Kinder Morgan, Inc. (NYSE: KMI) today announced its preliminary 2024 financial projections. “We expect 5% growth across the board in 2024 in Adjusted EBITDA, distributable cash flow (DCF) and DCF per share due to growth projects in all our business segments, but most prominently in Natural Gas Pipelines and Energy Transition Ventures, as well as from contract rate escalations in our Products Pipelines and Terminals business segments,” said Kim Dang, KMI Chief Executive Officer. “It is important to note that the company’s budget does not include the recently announced acquisition of NextEra Energy Partners’ STX Midstream assets which we expect would have a positive impact on the metrics above.
“We are projecting an annualized dividend of $1.15 in 2024, constituting the 7th year in a row in which we have increased our dividend. No share repurchases are assumed in the budget, but we will have substantial capacity to transact opportunistically as our 2024 Net Debt-to-Adjusted EBITDA ratio is forecast to be 3.8 times, far below our long-term target of 4.5 times,” Dang concluded.
“We anticipate generating net income attributable to KMI per share of $1.21, up 11% compared to our year-end 2023 forecast of $1.09 per share, with Adjusted EBITDA up 5% from 2023 at $8 billion, compared to the 2023 forecast of $7.6 billion, and DCF of $5 billion and DCF per share of $2.21, both up 5% from our 2023 forecast. Expected growth in DCF and DCF per share would have been higher if not for increased sustaining capex driven by expanded regulatory requirements,” said KMI President Tom Martin.
“We expect to continue benefiting from strong natural gas market fundamentals driving growth on our existing natural gas transportation, storage, and gathering and processing assets as well as expansion opportunities. In addition, we anticipate benefitting from increased rates in our refined products businesses, demand for renewable diesel and renewable diesel feedstocks, and demand for renewable natural gas,” Martin concluded.
Below is a summary of KMI’s expectations for 2024:
- Generate $1.21 of net income attributable to KMI per share, up 11% versus our current 2023 forecast of $1.09.
- Generate $2.21 DCF per share, up 5% from the current forecast for 2023.
- Generate $8.0 billion of Adjusted EBITDA, up 5% from the 2023 forecast.
- Invest $2.3 billion in discretionary capital expenditures including expansion projects and contributions to joint ventures.
- Return additional value to shareholders in 2024 through an anticipated $1.15 per share dividend (annualized).
- End 2024 with a Net Debt-to-Adjusted EBITDA ratio of 3.8 times, well below our long-term target of approximately 4.5 times.
- The expected $2.21 of DCF per share and the 3.8 times leverage metric do not reflect the impact of possible opportunistic share repurchases, which KMI will have substantial capacity to transact on.
- The guidance does not include the acquisition of NextEra Energy Partners’ STX Midstream assets. KMI has filed for approval pursuant to Hart-Scott-Rodino and expects to close in the first quarter of 2024.
This press release includes DCF, in the aggregate and per share, Adjusted EBITDA and Net Debt, all of which are non-GAAP financial measures. For descriptions of these non-GAAP financial measures and reconciliations to the most comparable measures prepared in accordance with generally accepted accounting principles, please see “Non-GAAP Financial Measures” below.
KMI’s expectations assume interest expense flat to 2023, consistent with the forward curve, and average annual prices for West Texas Intermediate (WTI) crude oil and Henry Hub natural gas of $82 per barrel and $3.50 per MMBtu, respectively, consistent with forward pricing during the budget process. The vast majority of cash generated by KMI is fee-based and therefore is not directly exposed to commodity prices. The primary area where KMI has commodity price sensitivity is in its CO2 segment, where KMI hedges the majority of its next 12 months of oil production to minimize this sensitivity. For 2024, the company estimates that every $1 per barrel change in the average WTI crude oil price impacts DCF by approximately $8 million and each $0.10 per MMBtu change in the price of natural gas impacts DCF by approximately $1 million.
The KMI board of directors has preliminarily reviewed the 2024 budget and will take formal action on it at the January board meeting. Management will discuss the budget in detail during the company’s annual investor day conference on January 24, 2024, in Houston, Texas. The 2024 budget will be the standard by which KMI measures its performance next year and will be a factor in determining employee compensation. Kinder Morgan remains committed to transparency and will continue to publish its budget on the company’s website as presented at the investor day conference. An investor presentation updated with a brief overview of the 2024 budget has been posted to the Investor Relations page of KMI’s website.
