ONEOK, Inc. (NYSE:OKE) Financial Guidance Update for 2024

ONEOK, Inc. has revised its full-year 2024 financial guidance upward for the second time, citing robust fee-based earnings and synergies from recent acquisitions. In the Third Quarter 2024 Earnings Conference Call, CEO Pierce Norton announced that the adjusted EBITDA for 2024 is projected to more than double compared to five years prior, reflecting growth following the Magellan acquisition.

Third Quarter 2024 Performance

The company reported a third-quarter net income of $693 million and an adjusted EBITDA of $1.55 billion, mainly driven by the Rocky Mountain region and natural gas pipeline services. ONEOK expects significant volume growth in the Permian Basin and the completion of key pipeline expansions by the end of 2024 and into 2025.

Key Takeaways

• ONEOK has increased its full-year 2024 financial guidance for the second time.
• The adjusted EBITDA for 2024 is projected to be over double that of five years ago.
• The company completed the acquisition of EnLink Midstream (NYSE:ENLC) and expects to finalize the Medallion acquisition soon.
• Third-quarter net income was $693 million, with an adjusted EBITDA of $1.55 billion.
• Significant volume growth is anticipated in the Permian Basin.
• Operations have resumed following wildfire disruptions in North Dakota.
• The company is optimistic about capturing growth in natural gas demand.

Company Outlook

• Consolidated financial guidance for 2024 includes a net income midpoint of approximately $3 billion and adjusted EBITDA of $6.625 billion.
• On a stand-alone basis, the guidance is a net income midpoint of $2.945 billion and adjusted EBITDA of $6.275 billion.
• The EBITDA guidance for 2025 is projected to exceed $8 billion.

Bearish Highlights

• Adjustments in the Bakken lateral length guidance for 2024 due to drilling delays, with some activities pushed to 2025.

Bullish Highlights

• Record processing volumes in the Rocky Mountain region and successful integration of Easton Energy NGL assets.
• Higher transportation rates in Q3 for the Natural Gas Pipeline segment are expected to exceed projections for 2024.

Misses

• Unplanned outages due to wildfires in North Dakota caused temporary production disruptions.

Q&A Highlights

• The $2 billion buyback plan through 2027 remains unchanged despite recent acquisitions.
• The EnLink Conflicts Committee is evaluating procedures for a potential acquisition of outstanding public units, with no additional procedural steps needed after clearing HSR reviews.

ONEOK's executives are optimistic about the company's future, focusing on synergy opportunities from recent acquisitions and organic growth. They plan to provide more detailed guidance in February 2024, including commodity prices, production, and capital expenditures. The company is strategically positioned to support LNG exports in Louisiana, with potential for further consolidation in the Mid-Continent region.

InvestingPro Insights

ONEOK's strong financial performance and optimistic outlook are evident in its recent market data and analyst projections. ONEOK's market capitalization stands at $55.81 billion, reflecting its significant presence in the midstream energy sector.

The company's revenue growth is noteworthy, with a 14.07% increase over the last twelve months as of Q3 2024, reaching $19.93 billion. A quarterly revenue growth of 19.91% in Q3 2024 supports the company's upward revision of its full-year 2024 financial guidance.

ONEOK has maintained solid profitability metrics, with a gross profit margin of 39.22% and an operating income margin of 22.46% for the last twelve months. This reflects efficiency in operations and growth strategies.

InvestingPro highlights two key aspects of ONEOK's financial health:

1. ONEOK has raised its dividend for 21 consecutive years, demonstrating a commitment to shareholder returns that aligns with a positive outlook and projected EBITDA growth.
2. The company shows a high return on invested capital, indicating efficient resource use in generating profits.

Conclusion

Overall, ONEOK's financial resilience and growth strategies demonstrate a strong trajectory for the upcoming years, bolstered by recent acquisitions and strategic positioning in key markets.