tapebrief
KMI · Q4 2025

KMI · Q1 2026 Earnings

Bullish

Kinder Morgan

Reported April 22, 2026

30-second summary

KMI opened FY2026 with Adjusted EBITDA of $2.54B (+18% YoY), revenue of $4.83B (+13.8% YoY), and non-GAAP EPS of $0.48 — well above the ~$2.15B Q1 EBITDA bogey we set last quarter for the FY2026 $8.6B guide to be credible. Management now expects to exceed FY2026 EBITDA budget by more than 3% (excluding Monument), lowered the year-end leverage target from 3.8x to 3.7x (Q1 print: 3.6x), and grew the backlog to $10.1B. The deceleration concern from Q4 is resolved on the Q1 print — the question now flips to whether the >3% beat language is the floor or the ceiling.

Headline numbers

EPS

Q1 FY2026

$0.48

Revenue

Q1 FY2026

$4.83B

+13.8% YoY

Free cash flow

Q1 FY2026

$0.69B

Operating margin

Q1 FY2026

29.9%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$4.83B+13.8%$4.51B+7.1%
EPS$0.48—$0.39+23.1%
Operating margin29.9%—30.3%-40bps
Free cash flow$0.69B—$0.87B-21.2%

Guidance

KMI reaffirmed FY2026 EPS and EBITDA guidance but tightened leverage ratio to 3.7x (from 3.8x) on >3% EBITDA outperformance; Q1 FY2026 earnings beat with strong 13.8% YoY revenue growth and $2.54B Adjusted EBITDA.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

MetricPeriodGuideYoY
Adjusted EBITDA outperformance vs budgetFY 2026>3% favorable to budget—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Net Debt-to-Adjusted EBITDA ratio
FY 2026
3.8 times3.7 times0.1x improvementLowered

Reaffirmed unchanged this quarter: Adjusted EPS ($1.36), Adjusted EBITDA ($8.6 billion), Dividends per share ($1.19)

Other KPIs

Q1 FY2026
SegmentQ1 FY2026
Natural Gas Transport Volumes49,475 BBtu/d
Natural Gas Gathering Volumes4,319 BBtu/d
Total Refined Products Volumes1,545 MBbl/d
Crude and Condensate Volumes420 MBbl/d
Liquids Terminal Utilization93.5%
Adjusted EBITDA$2,539 million
Net Debt-to-Adjusted EBITDA3.6x
Project Backlog$10.1 billion

Management tone

Narrative arc: Q2 FY2025 "best opportunity set in 24 years" → Q3 FY2025 "exceptionally promising / AI co-driver" → Q4 FY2025 "strong growth, reliable performance" (measured) → Q1 FY2026 "unparalleled and unrelenting" (maximum conviction).

The most consequential tone shift is Rich Kinder explicitly conceding his past projections were too conservative — "In almost every case, the projections I made turn out to be understated." Through Q2 and Q3 FY2025, Kinder anchored the bull thesis to a 20% multi-year demand growth number; Q4 FY2025 quietly trimmed that to 17%. This quarter, rather than re-defending the trimmed number, he flipped the framing entirely: the relevant signal isn't the headline % but that every forecast he has previously committed to has been beaten. That is a more powerful framing than restating a number, but it also gives management permission to walk away from specific demand percentages going forward — investors lose a falsifiable anchor.

The Q4 deceleration concern is being directly answered, not avoided. Three months ago we flagged that FY2026 EBITDA was guided at only +2% growth — a step down from delivered FY2025 — and that management was not framing the deceleration. This quarter, with Q1 EBITDA at $2.54B (+18% YoY vs Q1 FY2025 $2.157B), management volunteered ">3% favorable to budget" guidance for the full year, which implies ~$8.86B+ on the $8.6B base — roughly +5.6% FY YoY growth vs the +2% original guide. The deceleration narrative has been actively dismantled on the print, with the upside now characterized as organic ("excluding any contributions from the Monument acquisition") rather than acquisition-driven as it was in Q2/Q3 FY2025.

The leverage story has reversed. Through Q2 and Q3 FY2025, leverage stuck near 3.9x–4.0x; Q4 FY2025 hit 3.8x and management guided FY2026 flat at 3.8x. The Q4 brief read this as the death of the deleveraging thesis. One quarter later, KMI is at 3.6x — "the lowest for a Kinder Morgan entity since well before our 2014 consolidation" — and revised the year-end target to 3.7x. The deleveraging optionality that we wrote off is back, and management is volunteering it as a strategic feature rather than treating it as a passive byproduct.

The Northeast permit posture hardened in a useful way. Through prior quarters management characterized Northeast expansion as a long-term opportunity contingent on policy resolution. This quarter Kim set explicit gating conditions — "somebody's going to have to roll out the red carpet... we've gone down that road once. We rode off a fair amount of capital, and I think that's not something that we are interested in doing again." This is a discipline signal: capital will not be deployed against unresolved permit risk, regardless of the demand on the other end. It also implicitly rules out a Williams/MVP-style multi-year permit grind from KMI's playbook.

Carbon capture has been quietly demoted from optionality to "mostly gone away." This is the cleanest narrative cut in the brief — last quarters' CO2 segment discussion still framed carbon capture as a possible future business; this quarter Jeremy Tonette's exchange confirmed it's effectively off the table absent economic shift.

Recurring themes management leaned on this quarter:

Natural gas demand acceleration outpacing forecastsLNG feed gas and power generation as primary demand driversStrategic asset positioning enabling expansion opportunitiesStrong cash flow enabling self-funded growthStorage as competitive differentiatorDisciplined capital allocation on attractive multiples

Risks management surfaced:

Middle East uncertainty may not sustain long-term geopolitical premiumPermit risk on Northeast expansion projectsCommercial support risk from IPPs without reimbursement mechanismsExecution risk on $10.1B project backlogLeverage increasing slightly by year-end 2026 due to capex and partial-year Monument contribution

Q&A highlights

Jean Ann Salisbury · Bank of America

Clarification on Trident pipeline's ability to deliver more than the 30% referenced if there is greater demand in 2027, and whether the NGPL 550 MMCFD Amarillo expansion is driven by utility demand pull or Permian supply push.

Trident's first phase comes online Q1 2027 as scheduled; there is incremental capacity beyond the 30% planned for 2027, but the Q1 2027 start is the fixed timeline. The NGPL Amarillo expansion is market pull driven by power demand.

Trident first phase Q1 202730% of Trident capacity planned for 2027Incremental capacity available beyond 30%NGPL 550 MMCFD expansion demand-pull driven by power

Keith Stanley · Wolf Research

Confirmation on which SFPP assets will be contributed to Western Gateway JV, the EBITDA contribution amount, and how returns are being calculated—whether on cash-on-cash basis or including asset value upgrade from new contracts.

Only the SFPP east line (Amarillo to Phoenix) and west line (California to Phoenix/El Paso) will be contributed, not the entire SFPP system. Returns are calculated as full project IRR based on incremental return on capital contributed and cash received, not just year-one cash-on-cash.

East and west lines of SFPP being contributed to JVAdditional SFPP assets in California not being contributedReturns measured on full project IRR basisCalculation based on incremental return on capital

Olivia Foster · Goldman Sachs

Request for details on size, scope, and geography of gas transmission projects in the opportunity set and shadow backlog, plus clarification on volume impacts from higher commodity prices.

Management declined to provide specific project details due to competitive sensitivities, but noted opportunities span power, LNG, and industrial across the entire southern U.S. from Arizona to Florida. Refined product volumes down slightly but not attributed to higher prices. GMP gas volumes up 15% in quarter; Haynesville kinderhog volumes up 34%.

Opportunities across southern U.S. (Arizona to Florida)Primary drivers: power demand, LNG, industrialRefined products down slightly in quarterGMP volumes up 15%

Jeremy Tonette · JP Morgan

Breakdown of the 3% outperformance above budget into one-time vs. recurring components, and inquiry on carbon capture market demand going forward.

Terminal buyout is somewhat one-time; balance driven by commodity prices and winter weather impacts. Carbon capture market described as 'mostly gone away' with only a few prospects being evaluated, though management retains expertise if economic opportunities arise.

Terminal buyout characterized as one-timeCommodity prices and winter weather driving incremental margin performanceCarbon capture described as 'mostly gone away'CO2 production volumes up

Elvira Scato · RBC Capital Markets

Review of oil hedging strategy given current commodity price environment and forward-looking hedging plans.

90% hedged for remainder of 2024; 76% hedged for 2027 at approximately $65/barrel. Hedging strategy remains consistent: near-term years heavily hedged (80%+), moving higher as year approaches; years 3+ lightly hedged to match cost structure exposure. One dollar price move equals ~$3.5 million impact.

90% hedged for balance of 202476% hedged for 20272027 hedge price approximately $65/barrelOne dollar price move = $3.5 million impact

Answers to last quarter's watch list

FY2026 EBITDA tracking vs. $8.6B guide — Q1 Adjusted EBITDA came in at $2.54B (+18% YoY), comfortably above the ~$2.15B bogey we set for credibility of the FY $8.6B guide. Management now expects to exceed the budget by >3% on an organic basis (excluding Monument), implying ~$8.86B+ for FY2026 — roughly +5.6% YoY vs FY2025's $8.39B, materially better than the original +2% guide.
Resolved positively
Leverage trajectory in 1H FY2026 — Leverage came in at 3.6x at Q1, with management revising the year-end target from 3.8x to 3.7x. We specifically wrote in the Q4 brief that "if it drops to 3.7x mid-year, FY2026 guide is conservative." It dropped to 3.6x at Q1. The deleveraging story we declared dead is alive again.
Resolved positively
Specific FID announcements from the shadow backlog — Backlog grew $145M QoQ to $10.1B (vs the $700M Q4 jump), with $375M of new projects added and $230M placed in service. Three data center deals were included in the additions. Trident first-phase Q1 2027 timing was confirmed, but no marquee new FID was announced this quarter. The Monument Pipeline acquisition is a separate inorganic addition.
Continue monitoring
Backlog first-year EBITDA multiple — Resolved: backlog multiple disclosed at ~5.6x on remaining $8.9B (CO2 and G&P projects excluded), consistent with Q4. Transcript: "The backlog multiple remains below six times." Status: Resolved.
Power share of backlog — Disclosed at ~60% (power generation and local distribution company demand combined), with natural gas projects accounting for ~92% of the total backlog. Status: Resolved.
Liquids terminal utilization — Held at 93.5%, with Dax noting lease capacity remains "almost 94%" and tank utilization at key hubs near 99%. Suggests the Q4 dip was idiosyncratic rather than structural.
Resolved positively

What to watch into next quarter

Q2 EBITDA pace vs revised >3% beat trajectory: $8.86B implied FY (>3% above $8.6B) requires roughly $2.10B+ Q2 EBITDA based on historical 24-25% Q2 seasonality. A Q2 print below $2.05B would suggest the >3% framing was front-loaded by Q1 strength rather than sustainable; above $2.15B implies the >3% language is a floor, not a ceiling.

Leverage at Q2 mid-year: Revised exit target is 3.7x; Q1 print is 3.6x. Management explicitly flagged leverage will "increase slightly by year end" due to higher capex flows and partial-year Monument contribution. Watch whether mid-year holds at 3.6–3.7x (consistent with conservative guide) or drifts up faster than expected.

First major FID from the shadow backlog: The slate management committed to throughout FY2025 still has not fully materialized. Backlog grew $145M QoQ. Watch Q2 or Q3 for a specific FID announcement — name, capex, in-service date, contract structure — including potential Western Gateway FID "in the next few months" per Dax.

Backlog first-year EBITDA multiple disclosure: Held at ~5.6x this quarter (on the $8.9B ex-CO2/G&P portion), consistent with Q4. Watch whether new additions hold or compress this multiple — sustained sub-6x is the confidence signal worth tracking.

Monument Pipeline closure and contribution sizing: $500M purchase price, ~9-year weighted average contract life, medium-term multiple <8.0x driven by post-close expansion activity. HSR cleared; closure expected by end of month. Watch for first-year EBITDA contribution sizing once the asset is in the run-rate.

Refined products volumes: Down 2% YoY to 1,545 MBbl/d this quarter, with management explicitly saying it was not price-driven. Watch whether this is one-quarter weakness or the start of a softer demand trend.

Sources

  1. Kinder Morgan Q1 FY2026 press release / 8-K exhibit, filed April 22, 2026: https://www.sec.gov/Archives/edgar/data/1506307/000150630726000033/kmi2026q18-kex991.htm
  2. Kinder Morgan Q1 FY2026 earnings call commentary (management prepared remarks and Q&A)
  3. Tapebrief Q4 FY2025 KMI brief (prior-quarter trend and watch list context)
  4. Tapebrief Q3 FY2025 KMI brief (multi-quarter narrative arc)
  5. Tapebrief Q2 FY2025 KMI brief (multi-quarter narrative arc)

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