Kinetik (KNTK) - 2024 Q3 - Quarterly Report

Financial Performance - Total operating revenues for Q3 2024 were $396.4 million, a 20$330.3 million in Q3 2023[7] - Product revenue increased by 31.3% to $290.4 million in Q3 2024, compared to$221.3 million in Q3 2023[7] - Operating income for Q3 2024 was $72.9 million, up 89.5$38.4 million in Q3 2023[7] - Net income attributable to Class A Common Stock Shareholders was $25.8 million in Q3 2024, compared to$15.6 million in Q3 2023, representing a 65.5% increase[7] - Basic earnings per share for Q3 2024 was $0.35, up from$0.21 in Q3 2023, reflecting a 66.7% increase[7] - Net income for the nine months ended September 30, 2024, was $228,009 thousand, compared to$119,098 thousand for the same period in 2023, reflecting an increase of 91.6%[11] - Net income for the quarter ended September 30, 2024, was $25,763, a significant increase compared to the previous period[14] - For the nine months ended September 30, 2024, net income was$74,505, indicating strong performance year-to-date[15] - The company reported net income including noncontrolling interest of $83.6 million for the three months ended September 30, 2024, compared to$46.6 million for the same period in 2023, reflecting an increase of 79.5%[41] Operating Costs and Expenses - Total operating costs and expenses for Q3 2024 were $323.5 million, an increase of 10.8$291.9 million in Q3 2023[7] - Interest expense increased to $66.0 million in Q3 2024 from$45.0 million in Q3 2023[7] - General and administrative expenses increased by $21.7 million, or 30$94.8 million for the nine months ended September 30, 2024, compared to $73.1 million for the same period in 2023[178] - Depreciation and amortization expense increased by$28.0 million, or 13%, to $236.3 million for the nine months ended September 30, 2024, compared to$208.3 million for the same period in 2023[179] - Cost of sales increased by $70.7 million, or 19$444.8 million for the nine months ended September 30, 2024, compared to $374.1 million for the same period in 2023[175] - Operating expenses increased by$24.5 million, or 21%, to $143.3 million for the nine months ended September 30, 2024, compared to$118.8 million for the same period in 2023[176] Assets and Liabilities - Total assets increased to $6,860,461 thousand as of September 30, 2024, up from$6,496,873 thousand at December 31, 2023, representing a growth of 5.6%[8] - Total liabilities decreased to $3,797,986 thousand from$3,869,889 thousand, a decrease of 1.9%[8] - Long-term debt decreased to $3,279,689 thousand from$3,562,809 thousand, a reduction of 7.9%[8] - The company reported a significant increase in accounts receivable, net of allowance for credit losses, which decreased to $65,615 thousand from$215,721 thousand, a decline of 69.6%[8] - Cash and cash equivalents rose significantly to $20,438 thousand from$4,510 thousand, marking a substantial increase of 353.5%[8] Equity and Dividends - Cash dividends paid to Class A Common Stock shareholders increased to $128,428 thousand from$58,030 thousand, an increase of 121%[11] - The company declared a cash dividend of $0.78 per share on Class A Common Stock, payable on November 7, 2024[142] Acquisitions and Investments - The company completed the acquisition of Durango Permian LLC for an adjusted purchase price of approximately$845.2 million, which included $358.0 million in cash and approximately 3.8 million shares valued at$148.2 million[32] - The company made a net cash payment of $341,183 thousand for acquisitions during the nine months ended September 30, 2024[11] - The company has engaged in strategic acquisitions, including the Durango Acquisition valued at$423,200[15] - The company acquired an additional 12.5% equity interest in EPIC, increasing its total ownership to 27.5% as of September 30, 2024[153] Segment Performance - The Midstream Logistics segment accounted for over 97% of the Company's operating revenues for the three months ended September 30, 2024[131] - Midstream Logistics revenue for the three months ended September 30, 2024, was $391,331, up from$324,863 in the same period of 2023, marking an increase of approximately 20.5%[138] - For the nine months ended September 30, 2024, total segment operating revenue reached $1,097,213, an increase from$907,544 in the same period of 2023, representing a growth of approximately 21%[140] - For the nine months ended September 30, 2024, the Company reported total revenues of $380.4 million and net income of$245.0 million for the Permian Highway Pipeline LLC[64] Adjusted EBITDA - Adjusted EBITDA increased by $50.4 million, or 23$265.7 million for the three months ended September 30, 2024, compared to $215.3 million for the same period in 2023[191] - For the nine months ended September 30, 2024, Adjusted EBITDA increased by$122.8 million, or 20%, to $733.6 million compared to$610.8 million for the same period in 2023[192] - The increase in nine-month Adjusted EBITDA was driven by a $189.7 million increase in total operating revenue, partially offset by increased costs of sales and operating expenses of$120.3 million[192] Tax and Legal Matters - The effective tax rate for the three months ended September 30, 2024, was 8.99%, significantly lower than the 2.93% rate for the same period in 2023[13] - The income tax expense for the nine months ended September 30, 2024, was $21,261,000, compared to$2,030,000 for the same period in 2023[13] - The Company has no accruals for loss contingencies as of September 30, 2024, indicating a stable legal and financial position[120] - The Company is awaiting settlement of $8.0 million in outstanding vendor credits related to prior litigation, with no allowance established due to the counterparties' creditworthiness[122]