Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Q2 2024 Earnings Presentation
38 slides from Kinder Morgan's earnings presentation, Jul 17, 2024
Slide 1: Investor Presentation 2Q 2024 – May Update
INVESTOR PRESENTATION 2Q 2024 – May Update 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 to improve lives & create a better world — ~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. capac
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 ~$3.3 billion o
Slide 5: Strong Business Mix Continues to Improve
Strong Business Mix Continues to Improve BUSINESS MIX Natural Gas Transmission & Storge Natural Gas G&P CHANGES SINCE 2014 CO2 EOR Other Refined Products 24% Steady Refined Products 26% 8% CO2 EOR reduced -11% 19% 7% 11% Natural Gas G&P decreased -4% NATURAL GAS 57% 43% Natural Gas Transmission & St
Slide 6: High-Quality, Natural Gas Focused Cash Flows
High-Quality, Natural Gas Focused Cash Flows G&P Natural Gas Transportation & Storage CASH FLOW MIX(a) 12% – 57% of 2024B Total Adj. Segment EBDA Remaining KM – 89% take-or-pay cash flows(a) 36% – Average remaining contract life: Transportation & Storage 88% – ~6 years for transportation – ~4 years
Slide 7: Growing Earnings, Reducing Leverage, and Returning Meaningful Value to Shareholders
Growing Earnings, Reducing Leverage, and Returning Meaningful Value to Shareholders ADJUSTED NET DEBT / DIVIDENDS PAID & EPS ADJUSTED EBITDA SHARES REPURCHASED(b) ($ 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 8: 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 9: $3.3bn Committed Growth Capital Project Backlog
$3.3bn Committed Growth Capital Project Backlog as of 3/31/2024 Expect ~40% of Backlog Capital In Service in 2024, ~45% in 2025, and ~15% Beyond $ million TOTAL Natural Gas (excluding G&P) $1,711 96% for end-use demand (LDC, LNG, etc.) Refined Products (excluding G&P) 161 Renewable feedstocks and fu
Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: 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 17: Data Centers Could Be a Significant Source of Natural Gas Demand Growth
Data Centers Could Be a Significant Source of Natural Gas Demand Growth DEPENDABLE NATURAL GAS FIRED POWER PROJECTED INCREMENTAL NATURAL GAS DEMAND FOR ESSENTIAL FOR MUST-RUN DATA CENTERS DATA CENTERS Additional Potential capacity will upside be needed to 7+ bcfd serve peak demand PRIMARY POWER DEMA
Slide 18: 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 19: 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 20: 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 21: 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 22: 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 23: 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 24: Energy Transition Ventures (ETV) Group
Energy Transition Ventures (ETV) Group Renewable Natural Gas The group is evaluating commercial opportunities – Brought 3 facilities online in 2023 and emerging from the lower carbon energy transition expect a 4th in service in 4Q 2024 – Up to 6.4 bcf(a) of RNG production capacity once all facilitie
Slide 25: 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 Of our natural gas Reduction in MSCI score Increase in Budgeted to invest in m
Slide 26: 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 116 Oil & Gas Pipelines subsector Marketing, Transportation Storage & Transportat
Slide 27: Corporate Items and Non-GAAP Financial Measures & Reconciliations
CORPORATE ITEMS AND NON-GAAP FINANCIAL MEASURES & RECONCILIATIONS Tennessee Gas Pipeline
Slide 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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