Kinder Morgan posts 32% earnings growth, backed by AI data center gas demand

Kinder Morgan, a natural gas pipeline operator, reported its second-quarter results showing record performance. Net income reached $867 million（約1400億円）, a record for the second quarter. Adjusted earnings per share grew briskly by 32% to $0.37, driven by robust gas demand across multiple sources.

The strength came from Kinder Morgan's gas pipeline segment, which generated nearly $1.5 billion（約2400億円） in earnings before depreciation and amortization, up 8.5% from the prior year. A 7% uptick in volumes came from liquefied natural gas deliveries, increased exports to Mexico, and higher power generation demand. The company also posted a 17% increase in product pipeline earnings and a 43% surge in carbon dioxide profitability, both largely driven by higher commodity prices. Beyond the pipeline segment, Kinder Morgan completed $660 million（約1100億円） in growth capital projects during the quarter, including the Cumberland Project to serve a new gas-fired power plant in Tennessee and expansion of its Gulf Coast Express pipeline to increase gas flow from the Permian Basin to South Texas markets.

The company's strong momentum has it tracking well ahead of guidance. Kinder Morgan initially expected to generate $1.37 per share of adjusted earnings for the full year, up about 8% from the prior year. It now expects to exceed that budget by 12%. This outperformance is strengthening the balance sheet: the company now expects to end the year with a leverage ratio of 3.6 times, down from its 3.8 times target and at the low end of its target range. The company ended the quarter with a $9.6 billion（約1.5兆円） backlog of expansion projects, though this decreased by $500 million（約800億円） from the first quarter. Separately, Kinder Morgan's board recently provided contingent approval for nearly $400 million（約640億円） in additional projects not currently in the backlog, with the bulk supporting power generation and local distribution company demand.

Looking ahead, AI-driven power demand is emerging as a major long-term growth catalyst. There are currently 277 gigawatts of power demand from data centers under development in the U.S., representing 42 billion cubic feet per day of potential natural gas capacity to meet peak demand. While developers won't build all that capacity and gas won't be the only power source, the company is pursuing more than $10 billion（約1.6兆円） of additional gas infrastructure expansion opportunities beyond its current backlog. These secured projects provide visibility into growth through 2030. Against this backdrop, Kinder Morgan has increased its high-yielding 3.7% dividend for nine straight years, a trend the company expects to continue due to surging gas demand from AI infrastructure and other catalysts.

Kinder Morgan's second-quarter results reveal a company firing on multiple cylinders. The 32% jump in adjusted earnings per share and record Q2 net income of $867 million（約1400億円） reflect robust near-term demand across three channels: liquefied natural gas deliveries, Mexican exports, and power generation. The company's gas pipeline segment alone generated nearly $1.5 billion（約2400億円） in earnings before depreciation and amortization, up 8.5% year-over-year. What sets Kinder Morgan apart in the current market is that this strength is not isolated to cyclical commodity tailwinds. The company has identified a structural, multi-year demand driver in AI data center expansion: 277 gigawatts of power demand under development in the U.S. alone would require 42 billion cubic feet per day of natural gas capacity at peak demand. Although not all developers will build to that capacity and gas will not be the sole power source, the company is already translating this visibility into concrete capital deployment, with more than $10 billion（約1.6兆円） in expansion opportunities under active pursuit beyond its current $9.6 billion（約1.5兆円） backlog.

The balance sheet tells a complementary story. Kinder Morgan's year-to-date performance has been so strong that the company now expects to exceed its full-year adjusted earnings guidance by 12%, allowing it to reduce leverage to 3.6 times by year-end—below its 3.8 times target. This deleveraging, combined with secured projects providing visibility through 2030, creates the financial flexibility to continue the nine-year streak of dividend increases. For investors seeking both yield and growth, the combination of a 3.7% dividend backed by long-term infrastructure demand is unusual in the energy pipeline sector, where high yields typically accompany slower growth.

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