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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kinetik Holdings Inc | NYSE:KNTK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.16 | 2.91% | 40.99 | 41.03 | 39.82 | 40.26 | 912,996 | 01:00:00 |
Kinetik Holdings Inc. (NYSE: KNTK) (“Kinetik” or the “Company”) today reported financial results for the quarter ended March 31, 2024.
First Quarter 2024 Results and Commentary
For the three months ended March 31, 2024, Kinetik processed natural gas volumes of 1.53 Bcf/d and reported net income of $35.4 million.
Kinetik generated Adjusted EBITDA1 of $233.6 million, Distributable Cash Flow1 of $154.5 million, and Free Cash Flow1 of $107.5 million for the three months ended March 31, 2024.
“Kinetik has had a strong start to 2024,” said Jamie Welch, Kinetik’s President & Chief Executive Officer. “In particular, our first quarter results exceeded our internal forecast used to set our full year guidance in February. Adjusted EBITDA1 increased 25% year-over-year reflecting underlying volume growth and contributions from the New Mexico Expansion, Permian Highway Pipeline Expansion, and Delaware Link. With all three of our 2023 major growth capital projects completed and in-service, we can offer producers an integrated wellhead-to-Gulf Coast solution that provides them with reliability and access to premium pricing markets and generates enhanced marketing opportunities for Kinetik, especially in the current commodity price environment where Waha gas daily prices averaged negative $0.72 per MMBtu for the months of March and April. Many of our customers benefited significantly by having their March and April natural gas volumes sold at Gulf Coast pricing.”
“Kinetik has one of the best operational run times in the Permian Basin, and we continue to invest in our assets to maintain this reliability and enhance our efficiencies. The operations team did a great job in the quarter completing the planned molecular sieve bed change outs at several processing facilities, minimizing the amount of downtime required while maintaining flow assurance to our customers. In April, we completed our system-wide amine treating project with the installation at Pecos Bend. With these treating capabilities, we can now offer enhanced blending and treating services to our customers which enables us to accept a broader range of gas quality, resulting in increased revenue.”
“We remain focused on generating value for shareholders. In the first quarter, we facilitated a secondary offering for Apache’s remaining ownership stake in Kinetik. That transaction substantially increased the public float to almost $1.5 billion and our average daily trading volume has increased significantly since the transaction closed. We were pleased to see such high investor demand and interest in the Kinetik story.”
Financial
Selected Key Metrics:
Three Months Ended March 31,
2024
(In thousands, except ratios)
Net income including noncontrolling interest4
$
35,407
Adjusted EBITDA1
$
233,559
Distributable Cash Flow1
$
154,526
Dividend Coverage Ratio1,5
1.3x
Capital Expenditures6
$
60,772
Free Cash Flow1
$
107,511
Leverage Ratio1,2
3.8x
Net Debt to Adjusted EBITDA Ratio1,3
4.0x
Common stock issued and outstanding7
153,655
March 31, 2024
December 31, 2023
(In thousands)
Net Debt1,8
$
3,537,244
$
3,589,490
Operational
Governance and Sustainability
Upcoming Tour Dates
Kinetik plans to participate at the following upcoming conferences and events:
Investor Presentation
An updated investor presentation will be available under Events and Presentations in the Investors section of the Company’s website at www.ir.kinetik.com.
Conference Call and Webcast
Kinetik will host its first quarter 2024 results conference call on Thursday, May 9, 2024 at 8:00 am Central Daylight Time (9:00 am Eastern Daylight Time) to discuss first quarter results. To access a live webcast of the conference call, please visit the Investors section of Kinetik’s website at www.ir.kinetik.com. A replay of the conference call also will be available on the website following the call.
About Kinetik Holdings Inc.
Kinetik is a fully integrated, pure-play, Permian-to-Gulf Coast midstream C-corporation operating in the Delaware Basin. Kinetik is headquartered in Midland, Texas and has a significant presence in Houston, Texas. Kinetik provides comprehensive gathering, transportation, compression, processing and treating services for companies that produce natural gas, natural gas liquids, crude oil and water. Kinetik posts announcements, operational updates, investor information and press releases on its website, www.kinetik.com.
Forward-looking statements
This news release includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “seeks,” “possible,” “potential,” “predict,” “project,” “prospects,” “guidance,” “outlook,” “should,” “would,” “will,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about the Company’s future business strategy and other plans, expectations, and objectives for the Company’s operations, including statements about strategy, synergies, sustainability goals and initiatives, portfolio monetization opportunities, expansion projects and future operations, and financial guidance; the Company’s projected dividend amounts and the timing thereof; and the Company’s leverage and financial profile. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement whether as a result of new information, future development, or otherwise, except as may be required by law.
Additional information
Additional information follows, including a reconciliation of Adjusted EBITDA, Distributable Cash Flow, Free Cash Flow, and Net Debt (non-GAAP financial measures) to the GAAP measures.
Non-GAAP financial measures
Kinetik’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted EBITDA, Distributable Cash Flow, Free Cash Flow, Dividend Coverage Ratio, Net Debt and Leverage Ratio are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated. See “Reconciliation of GAAP to Non-GAAP Measures” elsewhere in this news release.
KINETIK HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
2024
2023
(In thousands, except per share data)
Operating revenues:
Service revenue
$
102,195
$
103,425
Product revenue
236,567
173,824
Other revenue
2,632
3,791
Total operating revenues
341,394
281,040
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization shown separately below) (1)
153,687
115,877
Operating expenses
43,406
35,973
Ad valorem taxes
6,292
5,458
General and administrative expenses
34,136
27,511
Depreciation and amortization expenses
73,606
68,854
Loss on disposal of assets
4,166
102
Total operating costs and expenses
315,293
253,775
Operating income
26,101
27,265
Other income (expense):
Interest and other income
91
294
Interest expense
(47,467
)
(69,308
)
Equity in earnings of unconsolidated affiliates
60,469
46,464
Total other income (expense), net
13,093
(22,550
)
Income before income taxes
39,194
4,715
Income tax expense
3,787
416
Net income including noncontrolling interest
35,407
4,299
Net income attributable to Common Unit limited partners
23,857
2,863
Net income attributable to Class A Common Stock Shareholders
$
11,550
$
1,436
Net income attributable to Class A Common Shareholders, per share
Basic
$
0.12
$
(0.06
)
Diluted
$
0.12
$
(0.06
)
Weighted-average shares(2)
Basic
57,869
47,612
Diluted
58,392
47,825
(1) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $44.5 million and $30.5 million for the three months ended March 31, 2024 and 2023, respectively, for certain volumes where we act as principal.
(2) Weighted average Class A common shares have been retrospectively restated due to bonus effect of Class A common shares issued under the Reinvestment Agreement for all periods presented in which the Class A common shares were outstanding.
KINETIK HOLDINGS INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
Three Months Ended
March 31,
2024
2023
(In thousands)
Net Income Including Noncontrolling Interest to Adjusted EBITDA
Net income including noncontrolling interest (GAAP)
$
35,407
$
4,299
Add back:
Interest expense
47,467
69,308
Income tax expense
3,787
416
Depreciation and amortization
73,606
68,854
Amortization of contract costs
1,655
1,655
Proportionate EBITDA from unconsolidated affiliates
88,402
71,867
Share-based compensation
22,561
17,540
Loss on disposal of assets
4,166
102
Hedging activities loss (gain)
15,088
(4,987
)
Integration costs
41
925
Acquisition transaction costs
—
268
Other one-time costs or amortization
2,425
3,748
Deduct:
Interest income
577
—
Warrant valuation adjustment
—
44
Equity income from unconsolidated affiliates
60,469
46,464
Adjusted EBITDA(1) (non-GAAP)
$
233,559
$
187,487
Distributable Cash Flow(2)
Adjusted EBITDA (non-GAAP)
$
233,559
$
187,487
Proportionate EBITDA from unconsolidated affiliates
(88,402
)
(71,867
)
Returns on invested capital from unconsolidated affiliates
77,213
67,764
Interest expense
(47,467
)
(69,308
)
Unrealized (gain) loss on interest rate derivatives
(9,377
)
17,189
Maintenance capital expenditures
(11,000
)
(4,560
)
Distributable cash flow (non-GAAP)
$
154,526
$
126,705
Free Cash Flow(3)
Distributable cash flow (non-GAAP)
$
154,526
$
126,705
Cash interest adjustment
(251
)
15,374
Realized gain on interest rate swaps
3,952
—
Growth capital expenditures
(48,253
)
(64,057
)
Capitalized interest
(944
)
—
Investments in unconsolidated affiliates
(3,273
)
(58,658
)
Returns of invested capital from unconsolidated affiliates
1,240
5,793
Contributions in aid of construction
514
669
Free cash flow (non-GAAP)
$
107,511
$
25,826
KINETIK HOLDINGS INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Three Months Ended
March 31,
2024
2023
(In thousands)
Reconciliation of net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities
$
153,705
$
119,591
Net changes in operating assets and liabilities
11,504
8,743
Interest expense
47,467
69,308
Amortization of deferred financing costs
(1,699
)
(1,521
)
Current income tax expense
127
53
Returns on invested capital from unconsolidated affiliates
(77,213
)
(67,764
)
Proportionate EBITDA from unconsolidated affiliates
88,402
71,867
Derivative fair value adjustment and settlement
(5,711
)
(12,744
)
Hedging activities loss (gain)
15,088
(4,987
)
Interest income
(577
)
—
Integration costs
41
925
Transaction costs
—
268
Other one-time cost or amortization
2,425
3,748
Adjusted EBITDA(1) (non-GAAP)
$
233,559
$
187,487
Distributable Cash Flow(2)
Adjusted EBITDA (non-GAAP)
$
233,559
$
187,487
Proportionate EBITDA from unconsolidated affiliates
(88,402
)
(71,867
)
Returns on invested capital from unconsolidated affiliates
77,213
67,764
Interest expense
(47,467
)
(69,308
)
Unrealized (gain) loss on interest rate derivatives
(9,377
)
17,189
Maintenance capital expenditures
(11,000
)
(4,560
)
Distributable cash flow (non-GAAP)
$
154,526
$
126,705
Free Cash Flow(3)
Distributable cash flow (non-GAAP)
$
154,526
$
126,705
Cash interest adjustment
(251
)
15,374
Realized gain on interest rate swaps
3,952
—
Growth capital expenditures
(48,253
)
(64,057
)
Capitalized interest
(944
)
—
Investments in unconsolidated affiliates
(3,273
)
(58,658
)
Returns of invested capital from unconsolidated affiliates
1,240
5,793
Contributions in aid of construction
514
669
Free cash flow (non-GAAP)
$
107,511
$
25,826
KINETIK HOLDINGS INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
March 31,
December 31,
2024
2023
(In thousands)
Net Debt(4)
Long-term debt, net
$
3,517,115
$
3,562,809
Plus: Debt issuance costs, net
29,885
31,191
Total long-term debt
3,547,000
3,594,000
Less: Cash and cash equivalents
9,756
4,510
Net debt (non-GAAP)
$
3,537,244
$
3,589,490
(1) Adjusted EBITDA is defined as net income including non-controlling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from unconsolidated affiliates, equity in earnings from unconsolidated affiliates, share-based compensation expense, non-cash increases and decreases related to trading and hedging agreements, extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including non-controlling interests or any other measure of financial performance presented in accordance with GAAP.
(2) Distributable Cash Flow is defined as Adjusted EBITDA, adjusted for the proportionate EBITDA from unconsolidated affiliates, returns on invested capital from unconsolidated affiliates, interest expense, net of amounts capitalized, unrealized gains or losses on interest rate derivatives and maintenance capital expenditures. Distributable Cash Flow should not be considered as an alternative to the GAAP measure of net income including non-controlling interests or any other measure of financial performance presented in accordance with GAAP. We believe that Distributable Cash Flow is a useful measure to compare cash generation performance from period to period and to compare the cash generation performance for specific periods to the amount of cash dividends we make.
(3) Free Cash Flow is defined as Distributable Cash Flow adjusted for growth capital expenditures, investments in unconsolidated affiliates, returns of invested capital from unconsolidated affiliates, cash interest, capitalized interest, realized gains or losses on interest rate derivatives and contributions in aid of construction. Free Cash flow should not be considered as an alternative to the GAAP measure of net income including non-controlling interests or any other measure of financial performance presented in accordance with GAAP. We believe that Free Cash Flow is a useful performance measure to compare cash generation performance from period to period and to compare the cash generation performance for specific periods to the amount of cash dividends that we make.
(4) Net Debt is defined as total long-term debt, excluding deferred financing costs, less cash and cash equivalents. Net Debt illustrates our total debt position less cash on hand that could be utilized to pay down debt at the balance sheet date. Net Debt should not be considered as an alternative to the GAAP measure of total long-term debt, or any other measure of financial performance presented in accordance with GAAP.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508708012/en/
Kinetik Investors: (713) 487-4832 Maddie Wagner (713) 574-4743 Alex Durkee Website: www.kinetik.com
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