Kinder Morgan, Inc.
KMI · NYSE
Next quarter
Reports Oct 28, 2026.
Consensus is $0.33 EPS for Sep 2026 across 8 estimates, ranging $0.30 to $0.39.
KMI Jun 2026
- 19.35%
- +0.86%
- $0.31
- $0.37
- —
- $4.10B
Reported results
- $4.10B
- $1.35B
- 32.85%
- $867.00M
- $0.39
Highlights
- Earnings beat: Adjusted EPS was $0.37 versus the $0.31 consensus, a 19.35% surprise; GAAP EPS was $0.39.
- Record profitability: Net income attributable to KMI reached $867 million, up 21% year over year and the highest second-quarter result on record; adjusted net income was $821 million, up 33%.
- EBITDA growth: Adjusted EBITDA rose 12% year over year to a second-quarter record of $2.199 billion, although it declined from an estimated $2.539 billion in the first quarter.
- Natural gas leadership: Adjusted Natural Gas Pipelines segment EBDA increased 8% to $1.461 billion, supported by 7% higher transport volumes and 26% higher gathering volumes.
- Project execution: KMI placed approximately $660 million of expansion projects into service, including Cumberland, Hiland Express and the Gulf Coast Express expansion.
- Backlog remains substantial: The project backlog ended at $9.6 billion, down $500 million sequentially after projects entered service; 92% is natural-gas related and more than 60% supports power generation and local distribution demand.
- Cash generation and leverage: Cash flow from operations was $1.960 billion and free cash flow was $978 million; net debt-to-adjusted EBITDA improved to 3.6x from 3.8x at year-end 2025.
- Raised outlook confidence: KMI expects 2026 adjusted EBITDA to be more than 5% above its $8.6 billion budget and adjusted EPS to be more than 12% above its $1.36 budget.
- Dividend: The board declared a quarterly dividend of $0.2975 per share, or $1.19 annualized, up 2% from the year-ago quarter.
Analysis
Kinder Morgan’s second quarter was a clear earnings beat driven by broad segment strength, with the natural-gas infrastructure portfolio doing most of the strategic work. Adjusted EPS of $0.37 exceeded the $0.31 consensus by 19.35%, while GAAP EPS was $0.39. Revenue was $4.477 billion, up 11% from $4.042 billion a year ago and broadly stable against $4.45 billion in the first quarter. Operating income rose 17% year over year to $1.346 billion, but declined from $1.44 billion sequentially; net income attributable to KMI increased 21% to $867 million, versus $976 million in Q1. Adjusted EBITDA reached a second-quarter record of $2.199 billion, up 12% year over year but below the estimated $2.539 billion first-quarter level.
The defining feature was sustained demand for gas transportation and gathering, alongside the conversion of that demand into new operating capacity. KMI commissioned approximately $660 million of projects and retained a $9.6 billion backlog, concentrated in natural gas and power-related infrastructure. Cash flow remained sufficient to fund growth and the dividend internally: operating cash flow was $1.960 billion, free cash flow was $978 million and leverage was 3.6x. Management now expects full-year adjusted EBITDA and adjusted EPS to exceed budget by more than 5% and 12%, respectively.
Earnings and outlook
The quarter combined a material consensus beat with strong year-over-year operating growth, though results moderated from the unusually stronger first quarter. Adjusted EPS rose to $0.37 from $0.28 a year ago and compared with a $0.31 consensus estimate. GAAP EPS was $0.39, versus $0.32 a year ago and $0.44 in Q1. Adjusted net income increased 33% year over year to $821 million, while the $46 million of negative Certain Items included mainly risk-management effects.
- Income statement: Revenue increased 11% year over year to $4.477 billion, operating income rose 17% to $1.346 billion and net income attributable to KMI rose 21% to $867 million.
- Full-year view: Against a budget of $8.6 billion for adjusted EBITDA and $1.36 for adjusted EPS, KMI expects to finish 2026 more than 5% and 12% above budget, respectively.
- Tax and interest: The effective tax rate increased to 23.3% from 19.3% a year ago, while net interest expense fell to $425 million from $452 million, partly offsetting the tax headwind.
Natural gas momentum
Natural Gas Pipelines remained the central earnings engine. Adjusted segment EBDA increased 8% to $1.461 billion, with gains across Midstream, East and West operations. The results reflected higher demand on Texas intrastate systems, KinderHawk gathering growth, completed expansion projects and stronger activity linked to market volatility.
- Volumes: Natural gas transport volumes rose 7% to 47,886 BBtu per day, while gathering volumes increased 26% to 4,637 BBtu per day.
- Midstream: Segment EBDA increased $54 million, or 10%, to $578 million, driven by higher Texas intrastate service demand, KinderHawk volumes and acquired Hiland assets.
- East and West: East EBDA rose $16 million to $695 million and West EBDA rose $14 million to $247 million, helped by expansions, lower maintenance costs and capacity-related activity.
- Strategic demand: LNG deliveries, exports to Mexico and higher power-generation demand supported transport volumes, reinforcing KMI’s focus on gas infrastructure tied to LNG, electricity and industrial growth.
Expansion projects and backlog
Project execution was a major feature of the quarter. KMI placed roughly $660 million of KM-share expansion projects into service, adding revenue-generating assets to an already highly utilized network. The backlog declined as projects were completed, rather than because of a reduction in demand.
- Projects commissioned: The Cumberland project began service with approximately 245,000 Dth per day of capacity for a new Tennessee power plant; Hiland Express converted the Double H system to NGL service; and the Gulf Coast Express expansion added approximately 570 MMcf per day from the Permian Basin to South Texas.
- Backlog mix: The remaining backlog was $9.6 billion at quarter-end, with about 92% related to natural gas and more than 60% tied to power-generation and local-distribution-company demand.
- Returns and additions: Excluding selected CO2 and gathering projects, the remaining $8.5 billion of backlog is expected to generate an aggregate first-full-year Project EBITDA multiple of approximately 5.6x. The board also gave contingent approval to nearly $400 million of projects not yet in backlog.
- Longer-dated opportunities: The roughly $1.8 billion KM-share South System Expansion 4 and approximately $1.7 billion Mississippi Crossing projects received FERC environmental-impact milestones and are targeted for service beginning in 2028, subject to permits and approvals.
Other segment performance
The quarter was broad-based rather than solely a gas story. Products Pipelines, Terminals and CO2 all contributed higher adjusted EBDA, although refined-products and crude volumes declined.
- Products Pipelines: Adjusted EBDA rose 17% to $339 million, primarily on higher commodity prices, blending spreads and transmix margins. Total refined-products volumes fell 5% to 1.623 million barrels per day, while crude and condensate volumes fell 16% to 421,000 barrels per day.
- Terminals: Adjusted EBDA increased 3% to $309 million. Liquids terminals benefited from higher Houston Ship Channel rates and ancillary fees, while the Jones Act tanker fleet benefited from higher average charter rates.
- CO2: Adjusted EBDA rose 43% to $207 million, supported by higher commodity prices and volumes. SACROC oil production increased 15% to 21.11 thousand barrels per day.
- Utilization: Liquids-terminal utilization remained high at 93.0%, although it was modestly below 94.4% a year earlier.
Cash flow and capital
KMI continued to present growth investment, dividends and balance-sheet discipline as mutually compatible. Six-month operating cash flow reached $3.451 billion, up from $2.811 billion a year ago, while capital expenditures rose to $1.786 billion from $1.413 billion.
- Quarterly cash generation: Cash flow from operations was $1.960 billion, capital expenditures were $982 million and free cash flow was $978 million. Free cash flow after dividends was $313 million.
- Six-month cash generation: Free cash flow was $1.665 billion, up from $1.398 billion a year earlier, and free cash flow after dividends was $346 million versus $102 million.
- Capital plan: KMI expects to invest $4.1 billion in 2026 across expansion projects, acquisitions and joint-venture contributions.
- Balance sheet: Net debt was $32.027 billion and trailing adjusted EBITDA was $9.0 billion at June 30, producing a 3.6x leverage ratio. The company had approximately $3.2 billion of available capacity under its $3.5 billion revolving credit facility.
