Kinetik Holdings Inc. (KNTK)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered solid top-line and cash flow: Revenue of $443.3M, Adjusted EBITDA of $250.0M, DCF of $157.0M, and FCF of $120.4M; gas processed volumes rose 17% YoY to 1.80 Bcf/d, with Midstream Logistics margin expansion noted .
• Versus S&P Global consensus, revenue beat by ~10% ($443.3M vs $402.4M*), while Primary EPS modestly missed ($0.257* actual vs $0.289* est); GAAP diluted EPS reported at $0.05, reflecting non-comparable definitions vs S&P “Primary EPS” .
• Guidance maintained: FY25 Adjusted EBITDA $1.09–$1.15B and capital $450–$540M; management flagged a ~$20M headwind if commodity strip persists and pushed several Q4’25 well pads into 2026; H1 annualized ~ $1.0B and Q4 annualized ~ $1.2B still expected .
• Board expanded share repurchase authorization to $500M, citing undervaluation and conviction in multiyear earnings and FCF growth; quarterly dividend declared at $0.78 per share .

What Went Well and What Went Wrong

What Went Well

• Adjusted EBITDA grew 7% YoY to $250.0M on higher processed volumes and Midstream Logistics margin expansion; volumes were up sequentially on Alpine High’s return to production .
• Construction milestones: Kings Landing (220 Mmcf/d) on track with commissioning in six weeks and operations in early Q3’25; ECCC pipeline right-of-way advancing, construction expected Q3’25, in-service Q1’26 .
• Capital returns and flexibility: $500M buyback authorized; leverage ratio 3.4x per credit agreement; A/R securitization facility increased to $250M .

Quote: “Adjusted EBITDA of $250 million represents a 7% increase year-over-year driven by growth in processed gas volumes and margin expansion in the Midstream Logistics segment.” — Jamie Welch, CEO .

What Went Wrong

• Commodity strip moved lower post “Liberation Day”; management sees ~$20M FY25 EBITDA headwind if current strip holds; several well pads shifted from Q4’25 to 2026, lowering gas volume growth assumption from ~20% to “high teens” .
• Q&A tone acknowledged below-midpoint bias within guidance given commodity and activity updates; management aimed for transparency on refreshed forecast .
• Residual macro uncertainty and potential tariff impacts on input costs; while largely insulated by early steel procurement, management remains cautious on large FIDs timing .

Financial Results

Core metrics and comparison vs prior periods and estimates

Note: Values with asterisks are retrieved from S&P Global.

Margins (S&P Global definitions)

Note: Values with asterisks are retrieved from S&P Global.

Segment Adjusted EBITDA

Key KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We anticipate annualized first half 2025 Adjusted EBITDA of approximately $1 billion… annualized fourth quarter 2025 Adjusted EBITDA of approximately $1.2 billion.” — Jamie Welch, CEO .
• “Our major announced capital projects… are largely insulated from any changes to tariff rates.” — Trevor Howard, CFO .
• “There is no way this stock sits with a 4 in front of it… annualized first quarter is $1 billion of EBITDA… fourth quarter… $1.2 billion.” — Jamie Welch on buybacks/value .
• “Approximately 83% of our 2025 expected gross profit is sourced from fixed fee agreements… only 3%… unhedged.” — Trevor Howard .

Q&A Highlights

• Capital allocation and buyback cadence: Management intends to be “on the front foot” deploying the $500M authorization opportunistically, with flexibility to pursue bolt-ons/M&A while preserving IG ratings and leverage targets .
• Growth durability/10% CAGR: Drivers include contractual step-ups, Barilla Draw processing capture later in decade, Kings Landing expansion prospects, and OpEx optimization (compression/power) .
• Commodity exposure: ~83% fixed fee; mid-80s long-term fixed composition; hedge program front-end weighted with plans to extend into late 2026 .
• Activity updates: Some well pads pushed to 2026; management expects to remain within FY25 EBITDA range but below midpoint given current strip and schedules .
• EPIC Crude: Business performing well; partner distributions begin in May; expansion viewed as compelling but timing prudently deferred .

Estimates Context

• Q1 2025 Revenue beat: $443.3M actual vs $402.4M* S&P consensus; ~10.2% beat.
• Q1 2025 Primary EPS miss: $0.257* actual vs $0.289* S&P consensus; ~11% below.
• Note: Company-reported diluted EPS is $0.05 (GAAP), which is not directly comparable to S&P “Primary EPS”; use S&P metrics for estimate comparisons .

Note: Values with asterisks are retrieved from S&P Global.

Where estimates may adjust: Street models likely to reflect the ~$20M commodity headwind, pushed well pad timing into 2026, and a “high teens” gas volume growth assumption vs ~20% prior; however, Kings Landing commissioning/ramp and EPIC distributions support H2 acceleration .

Key Takeaways for Investors

• Revenue strength and cash generation offset commodity and activity headwinds; Midstream Logistics margins benefited from Alpine High normalization and Northern Delaware assets .
• Guidance intact but with a realistic below-midpoint skew given strip and activity deferrals; watch Kings Landing commissioning in late Q2/early Q3 for H2 EBITDA step-up to ~$1.2B annualized .
• Capital returns are accelerating: $500M buyback authorization plus a stable $0.78 dividend creates near-term support; management signaling frustration with valuation and willingness to act .
• Risk management improving: Proactive steel procurement, improved Gulf Coast transport balance, and strong fee/hedge mix (~mid-80s fixed fee) reduce volatility exposure .
• Structural EBITDA tailwinds: Contractual NGL re-contracting roll-offs (’26–’28), Barilla Draw processing capture later in decade, and potential OpEx reductions via compression redeployment and behind-the-meter power .
• Near-term catalysts: Kings Landing commissioning, EPIC Crude distributions beginning in May, and potential Reeves County G&P agreement ramp later in 2025 .
• Monitoring items: Waha price volatility, tariff developments, upstream drilling cadence in H2, and any updates to Kings Landing II/Power JV FIDs .

Notes:

• Values with asterisks are retrieved from S&P Global.