BBtu/d)
42,122
42,014
42,864
42,666
Sales volumes (BBtu/d)
2,457
2,220
2,511
2,169
Gathering volumes (BBtu/d)
4,013
3,661
4,013
3,530
NGLs (MBbl/d)
42
34
39
33
Products Pipelines (MBbl/d)
Gasoline (2)
1,008
1,004
966
976
Diesel fuel
360
356
347
342
Jet fuel
308
290
291
281
Total refined product volumes
1,676
1,650
1,604
1,599
Crude and condensate
493
495
475
477
Total delivery volumes (MBbl/d)
2,169
2,145
2,079
2,076
Terminals
Liquids leasable capacity (MMBbl)
78.6
78.6
78.6
78.6
Liquids leased capacity %
94.3
%
93.6
%
94.1
%
93.2
%
Bulk transload tonnage (MMtons)
14.1
13.7
27.7
27.1
CO2
SACROC oil production
18.91
22.27
19.01
20.77
Yates oil production
6.09
6.55
6.17
6.65
Other
1.05
1.09
1.06
1.08
Total oil production - net (MBbl/d)
(3)
26.05
29.91
26.24
28.50
NGL sales volumes - net (MBbl/d) (3)
7.97
9.65
8.42
8.90
CO2 sales volumes - net (Bcf/d)
0.316
0.342
0.326
0.352
RNG sales volumes (BBtu/d)
9
5
8
5
Realized weighted average oil price ($ per
Bbl)
$
69.47
$
67.73
$
69.08
$
67.45
Realized weighted average NGL price ($ per
Bbl)
$
27.29
$
31.22
$
27.78
$
32.54
CO2 Segment Hedges
Remaining
2024
2025
2026
2027
2028
Crude Oil (4)
Price ($ per Bbl)
$
66.21
$
65.43
$
65.72
$
65.66
$
64.53
Volume (MBbl/d)
22.90
15.40
9.90
7.10
0.60
NGLs
Price ($ per Bbl)
$
48.34
$
50.17
Volume (MBbl/d)
4.24
1.09
Notes
(1)
Volumes for acquired assets are included
for all periods. However, EBDA contributions from acquisitions are
included only for periods subsequent to their acquisition. Volumes
for assets divested, idled and/or held for sale are excluded for
all periods presented.
(2)
Gasoline volumes include ethanol pipeline
volumes.
(3)
Net of royalties and outside working
interests.
(4)
Includes West Texas Intermediate
hedges.
Table 6
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Balance Sheets
(In millions,
unaudited)
June 30,
December 31,
2024
2023
Assets
Cash and cash equivalents
$
98
$
83
Other current assets
2,092
2,459
Property, plant and equipment, net
37,533
37,297
Investments
7,851
7,874
Goodwill
20,084
20,121
Deferred charges and other assets
3,044
3,186
Total assets
$
70,702
$
71,020
Liabilities and Stockholders'
Equity
Short-term debt
$
3,062
$
4,049
Other current liabilities
2,896
3,172
Long-term debt
28,560
27,880
Debt fair value adjustments
89
187
Other
4,401
4,003
Total liabilities
39,008
39,291
Other stockholders' equity
30,600
30,523
Accumulated other comprehensive loss
(262
)
(217
)
Total KMI stockholders' equity
30,338
30,306
Noncontrolling interests
1,356
1,423
Total stockholders' equity
31,694
31,729
Total liabilities and stockholders'
equity
$
70,702
$
71,020
Net Debt (1)
$
31,531
$
31,837
Table 6 (continued)
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Balance Sheets
(In millions,
unaudited)
Adjusted EBITDA Twelve Months
Ended (2)
Reconciliation of Net Income
Attributable to Kinder Morgan, Inc. to Last Twelve Months Adjusted
EBITDA
June 30,
December 31,
2024
2023
Net income attributable to Kinder
Morgan, Inc.
$
2,447
$
2,391
Total Certain Items (3)
54
19
DD&A
2,299
2,250
Amortization of excess cost of equity
investments
55
66
Income tax expense (4)
708
682
Interest, net (4)
1,838
1,804
Amounts from joint ventures
Unconsolidated JV DD&A
334
323
Less: Consolidated JV partners'
DD&A
(63
)
(63
)
Unconsolidated JV income tax expense
83
89
Adjusted EBITDA
$
7,755
$
7,561
Net Debt-to-Adjusted EBITDA (5)
4.1
4.2
Notes
(1)
Amounts calculated as total debt, less (i)
cash and cash equivalents; (ii) debt fair value adjustments; and
(ii) the foreign exchange impact on our Euro denominated debt of
$(7) million and $9 million as of June 30, 2024 and December 31,
2023, respectively, as we have entered into swaps to convert that
debt to U.S.$.
(2)
Reflects the rolling 12-month amounts for
each period above.
(3)
See table included in “Non-GAAP Financial
Measures—Certain Items.”
(4)
Amounts are adjusted for Certain Items.
See “Non-GAAP Financial Measures—Certain Items” for more
information.
(5)
Year-end 2023 net debt reflects borrowings
to fund the STX Midstream acquisition that closed on December 28,
2023. Including a full year of Adjusted EBITDA from the acquired
assets on a Pro Forma basis, the leverage ratio would have been
4.1x.
Table 7
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Supplemental
Information
(In millions,
unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
KMI FCF
Net income attributable to Kinder Morgan,
Inc.
$
575
$
586
$
1,321
$
1,265
Net income attributable to noncontrolling
interests
27
24
54
48
DD&A
584
557
1,171
1,122
Amortization of excess cost of equity
investments
13
19
25
36
Deferred income taxes
159
164
357
354
Earnings from equity investments
(208
)
(208
)
(451
)
(373
)
Distribution of equity investment earnings
(1)
233
179
416
367
Working capital and other items
304
229
(17
)
64
Cash flow from operations
1,687
1,550
2,876
2,883
Capital expenditures (GAAP)
(581
)
(535
)
(1,200
)
(1,042
)
FCF
1,106
1,015
1,676
1,841
Dividends paid
(641
)
(637
)
(1,272
)
(1,264
)
FCF after dividends
$
465
$
378
$
404
$
577
Notes
(1)
Periods ended June 30, 2024 and 2023
exclude distributions from equity investments in excess of
cumulative earnings of $46 million and $57 million for the
three-month periods, respectively, and $81 million and $118 million
for the six-month periods, respectively. These are included in cash
flows from investing activities on our consolidated statement of
cash flows.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240717447871/en/
Dave Conover Media Relations Newsroom@kindermorgan.com
Investor Relations (800) 348-7320 km_ir@kindermorgan.com
Kinder Morgan (NYSE:KMI)
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