Kinder Morgan Profit Growth Cools as Backlog Shrinks
Kinder Morgan posted second-quarter net income of $867 million, up 21% from a year earlier but down from $976 million in the first quarter as growth decelerated across key metrics.
Kinder Morgan (KMI) reported second-quarter net income attributable to the company of $867 million, up 21% from $715 million a year earlier, as the natural-gas pipeline operator raised its full-year guidance even as growth slowed from the prior quarter.
The deceleration marked a shift from the pace set earlier in the year. Net income of $976 million in the first quarter had grown 36% year over year, and Adjusted EBITDA of $2,539 million had risen 18%. In the second quarter, Adjusted EBITDA fell to $2,199 million, up 12% from a year earlier, with both the growth rate and the absolute dollar level stepping down sequentially.
Earnings per share came in at $0.39, up 22% from a year earlier, while Adjusted EPS of $0.37 rose 32%. Operating cash flow was roughly $2 billion for the quarter and free cash flow about $1 billion, both down in dollar terms from the first quarter's $1.5 billion in operating cash flow and $0.7 billion in free cash flow, which themselves had grown 28% and 73% year over year, respectively.
The Natural Gas Pipelines segment, Kinder Morgan's largest, generated earnings before depreciation and amortization of $1,520 million, up 5.8% from $1,436 million a year earlier, as transport volumes rose 7% and gathering volumes climbed 26% on LNG deliveries, Texas Intrastate demand and Mexico exports. Products Pipelines segment EBDA rose 18.7% to $343 million despite volume declines of 5% in refined products and 16% in crude and condensate, with the segment's growth driven entirely by price and commodity effects rather than throughput. Terminals EBDA increased 3.3% to $310 million, led by higher Houston Ship Channel rates and Jones Act tanker charter rates, while the CO2 segment benefited from higher commodity prices and a 15% increase in SACROC field volumes.
Kinder Morgan's project backlog declined to $9.6 billion at quarter-end from $10.1 billion at the end of the first quarter, reversing the growth trend of the prior two quarters. The $500 million drop reflected roughly $660 million of projects placed into service, partly offset by contingent board approval of about $400 million in new projects not yet reflected in the total. Natural gas projects held at about 92% of the backlog, up from 90% at the end of 2024. FERC is expected to issue certificates by the end of July for two large projects not mentioned in prior releases: SNG/EEC South System Expansion 4, valued at about $3.5 billion with a roughly $1.8 billion Kinder Morgan share, and TGP's Mississippi Crossing, valued at about $1.7 billion.
Kinder Morgan raised its full-year 2026 guidance, now expecting to exceed its $8.6 billion budgeted Adjusted EBITDA by more than 5% and its $1.36 budgeted Adjusted EPS by more than 12%, building on the outperformance framing management gave after first-quarter results. The company also lowered its year-end net debt-to-Adjusted EBITDA target to 3.6 times from an original budget of 3.8 times, matching the leverage ratio already achieved at the end of both the first and second quarters, an improvement from 3.8 times at the end of 2024.
The board declared a quarterly dividend of $0.2975 a share, a 2% increase from a year earlier and consistent with the 2% raises announced in the first quarter of 2026 and the fourth quarter of 2024.