Kinder Morgan, Inc.

Welcome to the quarterly earnings conference call. At this time, all participants are in a listen-only mode. During the Q&A session, if you'd like to ask a question, you may press star 1 on your phone. Today's call is being recorded. If you have any objections, you may disconnect at this time. I'll now turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan.

Thank you, Ted. And as usual, before we begin, I'd like to remind you that KMI's earnings release today and this call include forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 and the Security Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosure on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest filings with the SEC for important material assumptions, expectations, and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements. Now today, Steve, Kim, and David will take you through the details, but we believe 2023 is off to a good start. While in a company our size, there are always lots of moving parts, I think 2023 will be a solid year for KMI. and that with our capital expenditure program, we are positioning ourselves well for 2024 and beyond. At both the board and management level, we remain committed to transparency and utilizing our strong cash flow to benefit our shareholders by maintaining a strong balance sheet, funding capital projects that produce returns well in excess of our cost of capital, paying a healthy and growing dividend, which, by the way, in terms of yield, is one of the top 10 in the S&P 500, and repurchasing our shares on an opportunistic basis. In addition, through our investments in renewable natural gas, renewable diesel, and carbon capture and sequestration facilities, we are participating in the transition to cleaner energy. Let me conclude by reiterating our view, consistent with that of most energy experts worldwide, that fossil fuels will supply the great majority of the planet's energy needs for decades to come. For example, the recent IEA World Energy Outlook predicts that fossil fuels will supply 62% of the world's energy demand in 2050. And just this week, our Assistant Secretary of Energy stated that, given the current state of events, and I quote, the world absolutely needs new gas investment, end quote. While we expect that renewables will experience rapid growth over the coming years, the demand for energy as a whole will also increase substantially, thus driving the continued use of fossil fuels with natural gas playing an especially important role in the coming energy transition. In my judgment, this outlook deflates the argument of those investors who avoid our segment because they do not believe our assets will produce long-term value. And with that, I'll turn it over to Steve.

All right. Thanks, Rich. I'll make a few key points about our business, and then Kim and David will cover the substance and details of our performance, and then we'll take your questions. The overview is this. Our balance sheet is strong. Our backlog of projects is up. And our largest business, natural gas, continues to show growing strength. A couple more details on each of those. We built our budget for this year with balance sheet capacity available to enable opportunistic share repurchases and incremental investment opportunities at attractive returns, and we have done both. Second, the backlog projects are at attractive returns in aggregate well above our cost of capital. At Investor Day every year, starting with the 2015 to 2017 period, we have been showing you on an EBITDA multiple basis how we perform in those investments relative to our original assumptions, and we have performed very well. It's currently a challenging time from a supply chain standpoint, but we expect to deliver the current slate of projects, even with a challenge here and there, at very attractive returns. Our current backlog is $3.7 billion, up $400 million quarter to quarter, and at an aggregate EBITDA multiple of 3.5x. Third, on renewals, we showed at the beginning of the year how our base business renewals in the 2023 budget are showing more increases than decreases, especially in our natural gas business as the network tightens with increasing supply and demand. So a strong balance sheet, a growing backlog, and good signs in our base business. A few other broad points about the macro backdrop underpinning this performance. First, as is becoming clear as time goes on and as Rich mentioned, hydrocarbon infrastructure is going to be needed for a very long time to come in its current use. The world needs reliable and affordable energy to advance human development. and it needs natural gas transportation and storage assets to backstop renewables. Second, our assets are also well positioned for the energy forms of the future. You can see that with the renewable liquids fuels and renewable feedstocks projects in our products and terminals businesses. Third, our existing natural gas transportation and storage network is growing more valuable as the grid tightens with increasing demand over time and increasing volatility. Compounding this effect is the difficulty of citing new infrastructure in many parts of the country. The value of the network was on display in the first quarter where we had strong performance in our gas business and what was otherwise, except for the West, a mild and unremarkable winner. Finally, on the other hand, our network is well positioned for expansion in those parts of the country where it is possible to build new infrastructure, the Gulf Coast primarily. Our gas transportation and storage network is well positioned in Texas and Louisiana, where over 90% of natural gas demand growth is expected to take place. This point is well demonstrated by the growth in natural gas projects in our backlog. With that overview, I'll turn it over to Kim.