October 17, 2024 08:02 GMT
ENERGY SECTOR: Kinder Morgan Q3 Below Consensus With Guidance Cut
ENERGY SECTOR
Baa2/BBB/BBB
Not a name we have written much about given only a single EUR 27 line. Performance and outlook being weighed upon by weaker-than-expected pricing.
- Q3 revenue -5.3% YoY (-11.5% vs. BBG consensus).
- Adj-EBITDA +2.5% (-2.2% vs. consensus).
- EBITDA leverage of 4.1x (in line with consensus).
- CFO USD 1.2bn -2.9% YoY (-5.1% vs. consensus).
- FCF USD 0.6bn -7.4% (+32% vs. consensus).
- Outlook statement implies a cut the FY outlook for adj-EBITDA (+5% from +8%), EPS (+9% from +15%) and leverage (4x from 3.9x). At Q2 they had indicated they would be “roughly in-line with our budget for the full year (on budget or within 1-2% below)”.
- From the call; “As I said, right now we're at 4.1 times debt-to-EBITDA. We expect to end the year around 4 times debt-to-EBITDA. The high end of our range on debt-to-EBITDA is 4.5 times, every 0.1 is, roughly $700 million-ish. And so, I mean, you could -- we could debt fund, if you will, some incremental CapEx as long as we were sure that over time based on the cash flow that these projects would bring on, and I think based on the returns that we target, that would occur, that debt-to-EBITDA would come back down over time. And so, that's something that we can do.”
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