KMI 1Q 2024: Increases Dividend, Maintains Growth Outlook

On Wednesday, Kinder Morgan (KMI) released its first-quarter 2024 earnings. The firm reaffirmed its 2024 outlook and provided a constructive view on long-term natural gas demand growth.  

For the first quarter of 2024, KMI reported earnings of $0.33 per share, up 10% compared to the first quarter of 2023. The company reported adjusted EBITDA of $2.14 billion, in line with Wall Street expectations, and up 7% compared to last year. The firm saw distributable cash flow of over $1.4 billion for the first quarter, up 3.5% compared to the same quarter last year.  

The quarterly dividend payable in May increased to $0.2875, representing a sequential increase of 1.8%. KMI did not repurchase any equity in the quarter, after having bought back over $500 million in equity in 2023. 

Company management highlighted growth in a number of business segments, including natural gas pipelines, product pipelines, and terminals. 

The firm lowered its long-term leverage target to a range of 3.5x-4.5x. This represents a reduction from the previous 4.5x target and reflects recent trends, with Kinder Morgan generally maintaining leverage below its prior target. 

2024 Outlook Reaffirmed

Looking ahead to the rest of 2024, KMI anticipates overall results to outpace that of 2023. The firm forecasts adjusted EBITDA of $8.16 billion and distributable cash flow of $5 billion this year. Both projections for represent 8% gains over 2023’s numbers.  

See More: 2024 EBITDA Guidance: Midstream/MLPs See Growth 

Company management acknowledged that natural gas prices have been lower than its previous expectations of $3.50 per MMBtu. However, KMI noted that the long-term fundamentals for natural gas remain strong.  

Company management expects gas demand to rise significantly through 2030, with demand related to LNG exports set to more than double. Exports to Mexico are projected to increase by 50% between now and 2030. Management also expects artificial intelligence and cryptocurrency mining to drive significant natural gas demand for power generation.  

See More: Midstream Positions for Ballooning U.S. LNG Exports 

Ongoing Projects

KMI also provided an update on the firm’s many construction projects. Construction is ongoing for four pipeline and gas storage projects, with completion dates ranging between November 2024 and July 2025. 

Kinder Morgan is also continuing progress on energy transition ventures. The company expects its new renewable natural gas (RNG) facility to come online in 4Q, bringing its total RNG production capacity to 6.9 billion cubic feet annually.  

Kinder Morgan remains a top-10 holding within the Alerian Energy Infrastructure ETF (ENFR). As of April 18, 2024, 4.94% of ENFR assets are allocated toward KMI. ENFR tracks the Alerian Midstream Energy Select Index (AMEI). AMEI comprises North American midstream energy infrastructure companies engaged in the storage, transportation, and processing of energy commodities. AMEI is also the underlying index for the ALPS Alerian Energy Infrastructure Portfolio (ALEFX). 

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