Kinder Morgan's 2023 Financial Performance and 2024 Outlook

2024-01-20

Kinder Morgan, a leading energy infrastructure company, recently announced its earnings results for the fourth quarter of 2023. The company's earnings per share (EPS) came in at $0.28, falling short of expectations by $0.01. Additionally, revenue for the quarter stood at $4.04 billion, reflecting an 11.81% decline compared to the previous year and missing expectations by $357.81 million.

During the earnings call, key participants, including Rich Kinder, Executive Chairman, Kim Dang, CEO, and other company executives, discussed the financial outlook for 2024. They projected robust growth in EBITDA, EPS, and DCF per share. Kinder Morgan's strategy of expanding assets through expansion CapEx and acquisitions, primarily in the Natural Gas segment, has proven beneficial to the company's bottom line.

The company also highlighted various opportunities within its system, particularly the growth in natural gas production and demand driven by LNG exports and exports to Mexico. Notably, gathering volumes experienced a significant increase of 14% compared to Q3 2023 and a 19% increase over the full year of 2022. Additionally, Kinder Morgan observed a rise in refined product volumes, primarily due to an increase in jet fuel demand.

Kinder Morgan's financial performance in 2023 slightly missed the budget, with a 1% decrease in DCF per share and a 2% decrease in EBITDA. This decline was primarily attributed to lower commodity prices. However, the company successfully completed the NextEra South Texas acquisition, valued at approximately $1.8 billion, just before the end of 2023. This acquisition seamlessly integrates into Kinder Morgan's existing Texas system, serving the Gulf Coast and Mexico demand markets.

Looking ahead, Kinder Morgan has projected a budget for 2024 that includes a 15% growth in earnings per share and an 8% growth in DCF per share. The budget assumes commodity prices of $82 per barrel for WTI and $3.50 for Henry Hub natural gas. The company is confident in its ability to allocate capital and plans to spend at the higher end of the $1 billion to $2 billion per year discretionary CapEx range over the next few years.

Overall, Kinder Morgan remains optimistic about its future prospects, with a strong focus on capital allocation, growth opportunities, and risk management. The company continues to adapt to market conditions and leverage its assets to drive growth in the energy infrastructure sector.