KNTK Kinetik Holdings Inc

• Generated second quarter net income of $108.9 million, representing a 52% increase year-over-year, and Adjusted EBITDA1 of $234.4 million, a 13% increase in Adjusted EBITDA1 year-over-year

• Revised 2024 Adjusted EBITDA1 Guidance of $940 million to $980 million and 2024 Capital Expenditures2 Guidance of $260 million to $300 million (“2024 Guidance”)

• Completed acquisition of Durango Permian, LLC (“Durango”) at the end of June and closed divestiture of 16% non-operated equity interest in Gulf Coast Express pipeline (“GCX”) at the beginning of June

• Sanctioned pre-FID work scope and long-lead critical path items for Kings Landing II and advanced subsurface and permitting workstreams for an acid gas injection well, doubling the processing capacity and further enabling blending and treating at the Kings Landing Processing Complex

• Executed amendment with Lea County, New Mexico producer to increase treating services and minimum volume commitment levels (“MVC”)

Kinetik Holdings Inc. (NYSE: KNTK) (“Kinetik” or the “Company”) today reported financial results for the quarter ended June 30, 2024.

Second Quarter 2024 Results and Commentary

For the three and six months ended June 30, 2024, Kinetik reported net income including noncontrolling interest of $108.9 million and $144.4 million, respectively.

Kinetik generated Adjusted EBITDA1 of $234.4 million and $468.0 million, Distributable Cash Flow1 of $162.9 million and $317.4 million, and Free Cash Flow1 of $105.4 million and $213.0 million for the three and six months ended June 30, 2024, respectively.

For the three months ended June 30, 2024, Kinetik processed natural gas volumes of 1.58 Bcf/d.

“The second quarter was a major step towards our ultimate vision for Kinetik,” said Jamie Welch, Kinetik’s President & Chief Executive Officer. “In June, we closed our two largest transactions since the merger in 2022, expanding our system footprint into Northern Eddy and Lea Counties, New Mexico. This quickly followed the in-service of our organic gathering expansion into Lea County at the beginning of 2024, and most recently, Kinetik expanded gathering, treating, and processing services with one of our largest customers in Lea County, New Mexico. This new amendment increases the existing MVC while also expanding overall margin. A year ago, we had zero operations in the New Mexico Delaware Basin, and today, nearly 20% of our volumes are sourced from New Mexico.”

“The Durango acquisition, a Lea County gas gathering and processing amendment, and the previously announced long-term gas gathering and processing agreement in Eddy County represent approximately $1 billion of strategic investment at a mid-single digit Adjusted EBITDA1 multiple and significantly enhance our position across the entire Delaware Basin.”

“We are in the middle of our 100-day plan to integrate Durango’s assets, processes, and personnel, all while expanding Durango’s geographic scope and system scale. We are pleased with the overall performance of the business, and we have already identified a number of process and system improvements that will create immediate economic value. The Operations team’s project plan includes preventative maintenance, facility upgrades and capacity expansions to existing infrastructure at the Dagger Draw and Maljamar processing complexes. Back-office integration and the implementation of Kinetik’s Environmental, Health and Safety program are now complete. Additionally, we have welcomed over 70 talented employees to the Kinetik team.”

He went on to add, “The Commercial team has been very active with current and prospective customers in New Mexico. We remain highly focused on completing construction of Kings Landing I on time with expected in-service in April 2025, and we have now sanctioned the pre-FID work scope and long-lead critical path items for a second train at the Kings Landing Processing Complex. Growing producer demand in the region and attractive opportunities to connect our Texas System with the Durango system in the Northern Delaware Basin has accelerated the sanctioning of Kings Landing II.”

“Our base business continues to perform well versus our internal expectations outlined in February. Processed natural gas volumes in the quarter were 1.58 Bcf/d, representing a 7% increase year-over-year, despite continued wellhead volume curtailments in response to Waha Hub pricing, which were approximately 140 Mmcf/d.”

Welch continued, “Adjusted EBITDA1 increased 13% year-over-year, reflecting new volumes from the MVC-backed Lea County agreements and improved commodity margins, as well as contributions from the Permian Highway Pipeline Expansion and Delaware Link, which were partially offset by price-related gas volume curtailments and only two months of contributions from GCX. If we closed Durango contemporaneously with the sale of GCX, Kinetik’s second quarter Adjusted EBITDA1 would have increased to nearly $238 million. With the successful completion of the Durango and GCX transactions, we are revising upwards our 2024 Guidance.”

“I am incredibly proud of our team’s execution, focus and dedication to closing two transactions in the month of June and the completion of the integration process. These actions represent a significant step on our corporate journey and achievement of our financial targets.”

Revised 2024 Guidance and Outlook

On February 28, 2024, Kinetik provided 2024 Guidance, including full year Adjusted EBITDA1 of $905 million to $960 million and Capital Expenditures2 of $125 million to $165 million.

Following (i) earnings outperformance to budget in the first half of 2024, (ii) the successful completion of the Durango acquisition, and (iii) the divestiture of the Company’s equity interest in GCX, Kinetik is revising its 2024 Guidance upwards.

Kinetik now estimates full year 2024 Adjusted EBITDA1 between $940 million and $980 million, a 3% increase at the midpoint versus the previous guidance range and implies over 14% Adjusted EBITDA1 growth year-over-year.

Adjusted EBITDA1 Guidance assumptions include:

• Approximately six months of Durango’s existing business;
• High-teens growth of gas processed volumes across Kinetik system;
• Divestiture of the 16% non-operated GCX equity interest at the start of June 2024;
• Updated commodity prices of approximately $77 per barrel for WTI, $2 per MMBtu for Houston Ship Channel natural gas, and $0.60 per gallon for natural gas liquids for the remainder of the year; and
• Unhedged commodity exposure is approximately 7% of expected remaining gross profit.

For Capital Expenditures2 including maintenance capital, Kinetik now estimates guidance to be $260 million to $300 million. This increase reflects capital for (i) the construction of Kings Landing I and pre-FID spend for Kings Landing II, (ii) the new and amended long-term gathering and processing agreements in Eddy and Lea Counties, New Mexico, and (iii) capital for integration, growth and maintenance costs associated with the existing Durango business.

As previously stated, the acquisition and capital projects carry an attractive mid-single digit build-cost multiple and are expected to be over 10% accretive to free cash flow per share starting the second half of 2025.

Capital Allocation Priorities

The Company remains focused on its disciplined capital allocation priorities that maximize shareholder value. The achievement of its leverage target of 3.5x represents one of its core financial priorities and now provides Kinetik with broader capital allocation flexibility going forward.

Financial

1. Achieved quarterly net income of $108.9 million and Adjusted EBITDA1 of $234.4 million.
2. Declared a dividend of $0.75 per share for the quarter ended June 30, 2024, or $3.00 per share on an annualized basis.
3. Exited the quarter with a Leverage Ratio1,3 per the Company’s Credit Agreement of 3.4x and a Net Debt to Adjusted EBITDA1,4 Ratio of 3.8x.

Selected Key Metrics:

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

2024

 

 

 

 

 

 

 

(In thousands, except ratios)

Net income including noncontrolling interest5

 

$

108,948

 

$

144,355

Adjusted EBITDA1

 

$

234,403

 

$

467,962

Distributable Cash Flow1

 

$

162,892

 

$

317,418

Dividend Coverage Ratio1,6

 

1.4x

 

1.4x

Capital Expenditures2

 

$

38,046

 

$

98,818

Free Cash Flow1

 

$

105,449

 

$

212,960

Leverage Ratio1,3

 

 

 

3.4x

Net Debt to Adjusted EBITDA Ratio1,4

 

 

 

3.8x

Common stock issued and outstanding7

 

 

 

 

157,519

 

 

June 30, 2024

 

March 31, 2024

 

 

 

 

 

 

 

(In thousands)

Net Debt1,8

 

$

3,423,251

 

$

3,537,244

Operational

1. Construction continues on the 200 Mmcf/d Kings Landing I in Eddy County, New Mexico. The project is on schedule with an expected in-service in April 2025.
2. Commenced construction on low- and high-pressure gas gathering and processing project for the New Eddy County Agreement. The contract begins at year-end with gathering services, extending to processing in the second quarter 2025.
3. Executed new amendment to existing gas gathering, treating, and processing agreement with one of Kinetik’s largest customers in Lea County, New Mexico, increasing the MVC and expanding margins beginning in November 2024.
4. Sanctioned pre-FID work scope and procurement of long-lead critical path items for Kings Landing II in response to growing producer demand and attractive commercial opportunities.
5. Advanced subsurface and permitting workstreams for an acid gas injection well at Kings Landing that enables a valuable treating solution for natural gas containing high levels of H2S and CO2.

Governance and Sustainability

1. Received 2023 Safety Award from GPA Midstream Association for outstanding safety performance.
2. Publishing its 2023 Sustainability Report in August 2024.

Upcoming Tour Dates

Kinetik plans to participate at the following upcoming conferences and events:

1. Raymond James Virtual Industrial & Energy Showcase on August 9th
2. Citi One-on-One Midstream & New Energy Infrastructure Conference in Las Vegas on August 13th - 14th
3. Barclays CEO Energy-Power Conference in New York on September 4th - 5th
4. Wolfe Utilities, Midstream & Clean Energy Conference in New York on October 1st - 2nd
5. Citadel Securities Energy Investor Day in New York on October 3rd

Investor Presentation

An updated investor presentation will be available under Events and Presentations in the Investors section of the Company’s website at ir.kinetik.com.

Conference Call and Webcast

Kinetik will host its second quarter 2024 results conference call on Thursday, August 8, 2024 at 8:00 am Central Daylight Time (9:00 am Eastern Daylight Time) to discuss second quarter results. To access a live webcast of the conference call, please visit the Investors section of Kinetik’s website at 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 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.

1. A non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” for further details.

2. Net of contributions in aid of construction and returns of invested capital from unconsolidated affiliates.

3. Leverage Ratio is total debt less cash and cash equivalents divided by last twelve months Adjusted EBITDA, calculated in the Company’s credit agreement. The calculation includes EBITDA Adjustments for Qualified Projects, Acquisitions and Divestitures.

4. Net Debt to Adjusted EBITDA Ratio is defined as Net Debt divided by last twelve months Adjusted EBITDA.

5. Net income including noncontrolling interest for the three and six months ended June 30, 2023 was $71.7 million and $76.0 million, respectively.

6. Dividend Coverage Ratio is Distributable Cash Flow divided by total declared dividends.

7. Issued and outstanding shares of 157,518,898 is the sum of 59,735,864 shares of Class A common stock and 97,783,034 shares of Class C common stock. Excludes 7,680,492 shares of Class C common stock to be issued on July 1, 2025 in connection with the Durango Permian acquisition.

8. Net Debt is defined as total current and long-term debt, excluding deferred financing costs, less cash and cash equivalents.

KINETIK HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except per share data)

Operating revenues:

 

 

 

 

 

 

 

 

Service revenue

 

$

96,415

 

 

$

102,551

 

 

$

198,610

 

 

$

205,976

 

Product revenue

 

 

260,102

 

 

 

191,430

 

 

 

496,669

 

 

 

365,254

 

Other revenue

 

 

2,940

 

 

 

2,222

 

 

 

5,572

 

 

 

6,013

 

Total operating revenues

 

 

359,457

 

 

 

296,203

 

 

 

700,851

 

 

 

577,243

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Costs of sales (exclusive of depreciation and amortization shown separately below) (1)

 

 

146,513

 

 

 

110,467

 

 

 

300,200

 

 

 

226,344

 

Operating expenses

 

 

44,068

 

 

 

39,906

 

 

 

87,474

 

 

 

75,879

 

Ad valorem taxes

 

 

6,212

 

 

 

3,889

 

 

 

12,504

 

 

 

9,347

 

General and administrative expenses

 

 

31,091

 

 

 

22,869

 

 

 

65,227

 

 

 

50,380

 

Depreciation and amortization expenses

 

 

75,061

 

 

 

69,482

 

 

 

148,667

 

 

 

138,336

 

(Gain) loss on disposal of assets

 

 

(76

)

 

 

12,137

 

 

 

4,090

 

 

 

12,239

 

Total operating costs and expenses

 

 

302,869

 

 

 

258,750

 

 

 

618,162

 

 

 

512,525

 

Operating income

 

 

56,588

 

 

 

37,453

 

 

 

82,689

 

 

 

64,718

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest and other income

 

 

309

 

 

 

1,042

 

 

 

400

 

 

 

1,336

 

Loss on debt extinguishment

 

 

(525

)

 

 

—

 

 

 

(525

)

 

 

—

 

Gain on sale of equity method investment

 

 

59,884

 

 

 

—

 

 

 

59,884

 

 

 

—

 

Interest expense

 

 

(54,049

)

 

 

(16,126

)

 

 

(101,516

)

 

 

(85,434

)

Equity in earnings of unconsolidated affiliates

 

 

55,955

 

 

 

49,610

 

 

 

116,424

 

 

 

96,074

 

Total other income, net

 

 

61,574

 

 

 

34,526

 

 

 

74,667

 

 

 

11,976

 

Income before income taxes

 

 

118,162

 

 

 

71,979

 

 

 

157,356

 

 

 

76,694

 

Income tax expense

 

 

9,214

 

 

 

311

 

 

 

13,001

 

 

 

727

 

Net income including noncontrolling interest

 

 

108,948

 

 

 

71,668

 

 

 

144,355

 

 

 

75,967

 

Net income attributable to Common Unit limited partners

 

 

71,756

 

 

 

46,654

 

 

 

95,613

 

 

 

49,517

 

Net income attributable to Class A Common Stock Shareholders

 

$

37,192

 

 

$

25,014

 

 

$

48,742

 

 

$

26,450

 

 

 

 

 

 

 

 

 

 

Net income attributable to Class A Common Shareholders, per share

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

0.41

 

 

$

0.68

 

 

$

0.36

 

Diluted

 

$

0.54

 

 

$

0.41

 

 

$

0.67

 

 

$

0.36

 

 

 

 

 

 

 

 

 

 

Weighted-average shares

 

 

 

 

 

 

 

 

Basic

 

 

59,792

 

 

 

50,553

 

 

 

58,840

 

 

 

48,980

 

Diluted

 

 

60,279

 

 

 

50,625

 

 

 

59,503

 

 

 

49,220

 

(1) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $54.7 million and $38.1 million for the three months ended June 30, 2024 and 2023, respectively, and $99.2 million and $68.5 million for the six months ended June 30, 2024 and 2023, respectively, for certain volumes, where we act as principal.

KINETIK HOLDINGS INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2024

 

2023

 

2024

 

2023(1)

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Net Income Including Noncontrolling Interests to Adjusted EBITDA

 

 

 

 

 

 

 

 

Net income including noncontrolling interests (GAAP)

 

$

108,948

 

 

$

71,668

 

 

$

144,355

 

 

$

75,967

 

Add back:

 

 

 

 

 

 

 

 

Interest expense

 

 

54,049

 

 

 

16,126

 

 

 

101,516

 

 

 

85,434

 

Income tax expense

 

 

9,214

 

 

 

311

 

 

 

13,001

 

 

 

727

 

Depreciation and amortization

 

 

75,061

 

 

 

69,482

 

 

 

148,667

 

 

 

138,336

 

Amortization of contract costs

 

 

1,655

 

 

 

1,655

 

 

 

3,310

 

 

 

3,310

 

Proportionate EBITDA from unconsolidated affiliates

 

 

85,922

 

 

 

74,481

 

 

 

174,324

 

 

 

146,348

 

Share-based compensation

 

 

15,136

 

 

 

13,299

 

 

 

37,697

 

 

 

30,839

 

(Gain) loss on disposal of assets

 

 

(76

)

 

 

12,137

 

 

 

4,090

 

 

 

12,239

 

Loss on debt extinguishment

 

 

525

 

 

 

—

 

 

 

525

 

 

 

—

 

Unrealized hedging loss

 

 

—

 

 

 

—

 

 

 

6,883

 

 

 

—

 

Integration costs

 

 

2,510

 

 

 

41

 

 

 

2,551

 

 

 

953

 

Acquisition transaction costs

 

 

3,232

 

 

 

2

 

 

 

3,232

 

 

 

270

 

Other one-time costs or amortization

 

 

2,581

 

 

 

1,104

 

 

 

5,006

 

 

 

4,864

 

Deduct:

 

 

 

 

 

 

 

 

Interest income

 

 

310

 

 

 

—

 

 

 

887

 

 

 

—

 

Warrant valuation adjustment

 

 

—

 

 

 

33

 

 

 

—

 

 

 

77

 

Gain on sale of equity method investment

 

 

59,884

 

 

 

—

 

 

 

59,884

 

 

 

—

 

Unrealized hedging gain

 

 

8,205

 

 

 

2,678

 

 

 

—

 

 

 

7,643

 

Equity income from unconsolidated affiliates

 

 

55,955

 

 

 

49,610

 

 

 

116,424

 

 

 

96,074

 

Adjusted EBITDA(1) (non-GAAP)

 

$

234,403

 

 

$

207,985

 

 

$

467,962

 

 

$

395,493

 

 

 

 

 

 

 

 

 

 

Distributable Cash Flow(2)

 

 

 

 

 

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

234,403

 

 

$

207,985

 

 

$

467,962

 

 

$

395,493

 

Proportionate EBITDA from unconsolidated affiliates

 

 

(85,922

)

 

 

(74,481

)

 

 

(174,324

)

 

 

(146,348

)

Returns on invested capital from unconsolidated affiliates

 

 

75,429

 

 

 

68,466

 

 

 

152,642

 

 

 

136,230

 

Interest expense

 

 

(54,049

)

 

 

(16,126

)

 

 

(101,516

)

 

 

(85,434

)

Unrealized gain on interest rate derivatives

 

 

(189

)

 

 

(36,835

)

 

 

(9,566

)

 

 

(19,646

)

Maintenance capital expenditures

 

 

(6,780

)

 

 

(5,002

)

 

 

(17,780

)

 

 

(9,562

)

Distributable cash flow (non-GAAP)

 

$

162,892

 

 

$

144,007

 

 

$

317,418

 

 

$

270,733

 

 

 

 

 

 

 

 

 

 

Free Cash Flow(3)

 

 

 

 

 

 

 

 

Distributable cash flow (non-GAAP)

 

$

162,892

 

 

$

144,007

 

 

$

317,418

 

 

$

270,733

 

Cash interest adjustment

 

 

(29,144

)

 

 

(35,705

)

 

 

(29,395

)

 

 

(20,331

)

Realized gain on interest rate swaps

 

 

3,953

 

 

 

2,417

 

 

 

7,905

 

 

 

2,417

 

Growth capital expenditures

 

 

(32,160

)

 

 

(98,644

)

 

 

(80,413

)

 

 

(161,908

)

Capitalized interest

 

 

(986

)

 

 

(4,811

)

 

 

(1,930

)

 

 

(7,044

)

Investments in unconsolidated affiliates

 

 

—

 

 

 

(93,112

)

 

 

(3,273

)

 

 

(150,331

)

Returns of invested capital from unconsolidated affiliates

 

 

—

 

 

 

—

 

 

 

1,240

 

 

 

5,793

 

Contributions in aid of construction

 

 

894

 

 

 

6,203

 

 

 

1,408

 

 

 

6,872

 

Free cash flow (non-GAAP)

 

$

105,449

 

 

$

(79,645

)

 

$

212,960

 

 

$

(53,799

)

KINETIK HOLDINGS INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)

 

 

 

Six Months Ended June 30,

 

 

2024

 

2023

 

 

 

 

 

 

 

(In thousands)

Reconciliation of net cash provided by operating activities to Adjusted EBITDA

 

 

 

 

Net cash provided by operating activities

 

$

279,222

 

 

$

231,047

 

Net changes in operating assets and liabilities

 

 

49,046

 

 

 

47,040

 

Interest expense

 

 

101,516

 

 

 

85,434

 

Amortization of deferred financing costs

 

 

(3,582

)

 

 

(3,055

)

Current income tax expense

 

 

610

 

 

 

124

 

Returns on invested capital from unconsolidated affiliates

 

 

(152,642

)

 

 

(136,230

)

Proportionate EBITDA from unconsolidated affiliates

 

 

174,324

 

 

 

146,348

 

Derivative fair value adjustment and settlement

 

 

2,683

 

 

 

26,341

 

Unrealized hedging loss (gain)

 

 

6,883

 

 

 

(7,643

)

Interest income

 

 

(887

)

 

 

—

 

Integration costs

 

 

2,551

 

 

 

953

 

Transaction costs

 

 

3,232

 

 

 

270

 

Other one-time cost or amortization

 

 

5,006

 

 

 

4,864

 

Adjusted EBITDA(1) (non-GAAP)

 

$

467,962

 

 

$

395,493

 

 

 

 

 

 

Distributable Cash Flow(2)

 

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

467,962

 

 

$

395,493

 

Proportionate EBITDA from unconsolidated affiliates

 

 

(174,324

)

 

 

(146,348

)

Returns on invested capital from unconsolidated affiliates

 

 

152,642

 

 

 

136,230

 

Interest expense

 

 

(101,516

)

 

 

(85,434

)

Unrealized gain on interest rate derivatives

 

 

(9,566

)

 

 

(19,646

)

Maintenance capital expenditures

 

 

(17,780

)

 

 

(9,562

)

Distributable cash flow (non-GAAP)

 

$

317,418

 

 

$

270,733

 

 

 

 

 

 

Free Cash Flow(3)

 

 

 

 

Distributable cash flow (non-GAAP)

 

$

317,418

 

 

$

270,733

 

Cash interest adjustment

 

 

(29,395

)

 

 

(20,331

)

Realized gain on interest rate swaps

 

 

7,905

 

 

 

2,417

 

Growth capital expenditures

 

 

(80,413

)

 

 

(161,908

)

Capitalized interest

 

 

(1,930

)

 

 

(7,044

)

Investments in unconsolidated affiliates

 

 

(3,273

)

 

 

(150,331

)

Returns of invested capital from unconsolidated affiliates

 

 

1,240

 

 

 

5,793

 

Contributions in aid of construction

 

 

1,408

 

 

 

6,872

 

Free cash flow (non-GAAP)

 

$

212,960

 

 

$

(53,799

)

KINETIK HOLDINGS INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)

 

 

June 30,

 

March 31,

 

2024

 

2024

 

 

 

 

 

(In thousands)

Net Debt(4)

 

 

 

Short-term debt

$

148,800

 

$

—

Long-term debt, net

 

3,258,403

 

 

3,517,115

Plus: Debt issuance costs, net

 

28,597

 

 

29,885

Total debt

 

3,435,800

 

 

3,547,000

Less: Cash and cash equivalents

 

12,549

 

 

9,756

Net debt (non-GAAP)

$

3,423,251

 

$

3,537,244

(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 current and long-term debt, excluding deferred financing costs, premiums and discounts, 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/20240807347254/en/

Kinetik Investors: (713) 487-4832 Maddie Wagner (713) 574-4743 Alex Durkee Website: www.kinetik.com