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KM

KINDER MORGAN, INC. (KMI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered broad-based strength: GAAP EPS $0.32 (+23% YoY), Adjusted EPS $0.28 (+12% YoY), and record Adjusted EBITDA $1.972B (+6% YoY), driven by Natural Gas Pipelines and Terminals with healthy FCF generation ($1.002B) and leverage at 4.0x Net Debt/Adj EBITDA .
  • Backlog expanded to $9.3B (+6% QoQ), with ~93% in natural gas; ~$750M placed in service; notable expansions include Trident (to 2.0 Bcf/d), Texas Access, NGPL power projects, and the second phase of Evangeline Pass now in service .
  • Management reaffirmed 2025 budget (Adj EPS $1.27; Adj EBITDA $8.3B) and expects to exceed by at least Outrigger contributions; CFO signaled year-end leverage trending to ~3.9x, aided by tax reform; dividend maintained at $1.17 annualized (+2% YoY) .
  • Tariffs remain a watchpoint but management estimates ~1% project cost impact on larger projects and sees permitting tailwinds (FERC Order 871 waiver requests, prior notice limit raised), supporting on-time/on-budget delivery and incremental opportunity set (LNG and Power) .

What Went Well and What Went Wrong

What Went Well

  • Natural Gas Pipelines and Terminals outperformed YoY; CEO: “record Adjusted EBITDA… increased financial contributions from our Natural Gas Pipelines and Terminals” .
  • LNG-linked growth accelerating: Trident expanded to 2.0 Bcf/d; long-term contracted paths to move ~8 Bcf/d rising to ~12 Bcf/d by 2028; management framed U.S. LNG demand growth and KMI’s ~40% feedgas share as multi-decade tailwind .
  • Balance sheet and cash generation strong: Q2 CFO $1.649B, FCF $1.002B; Net Debt/Adj EBITDA at 4.0x and Moody’s/S&P moved outlooks to positive, tightening spreads .

Quotes:

  • Executive Chairman: “We are truly in an age of American global energy leadership… the world’s top exporter of LNG since 2023” .
  • CEO: “Our project backlog increased from $8.8 billion to $9.3 billion… underpinned by long-term contracts and have attractive returns” .

What Went Wrong

  • Products Pipelines contributions declined YoY despite volume gains, pressured by weak commodity prices and expiration of legacy contracts ahead of Double H conversion; partially offset by higher rates/volumes .
  • CO2 segment earnings declined YoY on lower CO2 and D3 RIN prices (offset by higher RNG volumes), and lower oil volumes vs plan for 2025 .
  • Gathering volumes down 6% YoY (Haynesville most impacted) and -1% sequentially; management expects recovery but acknowledged late-2024 price-driven producer slowdown and 2025 average below budget .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenues ($USD Millions)$3,987 $4,241 $4,042
Net Income ($USD Millions)$667 $717 $715
GAAP EPS ($)$0.30 $0.32 $0.32
Adjusted EPS ($)$0.32 $0.34 $0.28
Adjusted EBITDA ($USD Millions)$2,063 $2,157 $1,972
EBITDA Margin (%)41.94%*41.38%*43.74%*
Net Income Margin (%)16.73%*16.91%*17.69%*

Values with asterisk retrieved from S&P Global.

Segment performance (EBDA/Adjusted Segment EBDA, $USD Millions):

SegmentQ2 2024Q2 2025
Natural Gas Pipelines Adjusted Segment EBDA$1,223 $1,347
Products Pipelines Adjusted Segment EBDA$298 $289
Terminals Segment EBDA$281 $300
CO2 Adjusted Segment EBDA$162 $145

Selected KPIs:

KPIQ2 2024Q2 2025
Natural Gas Transport Volumes (BBtu/d)43,123 44,585
Gathering Volumes (BBtu/d)4,203 3,931
Total Refined Product Volumes (MBbl/d)1,676 1,710
Crude & Condensate (MBbl/d)493 503
Liquids Leased Capacity (%)94.3% 94.4%
Bulk Transload (MM tons)14.1 12.8
RNG Sales Volumes (BBtu/d)9 12

Guidance Changes

MetricPeriodPrevious Guidance (Q1)Current Guidance (Q2)Change
Net Income (GAAP)FY 2025$2.8B $2.8B; expect to exceed by at least Outrigger contribution Maintained; upside from Outrigger
Adjusted EPSFY 2025$1.27 $1.27; expect to exceed by Outrigger Maintained; upside
Adjusted EBITDAFY 2025$8.3B $8.3B; expect to exceed by Outrigger Maintained; upside
Net Debt/Adj EBITDAFY 2025 YE3.8x 3.8x budget; CFO expects ~3.9x by YE Slightly higher vs budget in CFO remark
Dividends per ShareFY 2025$1.17 $1.17; Q2 declared $0.2925 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
LNG demand and feedgasAnnounced Trident, MSX; highlighted LNG power/data center demand U.S. LNG demand set to more than double; KMI moves ~40% feedgas; long-term contracts ~8 Bcf/d → ~12 Bcf/d by 2028 Strengthening; contracts expanding
Power generation demandPursuing >5 Bcf/d; Houston-area expansion agreements ~50% of backlog serving power; broad utility demand across many states Expanding breadth
Tariffs/macroEarly mitigation steps; limited exposure Est. ~1% cost impact on large projects; procurement strategies in place Manageable with mitigation
Regulatory/permittingLarge projects advancing (MSX, SSE4) FERC Order 871 waiver requests; prior notice limit +50% accelerates smaller projects Tailwind improving timelines
Data center/AIEmerging opportunity cited Focus on utility-led solutions; exploring behind-the-meter partnerships/sites Building framework; early stage
CO2/RNGRNG capacity growth (Autumn Hills in service) CO2 earnings down on pricing; RNG volumes higher Mixed: RNG up, CO2 pressured

Management Commentary

  • Rich Kinder: “LNG feed gas demand in America will… more than double by 2030… a real positive for Kinder Morgan… we move about 40% of all the feed gas” .
  • CEO Kim Dang: “Our project backlog increased… added $1.3 billion in new projects and placed approximately $750 million of projects in service… all underpinned by long-term contracts and have attractive returns” .
  • President Tom Martin: “Transport volumes were up 3%… driven by LNG deliveries on TGP and Texas Intrastate;… Jones Act tanker fleet is fully leased through 2026, 97% through 2027” .
  • CFO David Michels: “Expect to end the year with net debt to adjusted EBITDA that rounds up to 3.9x… tracking to beat our budget… meaningful cash flow benefits from tax reform” .

Q&A Highlights

  • Competitive wins and project delivery: Management emphasized footprint advantages, execution reliability, and customer service in securing projects .
  • Copper State Connector (AZ): Large-scale opportunity ($4–$5B) under competitive/tariff constraints; disciplined returns required .
  • Behind-the-meter/data centers: Utility-led activity dominates; KMI exploring partner-consortium models for speed-to-market solutions .
  • Haynesville KinderHawk: ~$500M capex to unlock hydraulics; facilities by end of Q4 next year; serving projected basin production doubling by 2034 .
  • Permian egress and recontracting risk: GCX/PHP rates attractive; network integration and conservative economics (assumed step-downs) lower risk .
  • Regulatory acceleration: FERC prior notice limit now $61M; waiver requests for Order 871 could pull-forward timelines on major projects .

Estimates Context

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD)$4,135.6M$4,025.95M$3,828.58M
Revenue Actual ($USD)$3,987M $4,241M $4,042M
Primary EPS Consensus Mean ($)$0.32885$0.35725$0.27776
EPS Actual (Adjusted) ($)$0.32 $0.34 $0.28
EPS Actual (GAAP) ($)$0.30 $0.32 $0.32

Values in the consensus rows retrieved from S&P Global. KMI reported GAAP EPS and Adjusted EPS; consensus Primary EPS appears aligned to Adjusted EPS. In Q2 2025, revenue and Adjusted EPS were modest beats versus consensus, while GAAP EPS exceeded Adjusted due to Certain Items (hedge mark-to-market) .

Key Takeaways for Investors

  • Backlog growth and LNG/power mix are clear catalysts; the company is adding and scaling high-return, long-term contracted projects that support multi-year EBITDA expansion .
  • Permitting and policy tailwinds (Order 871 waiver, prior notice limit increase) can accelerate schedules, improving cash flow timing and ROIC realization .
  • Tariffs remain a manageable headwind (~1% on large projects) given proactive procurement and domestic steel capacity; monitor policy shifts but risk appears contained .
  • Products Pipelines and CO2 face transitory pressure; offset by rate/volume actions and RNG growth; overall portfolio resilience maintained .
  • Leverage trending to ~3.9x despite organic capex and Outrigger; dividend coverage supported by robust CFO/FCF; spreads tightening with positive outlooks from Moody’s/S&P .
  • Near-term trading: modest beat on Adjusted EPS/revenue and record Adjusted EBITDA coupled with backlog adds should support sentiment; watch for incremental LNG FIDs and power utility awards as catalysts .
  • Medium-term thesis: KMI’s fee-based, take-or-pay model levered to secular U.S. LNG/power demand, wide network optionality, and disciplined capital allocation underpins durable EPS/EBITDA growth and improving balance sheet quality .