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ONEOK, Inc. (OKE) Q1 Results - April 30

Posted: Wed Apr 30, 2025 1:15 pm
by dan_s
After the markets closed on April 29, ONEOK released Q1 results that were GOOD, but below my forecast. Revenues were more than $1 billion higher than my forecast, but "Cost of sales and fuel" were a higher percentage of revenues than I was expecting.

Higher First Quarter 2025 Results, Compared With First Quarter 2024:

Net income of $691 million (includes noncontrolling interests).
Net income attributable to ONEOK of $636 million, resulting in $1.04 per diluted share.
Adjusted EBITDA of $1.78 billion (includes $31 million of transaction costs).
15% increase in Rocky Mountain region NGL raw feed throughput volumes.
7% increase in Rocky Mountain region natural gas volumes processed.

"ONEOK's solid first quarter results highlight the strength of our integrated system, disciplined growth strategy and dedicated employees," said Pierce H. Norton II, ONEOK president and chief executive officer.

"Higher year-over-year volumes in the Rocky Mountain region, along with contributions from recent strategic acquisitions and growth initiatives, drove performance during the quarter," added Norton. "We expect continued execution on acquisition-related synergies, the completion of organic growth projects and the demand for our services to support growth throughout 2025, creating additional shareholder value."

HIGHLIGHTS:

On Jan. 31, 2025, ONEOK completed the acquisition of EnLink Midstream (EnLink).
In February 2025, ONEOK announced joint ventures to construct a 400,000-barrel per day (bpd) liquified petroleum gas (LPG) export terminal in Texas City, Texas, and a pipeline connecting ONEOK's Mont Belvieu storage facility to the new terminal.
In March 2025, ONEOK repaid $250 million of 3.2% senior notes at maturity with cash on hand.
In March 2025, ONEOK repurchased 190,000 shares of common stock for $17.4 million under its $2 billion share repurchase program, bringing total repurchases under the program to 1.865 million shares for $189 million since its inception in January 2024.
In April 2025, ONEOK declared a quarterly dividend of $1.03 per share, or $4.12 per share annualized. < An increase of $0.16 per share over the previous year's dividends of $3.96 per share.

As of March 31, 2025:
No borrowings outstanding under ONEOK's $3.5 billion credit agreement.
$141 million of cash and cash equivalents.

FIRST QUARTER 2025 FINANCIAL PERFORMANCE

ONEOK reported first quarter 2025 net income attributable to ONEOK and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of $636 million and $1.78 billion, respectively.

Results were driven primarily by a full quarter of adjusted EBITDA from EnLink and Medallion, and higher natural gas liquids (NGL) and natural gas processing volumes in the Rocky Mountain region. Results were partially offset by increased operating costs due primarily to higher employee-related costs from the growth of ONEOK's operations, and no earnings in 2025 from assets divested in 2024.

Additionally, first quarter 2025 adjusted EBITDA included $31 million of transaction costs related primarily to the EnLink acquisition.

Re: ONEOK, Inc. (OKE) Q1 Results - April 30

Posted: Wed Apr 30, 2025 2:17 pm
by dan_s
What's interesting is that ONEOK has not changed their EBITDA guidance range for 2025 of $8.0 billion to $8.450 billion. I was using the midpoint of their guidance. I will now use the bottom of their guidance, which will still be the best year in ONEOK's long history.

Not lowering their EBITDA forecast tells me that the much higher than expected "Cost of sales and fuel" in Q1 was an anomaly.

ONEOK raised their dividends, and they have more than enough DCF to keep them at $1.03/quarter and raise them in 2026 when the FEAR of the Tariff War fades.

TipRanks: "In the last 3 months, 13 ranked analysts set 12-month price targets for OKE. The average price target among the analysts is $110.17." < The 13 price targets range from $100 to $147.

I am lowering my current valuation by $10 to $112 per share.

At the time of this post OKE was trading at $81.60