Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 22, 2026 · Beat 3 of last 7 quarters
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Kinder Morgan's results reinforce the thesis that AI-driven power demand is accelerating natural gas infrastructure needs. The company's growing backlog of power-related projects (including >10 Bcf/d in development) and its ability to fund them internally highlight the critical role of midstream gas pipelines in supporting data center growth. The FERC milestones on major expansions and the strong Haynesville volumes signal continued buildout of gas supply infrastructure to meet AI-era electricity demand.
Kinder Morgan delivered a record second quarter with net income of $867 million and EPS of $0.39, up 21% and 22% YoY respectively. Adjusted EBITDA grew 12% and adjusted EPS grew 32%, with all segments contributing. The company placed $650 million of projects into service, added ~$200 million to backlog, and received FERC environmental impact statements for Mississippi Crossing and South System 4. Natural gas transport volumes rose 7% and gathering volumes rose 26%, while refined product volumes fell 5% and crude/condensate volumes fell 16% (down 5% ex-Double H). Terminals liquids lease capacity remained high at 93%, and the CO2 segment saw net oil production up 10%.
Management raised full-year 2026 guidance, now expecting adjusted EBITDA at least 5% above budget and adjusted EPS at least 12% above budget, representing more than $430 million of additional EBITDA contribution. They expect to FID substantial additional CapEx projects in the back half of 2026, likely more than offsetting the ~$1 billion of projects expected to be placed in service, with the $10 billion opportunity set continuing to grow. The company sees strong demand from power generation (>10 Bcf/d in development) and LNG (~3 Bcf/d), and expects to fund growth almost entirely with internal cash flow while maintaining leverage at the lower end of the target range. Western Gateway is expected to reach FID within the next month or two, and the company remains confident in its ability to convert shadow backlog projects into sanctioned backlog.
“The natural gas growth story remains very positive as demand for LNG export volumes and gas for electric generation continues to grow.”
on Demand outlook
“Adjusted EBITDA increased 12% compared to the second quarter of '25, while adjusted earnings per share increased 32%.”
on Quarterly performance
“We are not seeing a slowdown in the opportunity set. If anything, we're seeing increases.”
on Opportunity set
Is the ~$3B/year growth CapEx target still right given the size of data center/power opportunities? Could you outspend free cash flow and move to a leverage-neutral approach?
Kim Dang said the $3B figure is based on current backlog; with current backlog, leverage comes down over time. At 3.6x, there is $850M of capacity per 0.1x, so up to $3.4B of incremental balance sheet capacity to 4x. They expect to add projects, primarily power-driven, and have the ability to finance incremental CapEx while staying within target leverage.
What are the competitive advantages of Permian Link and when might you take FID?
Sital Mody said the differentiator is the link to storage and the 765 kV line approved by ERCOT. They are in discussions with customers from the open season; they will sanction when contracts support acceptable returns. Target in-service is around 2030, with long lead times; discussions are going well.
Can you give color on the ~$400M of projects contingently approved and the timeline for shadow backlog conversion?
Kim Dang said those projects have design, cost, and commercial terms agreed; contract signatures expected within weeks to a month. For the shadow backlog, timing is hard to predict, but they expect to add significant projects in the back half of this year, with the opportunity set increasing.