ONEOK Inc (OKE) Reports Strong Earnings Growth and Capital Expansion Plans
Net Income: Q4 net income rose to $688 million, full-year net income reached approximately $2.7 billion.
Adjusted EBITDA: Q4 adjusted EBITDA exceeded $1.5 billion, full-year adjusted EBITDA surpassed $5.2 billion.
Dividend Increase: Quarterly dividend increased by 3.7% to 99 cents per share.
Share Repurchase Program: Authorized a $2 billion share repurchase program.
Debt Reduction: Extinguished $1.3 billion of long-term debt in 2023.
Capital Expenditures: 2024 capital expenditure guidance set between $1.75 billion to $1.95 billion.
Volume Growth: Significant increases in throughput volumes across key regions.
On February 26, 2024, ONEOK Inc (NYSE:OKE) released its 8-K filing, announcing higher fourth-quarter and full-year earnings for 2023, along with its financial guidance for 2024. ONEOK, a leader in natural gas gathering, processing, storage, and transportation, as well as natural gas liquids transportation and fractionation, reported a net income of $688 million for Q4, resulting in $1.18 per diluted share, and a full-year net income of approximately $2.7 billion, or $5.48 per diluted share. The company's adjusted EBITDA for Q4 was more than $1.5 billion, with a full-year adjusted EBITDA of over $5.2 billion.
Financial Performance and Strategic Growth
ONEOK's financial achievements in 2023 were underpinned by record volumes in the Rocky Mountain region, a 19% increase in Gulf Coast/Permian region NGL raw feed throughput volumes, and a 54% increase in total wells connected. The company's president and CEO, Pierce H. Norton II, highlighted the year's significant growth and transformation, driven by strong financial performance and the closing of the Magellan acquisition. Norton emphasized the company's commitment to maximizing investor value through disciplined capital-growth opportunities, maintaining a strong balance sheet, dividend growth, and share repurchases.
Capital Expenditures and ESG Highlights
ONEOK's capital-growth projects include the Elk Creek Pipeline expansion and the Saguaro Connector Pipeline, with the latter awaiting a final investment decision by mid-year 2024. The company's environmental, social, and governance (ESG) efforts were recognized with an MSCI ESG Rating of AAA and inclusion in the Dow Jones Sustainability North American Index.
2024 Financial Guidance
Looking ahead, ONEOK provided 2024 earnings guidance with a net income midpoint of $2.8 billion and an adjusted EBITDA midpoint of $6.1 billion. The company plans to invest approximately $1.75 billion to $1.95 billion in total capital expenditures. The guidance reflects expectations of higher earnings from all business segments, a full-year contribution from the refined products and crude segment, and the realization of acquisition-related synergies.
Balance Sheet and Cash Flow Statements
As of December 31, 2023, ONEOK reported a net debt-to-EBITDA ratio of 3.46 times and had no borrowings outstanding under its $2.5 billion credit agreement. The company ended the year with $338 million in cash and cash equivalents. The full-year 2023 financial performance was driven by higher volumes, average fee rates, and natural gas storage and transportation services, which were partially offset by higher operating costs due to employee-related costs and outside services.
Analyst and Media Commentary
"Record volumes, strong financial performance and the closing of the Magellan acquisition solidified 2023 as a year of significant growth and transformation," said Pierce H. Norton II, ONEOK president and chief executive officer. "With volume momentum across our operations, a full-year earnings contribution from the refined products and crude segment, and the realization of acquisition-related synergies, weve guided to double-digit adjusted EBITDA growth in 2024."
ONEOK's robust financial results and strategic initiatives position the company for continued growth and value creation for its stakeholders. The company's focus on maintaining a strong balance sheet and capitalizing on growth opportunities, while also prioritizing ESG considerations, underscores its commitment to sustainable and responsible business practices.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from ONEOK Inc for further details.
This article first appeared on GuruFocus.
