Kinetik (US:KNTK)2025-05-08 21:18Financial Performance - Total operating revenues for Q1 2025 reached $443.3 million, a 30% increase from $341.4 million in Q1 2024[15] - Service revenue increased to $127.9 million, up 25% from $102.2 million year-over-year[15] - Product revenue rose to $312.5 million, representing a 32% increase compared to $236.6 million in the same period last year[15] - Operating income decreased to $19.3 million, down 26% from $26.1 million in Q1 2024[15] - Net income attributable to Class A Common Stock Shareholders was $6.1 million, a decline of 47% from $11.6 million in Q1 2024[15] - Net income including noncontrolling interest decreased by 46% to $19.3 million compared to $35.4 million for the same period in 2024[140] - Adjusted EBITDA increased by $16.5 million, or 7%, to $250.0 million for the three months ended March 31, 2025, compared to $233.6 million for the same period in 2024[154] Cash and Assets - Cash and cash equivalents increased to $8.8 million, up from $3.6 million at the end of 2024[18] - Total assets grew to $7.0 billion, an increase from $6.8 billion at the end of 2024[18] - Total long-term debt as of March 31, 2025, was $3,595.0 million, an increase from $3,390.0 million as of December 31, 2024[61] - The Company had available committed borrowing capacity of $693.6 million as of March 31, 2025, compared to $657.2 million at the end of 2024[180] Investments and Acquisitions - The Durango Acquisition, completed on June 24, 2024, had an adjusted purchase price of approximately $785.7 million, allowing the company to expand its footprint into New Mexico and the Northern Delaware Basin[42] - The company completed the Barilla Draw Acquisition for a total of $194.1 million, enhancing its natural gas and crude gathering capabilities[136] - The company plans to issue 7.7 million shares of Class C Common Stock as deferred consideration on July 1, 2025[25] Debt and Interest - Interest expense increased by $8.2 million, or 17%, to $55.7 million, primarily due to decreased gains on interest rate swaps[148] - The fair value of the Company's consolidated debt was $3.74 billion as of March 31, 2025, up from $3.52 billion as of December 31, 2024[69] - A 1.0% increase in interest rates would result in an annualized interest expense change of approximately $16.9 million based on outstanding borrowings[186] Revenue Segments - Total segment operating revenue for the Midstream Logistics segment was $440.86 million, contributing to a consolidated revenue of $443.26 million for the three months ended March 31, 2025[115] - For the three months ended March 31, 2025, the Company reported revenues of $128.3 million from Permian Highway, $59.5 million from Breviloba, and $102.4 million from EPIC, compared to $126.2 million, $50.9 million, and $84.1 million respectively in the same period of 2024[58] Expenses - Cost of sales (excluding depreciation and amortization) increased by $69.7 million, or 45%, to $223.4 million, driven by higher NGL and condensate volumes sold[145] - Operating expenses rose by $20.2 million, or 47%, to $63.6 million, with significant contributions from the Durango and Barilla Draw acquisitions[146] - Depreciation and amortization expenses increased by $19.1 million, or 26%, to $92.7 million, largely due to the Durango and Barilla Draw acquisitions[147] Equity and Dividends - Common Unit limited partners received distributions totaling $70.52 million during the period[24] - Kinetik Holdings Inc. declared dividends on Class A Common Stock at a rate of $0.75 per share, amounting to $43.20 million[24] - During the quarter ended March 31, 2025, the Company made cash dividend payments of $123.2 million, with $0.4 million reinvested in shares of Class A Common Stock[74] Market and Economic Conditions - The annual inflation rate in the U.S. was 2.4% as of March 2025, with the Federal Open Market Committee maintaining the federal funds rate target range at 4.25% - 4.50%[139] - The U.S. government imposed a 25% tariff on steel imports on March 12, 2025, which may adversely affect the Company's construction costs[196] Strategic Initiatives - Kinetik Holdings provided an optimistic outlook, projecting a revenue growth of 10-12% for the next quarter[212] - The company is investing in new product development, with a budget allocation of $30 million for R&D in the upcoming fiscal year[212] - Kinetik is expanding its market presence, targeting a 25% increase in market share through strategic partnerships and acquisitions[212] - Kinetik is implementing new sustainability initiatives, including the issuance of 6.625% Sustainability-Linked Senior Notes to fund green projects[212] - The company emphasized the importance of technology upgrades, with a focus on enhancing user experience and operational efficiency[212]