Kinetik Holdings Inc. Q1 FY2025 earnings call

• Jamie Welch noted Kinetik reported solid first quarter results exceeding internal expectations, made progress on strategic projects like Kings Landing and Barilla Draw acquisition, and announced a $500 million share repurchase program. - Trevor Howard discussed first quarter adjusted EBITDA of $250 million, distributable cash flow of $157 million, and free cash flow of $120 million. He reaffirmed full-year adjusted EBITDA guidance of $1.090 billion to $1.150 billion and capital guidance of $450 million to $540 million, noting anticipation of acceleration in adjusted EBITDA growth in the second half of the year.

In the first quarter, the Midstream Logistics segment generated adjusted EBITDA of $159 million, up 11% year-over-year due to increased process gas volumes and margin expansion from Northern Delaware assets. Processed gas volumes were up sequentially, driven by return to production at Alpine High. The Pipeline Transportation segment had adjusted EBITDA of $94 million, down 2% year-over-year as Gulf Coast Express had no contributions post-sale, offset by increased EPIC Crude contribution. Midstream Logistics contributed 63.6% of total adjusted EBITDA ($159M out of $250M), and Pipeline Transportation contributed 37.6% ($94M out of $250M).

• Affirmed adjusted EBITDA guidance of $1.090 billion to $1.150 billion and capital guidance of $450 million to $540 million. - Anticipates a meaningful acceleration in adjusted EBITDA growth during the second half of 2025, including commissioning of Kings Landing and contributions from Barilla Draw, Eddy County project, and Lea County agreement.

• Macro-economic uncertainty and commodity price headwinds. - Potential indirect impacts of lower commodity prices on customer development schedules, leading to possible slowdown in activity towards the end of the year.

Q: About long-term growth drivers, what are the factors behind Kinetik's 10% compound annual growth over the next five years?

A: Jamie Welch mentioned it's driven by contractual resets, step-ups on existing base contracts, Barilla Draw processing starting in 2028, and growth in New Mexico acreage. Also, power generation project or compression procurement has immediate OpEx benefits.

Q: Regarding capital allocation and buybacks, how is the share repurchase program positioned?

A: Trevor Howard stated the Board sees strong value in the stock price, leading to increasing the share repurchase program to $500 million for flexibility in choppy markets. Jamie Welch emphasized the stock's growth potential with annualized EBITDA expected to increase and attractive yield and dividend prospects.