Kinder Morgan (NYSE:KMI) saw its stock slip by 1.1% in after-market trading on Wednesday after Q3 revenues fell short of analyst expectations. However, the company’s better than expected distributable cash flow per share provided some offset.
In Q3, adjusted EBITDA increased by 3.5% year-over-year to $1.84 billion, just below the consensus estimate of $1.86 billion. Revenues declined by 25% to $3.91 billion, significantly missing the consensus projection of $4.39 billion. Despite this revenue disappointment, the distributable cash flow per share remained flat at $0.49, in line with the previous year’s quarter and beating Wall Street’s forecast by a penny.
Kinder Morgan (KMI) reported that its net debt-to-adjusted EBITDA ratio for Q3 was 4.1x, consistent with expectations and well within its long-term target of around 4.5x.
The company’s project backlog increased to $3.8 billion at the end of Q3, compared to $3.7 billion at the end of Q2. Kinder Morgan stated that it is allocating 84% of the project backlog towards lower-carbon energy investments, up from 80% in Q2, including natural gas as a substitute for higher-emitting fuels.
“We expect to finish 2023 slightly below our plan on a full-year basis, due to lower-than-expected commodity prices, delayed renewable natural gas projects, and higher pipeline integrity expense,” the company stated. “Although crude oil and natural gas prices have been below our 2023 budget assumptions so far, we continue to see strong overall business performance that partly offsets these challenges.”
A decline in contribution from the CO2 transportation segment also impacted Q3 results, driven by weaker prices of natural gas liquids and CO2, lower volumes, and higher power costs.
Despite the Q3 setback, CEO Kimberly Allen Dang expressed optimism during the post-earnings call, highlighting that “the 2024 curve is above 2023,” suggesting a positive outlook with various tailwinds expected in the business.