Kinder Morgan (KMI) Q4 2023 earnings summary

Executive summary

• 2023 net income was $2.4 billion and Adjusted EBITDA was $7.6 billion; Q4 results were lower YoY, primarily due to higher interest expense.

• Nearly 80% of the $3 billion project backlog was allocated to lower-carbon investments, including natural gas, RNG, renewable diesel and carbon capture.

Financial highlights

• Q4 revenue was $4.038 billion vs. $4.579 billion YoY; operating income was $1.101 billion vs. $1.104 billion.

• Q4 net income was $594 million vs. $670 million; Adjusted Earnings were $633 million vs. $708 million. EPS was $0.27, down 10% YoY.

• Q4 DCF was $1.171 billion vs. $1.217 billion; DCF per share was $0.52, down 4% YoY.

• FY 2023 net income was $2.391 billion vs. $2.548 billion, and DCF was $4.715 billion vs. $4.970 billion; higher interest and sustaining capital spending weighed on DCF.

• FY 2023 free cash flow was $4.174 billion vs. $3.346 billion; FCF after dividends was $1.645 billion vs. $842 million.

Outlook and guidance

• Revised 2024 budget: EPS of $1.22, up 15% YoY; DCF per share of $2.26 and Adjusted EBITDA of $8.16 billion, each up 8%; year-end net debt/Adjusted EBITDA of 3.9x.

• 2024 dividend expectation remains $1.15 per share; budget assumptions include WTI at $82/bbl and Henry Hub gas at $3.50/MMBtu.

• At WTI of $72/bbl and Henry Hub of $2.80/MMBtu, projected 2024 EPS growth is 12% and DCF-per-share growth is 6% vs. 2023.

• Remaining $1.9 billion of backlog projects is expected to generate an average Project EBITDA multiple of ~4.6x.