## Kinder Morgan Falls Short of Q3 Estimates, But Still Sees Growth in 2024
Kinder Morgan Inc. (KMI), a leading energy infrastructure company, reported its third-quarter financial results on Wednesday, revealing a mixed bag of news for investors. While the company missed analyst expectations on both revenue and earnings per share, it remains optimistic about its full-year outlook, citing strong growth in its Natural Gas Pipelines and Terminals business.
Q3 Earnings: A Mixed Bag
For the third quarter, Kinder Morgan reported revenue of $3.699 billion, falling short of the consensus estimate of $3.975 billion, according to Benzinga Pro. The company also reported quarterly earnings of 25 cents per share, missing analyst estimates of 27 cents per share. Despite these misses, Kinder Morgan generated a solid $1.2 billion in cash from operations and approximately $600 million in free cash flow during the quarter. This strong cash flow enabled the company to maintain its dividend at $0.2875 per share for the third quarter, payable on November 15th.
Strong Performance in Natural Gas Pipelines and Terminals
Kim Dang, CEO of Kinder Morgan, highlighted the company’s strong performance in its Natural Gas Pipelines and Terminals business segment, noting that Adjusted EBITDA was up 2% compared to the same period last year. This growth is attributed to increased demand for natural gas transportation and storage services.
Outlook Remains Positive Despite Challenges
While Kinder Morgan’s Q3 earnings fell short of expectations, the company remains optimistic about its full-year outlook. The company had initially anticipated full-year 2024 distributable cash flow of $5 and adjusted EBITDA of $8.16 billion, both up 8% year-over-year. However, due to lower-than-budgeted commodity prices and start-up delays on its renewable natural gas (RNG) facilities, Kinder Morgan now expects its Adjusted EBITDA to be down by approximately 2% and its Adjusted EPS to be down by approximately 4% for the full year. Despite these downward revisions, the company still expects Adjusted EBITDA to be up 5% and Adjusted EPS to be up 9% for the full year compared to 2023.
Looking Ahead: New Opportunities
Kinder Morgan is actively pursuing new opportunities in the natural gas sector, particularly related to the growing demand for natural gas in electric generation. The company is actively engaged in discussions for new projects that could cater to the increasing demand for natural gas for applications like coal conversions at power plants, artificial intelligence operations, cryptocurrency mining, data centers, and industrial re-shoring. This pipeline of potential projects represents a significant opportunity for the company, potentially adding more than 5 billion cubic feet per day (Bcf/d) of new demand.
Stock Performance
Prior to the earnings release, Kinder Morgan shares had gained approximately 41% year-to-date. Following the announcement, the stock dropped 3.81% after hours, closing at $23.98 per share at the time of publication. This drop reflects investor sentiment towards the company’s missed earnings estimates. However, the company’s positive outlook and focus on growth in the natural gas sector may provide some support to its stock in the long term.
Overall, Kinder Morgan’s Q3 earnings report presented a mixed picture for investors. While the company missed expectations in the short term, its strong performance in the Natural Gas Pipelines and Terminals segment, combined with its positive long-term outlook and focus on new growth opportunities, offer reasons for cautious optimism.