Kinetik (KNTK) - 2025 Q1 - Quarterly Results

Kinetik First Quarter 2025 Results This report details Kinetik's financial and operational performance for the first quarter of 2025, highlighting key achievements and future outlook Financial & Operating Highlights Kinetik reported strong Q1 2025 results with increased Adjusted EBITDA and gas volumes, affirming 2025 guidance and expanding share repurchases Q1 2025 Key Performance Indicators | Metric | Q1 2025 | YoY Change | | :--- | :--- | :--- | | Net Income | $19.3 million | - | | Adjusted EBITDA | $250.0 million | +7% | | Gas Processed Volumes | 1.80 Bcf/d | +17% | - Affirmed 2025 guidance with an Adjusted EBITDA range of $1.09 billion to $1.15 billion and a Capital Guidance range of $450 million to $540 million[4] - The Board of Directors authorized an increase to the existing share repurchase program, bringing the total authorization to $500 million[4][5] - Construction on the Kings Landing Complex is progressing, with commissioning expected to start in six weeks and operations commencing in early Q3 2025[4] Management Commentary Management highlighted a solid quarter, emphasizing proactive risk management and capital flexibility, anticipating significant Adjusted EBITDA growth in H2 2025 - Management noted that the company is well-positioned to navigate macroeconomic uncertainty through proactive procurement of steel pipe, vigilant cost control, and significant capital allocation flexibility with less than $50 million of committed growth capital in 2026 and beyond[3] - The company's earnings profile is described as a "tale of two halves," with annualized first-half 2025 Adjusted EBITDA of approximately $1 billion expected to ramp to an annualized fourth-quarter rate of approximately $1.2 billion following the commissioning of Kings Landing[3] - If current lower commodity price futures persist, full-year Adjusted EBITDA could be negatively impacted by approximately $20 million, though results are still expected to fall within the 2025 guidance range[5] - To demonstrate conviction in the company's value, senior management will receive a material percentage of their remaining 2025 salary in Kinetik common stock, with the CEO taking 100%[5] Financial Performance Kinetik reported Q1 2025 net income of $19.3 million and Adjusted EBITDA of $250.0 million, with increased revenues but lower net income due to higher expenses Key Financial Metrics Kinetik generated $157.0 million in Distributable Cash Flow and $120.4 million in Free Cash Flow in Q1 2025, with Net Debt increasing to $3.73 billion Q1 2025 Financial Metrics | Metric | Value (in thousands, except ratios) | | :--- | :--- | | Adjusted EBITDA | $250,017 | | Distributable Cash Flow | $156,981 | | Free Cash Flow | $120,393 | | Dividend Coverage Ratio | 1.3x | | Leverage Ratio | 3.4x | | Net Debt to Adjusted EBITDA Ratio | 3.8x | Net Debt Comparison | Date | Net Debt (in thousands) | | :--- | :--- | | March 31, 2025 | $3,734,955 | | December 31, 2024 | $3,526,594 | - In March, the company issued an additional $250 million of 6.625% sustainability-linked senior notes and increased its accounts receivable securitization facility to $250 million[6] Consolidated Statements of Operations Total operating revenues increased to $443.3 million in Q1 2025, but net income decreased to $19.3 million due to higher operating and interest expenses Income Statement Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total operating revenues | $443,263 | $341,394 | | Operating income | $19,280 | $26,101 | | Interest expense | ($55,714) | ($47,467) | | Net income including noncontrolling interest | $19,262 | $35,407 | | Diluted EPS | $0.05 | $0.12 | Operational & Commercial Update Kinetik is advancing key growth projects, including the Kings Landing complex and ECCC Pipeline, while securing a new long-term gas gathering agreement - Substantial construction progress was made at the Kings Landing facility, with commissioning expected to begin in six weeks and operations in early Q3 2025[10] - The ECCC Pipeline right-of-way approval process continues, with construction expected to begin in Q3 2025 and an in-service date in Q1 2026[10] - A new long-term gas gathering and processing agreement was executed with an existing large, private producer in Reeves County, Texas, with production expected to start later in 2025[10] Corporate Updates Kinetik announced its virtual Annual Meeting, the retirement of its Chief Strategy Officer, and upcoming investor conference participation - The Annual Meeting will be held virtually on May 19, 2025[10] - Anne Psencik, Chief Strategy Officer, will retire effective June 30, 2025, and will continue to consult for the Company[10] - Kinetik plans to participate in investor conferences in May, June, and July 2025[10] Non-GAAP Financial Measures & Reconciliations This section provides reconciliations of non-GAAP measures like Adjusted EBITDA, Distributable Cash Flow, and Free Cash Flow, along with their definitions and utility Q1 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Amount | | :--- | :--- | | Net income including noncontrolling interest (GAAP) | $19,262 | | Add: Interest, taxes, D&A, and other adjustments | $230,755 | | Adjusted EBITDA (non-GAAP) | $250,017 | Q1 2025 Reconciliation to DCF and FCF (in thousands) | Line Item | Amount | | :--- | :--- | | Adjusted EBITDA (non-GAAP) | $250,017 | | Adjustments (Proportionate EBITDA, interest, etc.) | ($93,036) | | Distributable cash flow (non-GAAP) | $156,981 | | Adjustments (CapEx, interest, etc.) | ($36,588) | | Free cash flow (non-GAAP) | $120,393 | - The report provides definitions for key non-GAAP measures including Adjusted EBITDA, Distributable Cash Flow (DCF), Free Cash Flow (FCF), and Net Debt, stating they are used to compare business operations and cash generation performance[25][26][27]