KMI · Q2 2026 Earnings

Bullish

Kinder Morgan

Reported July 22, 2026

30-second summary

Q2 Adjusted EBITDA came in at $2.199B (+11% YoY vs $1.97B Q2 FY2025) with revenue of $4.48B (+10.8% YoY), non-GAAP EPS of $0.37 beating consensus $0.31 by 19.4%, and the backlog stepping down to $9.6B from $10.1B. The forward frame is what matters: management widened its FY2026 outperformance guidance from >3% to >5% favorable to budget on EBITDA, introduced a new >12% EPS favorability disclosure vs the $1.36 point guide, and lowered the year-end leverage target from 3.7x to 3.6x. The deleveraging story we declared dead in Q4 is now three consecutive quarters of active reversal.

Headline numbers

EPS

Q2 FY2026

$0.37

+19.4% vs est.

Revenue

Q2 FY2026

$4.48B

+10.8% YoY

+5.8% vs est.

Free cash flow

Q2 FY2026

$0.98B

Operating margin

Q2 FY2026

30.1%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$4.48B	$4.04B	+10.8%	$4.83B	-7.3%
EPS	$0.37	$0.28	+32.1%	$0.48	-22.9%
Operating margin	30.1%	28.5%	+160bps	29.9%	+20bps
Free cash flow	$0.98B	$1.00B	-2.4%	$0.69B	+42.4%

Guidance

KMI significantly upgraded full-year outperformance expectations (Adjusted EBITDA favorability raised from >3% to >5%, and new Adjusted EPS favorability disclosure of >12%) while reaffirming absolute guidance, reflecting strong H1 execution and improved leverage.

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

New guidance

Metric	Period	Guide	YoY
Adjusted EPS favorability vs budget	FY 2026	more than 12% favorable to budget	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Net Debt-to-Adjusted EBITDA	FY 2026	3.7x (revised) / 3.8x (original)	3.6x	-0.1x to -0.2x improvement	Raised
Adjusted EBITDA favorability vs budget	FY 2026	more than 3% favorable to budget	more than 5% favorable to budget	+2+ percentage points	Raised

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

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Adjusted EBITDA	$2,199 million	$1,972 million	—
Natural gas transport volumes	47,886 BBtu/d	—	—
Natural gas gathering volumes	4,637 BBtu/d	—	—
Total refined products volumes	1,623 MBbl/d	—	—
Liquids utilization	93.0%	—	—
Net Debt-to-Adjusted EBITDA	3.6x	4.0x	—
Operating cash flow	$1,960 million	—	—
Project backlog	$9.6 billion	—	—

Management tone

Narrative arc: Q3 FY2025 "AI-driven re-acceleration" → Q4 FY2025 "cautious FY2026 reset ($8.6B, flat leverage)" → Q1 FY2026 "beat is organic, not acquisition-driven" → Q2 FY2026 "outperformance widens on both P&L and balance sheet."

The Q4 FY2025 deceleration narrative is now fully unwound, and the pace of that unwinding is what matters. Q4 guided FY2026 EBITDA at +2.5% and leverage flat at 3.8x — a soft, contained forward frame. One quarter later, that flipped to >3% above budget and 3.7x. This quarter, it's >5% above budget and 3.6x. Two consecutive quarters of upgrading both the growth line and the balance sheet target is not a rounding — it's management systematically re-anchoring a guide they under-set in Q4. The Q4 brief called this the "story management is not framing"; two quarters later, management is now framing it aggressively. Press release language: "we currently expects to be more than 5% favorable to budget on an Adjusted EBITDA basis and more than 12% favorable to budget on Adjusted EPS for the year."

The new >12% EPS favorability disclosure is the sharpest signal in this print. Prior quarters framed outperformance exclusively in EBITDA terms. Introducing a separate, larger EPS favorability figure — 12pp gap vs the 5pp EBITDA gap — pulls the tax-reform cash-flow narrative that Q3 FY2025 emphasized and Q4 dropped back to the center of the setup. Management is now inviting the investor to model >$1.52 FY2026 EPS against a $1.36 point guide. This is the most explicit permission-to-model-higher KMI has offered.

The Monument Pipeline framing has quietly reversed. Q1 FY2026 explicitly excluded Monument from the >3% outperformance to ring-fence inorganic upside. This quarter, that caveat is absent from the guidance change record. Either Monument's contribution has been absorbed into the run-rate and is now folded into the >5% figure, or the ring-fencing framework has been dropped as unnecessary. Either way, the "organic vs. inorganic" distinction that carried Q1's narrative is no longer being drawn — suggesting management is comfortable letting the combined result speak.

Leverage discipline has become a strategic feature, not a byproduct. Three quarters ago (Q4 FY2025) leverage was guided flat at 3.8x with no deleveraging path; two quarters ago it was 3.7x; one quarter ago it was 3.6x actual with 3.7x year-end target; this quarter it's 3.6x actual with 3.6x year-end target. That's a 20bp reduction in the multi-year run-rate expectation across two quarters. In an environment where midstream peers are being pressured to buy back stock or return incremental cash, KMI's answer is a lower leverage target — which preserves the option to fund an accelerating backlog internally without diluting.

Answers to last quarter's watch list

Q2 EBITDA pace vs revised >3% beat trajectory — Q2 Adjusted EBITDA came in at $2.199B, above the $2.15B "floor" threshold we flagged for the >3% framing to be sustainable. On a run-rate basis, 1H EBITDA of $4.74B (adding to Q1's $2.54B) implies a ~$9.0B+ FY trajectory — comfortably above the >5% favorable guidance management upgraded to this quarter. The >3% language was a floor, not a ceiling; the new >5% framing appears equally conservative given 1H performance.

Resolved positively

Leverage at Q2 mid-year — Held at 3.6x, matching Q1 rather than drifting up as management had flagged. Year-end target lowered from 3.7x to 3.6x this quarter, meaning KMI expects to hold current leverage through year-end capex flows and Monument absorption.

Resolved positively

First major FID from the shadow backlog — Backlog stepped down $500M QoQ to $9.6B, indicating projects placed in service outpaced additions. No specific marquee FID (Western Gateway or otherwise) was itemized in the press release. Without transcript detail this quarter, the shadow-to-disclosed conversion story remains open.

Continue monitoring

Backlog first-year EBITDA multiple disclosure — Not disclosed in the press release for Q2. Consistent with the pattern where this metric is volunteered on the call but not itemized in the release.

Not resolved

Monument Pipeline closure and contribution sizing — Contribution not itemized in the press release. Notable: the Q1 caveat that Monument was excluded from the >3% outperformance figure was dropped this quarter, suggesting Monument is now embedded in the >5% figure without a separate ring-fence.

Continue monitoring

Refined products volumes — Deteriorated from −2% YoY (Q1) to −5% YoY (Q2) at 1,623 MBbl/d. Two consecutive quarters of softening argues against the "one-quarter noise" read.

Resolved negatively

What to watch into next quarter

Q3 EBITDA pace vs revised >5% floor: $9.03B FY (>5% above $8.6B) requires roughly $2.15B+ Q3 EBITDA against Q3 FY2025's $1.99B (+8% YoY). A Q3 print at or below $2.10B would suggest the >5% framing is stretched by 1H strength; above $2.20B implies room to widen the guide again to >7% by year-end.

Refined products volume trajectory: Two consecutive quarters of deterioration (−2% → −5% YoY). Watch whether Q3 stabilizes, worsens further toward −7%, or reverts. If Q3 prints −5% or worse, this is a structural demand story that needs to be squared against the Terminals segment growth line.

Backlog step-up and shadow-to-disclosed conversion: Backlog dropped $500M this quarter to $9.6B. Watch whether Q3 shows net additions returning (implying "significant 2026 FIDs" are landing) or whether backlog drifts lower again. Sustained decline argues shadow backlog is aging without conversion.

Widening of the EPS-vs-EBITDA favorability gap: Currently >12% EPS favorability vs >5% EBITDA favorability, a 7pp gap. This gap quantifies below-the-line tailwinds (tax, interest). If Q3 widens this to 10pp+, tax reform impact is larger than modeled; if it compresses toward 5pp, the tax narrative is more modest than the current framing suggests.

First specific FID announcement: Four consecutive quarters of "significant FIDs coming in 2026" framing without a named marquee project. Watch Q3 for a specific FID — name, capex, in-service, contract — particularly Western Gateway, which Dax flagged as "in the next few months" back in Q1.

Transcript restoration: No Q2 transcript was available for this brief. Q3 will be the first opportunity to test whether the >5% / >12% outperformance framing is supported by call color on segment-level drivers (particularly the +26% gathering growth) or whether the release language is running ahead of operating detail.

Sources

Kinder Morgan Q2 FY2026 press release / 8-K exhibit, filed July 22, 2026: https://www.sec.gov/Archives/edgar/data/1506307/000150630726000063/kmi2026q28-kex991.htm
Tapebrief Q1 FY2026 KMI brief (prior-quarter guidance framing and watch list)
Tapebrief Q4 FY2025 KMI brief (FY2026 baseline reset context)
Tapebrief Q3 FY2025 KMI brief (multi-quarter narrative arc)
Tapebrief Q2 FY2025 KMI brief (multi-quarter narrative arc)

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