Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Q1 2024 Earnings Presentation
36 slides from Kinder Morgan's earnings presentation, Apr 17, 2024
Slide 1: Investor Presentation 1Q 2024
INVESTOR PRESENTATION 1Q 2024 TransColorado Conn Creek Compressor Station
Slide 2: Disclosure
Disclosure Forward-looking Statements / Non-GAAP Financial Measures / Industry & Market Data General – The information contained in this presentation does not purport to be all-inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to con
Slide 3: Irreplaceable Infrastructure Portfolio
Irreplaceable Infrastructure Portfolio Largest natural gas transmission network Delivering energy to improve lives & create a better world — ~70,000 miles of natural gas pipelines move ~40% of U.S. natural gas production — Have interest in 702 bcf of working storage capacity, ~15% of U.S. capacity L
Slide 4: How Kinder Morgan Drives Shareholder Value
How Kinder Morgan Drives Shareholder Value ~64% of KM cash flows come from natural gas Natural Gas Focus Transport ~40% of U.S. natural gas production BBB investment grade balance sheet Balance Sheet Strength ~3.9x YE 2024B Net Debt / Adjusted EBITDA High-Returning Growth Projects ~$3 billion of com
Slide 5: High-Quality, Natural Gas Focused Cash Flows
High-Quality, Natural Gas Focused Cash Flows G&P Natural Gas Transportation & Storage CASH FLOW MIX(a) 11% – 57% of 2024B Total Adj. Segment EBDA Remaining KM – 89% take-or-pay cash flows(a) 36% – Average remaining contract life: Transportation & Storage 89% – ~6 years for transportation – ~4 years
Slide 6: Growing Earnings, Reducing Leverage, and Returning Meaningful Value to Shareholders
Growing Earnings, Reducing Leverage, and Returning Meaningful Value to Shareholders ADJUSTED NET DEBT / DIVIDENDS PAID & EPS ADJUSTED EBITDA SHARES REPURCHASED(b) ($ billion) 8% CAGR 26% decrease in $20.3 billion returned leverage to shareholders 1.32 Uri $1.22 5.3x 0.38 $1.16 $0.5 5.1x $0.4 $1.07 C
Slide 7: Base Business Stability Provides Platform for Growth
Base Business Stability Provides Platform for Growth 2016 ‒ 2022 ADJUSTED EBITDA $billion ~$700 million in divested EBITDA from asset sales related to Canadian assets, SNG, NGPL, and Elba base business impacted by asset sales, Large contract rollovers associated with supply recontracting headwinds,
Slide 8: $3.0bn Committed Growth Capital Project Backlog as of 12/31/2023
$3.0bn Committed Growth Capital Project Backlog as of 12/31/2023 Expect 53% of Backlog Capital In Service in 2024, 36% in 2025, and 11% Beyond LOWER $ million TOTAL LOWER CARBON Natural Gas (excluding G&P) $1,613 $1,613 96% for end-use, 2% supply-push, 2% CCS Refined Products (excluding G&P) 158 85
Slide 9: Robust Macro Environment Gives Confidence in High End of Annual Growth Spend
Robust Macro Environment Gives Confidence in the High End of ~$1–$2 Billion of Annual Growth Spend Over the Next Few Years REFINED PRODUCTS NATURAL GAS ‒ Infrastructure for renewable feedstocks & fuels ‒ LNG Exports (Gulf Coast & West Coast) ‒ Supply short Southeast markets ‒ Exports to Mexico (Gulf
Slide 10: 2024 Budget Highlights
2024 Budget Highlights Adjusted Adjusted Net Debt / Cash EPS EBITDA DCF / Share Adjusted EBITDA Returns $ S $1.22 $8.2bn $2.26 3.9x $2.6bn ~14% increase ~8% increase ~8% increase 0.3x decrease Dividends expected vs. 2023 vs. 2023 vs. 2023 vs. year-end 2023 in 2024 Note: Budget does not assume any sh
Slide 11: Demand for U.S. Natural Gas Projected to Grow
Demand for U.S. Natural Gas Projected to Grow U.S. NATURAL GAS DEMAND bcfd 130 2023 – 2030 Natural Gas Demand 120 Demand has grown over 30 bcfd since 2015… 110 +19% Increase in total U.S. demand 100 …and is forecasted to increase an additional 20 bcfd by the +98% 90 end of the decade Increase in LNG
Slide 12: Rising Demand Benefitting Our Natural Gas Transportation Business
Rising Demand Benefitting Our Natural Gas Transportation Business INCREASED PIPELINE UTILIZATION(a) Increased demand leading to 73% 87% 2016 5-pipe 2023 5-pipe U.S. NATURAL GAS DEMAND average average bcfd +19% +39% INCREASED CONTRACT TERMS AND/OR RATES EXAMPLES 129 6.7 7.1 years 108 5.3 years 5.8 ye
Slide 13: Natural Gas Supply Overview: 2023 – 2030
Natural Gas Supply Overview: 2023 – 2030 2023 U.S. Production 104 bcfd Increase in supply by 2030 +19 bcfd 4 Haynesville +9 bcfd of growth 1 Abundant, low-cost, low-nitrogen supply 4 Key to serving Gulf Coast demand markets 4 3 Permian +7 bcfd of associated gas growth 2 Supply grows as oil productio
Slide 14: Natural Gas Demand Overview: 2023 – 2030
Natural Gas Demand Overview: 2023 – 2030 >95% of Demand Growth is Expected to Occur in Texas & Louisiana, Driven by Exports & Industrial 2023 U.S. Demand 108 bcfd Increase in demand by 2030 +20 bcfd LNG Feedgas 1 +16 bcfd of Gulf Coast demand growth 3 Well positioned to grow our deliveries over time
Slide 15: LNG Exports Drive Natural Gas Demand Growth
LNG Exports Drive Natural Gas Demand Growth Growth Primarily Along the Texas & Louisiana Gulf Coast with Great Overlap with Our Assets U.S. LNG EXPORT CAPACITY in bcfd Existing Under Construction Under Development +123% increase in U.S. LNG exports by 2030 30 KM has long-term contracts to move ~7 bc
Slide 16: Extensive Natural Gas Storage Footprint Provides Valuable Supply for Variable Demand
Extensive Natural Gas Storage Footprint Provides Valuable Supply for Variable Demand KM working storage capacity 1 NGPL ~702 bcf Highly contracted storage key for seasonal & Evaluating multiple brownfield peak day power, LDC & industrial demand expansion opportunities 288 bcf, cost-based rates 2 Tex
Slide 17: Products Segment Overview
Products Segment Overview Strategic Footprint Supplying a Diverse Mix of Feedstock & PRODUCTS ADJUSTED SEGMENT EBDA Finished Products Critical to Refining & Transportation Sectors & VOLUMES Refined Products (mmbbld) Crude G&P & transport (mmbbld) Adj. Segment EBDA ($bn) $1.3 $1.2 4.0 $1 COVID $1.1 $
Slide 18: Pivoting Products Segment's West Coast Assets to Handle Additional Renewable Diesel Volumes
Pivoting Product Segment’s West Coast Assets to Handle Additional Renewable Diesel Volumes Washington ability to move CURRENT ASSETS & FUTURE OPPORTUNITIES Southern ‒ Providing ~18 mbbld RD capacity at truck rack between Colton & Mission Valley ~57 mbbld California Hub of RD via pipeline ‒ Increasin
Slide 19: Terminals Segment Overview
Terminals Segment Overview Refined Products Focused; Providing Customers with Unmatched Scale, Service-Offerings & Market-Making Connectivity ASSET SUMMARY # of capacity terminals (mmbbls) Terminals segment – Bulk 27 Terminals segment – Liquids 47 79 Products segment 65 56 Total Terminals 139 135 Jo
Slide 20: Industry-Leading Renewable Feedstock Storage & Logistics Offering
Industry-Leading Renewable Feedstock Storage & Logistics Offering Leveraging Existing Assets to Grow Our Renewable Feedstock Capabilities New York Harbor Chicago 35 mbbl 160 mbbl One of the largest handlers of renewable feedstocks — Utilizing existing assets towards capital-efficient, attractive-ret
Slide 21: CO2 Segment Overview
CO2 Segment Overview World Class, Fully-Integrated Assets Consistently Generating Robust Free Cash Flow Interest in 5 oil CO2 pipelines CO2 EOR & TRANSPORT FREE CASH FLOW $ millions fields with 9.3 CO2 source fields billion barrels Oil fields FCF Capex Acquisitions Adj. Segment EBDA Crude pipelines
Slide 22: Energy Transition Ventures (ETV) Group
Energy Transition Ventures (ETV) Group The group is evaluating commercial opportunities Renewable Natural Gas emerging from the lower carbon energy transition – Brought 3 facilities online in 2023 and expect a 4th in service by 2H 2024 – Up to 6.4 bcf(a) of RNG production capacity once all facilitie
Slide 23: Committed To Being a Good Steward
Committed To Being a Good Steward Reduce & Investing in Avoid Methane Leak Safety Continued Diversity & Lower Carbon Emissions Detection Culture Improvement Inclusion Fuels 0 $ ~31% 100% 20% B → AA 22% $1.9bn Reduction in methane Of our natural gas Reduction in Employee MSCI score Increase in Budget
Slide 24: Sustainability Ratings Recognition
Sustainability Ratings Recognition Highly rated by multiple agencies improved ratings by publishing EEO-1 report and responding to CDP questionnaire FTSE #2 MSCI AA Sustainalytics #5 of Oil & Gas Oil & Gas Refining, of 117 Oil & Gas Pipelines subsector Marketing, Transportation Storage & Transportat
Slide 25: Contract Strategy Insulates Cash Flow Through Commodity Cycles
Contract Strategy Insulates Cash Flow Through Commodity Cycles Structure Long-Term Contracts That Minimize Price & Volume Volatility Take-or-pay or hedged Fee-based Commodity- Avg. remaining 2024B Total Adjusted Volumes & price are Price is fixed, contract life Segment EBDA: contractually fixed volu
Slide 26: 2024 Budget Sensitivities
2024 Budget Sensitivities Limited Overall Commodity Exposure 2024B assumptions Change Potential Impact to Adjusted EBITDA & DCF (full year) Natural Gas Products Terminals CO2 Total Natural gas G&P volumes 3,934 bbtud +/- 5% $34 million $34 million Refined products volumes (gasoline, diesel & jet fue
Slide 27: Core Holding in Any Portfolio
Core Holding in Any Portfolio Generating Robust Cash Flow & Returning Significant Value to Shareholders Largest natural gas transporter in the U.S. Extensive network moving ~40% of U.S. natural gas production ~13% owned by management & board Highly aligned management with significant equity interest
Slide 28: Non-GAAP Financial Measures & Reconciliations
NON-GAAP FINANCIAL MEASURES & RECONCILIATIONS WIC Diamond Compressor Station
Slide 29: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Our non-GAAP financial measures described below should not be considered alternatives to GAAP net income attributable to Kinder Morgan, Inc. or other GAAP measures and have important limitations as analytical tools. Our computations of these non-GAAP financial meas
Slide 30: Use of Non-GAAP Financial Measures (Continued)
Use of Non-GAAP Financial Measures (Continued) Adjusted EBITDA is calculated by adjusting net income attributable to Kinder Morgan, Inc. before interest expense, income taxes, DD&A, and amortization of excess cost of equity investments (EBITDA) for Certain Items. For periods from 2017 to 2019, Adjus
Slide 31: Net Income, Adjusted Net Income Attributable to KMI, and DCF
Net Income, Adjusted Net Income Attributable to KMI, and DCF $ in millions 2024 2023 Change Budget Actual $ % Net income attributable to KMI $ 2,726 $ 2,391 $ 335 14% Certain Items Change in fair value of derivative contracts - (126) 126 100% Loss on impairment - 67 (67) (100%) Income tax Certain It
Slide 32: Reconciliation of Adjusted Net Income Attributable to Common Stock and Adjusted EPS
Reconciliation of Adjusted Net Income Attributable to Common Stock and Adjusted EPS 2016 2017 2018 2019 2020 2021 2022 2023 Net income attributable to KMI $ 708 $ 183 $ 1,609 $ 2,190 $ 119 $ 1,784 $ 2,548 $ 2,391 NCI associated with Certain Items (8) - - - - - - - Certain Items Fair value amortizati
Slide 33: Reconciliations of KMI FCF and CO2 EOR & Transport FCF
Reconciliations of KMI FCF and CO2 EOR & Transport FCF $ in millions Reconciliation of KMI FCF 2019 2020 2021 2022 2023 CFFO (GAAP) $ 4,748 $ 4,550 $ 5,708 $ 4,967 $ 6,491 Capital expenditures (GAAP)(a) (2,270) (1,707) (1,281) (1,621) (2,317) FCF 2,478 2,843 4,427 3,346 4,174 Dividends paid (GAAP) (
Slide 34: Reconciliation of Adjusted EBITDA, Normalized for Divestitures
Reconciliation of Adjusted EBITDA, Normalized for Divestitures $ in millions Reconciliation of Adjusted EBITDA, Normalized for Divestitures 2016 2017 2018 2019 2020 2021 2022 2023 Net income attributable to KMI $ 708 $ 183 $ 1,609 $ 2,190 $ 119 $ 1,784 $ 2,548 $ 2,391 NCI associated with Certain Ite
Slide 35: Reconciliation of Net Debt
Reconciliation of Net Debt $ in millions Reconciliation of Net Debt 2016 2017 2018 2019 2020 2021 2022 2023 2024B Current portion of debt $ 2,696 $ 2,828 $ 3,388 $ 2,377 $ 2,558 $ 2,646 $ 3,385 $ 4,049 $ 1,749 Total long-term debt 37,354 35,015 33,936 31,915 32,131 30,674 28,403 28,067 30,081 Debt f
Slide 36: Reconciliation of Adjusted Net Income and Adjusted EBITDA Excluding Uri
Reconciliation of Adjusted Net Income Attributable to KMI and Adjusted EBITDA Excluding Uri $ in millions 2021 2021 Actual Reconciliation of Adjusted Net income attributable to KMI and Adjusted EBITDA Excluding Uri Actual Excluding Uri Net income attributable to KMI $ 1,784 $ 932 Certain Items Fair