Core Viewpoint - Kinder Morgan reported strong second quarter results for fiscal 2025, with significant revenue growth and a notable increase in net income, reflecting operational strength in its core pipeline and storage businesses [1][5]. Financial Performance - Revenue reached $4.04 billion, exceeding analyst estimates by $213 million, and showing a year-over-year increase of 13.2% from $3.57 billion [2][5]. - Adjusted earnings per share (Non-GAAP) were $0.28, matching consensus estimates and representing a 12% increase from $0.25 in Q2 2024 [2]. - Net income rose to $715 million, a 24.3% increase from $575 million in the prior-year quarter [2]. - Adjusted EBITDA was $1.97 billion, a 6% increase from $1.86 billion in Q2 2024, marking a company record [2][5]. - Free cash flow declined to $1.00 billion, down 9.4% from $1.11 billion in the previous year [2]. Operational Highlights - The Natural Gas Pipelines segment saw a 10% increase in adjusted segment earnings, with transport volumes up 3% due to higher LNG and power generation deliveries [6]. - The Products Pipelines segment experienced a 3% decline in earnings despite a 2% increase in volumes, attributed to weaker commodity prices [6]. - The Terminals segment's adjusted earnings increased by 7%, supported by high capacity utilization in liquid storage at 94.4% [6]. - The CO2 and Energy Transition Ventures segment reported a 10% decrease in earnings, impacted by lower prices for CO2 and regulatory credits [6]. Project Backlog and Investments - Kinder Morgan's project backlog grew by $1.3 billion to $9.3 billion, with 93% dedicated to natural gas projects [7]. - Significant investments include the Trident, Mississippi Crossing, and South System Expansion 4 projects, aimed at meeting rising natural gas demand [7]. - The company placed $750 million worth of projects in service during the quarter [7]. Environmental and Safety Initiatives - The quarter showed progress in environmental and safety initiatives, with no major incidents reported [8]. - Renewable natural gas (RNG) production capacity increased to 6.9 billion cubic feet per year [8]. - Hedging strategies were implemented to protect commodity prices in renewables and CO2 through 2028 [8]. Dividend and Shareholder Returns - The board declared a quarterly dividend of $0.2925 per share, reflecting a 2% year-over-year increase, supported by fee-based cash flows [9][13]. Business Model and Strategic Focus - Kinder Morgan's business model relies on long-term, take-or-pay contracts, providing stable cash flows and insulation from market volatility [10]. - The company focuses on expanding natural gas capacity, growing its project backlog, and securing new contracts to meet demand growth, particularly for LNG exports [4][11]. Future Guidance - Management reaffirmed its fiscal 2025 outlook, projecting net income of $2.8 billion (up 8%), adjusted earnings per share of $1.27 (up 10%), and adjusted EBITDA of $8.3 billion (up 4%) [12]. - The guidance assumes a West Texas Intermediate oil price of $68 per barrel and a Henry Hub natural gas price of $3.00 per million British thermal units [12].

Core Viewpoint - Kinder Morgan is experiencing significant growth driven by a projected 20% increase in U.S. gas demand by 2030, leading to new expansion opportunities and a $1.3 billion investment in expansion projects during the second quarter [1][5]. Expansion Projects - The company has approved several major expansion projects, including: - Trident Phase 2, increasing capacity from 1.5 Bcf/d to 2 Bcf/d with an estimated cost of $1.8 billion, expected completion in Q1 2027 [5]. - Texas Access Project, a $112 million expansion with a projected in-service date in Q4 2028 [5]. - KinderHawk Expansion, with over $500 million expected investment [5]. - NGPL joint venture expansions totaling $264 million, expected to enter service in 2028 [6]. Growth Backlog - Kinder Morgan's growth project backlog has increased to $9.3 billion through 2030, up from $8.1 billion at the end of the previous year and $3 billion at the end of 2023 [6]. Earnings Visibility - The majority of the projects are backed by long-term contracts and government-regulated rate structures, providing significant visibility into earnings growth over the coming years [7]. Future Growth Catalysts - Analysts predict that U.S. LNG export capacity will more than double by 2030, with Kinder Morgan's contracts to supply gas to LNG facilities increasing from 8 Bcf/d to 12 Bcf/d by 2028 [8]. - Rising power demand from AI data centers, reshoring of manufacturing, and electrification is driving the need for more gas-fired power plants, with half of Kinder Morgan's backlog supporting this demand [9]. Acquisition Strategy - The company has made strategic acquisitions, such as a $640 million purchase of a natural gas gathering and processing system in North Dakota, which enhances income and allows for capital reallocation [10]. Dividend Growth - Kinder Morgan is positioned to continue increasing its dividend, having achieved eight consecutive years of growth, supported by new projects entering commercial service [11].

Core Viewpoint - Kinder Morgan is positioned for robust growth driven by an expanding natural gas pipeline network and increasing demand for natural gas resources [1][2][3] Group 1: Growth and Demand - Demand for natural gas is forecasted to grow by 20% through the end of the decade, linked to decarbonization and the expansion of natural gas infrastructure [2] - The company expects to exceed its original net income growth forecast of 8%, supported by a growing project backlog of $9.3 billion, which represents a 6% net increase [10] Group 2: Financial Performance - Kinder Morgan reported Q2 revenue of $4.04 billion, a 13.2% increase, surpassing consensus forecasts by 550 basis points, primarily due to strength in natural gas and LNG export segments [8] - The adjusted earnings of $0.28 met expectations despite the strong revenue performance [9] Group 3: Dividend and Payout - The dividend yield stands at 4.28%, with expectations for future increases, and the payout ratio is nearly 100%, although the business model supports this through long-term contracts [4][6] - The company maintains a payout ratio of 65% in FQ2 2025, indicating a sustainable dividend payment structure [6] Group 4: Balance Sheet and Credit Ratings - The balance sheet shows increased total assets and rising equity, with low leverage as long-term debt is approximately one times the equity [7] - Credit ratings have improved, with two major agencies lifting their outlook to positive, indicating potential for upgrades [7] Group 5: Analyst Ratings and Price Forecast - Analysts have a 12-month stock price forecast of $31.00, indicating an 11.15% upside, with a high forecast of $38.00 representing a 38% upside when combined with the dividend yield [11][12] - Institutional ownership exceeds 60%, with buying activity at a multi-year high, indicating strong support for the stock [13]

Group 1 - Kinder Morgan management anticipates exceeding earnings guidance due to contributions from the Outrigger acquisition, with earnings expected to rise approximately 8% from the previous fiscal year [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] Group 2 - The analysis of oil and gas companies focuses on identifying undervalued entities, examining balance sheets, competitive positions, and development prospects [1]

Core Insights - Kinder Morgan reported revenue of $4.04 billion for the quarter ended June 2025, reflecting a 13.2% increase year-over-year and surpassing the Zacks Consensus Estimate of $3.88 billion by 4.11% [1] - The company's EPS for the quarter was $0.28, consistent with the consensus estimate, compared to $0.25 in the same quarter last year [1] Financial Performance Metrics - Realized weighted average oil price was $67.60, exceeding the average estimate of $66.45 [4] - Bulk transload tonnage at terminals was 12.80 million metric tons, slightly above the estimated 12.76 million metric tons [4] - Liquids leasable capacity at terminals was 78.70 million barrels, marginally higher than the estimated 78.68 million barrels [4] - Realized weighted average NGL price was $32.08, surpassing the average estimate of $30.26 [4] - Segment EBDA for Products Pipelines was $289 million, slightly below the average estimate of $292.43 million [4] - Segment EBDA for Terminals was $300 million, significantly above the estimated $276.23 million [4] - Segment EBDA for Natural Gas Pipelines was $1.44 billion, exceeding the average estimate of $1.32 billion [4] - Segment EBDA for CO2 was $150 million, below the average estimate of $178.58 million [4] Stock Performance - Kinder Morgan's shares returned -0.3% over the past month, while the Zacks S&P 500 composite increased by 5.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Kinder Morgan's unaudited consolidated financial statements for Q2 2025 and 2024, along with detailed notes on key financial aspects [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Kinder Morgan's Q2 2025 net income attributable to KMI increased 24% to $715 million, driven by a 13% rise in total revenues to $4.04 billion Consolidated Statements of Income Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $4,042 | $3,572 | +13.2% | | **Operating Income** | $1,152 | $1,038 | +11.0% | | **Net Income Attributable to KMI** | $715 | $575 | +24.3% | | **Diluted EPS** | $0.32 | $0.26 | +23.1% | Consolidated Statements of Income Highlights (Six Months 2025 vs 2024) | Metric | Six Months 2025 (in millions) | Six Months 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $8,283 | $7,414 | +11.7% | | **Operating Income** | $2,297 | $2,261 | +1.6% | | **Net Income Attributable to KMI** | $1,432 | $1,321 | +8.4% | | **Diluted EPS** | $0.64 | $0.59 | +8.5% | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $72.37 billion, while total liabilities rose to $40.29 billion, primarily due to long-term debt Consolidated Balance Sheet Summary | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | $2,486 | $2,521 | | **Total Assets** | $72,371 | $71,407 | | **Total Current Liabilities** | $3,633 | $5,101 | | **Total Long-term Debt** | $31,871 | $29,881 | | **Total Liabilities** | $40,290 | $39,540 | | **Total Stockholders' Equity** | $32,081 | $31,867 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations slightly decreased to $2.81 billion, while investing activities significantly increased to $2.04 billion due to acquisitions and capital expenditures Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $2,811 | $2,876 | | **Net Cash Used in Investing Activities** | $(2,039) | $(1,172) | | **Net Cash Used in Financing Activities** | $(789) | $(1,676) | | **Net (Decrease) Increase in Cash** | $(17) | $28 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, recent acquisitions like Outrigger Energy for $648 million, debt structure, risk management, and ongoing litigation - On February 18, 2025, the company acquired a natural gas gathering and processing system in North Dakota from Outrigger Energy II LLC for **$648 million**[43](index=43&type=chunk) - On May 1, 2025, the company issued two series of senior notes for combined net proceeds of **$1,834 million**[52](index=52&type=chunk) - The board of directors declared a Q2 2025 cash dividend of **$0.2925 per share**, payable on August 15, 2025[57](index=57&type=chunk) - As of June 30, 2025, the company had contractually committed revenue of **$36.1 billion** to be recognized in future periods[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial performance, highlighting a 24% increase in net income, segment results, non-GAAP measures, liquidity, and capital expenditure plans - The company expects to declare dividends of **$1.17 per share** for 2025, a **2% increase** from 2024[124](index=124&type=chunk) - KMI anticipates investing **$3.0 billion** in expansion projects, acquisitions, and contributions to joint ventures during 2025[124](index=124&type=chunk) Non-GAAP Financial Measures (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Adjusted Net Income Attributable to KMI** | $619 | $548 | +13.0% | | **Adjusted EBITDA** | $1,972 | $1,858 | +6.1% | | **Adjusted EPS** | $0.28 | $0.25 | +12.0% | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Q2 2025 consolidated revenues increased 13% to $4.04 billion, driven by natural gas sales and services, with Natural Gas Pipelines leading earnings growth - Q2 2025 revenue increased by **$470 million** year-over-year, driven by a **$415 million** increase in natural gas sales and a **$119 million** increase in services revenues[146](index=146&type=chunk)[147](index=147&type=chunk) - The Natural Gas Pipelines segment's EBDA increased by **$217 million** in Q2 2025 compared to Q2 2024, driven by strong performance in its Midstream and East business units[161](index=161&type=chunk)[166](index=166&type=chunk) - The Terminals segment's EBDA grew by **$19 million** in Q2 2025, largely due to higher charter rates for its Jones Act tankers[172](index=172&type=chunk)[175](index=175&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, KMI had **$82 million** cash and **$2.8 billion** credit availability, with projected 2025 capital investments of **$4.09 billion** - As of June 30, 2025, the company had **$82 million** in cash and approximately **$2.8 billion** in available borrowing capacity under its credit facility[182](index=182&type=chunk)[187](index=187&type=chunk) - On June 16, 2025, Moody's Investor Services upgraded KMI's rating outlook to positive[186](index=186&type=chunk) Expected 2025 Capital Investments | Category | Expected 2025 (in millions) | | :--- | :--- | | **Total Sustaining Capital Investments** | $1,098 | | **Total Expansion Capital Investments** | $2,988 | | **Total Capital Investments** | $4,086 | [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposures have occurred since the 2024 Form 10-K, with further details in Note 5 of the financial statements - There have been no material changes in market risk exposures from those disclosed in the 2024 Form 10-K[209](index=209&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[210](index=210&type=chunk) - No material changes were made to the internal control over financial reporting during the second quarter of 2025[210](index=210&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference Note 9 of the financial statements, detailing various legal and environmental matters - The company refers to Note 9, "Litigation and Environmental," for details on legal proceedings[211](index=211&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K and Q1 2025 Quarterly Report - No material changes in risk factors have occurred since the last quarterly report[212](index=212&type=chunk) [Other Information](index=60&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading plan adopted by a Vice President and a restricted stock unit grant to Dax Sanders for his promotion - On May 7, 2025, a Vice President adopted a Rule 10b5-1 trading plan for the sale of up to **73,992 shares** of KMI common stock[216](index=216&type=chunk) - On July 15, 2025, Dax Sanders was granted **98,426 restricted stock units** in connection with his promotion to President, effective January 31, 2026[217](index=217&type=chunk)

Core Viewpoint - Kinder Morgan reported earnings highlighting a growing project backlog and a positive outlook driven by increasing demand for natural gas [2] Company Summary - Kinder Morgan is a midstream company that plays a significant role in the liquefied natural gas sector [2] - The company emphasized the importance of its projects in response to the rising demand for natural gas [2]

Investment Returns - The total return on the Fund's net asset value for the first half of 2025 was 2.3%, with dividends and capital gains reinvested [1] - The S&P Energy Sector and the S&P 500 Materials Sector had returns of 0.8% and 6.0%, respectively, while the benchmark (S&P 500 Energy Sector 80% and S&P 500 Materials Sector 20%) returned 1.8% [1] - The total return on the Fund's market price for the same period was 3.1% [1] Annualized Comparative Returns - For the 1-year period, the Fund's net asset value (NAV) decreased by 2.2%, while the market price increased by 1.7% [4] - Over 3 years, the NAV returned 10.7% and the market price returned 12.3% [4] - The 5-year returns were 21.2% for NAV and 22.1% for market price, while the 10-year returns were 6.1% for NAV and 6.8% for market price [4] Net Asset Value - As of June 30, 2025, the Fund's net assets were $634.74 million, down from $689.99 million a year earlier [6] - The number of shares outstanding increased to 26,888,697 from 25,453,641 [6] - The net asset value per share decreased to $23.61 from $27.11 [6] Largest Equity Portfolio Holdings - The top ten equity holdings accounted for 62.9% of net assets, with Exxon Mobil Corporation at 22.7% and Chevron Corporation at 11.5% [7] - Other significant holdings included ConocoPhilips (5.3%), Linde plc (4.7%), and EOG Resources, Inc. (3.8%) [7] Industry Weightings - The Fund's net assets were allocated primarily to the energy sector, with Integrated Oil & Gas at 35.1% and Exploration & Production at 19.8% [9] - Other allocations included Storage & Transportation (11.6%), Chemicals (13.6%), and Metals & Mining (3.6%) [10]

Core Insights - Kinder Morgan, Inc. (KMI) reported second-quarter 2025 adjusted earnings per share of 28 cents, meeting the Zacks Consensus Estimate and increasing from 25 cents year over year [1][9] - Total quarterly revenues reached $4.04 billion, surpassing the Zacks Consensus Estimate of $3.88 billion and up from $3.57 billion in the prior-year quarter, driven by strong natural gas demand and segment performance [1][2][9] Segmental Analysis - **Natural Gas Pipelines**: Adjusted earnings before depreciation, depletion, and amortization (EBDA) increased to $1.35 billion from $1.22 billion a year ago, benefiting from higher contributions from the Texas Intrastate system and Tennessee Gas Pipeline [3] - **Product Pipelines**: EBDA decreased to $289 million from $298 million year over year, primarily due to weak commodity prices and the expiration of legacy contracts, although higher transport rates and increased volumes partially offset the decline [4] - **Terminals**: Generated quarterly EBDA of $300 million, up from $281 million a year ago, due to higher rates from the Jones Act tanker fleet, partially offset by lower coal handling earnings [5] - **CO2**: EBDA was $145 million, down from $162 million year over year, attributed to higher renewable natural gas sales volumes, partially offset by lower CO2 and D3 RIN prices [5] Operational Highlights - Operations and maintenance expenses totaled $773 million, up from $741 million year over year, while total operating costs increased to $2,890 million from $2,534 million [6] - KMI's project backlog rose nearly 6% to $9.3 billion, net of about $750 million in completed projects, up from $8.8 billion at the end of the first quarter [6] Balance Sheet - As of June 30, 2025, KMI reported $82 million in cash and cash equivalents, with long-term debt amounting to $31.7 billion [7] Outlook - For 2025, Kinder Morgan projected net income of $2.8 billion (up 8% from 2024) and adjusted EPS of $1.27 (up 10%), with expected dividends of $1.17 per share (up 2% from the prior year) [8] - Anticipated budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous year's level [8] - KMI forecasts a net debt-to-adjusted EBITDA of 3.8x, excluding potential contributions from the Outrigger Energy II acquisition, assuming average 2025 prices of $68 per barrel for WTI crude and $3.00/MMBtu for Henry Hub natural gas [10]

Group 1 - Kinder Morgan reported quarterly earnings of $0.28 per share, matching the Zacks Consensus Estimate, and an increase from $0.25 per share a year ago [1] - The company posted revenues of $4.04 billion for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 4.11%, compared to $3.57 billion in the same quarter last year [2] - Kinder Morgan has not surpassed consensus EPS estimates in the last four quarters, but has topped revenue estimates twice during that period [2] Group 2 - The stock has gained about 2% since the beginning of the year, underperforming the S&P 500, which has increased by 6.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the next quarter is $0.30 on revenues of $4.02 billion, and for the current fiscal year, it is $1.29 on revenues of $16.52 billion [7] Group 3 - The Zacks Industry Rank for Oil and Gas - Production and Pipelines is in the top 22% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Kinder Morgan was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it will perform in line with the market [6]