On July 17, 2024, Kinder Morgan Inc (KMI, Financial) released its 8-K filing detailing its financial performance for the second quarter of 2024. Kinder Morgan is one of the largest midstream energy firms in North America, with an interest in or an operator on about 82,000 miles in pipelines and 139 storage terminals. The company is active in the transportation, storage, and processing of natural gas, crude oil, refined products, natural gas liquids, and carbon dioxide. The majority of Kinder Morgan's cash flows stem from fee-based contracts for handling, moving, and storing fossil fuel products.
Financial Performance and Challenges
Kinder Morgan Inc (KMI, Financial) reported second-quarter earnings per share (EPS) of $0.26, which remained flat compared to the same period in 2023. The company also reported distributable cash flow (DCF) per share of $0.49, a 2% increase from the second quarter of 2023. Net income attributable to KMI was $575 million, slightly down from $586 million in the second quarter of 2023. Despite these challenges, the company managed to generate $1.1 billion in free cash flow (FCF) after capital expenditures.
Dividend and Cash Flow
The board of directors approved a cash dividend of $0.2875 per share for the second quarter, representing a 2% increase over the second quarter of 2023. This dividend is payable on August 15, 2024, to stockholders of record as of July 31, 2024. The company generated $1.7 billion in cash flow from operations during the quarter.
Segment Performance
The Natural Gas Pipelines segment saw higher contributions from the Texas Intrastate system and the STX Midstream acquisition, although these were partially offset by lower contributions from gathering systems due to asset divestitures and lower commodity prices. Natural gas transport volumes were up slightly, while natural gas gathering volumes increased by 10% compared to the second quarter of 2023.
The Products Pipelines segment benefited from higher rates on existing assets and new capital projects, with total refined products volumes up slightly. The Terminals segment saw increased earnings due to expansion projects and higher rates and utilization at New York Harbor hub facilities. However, the CO2 segment experienced a decline in earnings due to lower crude volumes, CO2 sales, and NGL volumes.
Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Revenue | $3,572 million | $3,501 million | 2% |
| Net Income | $575 million | $586 million | -2% |
| EPS | $0.26 | $0.26 | 0% |
| DCF | $1,100 million | $1,076 million | 2% |
Project Backlog and Future Outlook
Kinder Morgan's project backlog at the end of the second quarter was $5.2 billion, up from $3.3 billion in the first quarter of 2024. The company is devoting approximately 80% of its project backlog to lower-carbon energy investments, including conventional natural gas, renewable natural gas (RNG), renewable diesel (RD), and sustainable aviation fuel (SAF).
For 2024, Kinder Morgan has 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 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.
"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," said Executive Chairman Richard D. Kinder.
Conclusion
Kinder Morgan Inc (KMI, Financial) has demonstrated resilience in the face of challenges, maintaining steady earnings and increasing its dividend. The company's strong cash flow and significant project backlog position it well for future growth, particularly in lower-carbon energy investments. Investors and stakeholders will be keenly watching how Kinder Morgan navigates the evolving energy landscape and capitalizes on emerging opportunities.
Explore the complete 8-K earnings release (here) from Kinder Morgan Inc for further details.
