Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Q4 2023 Earnings Presentation
22 slides from Kinetik's earnings presentation, Feb 29, 2024
Slide 1: Fourth Quarter and Full Year 2023 Results & 2024 Guidance
Fourth Quarter and Full Year 2023 Results & 2024 Guidance February 28, 2024
Slide 2: Forward looking statements
Forward looking statements This presentation includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterization
Slide 3: What is new and a 2023 recap
What is new and a 2023 recap Successful completion of strategic organic growth projects and continued focus on financial targets Financial update Maximizing Organic growth Sustainability focus shareholder value 4Q23 and 2023 Net Income of Declared $0.75 per share Gathering system expansion First and
Slide 4: 2023 financial results
2023 financial results Achieved midpoint of Revised Adjusted EBITDA Guidance(1)(2) 2023 Adjusted EBITDA(1) ($mm) Financial Metrics ($mm) 2023 $838.8 $820 to $860 $822.1 Net Income(3) $386.5 $736.9 Pipeline Transport Adjusted EBITDA(1) $838.8 Midstream Midstream Logistics(4) $543.2 Logistics Pipeline
Slide 5: Midstream Logistics segment full-year performance
Midstream Logistics segment full-year performance Meaningful gas volume growth year-over-year Indexed Gas Volume Growth(1) Operational Performance 2022A 2023A Processed Gas Volumes (Bcfpd) 1.20 1.45 22% Kinetik processed gas volume growth has been 2x underlying Adjusted Gross Margin ($/mcf) $1.47 $1
Slide 6: 4Q23 Segment performance
4Q23 Segment performance Volume growth and pipeline projects drive Adjusted EBITDA growth despite weaker commodity prices(1) Midstream Logistics Pipeline Transportation Financial and activity results 4Q financial performance • 4Q23 Segment Adjusted EBITDA of $146.1mm (+10% YoY) (1) • 4Q23 Segment Ad
Slide 7: Significant upside opportunity across Kinetik's expansive acreage footprint
Significant upside opportunity across Kinetik’s expansive acreage footprint Infrastructure poised to support the next phase of Permian growth Lea and Eddy Counties, New Mexico • Positioned to increase market share with New Mexico gathering system expansion into Lea County Shallow Bone Spring • Inven
Slide 8: 2024 Guidance and assumptions
2024 Guidance and assumptions Key expectations and sensitivities reflected in full year Guidance 2024 Financial Guidance 2024 Commodity Price Sensitivities(4) Range Midpoint % YoY(3) % Change in Potential Impact ($mm) ($mm) Commodity Price Input Price to EBITDA(1) Adjusted EBITDA(1) $905 - $960 $933
Slide 9: 2024E Adjusted EBITDA Guidance
2024E Adjusted EBITDA Guidance(1) Recently completed organic growth projects to drive robust double-digit growth YoY(2) 2024E Adjusted EBITDA(1) ($mm) Key Drivers to 2024E Adjusted EBITDA Growth(1) $905 to $960 Midstream Logistics • Modest volume growth from existing customers ~$65 - 85 +11% YoY Gro
Slide 10: 2024E Adjusted EBITDA Guidance contributions
2024E Adjusted EBITDA Guidance contributions(1) Pipeline Transportation segment contribution expected to increase to 40% this year 2023A Adjusted EBITDA(1) 2024E Adjusted EBITDA(1) Crude Pipelines Crude Pipelines NGL Pipelines 3% NGL Pipelines 3% 5% 7% Gas Pipelines 28% Gas Pipelines 36% Pipeline 30
Slide 11: 2024E Capital Expenditures Guidance
2024E Capital Expenditures Guidance(1) Transition to a significantly reduced capital program resulting in robust Free Cash Flow generation(2) 2024E Capital Expenditures(1) ($mm) $531 Pipeline Transportation Guidance Key Drivers $287 • High-pressure gathering for New Mexico expansion • Maintenance ca
Slide 12: 2024E Capital Expenditure Guidance contributions
2024E Capital Expenditure Guidance contributions(1) Guidance reflects completion of merger integration projects 2023A Capital Expenditures(1) 2024E Capital Expenditures(1) New Mexico New Mexico 10% Well Connects 16% 14% Pipeline Transportation 54% Maintenance Maintenance 5% 22% ~25% higher in Treati
Slide 13: Debt capital structure update
Debt capital structure update Clean capital structure with prepayable debt affords substantial upside on lower interest rates Fully Unsecured Capital Structure Annual Interest Expense Sensitivity(1) +/- 1% in Secured Overnight Financing Rate $1.25bn Revolving Credit 4% Facility (NYSE: KNTK) due June
Slide 14: Our path to achieving our near-term financial priorities
Our path to achieving our near-term financial priorities Focused on Free Cash Flow generation, accelerating shareholder returns and financial flexibility(1) Kinetik’s action plan Significantly reduced 2024E capital program 3.5x leverage(2) / Investment Grade Meaningful 2024E Adjusted EBITDA growth(1
Slide 15: Our compelling value proposition
Our compelling value proposition Kinetik’s dividend yield and Free Cash Flow yield rank as one of highest among peers(1) Current Dividend Yield(2) 9% Large Cap Peer G&P Peer Kinetik 9% 9% 8% 7% 7% 7% 7% Peer Median: 7% 5% 5% 5% 4% 2% KNTK Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer
Slide 16: Kinetik at a glance
Kinetik at a glance ONE OF THE LARGEST MIDSTREAM APPROX. 35 COMPANIES IN THE DELAWARE BASIN CUSTOMERS Offices in Midland and Houston, TX INTERESTS IN OPERATES 4 MAJOR COMPLEXES EQUITY INTERESTS IN 4.7 Bcfpd & OVER 1,800 MILES OF PIPELINE LONG-HAUL PIPELINES: OF RESIDUE GAS TAKEAWAY 55.5% OF PHP 550
Slide 17: For more information:
For more information: Leadership Board of Directors Sustainability
Slide 18: IK
IK
Slide 19: Glossary of terms
Glossary of terms • Adjusted EBITDA (EBITDA) is defined as net income including non-controlling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from unconsolidated affiliates, equity in earnings from unconsolidated
Slide 20: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022(1) Net Income Including Non-controlling Interests to Adjusted EBITDA (In thousands) Net income including non-controlling interests (GAAP) $ 267,354 $ 48,462 $ 386,452 $ 250,721 Add b
Slide 21: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022(1) Distributable Cash Flow (2) (In thousands) Adjusted EBITDA (non-GAAP) $ 228,005 $ 211,110 $ 838,830 $ 772,189 Proportionate EBITDA from unconsolidated affiliates (81,139) (78,388)
Slide 22: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Net Debt(1) (In thousands) Long-term debt, net $ 3,562,809 $ 3,606,962 $ 3,625,799 $ 3,511,648 Plus: Deferred financing costs 31,510 23,038 24,201 25,352 Less: Unamortized premiums and discounts, net 3