Kinder Morgan posted record Q2 net income of $867M, up 21%, as it placed $660M in projects into service. Full-year guidance beat budget by 5%+ on EBITDA. Dividend up 2%.
Kinder Morgan posted a record second quarter, with net income rising 21% and adjusted earnings per share climbing 32%. The midstream company placed $660 million in expansion projects into service and raised its dividend by 2%.
Net income attributable to KMI reached $867 million, up from $717 million a year earlier. Adjusted EBITDA rose 12% to roughly $2.4 billion, CEO Kim Dang said. Free cash flow after capital expenditures hit $1 billion. The board declared a cash dividend of $0.2975 per share for the quarter, payable Aug. 17, bringing the annualized payout to $1.19.
Dang called the quarter a record. “Strong financial contributions from our business segments resulted in a record second quarter,” she said. The balance sheet remains healthy, she added, with a Net Debt-to-Adjusted EBITDA ratio of 3.6 times, at the low end of the company's targeted range.
Three large projects entered service during the second quarter. Tennessee Gas Pipeline’s Cumberland Project will serve a new natural gas-fired power plant in Tennessee. The Hiland Express conversion, which repurposed a crude oil pipeline to natural gas liquids service, also came online. The Gulf Coast Express pipeline expansion began flowing, boosting natural gas volumes from the Permian Basin to South Texas markets.
Those additions reduced the project backlog to $9.6 billion from $10.1 billion at the end of the first quarter. The board gave contingent approval for almost $400 million in new projects not yet included in the backlog, Dang said. Natural gas projects account for about 92% of the backlog, with more than 60% tied to power generation and local distribution company demand.
Executive Chairman Richard D. Kinder credited the company's fee-based business model and long-term contracts for stable cash flows. “Increasing LNG exports, rising power demand, and industrial expansion make our existing highly utilized assets more valuable,” he said. The company sees strong interest from customers in developing additional natural gas infrastructure, Dang added.
For the full year, KMI expects to beat its original budget by more than 5% on Adjusted EBITDA and more than 12% on Adjusted EPS. The company budgeted net income of $3.1 billion, Adjusted EPS of $1.36, and year-end leverage of 3.8 times. Based on first-half results, management now projects leverage of 3.6 times.
President Dax Sanders said the Natural Gas Pipelines segment performed better than a year earlier, driven by higher contributions from the Texas Intrastate system and gathering assets.
KMI carries an Alpha Score of 60 out of 100, labeled Moderate. The score reflects stable cash flows but modest dividend growth and leverage near the low end of its target range. It places the company alongside peers such as EPD and MPLX at similar risk profiles, as discussed in Midstream MLP Scores: KMI, EPD, MPLX at Moderate Risk.
KMI ended the quarter with a Net Debt-to-Adjusted EBITDA ratio of 3.6 times, at the low end of its targeted range.
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