Kinetik Holdings Inc. (NASDAQ: KNTK) (“
Kinetik” or
the “
Company”) today reported financial results
for the quarter ended June 30, 2022.
“Following a strong first quarter, we have
continued to deliver robust results and execute on our capital
allocation priorities,” said Jamie Welch, Kinetik’s Chief Executive
Officer and President. “As such, we are revising our prior 2022
guidance upwards to reflect our recent achievements.”
“The first quarter was largely focused on our
Midstream Logistics segment and capitalizing on our operating
leverage, while this past second quarter has been a drive to
execute on the highly accretive opportunities in our Pipeline
Transportation segment. We completed our comprehensive refinancing,
of which 100% is linked to sustainability performance targets. We
also fully redeemed the outstanding balance of the Series A
Preferred Units in early July. Both of these steps simplify our
capital structure and demonstrate our commitment towards
transparency and executing on our financial strategy.”
He went on to add, “Our initial credit ratings
from the various credit rating agencies of Ba1 from Moody’s, BB+
from S&P, both with a Stable outlook, and BB+ with a Positive
outlook from Fitch provide a clear line of sight to our stated
financial target of achieving investment grade ratings in
2023.”
“Additionally, we announced with Kinder Morgan
and Exxon that we have reached a final investment decision for the
Permian Highway Pipeline expansion project. This expansion will
help address the natural gas takeaway constraints facing the
Permian Basin and, more importantly, will further support growth of
American-sourced LNG supply.”
Kinetik has presented certain financial results
herein on a “pro forma basis”1 as the Company believes it provides
more meaningful information to its investors and helps to reconcile
to its previously provided 2022 full year guidance.
For US GAAP purposes, Kinetik’s financial
results reflect BCP from January 1, 2022 to February 22, 2022 and
the combined Company, which includes Altus, from the closing date,
February 22, 2022, onwards. The results for Altus are specifically
excluded for the period from January 1, 2022 to February 22, 2022.
See “Notes Regarding Presentation of Financial Information.”
For the three and six months ended June 30,
2022, Kinetik processed natural gas volumes of 1.16 Bcf/d and 1.14
Bcf/d, respectively, and reported net income including
noncontrolling interest of $131.4 million and $153.7 million for
the three and six months ended June 30, 2022, respectively. Net
income including noncontrolling interests includes a non-cash gain
on the change in the valuation of the embedded derivative of $91.4
million and $88.6 million for the three and six months ended June
30, 2022, respectively. Kinetik generated Pro Forma Adjusted
EBITDA1,2,3 of $207.9 million and $398.7 million for the three and
six months ended June 30, 2022, respectively, Pro Forma
Distributable Cash Flow (“DCF”)1,2,3 of $170.1 million and $316.2
million for the three and six months ended June 30, 2022,
respectively, and Pro Forma Free Cash Flow (“FCF”)1,2,3 of $127.0
million and $246.0 million for the three and six months ended June
30, 2022, respectively. The results were primarily driven by
increased volumes across both the Midstream Logistics and Pipeline
Transportation segments and higher commodity prices.
On February 23, 2022, Kinetik provided 2022
Guidance, including full year 2022 Pro Forma Adjusted EBITDA1,2,3
of $770 million to $810 million and capital expenditures of $125
million to $150 million. Based on first half results and its
current outlook, Kinetik is revising upwards its 2022 Guidance to
$820 million to $840 million for Pro Forma Adjusted
EBITDA1,2,3.
For capital expenditures, Kinetik’s prior
Guidance of $125 million to $150 million, was solely attributable
to its Midstream Logistics segment. The capital expenditures
Guidance for this segment is now $170 million to $190 million, a
$42.5 million increase at the midpoint. which reflects (i) $25
million of additional capital required for incremental wells to be
turned-in-line in 2022 and new long-term gathering & processing
agreements, including the major contracts announced with Kinetik’s
first quarter results, (ii) $8 million of capital in 2022 for the
120 MMcf/d processing capacity expansion of the Diamond Cryo
complex and (iii) approximately $10 million related to early
capital spend for its 1 Bcf/d Delaware Link residue pipeline from
Central Reeves County to Waha, which will be fully subscribed and
placed in-service prior to the PHP expansion in-service date in
2023.
The addition of those attractive capital
projects, which have an average build-cost multiple of less than
five times, is Kinetik’s sole reason for increasing its Midstream
Logistics capital expenditures Guidance. If the projects were
excluded, expected capital expenditures in 2022 are in-line with
Guidance originally provided in February.
Kinetik’s revised total 2022 capital expenditure
guidance is $280 million to $300 million and includes approximately
$110 million of capital contributions associated with the PHP
expansion project, which is included in the Pipeline Transportation
segment. Kinetik expects a mid-teens pre-tax unlevered rate of
return for its investment in the PHP expansion project.
Kinetik expects to fully fund its go-forward
capital budget with organically generated free cash flow,
borrowings on its $1.25 billion revolving credit facility and
proceeds from its Dividend Reinvestment Plan, all the while,
positioning the Company to achieve its 3.5x Leverage Ratio target
in 2023.
Financial
- Two-for-one stock
split of Class A and Class C common stock was completed on June 8,
2022.
- Dividend of $0.75
per share was declared on July 20, 2022 for the quarter ended June
30, 2022, or $3.00 per share on an annualized basis. The dividend
will be paid on August 17, 2022 to shareholders of record as of
August 5, 2022. 117 million shares have elected to reinvest the
second quarter dividend into newly issued shares of Class A common
stock of the Company. As a result, only $13.6 million of second
quarter dividends will be paid in cash.4
- $3.0 billion
comprehensive sustainability-linked refinancing was completed with
an additional $1.25 billion of fully accessible liquidity as of
June 30, 2022.
- The first half of
the year exited with a leverage ratio1,2,3,5 of 3.7x.
- 75,000 Series A
Preferred Units were redeemed during the second quarter of 2022 and
the full remaining balance was redeemed in early July 2022. The
accelerated redemption results in immediate cash savings to the
Company and completes Kinetik’s capital structure
simplification.
Key Metrics:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2022 |
|
|
|
|
|
(In thousands, except ratios) |
Net income including noncontrolling interests6 |
$ |
131,448 |
|
$ |
152,837 |
Adjusted EBITDA3 |
$ |
207,919 |
|
$ |
348,709 |
Pro forma adjusted
EBITDA1,2,3 |
$ |
207,919 |
|
$ |
398,735 |
Pro forma DCF1,2,3 |
$ |
170,060 |
|
$ |
316,228 |
Pro Forma dividend coverage
ratio1,2,3,7 |
1.7x |
|
1.6x |
Pro Forma FCF1,2,3 |
$ |
127,048 |
|
$ |
246,028 |
Leverage Ratio1,2,3,5 |
|
|
3.7x |
|
June 30, 2022 |
|
March 31, 2022 |
|
|
|
|
|
(In thousands) |
Net Debt3,8 |
$ |
2,994,681 |
|
$ |
2,966,103 |
1. |
Pro forma
information has been prepared for informational purposes only. |
2. |
Pro Forma Adjusted EBITDA, DCF, Dividend Coverage Ratio, FCF
and Leverage Ratio are calculated as if the Transaction occurred on
January 1, 2022. |
3. |
A non-GAAP financial measure. See “Non-GAAP Financial Measures”
and “Reconciliation of Non-GAAP Measures” for further details. |
4. |
Dividends reinvested and dividends paid in cash as of August 9,
2022. Final numbers are subject to change. |
5. |
Leverage Ratio is total Debt less cash and cash equivalents
dividend by last twelve months of pro forma Adjusted EBITDA. |
6. |
Net loss including noncontrolling interest for the three months
ended June 30, 2021 was $15.4 million. Net income including
noncontrolling interest for the six months ended June 30, 2021 was
$2.7 million. |
7. |
Pro Forma Dividend Coverage Ratio is pro forma DCF divided by
total declared dividends. |
8. |
Net debt is defined as total long-term debt, excluding deferred
financing costs, less cash and cash equivalents. |
Strategic
- Additional, new
gathering and processing agreements were finalized in the first
half of this year with several private producers requiring
minimal-to-modest capital spend with expected first gas volumes
later this year and in early 2023.
- Upstream customer
consolidation continued in the Texas Delaware Basin and is expected
to result in commercial and financial benefits to Kinetik.
Specifically, Kinetik expects incremental development activity on
its dedicated acreage in Texas following the close of the merger
between Colgate and Centennial and on Apache’s recently acquired
Texas Delaware Basin oil and gas properties.
- Apache relocated
one of its Lower 48 rigs to Alpine High to execute its one-rig
program, marking the return of development activity at Alpine High.
Apache is currently drilling a five-well pad consisting of 2-mile
lateral length wells, which is expected to turn-to-sales in the
first quarter of 2023.
- With Kinder Morgan
and Exxon, announced the final investment decision of the PHP
expansion of 550 MMcf/d of incremental capacity. The pipeline’s
expanded capacity is fully sold out with 10-year, take-or-pay
agreements and is anticipated to be fully in-service by November 1,
2023. Based on capital funding of the expansion, Kinetik’s
ownership of PHP will increase to over 55% after the in-service
date.
- The Shin Oak
expansion is supported by increasing NGL production in the Permian
Basin and the need for additional transportation capacity to the
Gulf Coast, which will be achieved by pipeline looping and
modifications to existing pump stations.
- With Kinder
Morgan, DCP Midstream, and an affiliate of ArcLight Capital,
Kinetik continues to secure interested customers for the possible
expansion of Gulf Coast Express pipeline to increase capacity by as
much as 570 MMcf/d.
Operational and Governance
- Super-system
interconnect in-service on June 22, 2022, on budget and on
schedule.
- Nearly all
integration workstreams, not relating to surplus equipment
relocation, were fully completed in the second quarter.
- Deborah Byers was
appointed to the Board of Directors, bringing the Board to its full
complement of 11 directors.
- 2021
Environmental, Social and Governance Report was published on July
21, 2022.
Upcoming Tour Dates
Kinetik plans to participate at the following
upcoming conferences and events:
- Goldman Sachs
Power, Utilities, MLPs and Pipelines Conference in New York City on
August 11
- Barclays 2022 CEO
Energy-Power Conference in New York City on September 6 - 8
- Pickering TE&M
Fest in Austin on September 15
Investor Presentation
An updated investor presentation will be
available under Events and Presentations in the Investors section
of the Company’s website at www.kinetik.com.
Conference Call and Webcast
Kinetik will host its second quarter 2022
results conference call on Wednesday, August 10, 2022 at 8:00 am
Central Daylight Time (9:00 am Eastern Daylight Time) to discuss
second quarter results. To access a live webcast of the conference
call, please visit the Investor Relations section of Kinetik’s
website at www.kinetik.com. A replay of the conference call also
will be available on the website following the call.
About Kinetik Holdings Inc.
Kinetik is a fully integrated, pure-play,
Permian-to-Gulf Coast midstream C-corporation operating in the
Delaware Basin. Kinetik is headquartered in Midland, Texas and has
a significant presence in Houston, Texas. Kinetik provides
comprehensive gathering, transportation, compression, processing
and treating services for companies that produce natural gas,
natural gas liquids, crude oil and water. Kinetik posts
announcements, operational updates, investor information and press
releases on its website, www.kinetik.com.
Additional information
Additional information follows, including a
reconciliation of Adjusted EBITDA, Pro Forma Adjusted EBITDA, Free
Cash Flow, Pro Forma Free Cash Flow, Distributable Cash Flow, Pro
Forma Distributable Cash Flow, Pro Forma Dividend Coverage Ratio,
Leverage Ratio and Net Debt (non-GAAP financial measures) to the
GAAP measures.
Non-GAAP financial measures
Kinetik’s financial information includes
information prepared in conformity with generally accepted
accounting principles (GAAP) as well as non-GAAP financial
information. It is management’s intent to provide non-GAAP
financial information to enhance understanding of our consolidated
financial information as prepared in according with GAAP. Adjusted
EBITDA, Pro Forma Adjusted EBITDA, Free Cash Flow, Pro Forma Free
Cash Flow, Distributable Cash Flow, Pro Forma Distributable Cash
Flow, Pro Forma Dividend Coverage Ratio, Net Debt and Leverage
Ratio are non-GAAP measures. This non-GAAP information should be
considered by the reader in addition to, but not instead of, the
financial statements prepared in accordance with GAAP and
reconciliations from these results should be carefully
evaluated.
Forward-looking statements
This news release includes certain statements
that may constitute “forward-looking statements” for purposes of
the federal securities laws. Forward-looking statements include,
but are not limited to, statements that refer to projections,
forecasts or other characterizations of future events or
circumstances, including any underlying assumptions. The words
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intends,” “may,” “might,” “plan,” “seeks,” “possible,”
“potential,” “predict,” “project,” “prospects,” “guidance,”
“outlook,” “should,” “would,” “will,” and similar expressions may
identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking. These
statements include, but are not limited to, statements about the
Company’s future plans, expectations, and objectives for the
Company’s operations, including statements about strategy,
synergies, and future operations and 2022 financial guidance. While
forward-looking statements are based on assumptions and analyses
made by us that we believe to be reasonable under the
circumstances, whether actual results and developments will meet
our expectations and predictions depend on a number of risks and
uncertainties which could cause our actual results, performance,
and financial condition to differ materially from our expectations.
See Part II, Item 1A. Risk Factors in our Quarterly Report on Form
10-Q for the period ended March 31, 2022. Any forward-looking
statement made by us in this news release speaks only as of the
date on which it is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is
not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future development, or
otherwise, except as may be required by law.
Contacts |
Kinetik
Investors: |
(713)
487-4832 |
Maddie
Wagner |
Website: www.kinetik.com |
Notes Regarding Presentation of Financial
Information
The following addresses the results of our
operations for the three and six months ended June 30, 2022, as
compared to our results of operations for the three and six months
ended June 30, 2021. As the Transaction was determined to be a
reverse merger, BCP was considered the accounting acquirer and
Altus was considered the legal acquirer. Therefore, BCP’s net
assets, carrying at historical value, were presented as the
predecessor to the Company’s historical financial statements and
the comparable period presented herein reflects the results of
operations of BCP for the three and six months ended June 30, 2021.
The results of operations of Altus are reflected within the
Company’s Condensed Consolidated Financial Statements from February
22, 2022, the closing date, through June 30, 2022.
Unless otherwise noted or the context requires
otherwise, references herein to Kinetik Holdings Inc. or “the
Company” with respect to time periods prior to February 22, 2022
include BCP and its consolidated subsidiaries and do not include
Altus and its consolidated subsidiaries, while references herein to
Kinetik Holdings Inc. with respect to time periods from and after
February 22, 2022 include Altus and its consolidated
subsidiaries.
KINETIK HOLDINGS
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
Three Months Ended June
30,(1) |
|
Six Months Ended June 30,(1) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share data) |
Operating revenues: |
|
|
|
|
|
|
|
Service revenue |
$ |
102,080 |
|
|
$ |
62,242 |
|
|
$ |
182,525 |
|
|
$ |
129,904 |
|
Product revenue |
|
229,651 |
|
|
|
71,099 |
|
|
|
404,579 |
|
|
|
151,092 |
|
Other revenue |
|
3,841 |
|
|
|
2,425 |
|
|
|
5,717 |
|
|
|
2,873 |
|
Total operating revenues |
|
335,572 |
|
|
|
135,766 |
|
|
|
592,821 |
|
|
|
283,869 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Costs of sales (exclusive of depreciation and amortization shown
separately below) |
|
152,714 |
|
|
|
43,503 |
|
|
|
272,989 |
|
|
|
80,508 |
|
Operating expenses |
|
35,280 |
|
|
|
25,280 |
|
|
|
65,151 |
|
|
|
40,844 |
|
Ad valorem taxes |
|
5,880 |
|
|
|
3,414 |
|
|
|
10,033 |
|
|
|
5,765 |
|
General and administrative expenses |
|
25,960 |
|
|
|
5,337 |
|
|
|
48,712 |
|
|
|
10,963 |
|
Depreciation and amortization |
|
66,581 |
|
|
|
57,166 |
|
|
|
127,604 |
|
|
|
113,137 |
|
Loss on disposal of assets |
|
8,546 |
|
|
|
422 |
|
|
|
8,656 |
|
|
|
454 |
|
Total operating costs and expenses |
|
294,961 |
|
|
|
135,122 |
|
|
|
533,145 |
|
|
|
251,671 |
|
Operating income |
|
40,611 |
|
|
|
644 |
|
|
|
59,676 |
|
|
|
32,198 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest and other income |
|
— |
|
|
|
26 |
|
|
|
250 |
|
|
|
563 |
|
Gain on redemption of mandatorily redeemable Preferred Units |
|
5,087 |
|
|
|
— |
|
|
|
9,580 |
|
|
|
— |
|
Gain (loss) on debt extinguishment |
|
(27,975 |
) |
|
|
60 |
|
|
|
(27,975 |
) |
|
|
60 |
|
Unrealized loss on embedded derivative |
|
91,448 |
|
|
|
— |
|
|
|
88,562 |
|
|
|
— |
|
Interest expense |
|
(25,347 |
) |
|
|
(32,607 |
) |
|
|
(52,121 |
) |
|
|
(57,917 |
) |
Equity in earnings of unconsolidated affiliates |
|
47,786 |
|
|
|
16,511 |
|
|
|
75,703 |
|
|
|
27,866 |
|
Total other income (expense), net |
|
90,999 |
|
|
|
(16,010 |
) |
|
|
93,999 |
|
|
|
(29,428 |
) |
Income before income taxes |
|
131,610 |
|
|
|
(15,366 |
) |
|
|
153,675 |
|
|
|
2,770 |
|
Income tax expense |
|
162 |
|
|
|
— |
|
|
|
838 |
|
|
|
— |
|
Net income including
noncontrolling interest |
|
131,448 |
|
|
|
(15,366 |
) |
|
|
152,837 |
|
|
|
2,770 |
|
Net income attributable to Preferred Unit limited partners |
|
109,502 |
|
|
|
— |
|
|
|
114,495 |
|
|
|
— |
|
Net Income attributable to common
shareholders |
|
21,946 |
|
|
|
(15,366 |
) |
|
|
38,342 |
|
|
|
2,770 |
|
Net income attributable to Common Unit limited partners |
|
15,508 |
|
|
|
(15,366 |
) |
|
|
28,039 |
|
|
|
2,770 |
|
Net income attributable to Class
A Common Shareholders |
$ |
6,438 |
|
|
$ |
— |
|
|
$ |
10,303 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Class
A Common Shareholders, per share |
|
|
|
|
|
|
|
Basic |
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.16 |
|
|
$ |
— |
|
Diluted |
$ |
0.06 |
|
|
$ |
— |
|
|
$ |
0.16 |
|
|
$ |
— |
|
Weighted average shares(2) |
|
|
|
|
|
|
|
Basic |
|
39,297 |
|
|
|
— |
|
|
|
38,766 |
|
|
|
— |
|
Diluted |
|
39,329 |
|
|
|
— |
|
|
|
38,796 |
|
|
|
— |
|
(1) The results of the legacy ALTM business are
not included in the Company’s consolidated financials prior to
February 22, 2022. Refer to Note 10 – Equity and Warrants in the
Notes to the Condensed Consolidated Financial Statements of the
Company’s Form 10-Q filed on August 9, 2022 for further
information.
(2) Share amounts have been retroactively
restated to reflect the Company’s two-for-one stock split, which
was effected on June 8, 2022. Refer to Note 10 – Equity and
Warrants in the Notes to the Condensed Consolidated Financial
Statements of the Company’s Form 10-Q filed on August 9, 2022 for
further information.
KINETIK HOLDINGS INC.
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES
|
Three Months Ended June
30,(1) |
|
Six Months Ended June 30,(1) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Net Income Including
Noncontrolling Interests to Adjusted EBITDA |
(In thousands) |
Net income including
noncontrolling interests (GAAP) |
$ |
131,448 |
|
|
$ |
(15,366 |
) |
|
$ |
152,837 |
|
|
$ |
2,770 |
|
Add back: |
|
|
|
|
|
|
|
Interest expense |
|
25,347 |
|
|
|
32,607 |
|
|
|
52,121 |
|
|
|
57,917 |
|
Income tax expense |
|
162 |
|
|
|
— |
|
|
|
838 |
|
|
|
— |
|
Depreciation and
amortization |
|
66,581 |
|
|
|
57,166 |
|
|
|
127,604 |
|
|
|
113,137 |
|
Amortization of contract
costs |
|
448 |
|
|
|
448 |
|
|
|
896 |
|
|
|
896 |
|
Proportionate EBITDA from
unconsolidated affiliates |
|
71,340 |
|
|
|
21,717 |
|
|
|
112,081 |
|
|
|
37,973 |
|
Share-based compensation |
|
12,174 |
|
|
|
— |
|
|
|
18,304 |
|
|
|
— |
|
Loss on sale of assets |
|
8,546 |
|
|
|
422 |
|
|
|
8,656 |
|
|
|
454 |
|
Loss (gain) on debt
extinguishment |
|
27,975 |
|
|
|
(60 |
) |
|
|
27,975 |
|
|
|
(60 |
) |
Derivative loss due to Winter
Storm Uri |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,456 |
|
Integration Costs |
|
5,286 |
|
|
|
— |
|
|
|
11,438 |
|
|
|
— |
|
Transaction Costs |
|
674 |
|
|
|
— |
|
|
|
6,350 |
|
|
|
— |
|
Other one-time cost or
amortization |
|
2,259 |
|
|
|
515 |
|
|
|
3,454 |
|
|
|
843 |
|
Producer Settlement |
|
— |
|
|
|
6,827 |
|
|
|
— |
|
|
|
6,827 |
|
Deduct: |
|
|
|
|
|
|
|
Interest and other income |
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
41 |
|
Gain on redemption of mandatorily
redeemable Preferred Units |
|
5,087 |
|
|
|
— |
|
|
|
9,580 |
|
|
|
— |
|
Unrealized loss on
derivatives |
|
91,448 |
|
|
|
— |
|
|
|
88,562 |
|
|
|
— |
|
Equity income from unconsolidated
affiliates |
|
47,786 |
|
|
|
16,511 |
|
|
|
75,703 |
|
|
|
27,866 |
|
Adjusted
EBITDA(2)(non-GAAP) |
$ |
207,919 |
|
|
$ |
87,741 |
|
|
$ |
348,709 |
|
|
$ |
206,306 |
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow(3) |
|
|
|
|
|
|
|
Adjusted EBITDA (non-GAAP) |
$ |
207,919 |
|
|
$ |
87,741 |
|
|
$ |
348,709 |
|
|
$ |
206,306 |
|
Proportionate EBITDA from
unconsolidated affiliates |
|
(71,340 |
) |
|
|
(21,717 |
) |
|
|
(112,081 |
) |
|
|
(37,973 |
) |
Cash distributions received from
unconsolidated affiliates |
|
69,471 |
|
|
|
19,679 |
|
|
|
117,544 |
|
|
|
27,882 |
|
Interest expense |
|
(25,347 |
) |
|
|
(32,607 |
) |
|
|
(52,121 |
) |
|
|
(57,917 |
) |
Maintenance capital
expenditures |
|
(1,856 |
) |
|
|
(1,875 |
) |
|
|
(3,439 |
) |
|
|
(3,794 |
) |
Distributions paid to preferred
unit limited partners |
|
(8,787 |
) |
|
|
— |
|
|
|
(8,787 |
) |
|
|
— |
|
Distributable cash
flow(non-GAAP) |
$ |
170,060 |
|
|
$ |
51,221 |
|
|
$ |
289,825 |
|
|
$ |
134,504 |
|
|
|
|
|
|
|
|
|
Free Cash
Flow(4) |
|
|
|
|
|
|
|
Distributable cash flow
(non-GAAP) |
$ |
170,060 |
|
|
$ |
51,221 |
|
|
$ |
289,825 |
|
|
$ |
134,504 |
|
Cash interest adjustment |
|
(1,827 |
) |
|
|
5,343 |
|
|
|
(854 |
) |
|
$ |
3,609 |
|
Growth capital expenditures |
|
(45,296 |
) |
|
|
(21,518 |
) |
|
|
(76,506 |
) |
|
|
(42,053 |
) |
Investments in unconsolidated
affiliates |
|
(2,675 |
) |
|
|
— |
|
|
|
(2,675 |
) |
|
|
(20,522 |
) |
Contributions in aid of
construction |
|
6,786 |
|
|
|
2,875 |
|
|
|
11,592 |
|
|
|
3,491 |
|
Free cash
flow(non-GAAP) |
$ |
127,048 |
|
|
$ |
37,921 |
|
|
$ |
221,382 |
|
|
$ |
79,029 |
|
KINETIK HOLDINGS INC.
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES (Continued)
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
|
Net
Debt(5) |
(In thousands) |
Current portion of long-term debt, net |
$ |
— |
|
$ |
54,324 |
|
$ |
54,280 |
Long-term debt, net |
|
2,971,270 |
|
|
2,894,025 |
|
|
2,253,422 |
Plus: Deferred financing
costs |
|
28,730 |
|
|
35,400 |
|
|
38,485 |
Total long-term debt |
|
3,000,000 |
|
|
2,983,749 |
|
|
2,346,187 |
Less: Cash and cash
equivalents |
|
5,319 |
|
|
17,646 |
|
|
18,729 |
Net debt (non-GAAP) |
$ |
2,994,681 |
|
$ |
2,966,103 |
|
$ |
2,327,458 |
(1) The results of the legacy Altus business are not included in
the Company’s consolidated financials prior to February 22,
2022.
(2) Adjusted EBITDA is defined as net income including
noncontrolling interests adjusted for interest, taxes, depreciation
and amortization, impairment charges, asset write-offs, the
proportionate EBITDA from our equity method investments, equity in
earnings from investments recorded using the equity method,
stock-based compensation expense, extraordinary losses and unusual
or non-recurring charges. Adjusted EBITDA provides a basis for
comparison of our business operations between current, past and
future periods by excluding items that we do not believe are
indicative of our core operating performance. Adjusted EBITDA
should not be considered as an alternative to the GAAP measure of
net income including noncontrolling interests or any other measure
of financial performance presented in accordance with GAAP.
(3) Distributable cash flow is defined as Adjusted EBITDA,
adjusted for the proportionate EBITDA from our equity method
investments, cash distributions received from our equity method
investments, interest expense, net of amounts capitalized, and
maintenance capital expenditures. Distributable cash flow should
not be considered as an alternative to the GAAP measure of net
income including noncontrolling interests or any other measure of
financial performance presented in accordance with GAAP. We believe
that distributable cash flow is a useful measure to compare cash
generation performance from period to period and to compare the
cash generation performance for specific periods to the amount of
cash dividends we make.
(4) Free cash flow is defined as distributable cash flow
adjusted for growth capital expenditures, cash interest and
contributions in aid of construction. Free cash flow should not be
considered as an alternative to the GAAP measure of net income
including noncontrolling interests or any other measure of
financial performance presented in accordance with GAAP. We believe
that free cash flow is a useful performance measure to compare cash
generation performance from period to period and to compare the
cash generation performance for specific periods to the amount of
cash dividends that we make.
(5) Net Debt is defined as total long-term debt, excluding
deferred financing costs, less cash and cash equivalents. Net debt
illustrates our total debt position less cash on hand that could be
utilized to pay down debt at the balance sheet date. Net debt
should not be considered as an alternative to the GAAP measure of
total long-term debt, or any other measure of financial performance
presented in accordance with GAAP.
KINETIK HOLDINGS INC.
RECONCILIATION OF PRO FORMA NON-GAAP
FINANCIAL MEASURES
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2022 |
|
June 30, 2022 |
|
|
|
|
Reconciliation of
Adjusted EBITDA to Pro Forma Adjusted EBITDA |
(In thousands) |
Adjusted EBITDA (non-GAAP) |
$ |
207,919 |
|
|
$ |
348,709 |
|
Altus EBITDA Jan 1 - Feb 22 |
|
— |
|
|
|
42,632 |
|
Operational & general and
administrative synergies |
|
— |
|
|
|
3,029 |
|
Ad valorem synergies |
|
— |
|
|
|
1,307 |
|
Non-cash amortizations |
|
— |
|
|
|
1,491 |
|
One-time marketing loss |
|
— |
|
|
|
1,567 |
|
Pro forma adjusted
EBITDA(non-GAAP) |
$ |
207,919 |
|
|
$ |
398,735 |
|
|
|
|
|
Pro Forma Distributable
Cash Flow |
|
|
|
Pro forma adjusted EBITDA
(non-GAAP) |
$ |
207,919 |
|
|
$ |
398,735 |
|
Proportionate EBITDA from
unconsolidated affiliates |
|
(71,340 |
) |
|
|
(141,008 |
) |
Cash distributions received from
unconsolidated affiliates |
|
69,471 |
|
|
|
135,877 |
|
Interest expense |
|
(25,347 |
) |
|
|
(53,588 |
) |
Maintenance capital
expenditures |
|
(1,856 |
) |
|
|
(3,439 |
) |
Distributions paid to preferred
unit limited partners |
|
(8,787 |
) |
|
|
(20,349 |
) |
Pro forma distributable
cash flow(non-GAAP) |
$ |
170,060 |
|
|
$ |
316,228 |
|
|
|
|
|
Pro Forma Free Cash
Flow |
|
|
|
Pro Forma Distributable Cash Flow
(non-GAAP) |
$ |
170,060 |
|
|
$ |
316,228 |
|
Cash interest adjustment |
|
(1,827 |
) |
|
|
(2,611 |
) |
Growth capital expenditures |
|
(45,296 |
) |
|
|
(76,506 |
) |
Investments in unconsolidated
affiliates |
|
(2,675 |
) |
|
|
(2,675 |
) |
Contributions in aid of
construction |
|
6,786 |
|
|
|
11,592 |
|
Pro forma free cash
flow(non-GAAP) |
$ |
127,048 |
|
|
$ |
246,028 |
|
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