Kinder Morgan (KMI) delivered a robust start to 2026, posting first-quarter results that exceeded internal budgets and prompted an upward revision to full-year guidance. The midstream company is capitalizing on a tightening energy infrastructure landscape, driven by a surge in natural gas demand for power generation and liquefied natural gas (LNG) exports.
Key Takeaways
- Kinder Morgan increased its full-year adjusted EBITDA outlook by over 3% ($250 million) relative to its original budget.
- Kinder Morgan reduced its leverage to a 3.6x net debt-to-adjusted EBITDA ratio while simultaneously increasing its quarterly dividend by 2% to $0.2975 per share, signaling a balance between balance sheet strength and shareholder returns.
- The company’s project backlog reached $10.1 billion, bolstered by new deals specifically supporting data centers.
Every business segment outperformed its budget for the quarter, with the natural gas segment leading the charge. This outperformance was bolstered by increased utilization during winter storm Fern and extended cold weather in the Northeast.
The company reported adjusted EBITDA of $2.539 billion, beating the consensus estimate of $2.294 billion and representing an 18% increase year-over-year. Following the strong start to the year, management now projects full-year adjusted EBITDA to beat original 2026 budgets by more than 3%, or approximately $250 million. This revised outlook notably excludes contributions from the pending acquisition of the Monument Pipeline system.
In a strategic move to bolster its Texas footprint, Kinder Morgan entered into an agreement to acquire the intrastate network for approximately $500 million at an expected medium-term multiple of less than 8.0×. The assets are backed by long-term contracts with a weighted average life of about nine years. Management noted the acquisition provides synergies with existing storage and brings incremental low-nitrogen supply to the network.
Data Center Demand Bolsters Backlog
A significant highlight of the quarter was the growth in Kinder Morgan’s expansion project backlog, which now stands at $10.1 billion, up $145 million from last quarter. During the quarter, the company added $375 million in new projects, which notably included three deals specifically serving data centers. Natural gas projects account for approximately 92% of the backlog, with nearly 60% supporting power generation and local distribution company demand. On their call, management highlighted an S&P Global Market Intelligence report that utilities expect to add 153 gigawatts of gas-fired generation capacity, with most of that coming into service by 2030. This is notably twice the estimate from the same organization a year ago and speaks to the rapid growth in this area.
The backlog maintains a healthy multiple of below 6x, with an average in-service date of Q1 2028. Kinder Morgan’s three largest projects, representing over 50% of the total backlog, remain on time and on budget. Management expressed confidence that power growth will continue to convert identified opportunities into approved projects throughout 2026.
Kinder Morgan Details Western Gateway & Capital Allocation
Looking beyond the current backlog, Kinder Morgan is nearing a Final Investment Decision (FID) on the Western Gateway Pipeline system with Phillips 66 (PSX). Following a successful open season, the company expects to reach FID within the next few months for a mid-2029 completion. The project aims to provide California and Arizona with domestic refined product supply, reducing reliance on international markets (read more).
Bolstering its commitment to shareholder returns, KMI declared a dividend of $0.2975 per share, a 2% year-over-year increase. The company also reported a net debt-to-adjusted EBITDA ratio of 3.6×. While leverage is expected to tick up slightly to 3.7x by year-end due to capital spending, it remains comfortably within the target range. Citing reduced financial leverage, disciplined capital allocation, and a visible backlog for expansion projects, Moody’s recently upgraded KMI’s credit rating to Baa1, meaning the company is now rated the equivalent of BBB+ across all three major credit rating agencies.
Kinder Morgan is a top-15 holding in the Alerian Energy Infrastructure ETF (ENFR ), weighted 4.8% as of April 22. ENFR tracks the Alerian Midstream Energy Select Index (AMEI), a composite of North American energy infrastructure companies. Additionally, investors can access AMEI with the ALPS Alerian Energy Infrastructure Portfolio, which provides exposure in a VIT wrapper.
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