Kinder Morgan outlines $10B natural gas project pipeline and signals double-digit adjusted EPS growth amid surging LNG and AI-driven demand

Earnings Call Insights: Kinder Morgan (KMI) Q3 2025

MANAGEMENT VIEW

* Executive Chairman Richard Kinder stated the company’s future is strongly tied to natural gas, highlighting "continued rapid growth in LNG feedgas demand driven by the enormous expansion of export facilities, primarily along the Gulf Coast." He emphasized the impact of AI data centers on electricity demand and positioned natural gas as the most viable option to meet this need due to the limitations of renewables and nuclear. "The tremendous growth in natural gas demand drives the opportunity for expanding and extending our pipeline and terminal networks and adding new facilities as evidenced by the $9 billion plus of projects already approved by our Board."
* CEO Kimberly Dang said, "We're pleased to report another strong quarter with EBITDA up 6% and adjusted EPS growing 16% year-on-year." Dang stated that results reflect "the strength of our underlying business and the continued execution on our growth projects." She reported that the natural gas segment, accounting for two-thirds of the business, is outperforming its budget, and added, "We currently expect to exceed our full year budget due to the contributions from the Outrigger acquisition."
* Dang highlighted a $9.3 billion project backlog and an actively pursued "over $10 billion in potential projects, primarily in natural gas," with approximately 50% of new projects supporting power generation and 50% focused on refined product tankage. She noted, "Today, we transport over 40% of the natural gas in the United States, including more than 40% of the volume headed to LNG export facilities."
* President Thomas Martin reported 6% growth in natural gas transport volumes and 9% growth in gathering volumes year-over-year, with sequential gathering volume growth at 11%. He said, "The gathering volume growth trend continues in the early days of the fourth quarter, most notably on our Haynesville system as it is approaching new daily volume records in October."
* CFO David Michels declared a quarterly dividend of $0.2925 per share and annualized $1.17, representing a 2% increase over 2024. "For the third quarter, we generated net income attributable to KMI of $628 million and EPS of $0.28 per share, both in line with the third quarter of 2024." Michels emphasized, "Excluding those items, adjusted net income and adjusted EPS grew 16% year-over-year, delivering strong double-digit growth."

OUTLOOK

* Dang stated the company expects to exceed its 2025 budget, which anticipated 4% adjusted EBITDA growth and 10% adjusted EPS growth from 2024. She said, "With the outperformance, we expect to deliver even larger year-over-year growth."
* Management projected a "28 Bcf a day increase in natural gas demand by 2030, driven primarily by growth in LNG exports as well as power and exports to Mexico." Dang also referenced Wood Mackenzie’s forecast of "22 Bcf a day of growth in overall natural gas demand."
* The company is actively pursuing over $10 billion in natural gas project opportunities, with expectations to convert a portion into additional backlog.

FINANCIAL RESULTS

* For Q3 2025, net income attributable to KMI was $628 million and EPS was $0.28 per share. Adjusted net income and adjusted EPS grew 16% year-over-year, after excluding mark-to-market hedge impacts and a one-time non-cash tax benefit from the prior year.
* Cash flow from operations year-to-date was $4.225 billion, with dividends paid of $1.95 billion and total capital spent of $2.245 billion. The Outrigger acquisition totaled $650 million.
* Net debt to adjusted EBITDA ratio improved to 3.9x at the end of Q3, down from 4.1x at the end of Q1. Fitch upgraded the company’s senior unsecured rating to BBB+ in August.

Q&A

* Theresa Chen, Barclays: Asked about the improved growth outlook and $10 billion opportunity set. Dang explained, "It's mostly natural gas...export LNG, power, but there's also projects that support exports to Mexico and industrial growth." On Western Gateway’s competitive positioning, Dang said, "From our perspective, it's a very good project for Arizona...Arizona is a growing market."
* Jeremy Tonet, JPMorgan: Queried the robustness of the opportunity set and competitive landscape. Dang responded, "What makes us very competitive is our existing footprint, which provides us with opportunities to build off of that footprint, and we can provide our customers services that other competitors can't offer."
* Julien Dumoulin-Smith, Jefferies: Asked about regional opportunity emergence and power sector focus. Mody, VP & President of Natural Gas Pipelines, said, "We have strong connectivity to Mexico. When you look out in the Southeast, you've seen the IRPs that have been put out by all the various states. Clearly, there's demand that's coming."
* Michael Blum, Wells Fargo: Asked about Hiland Express and behind-the-meter opportunities. Dang replied, "It is unlikely that we invest behind the meter." Mody added, "We are looking at working with our partners to supply gas in certain instances to be able to support a consortium of folks to be able to provide reliable power."

SENTIMENT ANALYSIS

* Analysts raised probing questions around project commercialization pace, competitive dynamics, and segment-specific opportunities, signaling a neutral to slightly positive tone as they explored the depth and timing of growth prospects.
* Management maintained a consistently confident tone, with Dang stating, "We remain confident in our strategy, our execution and our ability to deliver long-term value for our shareholders." During Q&A, responses were detailed and assertive, with few signs of defensiveness or hesitation.
* Compared to the previous quarter, both analysts and management maintained a similar tone, though management offered more granular detail on segment performance and backlog opportunities this quarter.

QUARTER-OVER-QUARTER COMPARISON

* The opportunity set for unsanctioned projects remained robust, with the current quarter specifically referencing "over $10 billion" in active pursuits, compared to the previous quarter’s $7–$11 billion range.
* Adjusted EBITDA and adjusted EPS growth rates accelerated to 6% and 16% year-on-year, respectively, compared to 6% and 12% in the prior quarter.
* Management’s tone on regulatory and permitting environment remained positive, but the current quarter placed greater emphasis on AI-driven power demand and LNG export growth as strategic growth drivers.
* Analysts continued to focus on project pipeline, commercialization timing, and segment-specific performance, with recurring questions on Western Gateway and Haynesville capacity.

RISKS AND CONCERNS

* Dang highlighted weaker than budgeted D3 RIN prices and RNG volumes as partial offsets to overall outperformance, noting, "Currently, the RNG volumes are much closer to budget, but RINs prices remain weak."
* The company acknowledged competitive pressures for project wins and uncertainty in the commercialization cadence.
* Management addressed regulatory gating factors and capacity constraints, with Dang stating, "We would target a 2029 in-service date" for Western Gateway, subject to regulatory approvals.

FINAL TAKEAWAY

Kinder Morgan management emphasized a compelling long-term growth story underpinned by surging natural gas demand from LNG exports and AI-related power generation. The company reported double-digit adjusted EPS growth, an expanding project backlog, and a robust pipeline of $10 billion in prospective projects, with strategic focus on leveraging its extensive infrastructure footprint. Backed by improved balance sheet metrics and favorable credit ratings, Kinder Morgan positioned itself for continued high-quality growth, while remaining vigilant about competitive dynamics and segment-specific risks.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/kmi/earnings/transcripts]

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