Executive Summary

Q2 2025 delivered revenue of $426.74M and Adjusted EBITDA of $242.93M, with processed gas volumes at 1.75 Bcf/d; management revised FY25 Adjusted EBITDA guidance to $1.03–$1.09B, citing commodity price volatility and higher electricity/compression costs .
Revenue and Primary EPS exceeded S&P Global consensus in Q2; sequential revenue declined vs Q1 while Adjusted EBITDA was modestly below Q1 as commissioning of Kings Landing ramps into late September .
Capital guidance tightened to $460–$530M (weighted to Q3) with leverage at 3.6x and net debt of $3.94B; $72.6M of buybacks in Q2 and $172.6M YTD underscore capital return .
The near-term stock narrative hinges on timely full in-service of Kings Landing, normalization of unit costs, and confidence in exiting 2025 at ~$1.2B annualized Adjusted EBITDA; guidance recalibration and commissioning milestones are likely to drive investor reaction .

What Went Well and What Went Wrong

What Went Well

Processed gas volumes grew 11% YoY with Q2 Adjusted EBITDA at $242.9M; management reiterated conviction in reaching ~$1.2B annualized Adjusted EBITDA in Q4 2025 .
Kings Landing commissioning commenced; full commercial in-service expected late September, alleviating Delaware North curtailments and enabling resumed development .
Strategic progress on ECCC pipeline construction and acid gas injection permit filing positions Kinetik to handle increasingly sour gas and unlock system flexibility .

Management quote: “Kinetik navigated both successes and challenges in the second quarter of 2025… Adjusted EBITDA of $243 million with processed gas volumes growing 11% year-over-year. That growth was partially offset by lower commodity pricing and higher operating costs.” — Jamie Welch, CEO .

What Went Wrong

FY25 Adjusted EBITDA guidance lowered ~~5% at midpoint ($1.06B) due to later Kings Landing ramp, delays in producer development timing, and commodity price headwinds (~~$20M impact vs initial assumptions) .
Unit OpEx pressures persisted: electricity and lease compression lifted unit costs, with YoY unit cost per Mcf up ~$0.10 in Q2; expected moderation as volumes come online but full normalization still pending .
Q2 GAAP EPS diluted ($0.33) declined YoY vs $0.54 in Q2 2024, reflecting cost inflation and commodity exposure despite higher revenues .

Financial Results

Core P&L and Operating Metrics (filings-based)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$385.72	$443.26	$426.74
Operating Income ($USD Millions)	$23.67	$19.28	$77.46
Net Income Incl. NCI ($USD Millions)	$16.22	$19.26	$74.42
GAAP Diluted EPS (Class A) ($)	$0.01	$0.05	$0.33
Adjusted EBITDA ($USD Millions)	$237.47	$250.02	$242.93

YoY snapshot (Q2 2025 vs Q2 2024):

Revenue: $426.74M vs $359.46M (+18.7%) .
Adjusted EBITDA: $242.93M vs $234.40M (+3.6%) .
GAAP Diluted EPS (Class A): $0.33 vs $0.54 (-38.9%) .

Segment Breakdown (Adjusted EBITDA)

Segment	Q2 2025 Adjusted EBITDA ($USD Millions)
Midstream Logistics	$151
Pipeline Transportation	$97

KPIs and Balance Sheet

KPI	Q4 2024	Q1 2025	Q2 2025
Processed Gas Volumes (Bcf/d)	1.74	1.80	1.75
Distributable Cash Flow ($USD Millions)	$155.44	$156.98	$153.30
Free Cash Flow ($USD Millions)	$32.48	$120.39	$7.88
Capital Expenditures ($USD Millions)	$107.19	$78.07	$126.27
Dividend Coverage (x)	1.3x	1.3x	1.2x
Leverage Ratio (Credit Agreement, x)	3.4x	3.4x	3.6x
Net Debt ($USD Millions)	$3,526.59	$3,734.96	$3,943.57

Estimates vs Actuals (S&P Global)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue Consensus Mean ($USD Millions)*	434.63	402.42	394.46
Revenue Actual ($USD Millions)*	385.72	443.26	426.74
Revenue Outcome	Miss	Beat	Beat
Primary EPS Consensus Mean ($)*	0.367	0.289	0.210
Primary EPS Actual ($)*	0.335	0.257	0.500
EPS Outcome	Miss	Miss	Beat

Values retrieved from S&P Global.*
Filings-based revenue actuals also shown above for cross-reference .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2025	$1.09–$1.15B (Feb; affirmed in May)	$1.03–$1.09B	Lowered
Adjusted EBITDA (annualized)	Q4 2025	~$1.2B	~$1.2B	Maintained
Capital	FY 2025	$450–$540M	$460–$530M; ~60% 2H and ~45% in Q3	Narrowed/Timing skewed to Q3
Processed Gas Volume Growth	FY 2025	~20% YoY assumption	Mid-teens	Lowered
Exit Processed Volumes	FY 2025 Exit	N/A	~2.0 Bcf/d exit rate	New directional datapoint
Dividend	Q2 2025	N/A	$0.78/sh (paid Aug 1)	Announced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Kings Landing commissioning	In construction; start-up end of June 2025	Commissioning to begin in ~6 weeks; early Q3 ops	Commissioning commenced; full in-service late Sep	Progressing; timing shifted later
Acid Gas Injection (AGI)	Power-gen JV exploration; sour gas context	N/A	AGI permit filed; expect approval by YE; sour gas mix rising	Capacity focus; differentiation
ECCC pipeline	Pipeline procurement/ROW started; H1’26 in-service target	Construction expected to begin Q3’25	Construction started; H1’26 in-service; expansion potential	Execution underway
Commodity volatility/hedging	Negative Waha events noted; exposure managed	Tariff, price uncertainty flagged; strip below assumptions	~10% decline vs original price deck; ~$20M headwind; broader hedges into 2026-27	More conservative pricing
OpEx inflation (electricity/compression)	Elevated costs; exploring power-gen JV	Spend scrutiny	Unit cost/Mcf +$0.10 YoY; owned compression, fixed-block power to mitigate	Persistent; mitigation actions
NGL recontracting	N/A	N/A	Early recontracting tailwinds possible; multiple providers competing	Potential late-2025/2026 uplift
Capital returns	Dividend increased 4%	$500M buyback authorization	$72.6M Q2 buybacks; $172.6M YTD	Active repurchases
Macro/producer activity	Exposure to Permian dynamics	Measured slowdown later in 2025	Timing shifts to 2026; rock quality strong; customer pad timing adjustments	Timing delays; demand intact

Management Commentary

Strategic focus: “The investments we have made and continue to make across our system provide a multiyear earnings tailwind… we continue to expect fourth quarter 2025 annualized Adjusted EBITDA of approximately $1,200,000,000” — Jamie Welch, CEO .
Guidance drivers: “On a weighted average basis, our revised guidance assumes a 10% decline in commodity prices versus our original guidance… representing an approximately $20,000,000 impact” — Trevor Howard, CFO .
Sour gas differentiation: “By the addition of acid gas injection at Kings Landing, we will… be amongst the biggest in New Mexico in the context of TAG capacity” — Jamie Welch .
Capital allocation: “We repurchased $173,000,000 of Kinetic Class A common stock since May… nearly 2.5% of our outstanding shares” — Trevor Howard .

Q&A Highlights

Building to ~$1.2B annualized in Q4: Confidence anchored in Kings Landing ramp, reduced curtailments, and incremental volumes; plumbing to separate sour/sweet gas took longer but increases confidence in exit trajectory .
Buybacks: Cadence linked to valuation; management views shares in low $40s as compelling; program used opportunistically .
NGL recontracting: Competitive dynamics among large operators may pull forward tailwinds; staggered expirations through decade could unlock rate improvements .
CapEx trajectory: Prioritization among KL2, AGI capacity, ECCC expansion, and potential Texas processing; reinvestment sizing around ~25–30% of EBITDA, elevated in plant-build years .
Cost mitigation: Deposits for owned compression into 2026–27; exploring behind-the-meter power; fixed-block retail power to bridge near term .
M&A appetite: Focus on organic returns; multiples have risen; inorganic only if exceptionally compelling vs KL2/AGI returns .

Estimates Context

Q2 revenue and Primary EPS beat consensus; prior two quarters mixed with revenue beats in Q1 but EPS misses in Q1 and Q4 given commodity and OpEx pressures. Estimate models should adjust for later Kings Landing in-service, mid-teens volume growth vs ~20% prior, and updated commodity exposure mix and hedges .
S&P Global consensus history shows sensitivity to pricing decks and timing of producer turn-in-lines; guidance revisions imply modest downward estimate recalibration for FY25, offset by stronger exit-rate confidence into FY26.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

Near-term setup: Commissioning risk transitions to execution risk — late September full in-service of Kings Landing is the primary catalyst for volume uplift and margin normalization .
Guidance recalibration: FY25 midpoint reduced to $1.06B; watch Q3 CapEx concentration and Q4 volume ramp to validate exit $1.2B annualized trajectory .
Cost curve: Electricity and compression cost inflation remains a headwind; owned compression and power strategies are key to medium-term margin defense .
Balance sheet and capital returns: Leverage at 3.6x with active buybacks and $0.78 dividend highlight balanced capital allocation; monitor net debt trend with Q3-heavy CapEx .
Strategic optionality: ECCC and AGI expand serviceable sour gas capacity; potential NGL recontracting tailwinds and EPIC distributions underpin midstream transportation earnings resilience .
Estimate posture: Expect near-term consensus to reflect lower FY25 EBITDA range and later volume timing; upside bias resides in execution on Kings Landing and cost mitigation, with clearer tailwinds into 2026.*
Trading implications: The stock is likely sensitive to commissioning updates, unit cost trends, and Q3 CapEx tracking; conviction should build as throughput and fee capture improve into Q4 and early 2026 .

Kinetik Holdings Inc. (KNTK)·Q2 2025 Earnings Summary