Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Q3 2024 Earnings Presentation
36 slides from Kinder Morgan's earnings presentation, Oct 16, 2024
Slide 1: Investor Presentation 3Q 2024
INVESTOR PRESENTATION 3Q 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 U.S. natural gas transmission network Delivering Energy. Improving Lives — ~66,000 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 Largest U.S. indepen
Slide 4: How Kinder Morgan Drives Shareholder Value
How Kinder Morgan Drives Shareholder Value ~64% of KM cash flows(a) 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 ~$5.2 billion o
Slide 5: Strong Business Mix Continues to Improve
Strong Business Mix Continues to Improve BUSINESS MIX Natural Gas Transmission & Storge Natural Gas G&P CHANGES SINCE 2014 CO2 EOR Other Refined Products 24% Steady Refined Products 26% 8% CO2 EOR reduced -11% 19% 7% 11% Natural Gas G&P decreased -4% NATURAL GAS 57% 43% Natural Gas Transmission & St
Slide 6: High-Quality, Natural Gas Focused Cash Flows
High-Quality, Natural Gas Focused Cash Flows G&P Natural Gas Transportation & Storage CASH FLOW MIX(a) 12% – 57% of 2024B Total Adj. Segment EBDA Remaining KM – 89% take-or-pay cash flows(a) 36% – Average remaining contract life: Transportation & Storage 88% – ~6 years for transportation – ~4 years
Slide 7: Growing Earnings, Reducing Leverage, and Returning Value to Shareholders
Growing Earnings, Reducing Leverage, and Returning Meaningful Value to Shareholders ADJUSTED NET DEBT / DIVIDENDS PAID & EPS ADJUSTED EBITDA SHARES REPURCHASED(b) ($ 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 8: $5.2bn Committed Growth Capital Project Backlog
$5.2bn Committed Growth Capital Project Backlog as of 6/30/2024 Around Half of Backlog Capital in Service Between 2024 & 2025 $ million TOTAL Added $1.7 Billion(a) SSE4 Project Natural Gas (excluding G&P) $3,535 Mostly for LNG, Power, and LDC demand ~1.2 bcfd expansion supported by 20-year Other 240
Slide 9: Robust Macro Environment Gives Confidence in ~$2 Billion Annual Growth Capital Spend
Robust Macro Environment Gives Confidence in ~$2 Billion Annual Growth Capital Spend REFINED PRODUCTS NATURAL GAS ‒ Infrastructure for renewable feedstocks & fuels ‒ LNG Exports (Gulf Coast & West Coast) ‒ Supply short Southeast markets ‒ Exports to Mexico (Gulf Coast & West Coast) ‒ Storage ETV GRO
Slide 10: 2024 Budget Highlights
2024 Budget Highlights Expect to Be In-Line With or Within 1-2% Below Budget for the Full Year 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. 202
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 Demand has grown over 120 110 30 bcfd since 2015… +19% Increase in total U.S. demand …and is forecasted to increase an additional 20 bcfd by the 100 end of the decade +92% 90 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 128 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 +18 bcfd 4 Permian +8 bcfd of associated gas growth 1 Supply grows as oil production increases & GORs rise 4 Vital to supplying West Coast, Gulf Coast, and Mexico 4 3 Haynesville +7 bcfd of growth 2 Abu
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 +15 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 FEEDGAS in bcfd KM has long-term contracts to move ~7 bcfd to facilities today & ~10 bcfd by the end of 2025 Pursuing ~13 bcfd of additional opportunities 2
Slide 16: Data Centers Drive Additional Natural Gas Demand
Data Centers Drive Additional Natural Gas Demand PROJECTED INCREMENTAL AI-DRIVEN DATA CENTERS LEADING TO SURGE IN POWER DEMAND NATURAL GAS DEMAND FOR DATA CENTERS Potential Upside 10+ bcfd U.S. electricity demand Coal plants continue Dependable natural gas projected to increase to be retired at a fi
Slide 17: Extensive Natural Gas Storage Footprint Provides Valuable Supply
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 18: 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 19: Converting West Coast Assets to Handle Additional Renewable Fuels
Converting Product Segment’s West Coast Assets to Handle Additional Renewable Fuels 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 ‒ Increased biodiesel blend capabilit
Slide 20: 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 21: 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 22: CO2 Segment Overview
CO2 Segment Overview World Class, Fully-Integrated Assets Consistently Generating Robust Free Cash Flow Interest in 3 oil CO2 pipelines CO2 EOR & TRANSPORT FREE CASH FLOW $ millions fields with 8.8 CO2 source fields billion barrels Oil fields FCF Capex Acquisitions Adj. Segment EBDA Crude pipelines
Slide 23: 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 in 4Q 2024 – Up to 6.4 bcf(a) of RNG production capacity once all facilitie
Slide 24: Committed to Being a Good Steward
Committed to Being a Good Steward Reduce & Investing in Avoid Methane Leak Safety Continuous Diversity & Lower Carbon Emissions Detection Culture Improvement Inclusion Fuels 0 $ ~8% 100% 42% BB → AA 33% $1.9bn reduction in of our natural gas reduction in MSCI score total gender budgeted to invest in
Slide 25: Sustainability Ratings Recognition
Sustainability Ratings Recognition Highly rated by multiple agencies FTSE #2 MSCI AA Sustainalytics #3 of Oil & Gas Oil & Gas Refining, of 113 Oil & Gas Pipelines subsector Marketing, Transportation Storage and Transportation & & Storage Industry #3 of 203 Refiners & Pipelines Refinitiv #6 S&P Globa
Slide 26: Corporate Items and Non-GAAP Financial Measures & Reconciliations
CORPORATE ITEMS AND NON-GAAP FINANCIAL MEASURES & RECONCILIATIONS Tennessee Gas Pipeline
Slide 27: 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 28: 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 29: 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 30: 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 31: Reconciliation of Segment EBDA to Adjusted Segment EBDA
Reconciliation of Segment EBDA to Adjusted Segment EBDA $ in millions 2024 2014 2024 2014 (a) (a) Segment EBDA Budget Actual Segment EBDA Budget Actual Natural Gas Pipelines Segment EBDA 5,524 4,327 CO2 Segment EBDA 849 1,248 Certain Items (b) Certain Items (b) Contract early termination revenue - (
Slide 32: Reconciliation of Adjusted Net Income 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