Kinder Morgan Inc - Class P
Q4 2023 Earnings
Did KMI Beat Earnings? Q4 2023 Results
Kinder Morgan closed out the fourth quarter of 2023 with earnings under pressure, posting GAAP EPS of $0.27 on revenue of $4.04 billion, with net income falling to $594 million from $670 million a year earlier as higher interest expense weighed on results across the board. The 10% year-over-year EPS decline was largely anticipated, though softer commodity prices pushed full-year performance slightly behind the company's internal budget. The defining move of the quarter was the $1.81 billion acquisition of NextEra Energy Partners' STX Midstream assets, which closed on December 28 and added an integrated network of large-diameter natural gas pipelines linking the Eagle Ford basin to Gulf Coast and Mexico markets, temporarily lifting KMI's net debt-to-adjusted EBITDA ratio to 4.2x. Looking ahead, management updated its 2024 budget to reflect the acquisition, now targeting EPS of $1.22, up 15% versus 2023, with adjusted EBITDA of $8.16 billion and a planned year-end leverage ratio of 3.9x, supported by an unchanged dividend forecast of $1.15 per share.
- Natural gas transport volumes up 5% driven by higher deliveries to power generation, LNG facilities and industrial customers
- Natural gas gathering volumes up 27% primarily from Haynesville and Eagle Ford gathering systems
- Products Pipelines benefited from higher rates on existing assets and new capital project contributions
- Terminals segment benefited from higher Jones Act tanker charter rates and improving tank lease rates
- CO2 segment impacted by lower crude oil and CO2 volumes and 21% drop in realized NGL prices
- Higher interest expense was the primary driver of year-over-year decline in earnings and DCF
- Lower commodity prices contributed to finishing the year slightly behind budget
“This quarter we expeditiously closed a major acquisition of STX Midstream for $1.8 billion. Those assets fit nicely into our existing Texas Intrastate system serving Gulf Coast and Mexico demand markets. We also continued to execute on expansion projects in all of our business segments, most notably our Natural Gas Pipelines business segment, where four major projects were placed in service during the quarter and another four are underway.”
Kinder Morgan CEO, on the earnings call
Forward Guidance & Outlook
KMI's updated 2024 budget (incorporating the STX Midstream acquisition) forecasts EPS of $1.22 (up 15% vs. 2023), DCF per share of $2.26 (up 8% vs. 2023), and Adjusted EBITDA of $8.16 billion (up 8% vs. 2023), with a year-end Net Debt-to-Adjusted EBITDA ratio of 3.9x. The company expects to declare dividends of $1.15 per share for 2024. Budget assumptions include WTI crude oil at $82/barrel and Henry Hub natural gas at $3.50/MMBtu. Even at lower commodity prices ($72 WTI, $2.80 Henry Hub), EPS would still grow 12% and DCF per share 6% versus 2023. The 2024 revised budget projects GAAP net income of $2.7 billion and Adjusted EBITDA of $8.2 billion.
KMI YoY Financials
KMI Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.