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Kinetik Reports Fourth Quarter and Full Year 2023 Financial and Operating Results and Provides 2024 Guidance

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Kinetik Holdings Inc. (NYSE: KNTK) reported strong financial results for Q4 2023, with net income of $267.4 million and Adjusted EBITDA of $228.0 million. The full year 2023 net income was $386.5 million, with Adjusted EBITDA of $838.8 million. The company issued guidance for 2024 with Adjusted EBITDA expected to be between $905 million and $960 million. Kinetik completed strategic growth projects in 2023, positioning itself for future growth.
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Kinetik Holdings Inc.'s financial results for Q4 and full year 2023 demonstrate robust performance, with a significant net income of $267.4 million for the quarter and $386.5 million for the year. The Adjusted EBITDA of $838.8 million aligns with the company's revised guidance, suggesting effective operational management and cost control. The capital expenditures of $531.2 million indicate a strategic investment in growth projects, which is crucial for the company's long-term expansion and competitive positioning.

Looking ahead, the 2024 Adjusted EBITDA guidance of $905 million to $960 million reflects an optimistic outlook, projecting over 11% year-over-year growth. This, coupled with the lower capital expenditures guidance of $125 million to $165 million, suggests a strategic pivot towards optimizing free cash flow. Investors should note the potential for increased shareholder returns due to the shift to 100% cash dividends, which may enhance the stock's attractiveness.

The energy sector, particularly natural gas processing and transportation, is experiencing dynamic changes and Kinetik's strategic investments such as the Delaware Link and PHP expansion position the company advantageously in the Northern Delaware Basin. The reported 22% exit-to-exit growth in processed gas volumes indicates an increasing market share and operational efficiency. Additionally, the reliance on fixed-fee contracts for over 90% of gross profit provides revenue stability amidst volatile energy markets.

It is important to recognize the implications of the company's Leverage Ratio of 4.0x and Net Debt to Adjusted EBITDA Ratio of 4.3x. While these figures suggest a manageable debt level, stakeholders should monitor these metrics closely for future financial flexibility and risk assessment. The completion of growth projects and the focus on a reduced capital program may also signal a transition to a more mature phase of the company's lifecycle, with potentially lower but more stable growth rates.

Kinetik's operational achievements, such as the in-service completion of the PHP expansion and Delaware Link, are significant in the context of the broader energy infrastructure landscape. These projects enhance the company's ability to transport natural gas from the Permian Basin to key markets, which is increasingly important as the U.S. continues to be a major player in global energy exports. The focus on sustainability-linked financing, as evidenced by the issuance of $800 million in sustainability-linked senior notes, reflects a growing trend in the energy sector to align financial strategies with environmental objectives.

The installation of front-end amine treating at Pecos Bend, scheduled for completion by April 2024, indicates Kinetik's commitment to improving the quality of processed natural gas, which can command higher market prices and reduce environmental impact. This strategic move, along with the company's emphasis on sustainability in its compensation program and upcoming sustainability report, demonstrates an alignment with industry trends towards responsible environmental stewardship and could positively influence investor perception and company valuation.

  • Generated fourth quarter 2023 net income of $267.4 million and Adjusted EBITDA1 of $228.0 million
  • Reported full year 2023 net income of $386.5 million, Adjusted EBITDA1 of $838.8 million, and Capital Expenditures2 and investments of $531.2 million
  • Issuing full year 2024 Adjusted EBITDA1 guidance of $905 million to $960 million and $125 million to $165 million of 2024 Capital Expenditures2 guidance (“2024 Guidance”)
  • Completing the core shareholder dividend reinvestment obligation with the upcoming dividend to be paid on March 7th, 2024; and going forward, all shareholders will now be eligible to receive 100% cash dividends
  • Placed Delaware Link and the Permian Highway Pipeline (“PHP”) expansion in-service in the fourth quarter
  • Completed construction and placed in-service the gathering expansion into Lea County, New Mexico in January 2024, marking the third and final in-service of the 2023 strategic growth projects

HOUSTON & MIDLAND, Texas--(BUSINESS WIRE)-- Kinetik Holdings Inc. (NYSE: KNTK) (“Kinetik” or the “Company”) today reported financial results for the quarter and year ended December 31, 2023.

2023 Results and Commentary

For the three and twelve months ended December 31, 2023, Kinetik processed natural gas volumes of 1.54 Bcf/d and 1.45 Bcf/d, respectively, and reported net income including non-controlling interest of $267.4 million and $386.5 million, respectively. Kinetik generated Adjusted EBITDA1 of $228.0 million and $838.8 million for the three and twelve months ended December 31, 2023, respectively, Distributable Cash Flow1 of $149.7 million and $568.5 million for the three and twelve months ended December 31, 2023, respectively, and Free Cash Flow1 of $76.9 million and $59.9 million for the three and twelve months ended December 31, 2023, respectively.

“2023 was a critical year for Kinetik as we executed upon highly strategic organic growth projects, key to our long-term vision,” said Jamie Welch, President and Chief Executive Officer. “We reported record volume growth each successive quarter, and exit-to-exit processed gas volumes grew by 22%. Our initiatives throughout 2023 have positioned us well for future growth with existing customers and market share capture in the Northern Delaware Basin. We have meaningfully increased our gas treating capabilities at our processing complexes and placed into service Delaware Link, the PHP expansion, and the gathering system expansion into Lea County, New Mexico. Today, we stand competitively advantaged with available processing capacity and a fully integrated ‘wellhead to Gulf Coast market’ natural gas transportation solution.”

“We reported full year 2023 Adjusted EBITDA1 of $838.8 million, at the middle of the revised guidance we provided in November and above the midpoint of the original guidance range issued in February 2023. Capital Expenditures2 in 2023 were $531.2 million, within our guidance range. Our operations team did a fantastic job with operated capital spend coming in 5% below internal estimates for full year 2023, which helped offset a portion of the non-operated PHP expansion cost increases. With the completion of our 2023 growth projects, our capital program and Free Cash Flow1 outlook look markedly different, representing an approximately $450 million increase in Free Cash Flow1 year-on-year.”

2024 Guidance and Outlook

Kinetik estimates full year 2024 Adjusted EBITDA1 between $905 million and $960 million. The midpoint of the 2024 Guidance implies Adjusted EBITDA1 growth of over 11% year-over-year.

Guidance assumptions include:

  • Low-double digit growth of gas processed volumes;
  • Over 90% of gross profit from fixed-fee contracts;
  • 2024 average annual commodity prices of approximately $76 per barrel for WTI, $2 per MMBtu for Houston Ship Channel natural gas, and $0.60 per gallon for natural gas liquids; and
  • Unhedged commodity-linked gross profit representing approximately 5% of total gross profit

The Company estimates 2024 Capital Expenditures2 to be between $125 million and $165 million. This includes approximately $35 million of maintenance capital which is elevated for this year.

Welch added, “2024 will be an important year along the journey to achieve our financial targets. We have strengthened the composition of our cash flows with increased contributions from our Pipeline Transportation segment and MVC fee-based revenue. The Pipeline Transportation segment is expected to contribute 40% of total 2024 Adjusted EBITDA1, a nearly 15% increase in two years. Our 2024 Capital Expenditures2 guidance is below our previously communicated expectations as we focus on a reduced capital program given the completion of last year’s growth projects. We expect a significant increase in Free Cash Flow1 this year, despite the dividend being paid in cash to all shareholders.”

Financial

  1. Achieved quarterly net income of $267.4 million and Adjusted EBITDA1 of $228.0 million.
  2. Achieved 2023 annual net income of $386.5 million and Adjusted EBITDA1 of $838.8 million.
  3. Reported full year 2023 Capital Expenditures2 of $531.2 million, within the Company’s guidance range provided in February, and for the fourth quarter 2023 reported Capital Expenditures2 of $95.0 million.
  4. Declared a dividend of $0.75 per share for the quarter ended December 31, 2023, or $3.00 per share on an annualized basis. 98.9 million shares have elected to reinvest fourth quarter dividends into newly issued shares of Class A common stock. As a result, $39.2 million of fourth quarter dividends will be paid in cash.3
  5. Following the payment on March 7, 2024, all shareholders will be eligible to receive 100% cash dividend payments.
  6. Exited the fourth quarter with a Leverage Ratio1,4 per the Company’s Revolving Credit Agreement of 4.0x and a Net Debt to Adjusted EBITDA Ratio1,5 of 4.3x.
  7. Realized over $50 million of Adjusted EBITDA1 synergies in 2023, exceeding the original merger target.
  8. Issued $800 million of 6.625% sustainability-linked senior notes. The net proceeds repaid a portion of the outstanding borrowings under Kinetik’s existing Term Loan Credit Facility and extended the maturity of that facility to June 2026.
  9. Closed upsized secondary offering of 7.5 million shares by APA Corporation, increasing public float by 47%.

Selected Key 2023 Metrics:

 

 

Three Months Ended

 

Twelve Months Ended December 31,

 

 

2023

 

2023

  

 

 

 

 

 

 

(In thousands, except ratios)

Net income including non-controlling interest6

 

$

267,354

 

$

386,452

Adjusted EBITDA1

 

$

228,005

 

$

838,830

Distributed Cash Flow1

 

$

149,713

 

$

568,507

Dividend Coverage Ratio1,7

 

1.3x

 

1.3x

Free Cash Flow1

 

$

76,917

 

$

59,931

Leverage Ratio1,4

 

 

 

4.0x

Net Debt to Adjusted EBITDA Ratio1,5

 

 

 

4.3x

Common stock issued and outstanding8

 

 

 

 

151,185,576

 

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Net Debt1,9

 

$ 3,589,490

 

$ 3,629,932

 

$ 3,647,763

 

$ 3,535,016

Growth Projects

  1. Completed and placed in service Kinetik’s gathering system expansion into Lea County, New Mexico on January 18, 2024, ahead of schedule by over two months and under budget.
  2. Placed in service the PHP expansion on December 1, 2023, expanding PHP’s capacity by 550 MMcf/d and increasing natural gas deliveries from the Permian to the U.S. Gulf Coast. Kinetik’s PHP ownership is now over 55%.
  3. Placed in service on October 1, 2023, Delaware Link, Kinetik’s wholly owned and operated 30 inch intrabasin residue gas pipeline to Waha with an initial throughput capacity of 1 Bcf/d.
  4. Installation of front-end amine treating at Pecos Bend should be placed in-service by April 2024, completing Kinetik’s system wide treating project.

Governance and Sustainability

  1. Michael Kumar was appointed to the Board of Directors, replacing Ron Schweizer. Mr. Kumar currently serves as a Senior Policy Advisor for I Squared Capital.
  2. The Company’s 2023 compensation program tied 20% of all salaried employees’ at-risk pay, including executives, to specific sustainability and safety related goals. The Company plans for a similar approach in 2024.
  3. Kinetik expects to publish its 2023 Sustainability Report mid-year, providing further details on its sustainability strategy, targets, and results.
  4. Granted 2023 performance bonuses in Kinetik Class A Common Stock rather than cash which reinforces alignment with our shareholders.

Upcoming Tour Dates

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

  1. Morgan Stanley Energy & Power Conference in New York City on March 7th
  2. Barclays Midstream Corporate Access Day Luncheon in New York City on March 7th
  3. Goldman Sachs Non-Deal Roadshow in Boston on March 12th
  4. Wolfe Houston Bus Tour on March 19th
  5. Bank of America Spring Energy Summit in Houston on March 26th

Investor Presentation

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

Conference Call and Webcast

Kinetik will host its fourth quarter 2023 results conference call on Thursday, February 29, 2024 at 8:00 am Central Standard Time (9:00 am Eastern Standard Time) to discuss fourth quarter results. To access a live webcast of the conference call, please visit the Investor Relations 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 share repurchase program and the projected timing, purchase price and number of shares purchased under such program, if at all; 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 to be filed with the SEC. 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. This news release also includes certain forward-looking non-GAAP financial information. Reconciliations of these forward-looking non-GAAP measures to their most directly comparable GAAP measure are not available without unreasonable efforts. This is due to the inherent difficulty of forecasting the timing or amount of various reconciling items that would impact the most directly comparable forward-looking GAAP financial measure, that have not yet occurred, are out of Kinetik’s control and/or cannot be reasonably predicted. Accordingly, such reconciliation is excluded from this new release. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

  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 Qualified Project and Acquisition EBITDA Adjustments that pertain to the funding of the Permian Highway Pipeline expansion project, Delaware Link project, first quarter 2023 midstream infrastructure asset acquisition, and other qualified projects at the Midstream Logistics segment.
  4. Net Debt to Adjusted EBITDA Ratio is defined as Net Debt divided by last twelve months Adjusted EBITDA.
  5. Dividends reinvested and dividends paid in cash as of February 27th, 2024. Final numbers are subject to change.
  6. Net income including noncontrolling interest for the three and twelve months ended December 31, 2022 was $48.5 million and $250.7 million, respectively.
  7. Dividend Coverage Ratio is Distributable Cash Flow divided by total declared dividends.
  8. Issued and outstanding shares of 151,185,576 is the sum of 57,096,538 shares of Class A common stock and 94,089,038 shares of Class C common stock.
  9. Net Debt is defined as total long-term debt, excluding deferred financing costs, premiums and discounts, less cash and cash equivalents.

Notes Regarding Presentation of Financial Information

The following addresses the results of our operations for the three and twelve months ended December 31, 2023, as compared to our results of operations for the same periods in 2022. As the business combination between BCP Raptor Holdco, LP, Kinetik’s predecessor for accounting purposes (“BCP”) and Altus Midstream LP (“Altus”) (the “Transaction”) was determined to be a reverse merger, BCP was considered the accounting acquirer and Altus was considered the legal acquirer. Therefore, BCP’s net assets, carrying at historical value, were presented as the predecessor to the Company’s historical financial statements and the comparable period presented herein reflects the results of operations of BCP for the three and twelve months ended December 31, 2022 and Altus’ results of operations from February 22, 2022, the closing date of the Transaction, through December 31, 2022. Kinetik’s financial results on and after February 22, 2022 reflect the results of the combined company.

Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc. or “the Company” with respect to time periods prior to February 22, 2022 include BCP and its consolidated subsidiaries and do not include Altus and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc. with respect to time periods from and after February 22, 2022 include Altus and its consolidated subsidiaries.

The Company completed a two-for-one Stock Split on June 8, 2022. All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retroactively restated to reflect the two-for-one Stock Split.

KINETIK HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

2022(1)

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except per share data)

Operating revenues:

 

 

 

 

 

 

 

 

Service revenue

 

$

107,426

 

 

$

103,832

 

 

$

417,751

 

 

$

393,954

 

Product revenue

 

 

235,876

 

 

 

187,971

 

 

 

822,410

 

 

 

806,353

 

Other revenue

 

 

5,566

 

 

 

3,690

 

 

 

16,251

 

 

 

13,183

 

Total operating revenues

 

 

348,868

 

 

 

295,493

 

 

 

1,256,412

 

 

 

1,213,490

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Costs of sales (exclusive of depreciation and amortization shown separately below)(2)

 

 

141,621

 

 

 

123,321

 

 

 

515,721

 

 

 

541,518

 

Operating expenses

 

 

42,716

 

 

 

36,293

 

 

 

161,520

 

 

 

137,289

 

Ad valorem taxes

 

 

6,668

 

 

 

1,034

 

 

 

21,622

 

 

 

16,970

 

General and administrative expenses

 

 

24,775

 

 

 

22,088

 

 

 

97,906

 

 

 

94,268

 

Depreciation and amortization

 

 

72,715

 

 

 

67,736

 

 

 

280,986

 

 

 

260,345

 

Loss on disposal of assets

 

 

4,236

 

 

 

9

 

 

 

19,402

 

 

 

12,611

 

Total operating costs and expenses

 

 

292,731

 

 

 

250,481

 

 

 

1,097,157

 

 

 

1,063,001

 

Operating income

 

 

56,137

 

 

 

45,012

 

 

 

159,255

 

 

 

150,489

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest and other income

 

 

379

 

 

 

239

 

 

 

2,004

 

 

 

489

 

Gain on redemption of mandatorily redeemable Preferred Units

 

 

 

 

 

 

 

 

 

 

 

9,580

 

Loss on debt extinguishment

 

 

(1,876

)

 

 

 

 

 

(1,876

)

 

 

(27,975

)

Gain on embedded derivative

 

 

 

 

 

 

 

 

 

 

 

89,050

 

Interest expense

 

 

(75,411

)

 

 

(56,667

)

 

 

(205,854

)

 

 

(149,252

)

Equity in earnings of unconsolidated affiliates

 

 

53,187

 

 

 

60,250

 

 

 

200,015

 

 

 

180,956

 

Total other (expense) income, net

 

 

(23,721

)

 

 

3,822

 

 

 

(5,711

)

 

 

102,848

 

Income before income taxes

 

 

32,416

 

 

 

48,834

 

 

 

153,544

 

 

 

253,337

 

Income tax (benefit) expense

 

 

(234,938

)

 

 

372

 

 

 

(232,908

)

 

 

2,616

 

Net income including non-controlling interest

 

 

267,354

 

 

 

48,462

 

 

 

386,452

 

 

 

250,721

 

Net income attributable to Preferred Unit limited partners

 

 

 

 

 

 

 

 

 

 

 

115,203

 

Net Income attributable to common shareholders

 

 

267,354

 

 

 

48,462

 

 

 

386,452

 

 

 

135,518

 

Net income attributable to Common Unit limited partners

 

 

168,046

 

 

 

32,966

 

 

 

245,114

 

 

 

94,783

 

Net income attributable to Class A Common Shareholders

 

$

99,308

 

 

$

15,496

 

 

$

141,338

 

 

$

40,735

 

 

 

 

 

 

 

 

 

 

Net income attributable to Class A Common Shareholders, per share

 

 

 

 

 

 

 

 

Basic

 

$

1.70

 

 

$

0.26

 

 

$

2.39

 

 

$

1.48

 

Diluted

 

$

1.70

 

 

$

0.25

 

 

$

2.38

 

 

$

1.48

 

Weighted average shares(3)

 

 

 

 

 

 

 

 

Basic

 

 

55,738

 

 

 

44,403

 

 

 

51,791

 

 

 

41,326

 

Diluted

 

 

55,883

 

 

 

44,448

 

 

 

52,060

 

 

 

41,361

 

(1) The results of the legacy Altus business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1 – Description of Business and Basis of Presentation in the Notes to the Consolidated Financial Statements of the Company’s Form 10-K to be filed subsequent to this earnings release for further information.
(2) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $148.3 million and $70.4 million for the years ended December 31, 2023 and 2022, respectively, for certain volumes where we act as principal.
(3) Share amounts have been retrospectively restated to reflect the Company’s two-for-one stock split, which was effected on June 8, 2022. Refer to Note 11 – Equity and Warrants in the Notes to the Consolidated Financial Statements of the Company’s Form 10-K to be filed subsequent to this earnings release for further information.

KINETIK HOLDINGS INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

2022(1)

 

 

 

 

 

 

 

 

Net Income Including Non-controlling Interests to Adjusted EBITDA

(In thousands)

Net income including non-controlling interests (GAAP)

$

267,354

 

 

$

48,462

 

 

$

386,452

 

 

$

250,721

 

Add back:

 

 

 

 

 

 

 

Interest expense

 

75,411

 

 

 

56,667

 

 

 

205,854

 

 

 

149,252

 

Income tax (benefit) expense

 

(234,938

)

 

 

372

 

 

 

(232,908

)

 

 

2,616

 

Depreciation and amortization

 

72,715

 

 

 

67,736

 

 

 

280,986

 

 

 

260,345

 

Amortization of contract costs

 

1,655

 

 

 

463

 

 

 

6,620

 

 

 

1,807

 

Proportionate EBITDA from unconsolidated affiliates

 

81,139

 

 

 

78,388

 

 

 

306,072

 

 

 

268,826

 

Share-based compensation

 

12,642

 

 

 

11,814

 

 

 

55,983

 

 

 

42,780

 

Loss on disposal of assets

 

4,236

 

 

 

9

 

 

 

19,402

 

 

 

12,611

 

Loss on debt extinguishment

 

1,876

 

 

 

 

 

 

1,876

 

 

 

27,975

 

Integration costs

 

30

 

 

 

2,197

 

 

 

1,015

 

 

 

12,208

 

Acquisition transaction costs

 

 

 

 

 

 

 

648

 

 

 

6,412

 

Other one-time cost or amortization

 

4,356

 

 

 

5,385

 

 

 

11,901

 

 

 

16,355

 

Deduct:

 

 

 

 

 

 

 

Interest and other income

 

363

 

 

 

 

 

 

677

 

 

 

 

Warrant valuation adjustment

 

14

 

 

 

133

 

 

 

88

 

 

 

133

 

Gain on redemption of mandatorily redeemable Preferred Units

 

 

 

 

 

 

 

 

 

 

9,580

 

Unrealized gain on derivatives

 

4,907

 

 

 

 

 

 

4,291

 

 

 

 

Gain on embedded derivative

 

 

 

 

 

 

 

 

 

 

89,050

 

Equity income from unconsolidated affiliates

 

53,187

 

 

 

60,250

 

 

 

200,015

 

 

 

180,956

 

Adjusted EBITDA(2) (non-GAAP)

$

228,005

 

 

$

211,110

 

 

$

838,830

 

 

$

772,189

 

 

 

 

 

 

 

 

 

Distributable Cash Flow (3)

 

 

 

 

 

 

 

Adjusted EBITDA (non-GAAP)

$

228,005

 

 

$

211,110

 

 

$

838,830

 

 

$

772,189

 

Proportionate EBITDA from unconsolidated affiliates

 

(81,139

)

 

 

(78,388

)

 

 

(306,072

)

 

 

(268,826

)

Returns on invested capital from unconsolidated affiliates

 

66,599

 

 

 

70,978

 

 

 

272,490

 

 

 

256,764

 

Interest expense

 

(75,411

)

 

 

(56,667

)

 

 

(205,854

)

 

 

(149,252

)

Unrealized (gain) loss on interest rate derivatives

 

22,862

 

 

 

 

 

 

(4,619

)

 

 

 

Maintenance capital expenditures

 

(11,203

)

 

 

(4,806

)

 

 

(26,268

)

 

 

(12,298

)

Distributions paid to preferred unit limited partners

 

 

 

 

 

 

 

 

 

 

(8,787

)

Distributable cash flow (non-GAAP)

$

149,713

 

 

$

142,227

 

 

$

568,507

 

 

$

589,790

 

 

 

 

 

 

 

 

 

Free Cash Flow (4)

 

 

 

 

 

 

 

Distributable cash flow (non-GAAP)

$

149,713

 

 

$

142,227

 

 

$

568,507

 

 

$

589,790

 

Cash interest adjustment

 

10,726

 

 

 

12,989

 

 

 

2,773

 

 

 

28,982

 

Realized gain on interest rate derivatives

 

4,736

 

 

 

 

 

 

11,818

 

 

 

 

Growth capital expenditures

 

(56,231

)

 

 

(42,409

)

 

 

(296,872

)

 

 

(207,927

)

Capitalized interest

 

(4,495

)

 

 

(1,485

)

 

 

(18,270

)

 

 

(2,755

)

Investments in unconsolidated affiliates

 

(32,822

)

 

 

(21,041

)

 

 

(226,947

)

 

 

(76,770

)

Returns of invested capital from unconsolidated affiliates

 

886

 

 

 

 

 

 

6,679

 

 

 

 

Contributions in aid of construction

 

4,404

 

 

 

1,455

 

 

 

12,243

 

 

 

15,799

 

Free cash flow (non-GAAP)

$

76,917

 

 

$

91,736

 

 

$

59,931

 

 

$

347,119

 

KINETIK HOLDINGS INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)

 

 

 

Twelve Months Ended
December 31,

 

 

 

2023

 

 

2022(1)

 

 

 

 

 

 

 

(In thousands)

Reconciliation of net cash provided by operating activities to Adjusted EBITDA

 

 

 

 

Net cash provided by operating activities

 

$

584,480

 

 

$

613,006

 

Net changes in operating assets and liabilities

 

 

4,057

 

 

 

(24,682

)

Interest expense

 

 

205,854

 

 

 

149,252

 

Amortization of deferred financing costs

 

 

(6,194

)

 

 

(9,569

)

Contingent liabilities remeasurement

 

 

 

 

 

839

 

Current income tax expense

 

 

492

 

 

 

522

 

Returns on invested capital from unconsolidated affiliates

 

 

(272,490

)

 

 

(256,764

)

Proportionate EBITDA from unconsolidated affiliates

 

 

306,072

 

 

 

268,826

 

Derivative fair value adjustment and settlement

 

 

7,963

 

 

 

(4,216

)

Interest income

 

 

(677

)

 

 

 

Unrealized gain on derivatives

 

 

(4,291

)

 

 

 

Integration costs

 

 

1,015

 

 

 

12,208

 

Transaction costs

 

 

648

 

 

 

6,412

 

Other one-time cost or amortization

 

 

11,901

 

 

 

16,355

 

Adjusted EBITDA(2) (non-GAAP)

 

$

838,830

 

 

$

772,189

 

 

 

 

 

 

Distributable Cash Flow(3)

 

 

 

 

Adjusted EBITDA (non-GAAP)

 

$

838,830

 

 

$

772,189

 

Proportionate EBITDA from unconsolidated affiliates

 

 

(306,072

)

 

 

(268,826

)

Returns on invested capital from unconsolidated affiliates

 

 

272,490

 

 

 

256,764

 

Interest expense

 

 

(205,854

)

 

 

(149,252

)

Unrealized gain on interest rate derivatives

 

 

(4,619

)

 

 

 

Maintenance capital expenditures

 

 

(26,268

)

 

 

(12,298

)

Distributions paid to preferred unit limited partners

 

 

 

 

 

(8,787

)

Distributable cash flow (non-GAAP)

 

$

568,507

 

 

$

589,790

 

 

 

 

 

 

Free Cash Flow(4)

 

 

 

 

Distributable cash flow (non-GAAP)

 

$

568,507

 

 

$

589,790

 

Cash interest adjustment

 

 

2,773

 

 

 

28,982

 

Realized gain on interest rate derivatives

 

 

11,818

 

 

 

 

Growth capital expenditures

 

 

(296,872

)

 

 

(207,927

)

Capitalized interest

 

 

(18,270

)

 

 

(2,755

)

Investments in unconsolidated affiliates

 

 

(226,947

)

 

 

(76,770

)

Returns of invested capital from unconsolidated affiliates

 

 

6,679

 

 

 

 

Contributions in aid of construction

 

 

12,243

 

 

 

15,799

 

Free cash flow (non-GAAP)

 

$

59,931

 

 

$

347,119

 

KINETIK HOLDINGS INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)

 

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

March 31, 2023

 

 

 

 

 

 

 

 

Net Debt(5)

(In thousands)

Long-term debt, net

$

3,562,809

 

$

3,606,962

 

$

3,625,799

 

$

3,511,648

Plus: Deferred financing costs

 

31,510

 

 

23,038

 

 

24,201

 

 

25,352

Less: Unamortized premiums and discounts, net

 

319

 

 

 

 

 

 

Total long-term debt

 

3,594,000

 

 

3,630,000

 

 

3,650,000

 

 

3,537,000

Less: Cash and cash equivalents

 

4,510

 

 

68

 

 

2,237

 

 

1,984

Net debt (non-GAAP)

$

3,589,490

 

$

3,629,932

 

$

3,647,763

 

$

3,535,016

 

(1) The results of the legacy Altus business are not included in the Company’s consolidated financials prior to February 22, 2022.
(2) 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.
(3) 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, distributions to preferred unitholders 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.
(4) 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.
(5) Net Debt is defined as total 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.

 

Kinetik Investors:

(713) 487-4832 Maddie Wagner

(713) 574-4743 Alex Durkee

Website: www.kinetik.com

Source: Kinetik Holdings Inc.

FAQ

What were Kinetik's Q4 2023 net income and Adjusted EBITDA?

Kinetik reported a net income of $267.4 million and Adjusted EBITDA of $228.0 million for Q4 2023.

What was Kinetik's full year 2023 net income and Adjusted EBITDA?

Kinetik's full year 2023 net income was $386.5 million, with Adjusted EBITDA of $838.8 million.

What is Kinetik's ticker symbol?

Kinetik's ticker symbol is NYSE: KNTK.

What is Kinetik's 2024 Adjusted EBITDA guidance range?

Kinetik issued guidance for 2024 with Adjusted EBITDA expected to be between $905 million and $960 million.

What strategic growth projects did Kinetik complete in 2023?

In 2023, Kinetik completed strategic growth projects including Delaware Link, Permian Highway Pipeline expansion, and gathering system expansion into Lea County, New Mexico.

Kinetik Holdings Inc.

NYSE:KNTK

KNTK Rankings

KNTK Latest News

KNTK Stock Data

2.38B
35.87M
16.48%
56.33%
3.98%
Pipeline Transportation of Crude Oil
Transportation and Warehousing
Link
United States of America
HOUSTON

About KNTK

altus midstream company owns gas gathering, processing, and transmission assets in the permian basin of west texas. as of december 31, 2019, its assets included approximately 178 miles of in-service natural gas gathering, 55 miles of residue gas, and 38 miles of natural gas liquids (ngl) pipelines; three cryogenic processing trains; and an ngl truck loading terminal with six lease automatic custody transfer units and eight ngl bullet tanks. the company is based in houston, texas. altus midstream company is a subsidiary of apache midstream llc.