What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 139 added, 222 removed, 134 unchanged (73% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis addresses the results of our operations for the three and nine month periods ended September 30, 2023, as compared to our results of operations for the same periods in 2022.

In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods.

The business combination of Altus Midstream Company (“ALTM”) and BCP Raptor Holdco, LP (“BCP”) and their respective consolidated subsidiaries closed on February 22, 2022.

As the transaction was determined to be a reverse merger, BCP was considered the accounting acquirer and ALTM was considered the legal acquirer.

Therefore, BCP’s net assets, carried at historical value, were presented as the predecessor to Kinetik Holdings Inc.’s (the “Company”) historical financial statements and the comparable period presented herein reflects the results of operations of BCP for the three and nine months ended September 30, 2022 and results of operations of ALTM from the Closing Date (as defined below) through September 30, 2022.

Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc.

“the Company”, “us”, “our”, “we” or similar terms, with respect to time periods prior to February 22, 2022, include BCP and its consolidated subsidiaries and do not include ALTM and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc.

with respect to time periods from and after February 22, 2022, include ALTM and its consolidated subsidiaries.

Business Combination

On February 22, 2022 (the “Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company, and BCP.

The transactions contemplated by the Contribution Agreement are referred to herein as the “Transaction.” In connection with the closing of the Transaction (the “Closing”), the Company changed its name from “Altus Midstream Company” to “Kinetik Holdings Inc.” Upon closing of the business combination, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership.

The Transaction was accounted for as a reverse merger pursuant to ASC 805 Business Combination (“ASC 805”).

Refer to Note 2—Business Combination s in the Notes to Condensed Consolidated Financial Statements for further information regarding the Transaction.

The following discussion and analysis addresses the results of our operations for the three month period ended March 31, 2024 , as compared to our results of operations for the same period in 2023 .

Please read the following discussion of our financial condition and results of operations in conjunction with the financial statements and notes thereto included elsewhere in this report.

We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services.

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and crude oil gathering, stabilization, storage and transportation.

The Company’s corporate office is located in Houston, Texas and our operations are strategically located in the heart of the Delaware Basin.

Our operations are strategically located in the heart of the Delaware Basin.

Our Operations and Segments

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The Midstream Logistics segment operates under three service offerings, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal.

The Pipeline Transportation segment consists of four equity method investment (“EMI”) pipelines originating in the Permian Basin with various access points to the Texas Gulf Coast, Kinetik NGL Pipeline and Delaware Link Pipeline.

The pipelines transport crude oil, natural gas and NGLs within the Permian Basin and to the Texas Gulf Coast.

The Pipeline Transportation segment consists of four EMI pipelines originating in the Permian Basin with various access points to the U.S.

Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines.

The pipelines transport crude oil, natural gas and NGLs within the Permian Basin and to the U.S.

Midstream Logistics

Gas Gathering and Processing.

The Midstream Logistics segment provides gas gathering and processing services with over 1,600 miles of low and high-pressure steel pipeline located throughout the Delaware Basin.

The Midstream Logistics segment provides gas gathering and processing services with over 1,600 miles of low and high-pressure steel pipelines located throughout the Delaware Basin.

Gas processing assets are centralized at five processing complexes with total cryogenic processing capacity of approximately 2.0 Bcf/d.

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EMI pipelines.

The Company owns the following equity interests in four EMI pipelines in the Permian Basin with access to various points along the Texas Gulf Coast:

1) an approximate 53.3% equity interest in Permian Highway Pipeline LLC (“ PHP”), which is also owned and operated by Kinder Morgan;

2) 16% equity interest in Gulf Coast Express Pipeline LLC (“ GCX”), which is owned and operated by Kinder Morgan;

3) 33% equity interest in Shin Oak, which is owned by Breviloba, LLC, and operated by Enterprise Products Operating LLC;

The Company owns the following equity interests in four EMI pipelines in the Permian Basin with access to various points along the U.S.

1) an approximate 55.5% equity interest in Permian Highway Pipeline LLC (“ PHP”), which is operated by Kinder Morgan;

2) 16% equity interest in Gulf Coast Express Pipeline LLC (“ GCX”), which is also operated by Kinder Morgan;

3) 33% equity interest in Breviloba, LLC, the owner of Shin Oak, which is operated by Enterprise Products Operating LLC;

and 4) 15% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC.

Kinetik NGL Pipeline.

The Kinetik NGL Pipeline consists of approximately 30 miles of 20-inch NGL pipelines connected to our Diamond Cryogenic complex.

Kinetik NGL Pipelines.

The Kinetik NGL Pipelines consist of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans 40 miles, and our 30 mile, 16-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex.

The Kinetik NGL pipeline system has a capacity of approximately 580 MBbl/d.

Delaware Link Pipeline.

The Delaware Link Pipeline consists of approximately 40 miles of pipeline with a capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha.

The Delaware Link Pipeline consists of approximately 40 miles of 30-inch diameter pipeline with an initial capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha.

The project reached commercial in-service in October 2023.

Recent Developments

On April 2, 2024, Kinetik Receivables LLC (“Kinetik Receivables”), a bankruptcy remote special purpose entity formed as a direct subsidiary of Kinetik Holdings LP, a Delaware limited partnership ( the “Partnership”) , entered into an accounts receivable securitization facility with an initial facility limit of $150 million (“A/R Facility”) which has a scheduled termination date of April 1, 2025, with renewal options.

Pursuant to the terms of the A/R Facility, Kinetik Receivables acquires certain receivables from the Partnership and other subsidiaries of the Company and makes further sales of such receivables to certain purchasers.

The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the existing term loan credit facility (“Term Loan Credit Facility”), lowering the remaining balance to $1.00 billion.

As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026.

Secondary Offering of Common Stock

On March 13, 2024, the Company and Apache (the “Selling Stockholder”) entered into an Underwriting Agreement with Goldman Sachs & Co.

LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Selling Stockholder agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Selling Stockholder, subject to and upon the terms and conditions set forth therein, 13,079,871 shares of Class A Common Stock.

The Company did not receive any proceeds from the sale of shares of Common Stock in the offering.

Factors Affecting Our Business

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There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices.

As a result of uncertainty around global commodity supply and demand, the current armed conflict in Israel and the Gaza Strip, the ongoing armed conflict in Ukraine, and uncertainty from the recent banking turmoil and its effects on financial markets, global oil and natural gas commodity prices continue to remain volatile.

As a result of uncertainty around global commodity supply and demand, the current conflict in Israel and the Gaza Strip and elsewhere in the Middle East, as well as the ongoing armed conflict in Ukraine, global oil and natural gas commodity prices continue to remain volatile.

The volatility and uncertainty of natural gas, crude oil and NGL prices impact drilling, completion and other investment decisions by producers and ultimately supply to our systems.

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Our product sales revenue is exposed to commodity price fluctuations.

Therefore, commodity price decline and sustained periods of low natural gas and NGL prices could have an adverse effect on our product revenue stream.

Also, after a rapid rise of oil and natural gas prices in the first half of 2022, oil and natural gas prices have moderated from their peaks during the past twelve months.

Therefore, commodity price decline and sustained periods of low natural gas, condensate and NGL prices could have an adverse effect on our product revenue stream.

The Company continues to monitor commodity prices closely and may enter into commodity price hedges from time to time as necessary to mitigate the volatility risk.

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Inflation and Interest Rates

The annual rate of inflation in the United States was 3.7% in September 2023 compared to 8.2% in September 2022, as measured by the Consumer Price Index, which was the lowest since April 2021.

However, the Federal Open Market Committee (“FOMC”) maintains its long run goals of maximum employment and inflation at the rate of 2.00%.

In support of these goals, the FOMC maintained the target range for the federal funds rate to 5.25% - 5.50% during its meeting in November 2023.

During the meeting, the FOMC acknowledged that the economic activity expanded at a strong pace in the third quarter and the U.S.

banking system is sound and resilient.

However, tighter financial and credit conditions for households and businesses are likely to weigh on economic activities, hiring and inflation.

As the extent of these effects remains uncertain, the FOMC remains highly attentive to inflation risks and is strongly committed to returning inflation to its goal of 2.00%.

Increased interest rates beyond the term of our hedges will increase our financing costs and have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses, capital expenditures, dividends and distributions.

Income Tax Provision

The Company was at a net deferred tax asset position as of September 30, 2023 and December 31, 2022 before any valuation allowance assessment.

Based on all available positive and negative evidence, including projections of future taxable income, we believed it was more likely than not that our deferred tax assets would not be realized.

As such, a full valuation allowance was recorded against our net deferred tax asset position for federal purposes as of September 30, 2023 and December 31, 2022.

To arrive at this assessment, a significant piece of objectively verifiable negative evidence the Company used was the cumulative loss incurred throughout the last several years.

The Company also anticipates a net deferred tax asset position for the year ended December 31, 2023.

In evaluating the realizability of the deferred tax assets, the Company believes it will achieve a three-year cumulative level of profitability for the year ended December 31, 2023, which may allow management to conclude that it is more likely than not that the deferred tax assets would be realized and support a release of substantially all or a portion of the valuation allowance.

If the Company releases all or a portion of the valuation allowance, the Company will have a significant deferred income tax benefit in such period.

The Company will continue to evaluate whether the valuation allowance is needed in each reporting period based on information available to the Company.

The annual rate of inflation in the United States was 3.25% in March 2024 compared to 5.0% in March 2023, as measured by the Consumer Price Index.

However, the Federal Open Market Committee (“FOMC”) maintains its long-term goals of maximum employment and inflation at the rate of 2.00%.

In support of these goals, the FOMC maintained the target range for the federal funds rate to 5.25% - 5.50% during its meeting in March 2024.

During the meeting, the FOMC noted the economic outlook is uncertain and the FOMC remains highly attentive to inflation risk.

It does not expect to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2.00%.

Elevated interest rates beyond the term of our hedges will increase our financing costs and could have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses, capital expenditures, dividends and distributions.

Results of Operations

The following table presents the Company’s results of operations for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

2024 2023 % Change

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Other revenue 2,632 3,791 (31 %)

Total revenues 330,301 325,176 2 % 907,544 917,997 (1 %)

Total operating revenues

341,394 281,040 21 %

Operating costs and expenses:

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153,687 115,877 33 %

Operating expense 42,925 35,845 20 % 118,804 100,996 18 %

Operating expenses

43,406 35,973 21 %

Ad valorem taxes 6,292 5,458 15 %

General and administrative 22,751 23,468 (3 %) 73,131 72,180 1 %

Depreciation and amortization 69,935 65,005 8 % 208,271 192,609 8 %

Loss on disposal of assets 2,927 3,946 (26 %) 15,166 12,602 20 %

General and administrative expenses

34,136 27,511 24 %

Depreciation and amortization expenses

73,606 68,854 7 %

Loss on disposal of assets 4,166 102 NM

Total operating costs and expenses 315,293 253,775 24 %

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Other income (expense):

Interest and other income 289 — 100 % 1,625 250 NM

Gain on redemption of mandatorily redeemable Preferred Units — — — % — 9,580 (100 %)

Loss on debt extinguishment — — — % — (27,975) (100 %)

Gain on embedded derivative — 488 (100 %) — 89,050 (100 %)

Interest and other income 91 294 (69 %)

Interest expense (47,467) (69,308) (32 %)

Equity in earnings of unconsolidated affiliates 60,469 46,464 30 %

Total other income, net 6,034 5,027 20 % 18,010 99,026 (82 %)

Income before income taxes 44,434 50,828 (13 %) 121,128 204,503 (41 %)

Income tax expense 1,303 1,406 (7 %) 2,030 2,244 (10 %)

Net income including noncontrolling interest $ 43,131 $ 49,422 (13 %) $ 119,098 $ 202,259 (41 %)

(1) The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022.

Refer to the Form 10-Q basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q, for further information.

(2) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $38.6 million and $17.1 million for the three months ended September 30, 2023 and 2022, respectively, and $107.1 million and $51.1 million for the nine months ended September 30, 2023 and 2022, respectively, for certain volumes where we act as principal

Total other income (expense), net 13,093 (22,550) 158 %

Income before income taxes 39,194 4,715 NM

Income tax expenses

Net income including noncontrolling interest $ 35,407 $ 4,299 NM

(1) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $44.5 million and $30.5 million for the three months ended March 31, 2024 and 2023, respectively for certain volumes where we act as principal.

NM - Not meaningful

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

For the three months ended September 30, 2023, revenue increased $5.1 million, or 2%, to $330.3 million, compared to $325.2 million for the same period in 2022.

The increase was primarily driven by an increased product revenue related to increased NGL and condensate volumes sold, partially offset by period-to-period lower service revenues.

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

For the three months ended March 31, 2024, revenue increased $60.4 million, or 21%, to $341.4 million, compared to $281.0 million for the same period in 2023.

The increase was primarily driven by higher product revenue related to increased commodity prices and increased natural gas residue volumes sold.

Service revenue

Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and produced water disposal services necessary to bring natural gas, NGLs and crude oil to market.

Service revenue for the three months ended September 30, 2023, decreased by $3.2 million, or 3%, to $104.3 million, compared to $107.6 million for the same period in 2022.

Service revenue for the three months ended March 31, 2024, decreased by $1.2 million, or 1%, to $102.2 million, compared to $103.4 million for the same period in 2023.

This decrease was driven by lower period over period crude gathering fees of $1.1 million.

Period-over-period gathered and processed gas volumes increased by 207.0 Mcf per day, or 13% and by 204.9 Mcf per day, or 15%, respectively.

However, the total gathered and processed gas volumes where we function as the agent decreased period over period, which lead to the $3.2 million decrease in service fees presented.

Additionally, period over period water gathering and disposal revenues were up $8.3 million primarily related to the new water gathering assets acquired during the first quarter of 2023, but the increase was overshadowed by the decrease in agent related gathered and processed gas volumes.

Over 99% of service revenues are included in the Midstream Logistics segment.

Product revenue

Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs).

Product revenue for the three months ended September 30, 2023, increased by $7.5 million, or 3%, to $221.3 million, compared to $213.8 million for the same period in 2022, primarily due to increases in NGL and condensate volumes sold, partially offset by lower commodity prices.

Period over period NGL and condensate volumes sold increased 3.8 million barrels, or 86%.

These increases were partially offset by period over period decreases in NGL prices of $13.06 per barrel, or 37%, condensate prices of $12.07 per barrel or 13% and residue prices of $4.94 per MMBtu or 68%.

Natural gas residue sales volumes also decreased 0.8 MMBtu, or 14%.

Product revenues are included entirely in the Midstream Logistics segment.

Operating Costs and Expenses

Costs of sales (exclusive of depreciation and amortization)

Cost of sales (exclusive of depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties.

For the three months ended September 30, 2023, cost of sales increased $2.5 million, or 2%, to $147.8 million, compared to $145.2 million for the same period in 2022.

The increase was primarily driven by aforementioned period over period increase in NGL volumes sold.

Cost of sales (exclusive of depreciation and amortization) are included entirely in the Midstream Logistics segment.

Operating expenses

Operating expenses increased by $7.1 million, or 20%, to $42.9 million for the three months ended September 30, 2023, compared to $35.8 million for the same period in 2022.

Of the total increase, $2.2 million relates to increased operating expenses from our water operations primarily in relation to the new midstream infrastructure assets acquired during the first quarter of 2023.

The remaining increase was driven by higher leased compression and electricity expenses from the increased gathered and processed volumes discussed above.

Other Income (Expense)

Interest Expense

Interest expense increased by $4.5 million, or 11%, to $45.0 million for the three months ended September 30, 2023, compared to $40.5 million for the same period in 2022.

The increase was primarily driven by higher average debt obligations during the quarter, as well as an overall increase in interest rates associated with the Term Loan Credit Facility (as defined below) and Revolving Credit Facility (as defined below), which carried some variability.

The increase was partially offset by realized gains and favorable valuation marks on our interest rate swaps totaling $12.5 million for the period.

Refer to Note—12 Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk.

Equity in earnings of unconsolidated affiliates

Income from EMI pipelines increased by $5.8 million, or 13%, to $50.8 million for the three months ended September 30, 2023, compared to $45.0 million for the same period in 2022.

The increase reflected higher profitability by the Company’s EMIs.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

For the nine months ended September 30, 2023, revenue decreased $10.5 million, or 1%, to $907.5 million, compared to $918.0 million for the same period in 2022.

The decrease was primarily driven by period-to-period lower product revenues due to decreases in commodity prices, partially offset by higher service revenues related to increases in gathered and processed gas volumes.

Service revenue

Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market.

Service revenue for the nine months ended September 30, 2023, increased by $20.2 million, or 7%, to $310.3 million, compared to $290.1 million for the same period in 2022.

This increase was due to a period-over-period increase in water gathering and disposal revenues totaling $21.7 million primarily related to the new water gathering assets acquired during the first quarter of 2023.

Additionally, total gathered and processed gas volumes increased 302.3 Mcf per day, or 24% and 316.9 Mcf per day, or 27%, respectively.

However, the total gathered and processed gas volumes where we function as the agent slightly decreased period over period.

However, the total gathered and processed gas volumes where we function as the agent decreased period over period causing the change in net gas gathering fees presented as revenues to be flat.

Over 99% of service revenues are included in the Midstream Logistics segment.

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Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs).

Product revenue for the nine months ended September 30, 2023, decreased by $31.8 million, or 5%, to $586.5 million, compared to $618.4 million for the same period in 2022, primarily due to period over period decreases in commodity prices.

Period over period NGL prices decreased $18.31 per barrel, or 46%, condensate prices decreased $22.40 per barrel or 23% and residue prices decreased $4.49 per MMBtu, or 73%.

The overall decrease was partially offset by increases in NGL and condensate volumes sold of 10.9 million barrels, or 91%.

Natural gas residue sales volumes decreased 4.1 million MMBtu, or 20%.

Product revenue for the three months ended March 31, 2024, increased by $62.7 million, or 36%, to $236.6 million, compared to $173.8 million for the same period in 2023, primarily due to increased residue gas volumes sold and higher commodity prices.

Period over period natural gas residue volumes sold increased 4.4 million MMBtu, or 45% and the period over period natural gas price realized increased by $0.62 per MMBtu, or 49%.

Further contributing to the quarter over quarter increased product sales, composite NGL prices increased $8.59 per barrel, or 36%, and condensate prices increased $2.93 per barrel or 4%.

Partially offsetting these increases, NGL and condensate volumes sold decreased 0.2 million barrels, or 3%.

Product revenues are included entirely in the Midstream Logistics segment.

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For the nine months ended September 30, 2023, cost of sales decreased $44.1 million, or 11%, to $374.1 million, compared to $418.2 million for the same period in 2022.

The decrease was primarily driven by a period to period decrease in commodity prices, slightly offset by increases in NGL volumes sold.

Cost of sales (exclusive of depreciation and amortization) are included entirely in the Midstream Logistics segment.

For the three months ended March 31, 2024, cost of sales increased $37.8 million, or 33%, to $153.7 million, compared to $115.9 million for the same period in 2023.

The increase was primarily driven by aforementioned period over period increases in commodity prices and natural gas residue volumes sold.

Cost of sales (exclusive of depreciation and amortization) is included entirely in the Midstream Logistics segment.

Operating expenses

Operating expenses increased by $17.8 million, or 18%, to $118.8 million for the nine months ended September 30, 2023, compared to $101.0 million for the same period in 2022.

Of the total increase, $4.5 million was driven by the inclusion of Altus operations for the entire period, versus just over four months during the same period of 2022 and $3.7 million relates to increased operating expenses from our water operations predominantly related to the newly acquired midstream infrastructure assets.

The remaining increase is primarily the result of higher compression and electricity costs from the increased gathered and processed volumes discussed above.

Over 99% of operating expenses are included in the Midstream Logistics segment.

Operating expenses increased by $7.4 million, or 21%, to $43.4 million for the three months ended March 31, 2024, compared to $36.0 million for the same period in 2023.

Of the total increase, $1.8 million relates to increased water gathering operating expenses, primarily associated with the assets that were acquired during the first quarter of 2023.

The remaining increase relates to higher electricity, internal labor, lubricants and chemicals, and leased compression associated with the increased period over period gathered and processed gas volumes.

General and administrative expenses

General and administrative expenses increased by $6.6 million, or 24% to $34.1 million for the three months ended March 31, 2024, compared to $27.5 million for the same period in 2023.

The increase was mainly driven by an increase in share-based compensation of $5.0 million due to additional incentive units granted to employees during the first quarter of 2024.

Other Income (Expense)

Loss on debt extinguishment

For the nine months ended September 30, 2022, the Company recognized a loss on debt extinguishment of $28.0 million in relation to the comprehensive refinancing completed in June 2022.

We did not recognize any loss on debt extinguishment for the nine months ended September 30, 2023.

Unrealized gain on embedded derivative

For the nine months ended September 30, 2022, the Company recognized an unrealized gain on an embedded derivative of $89.1 million.

The unrealized gain was a result of the redemption of the redeemable noncontrolling interest Preferred Units.

All redeemable noncontrolling interest Preferred Units were redeemed in 2022;

as such, no unrealized gain or loss was recognized during 2023.

Interest expense

Interest expense increased by $37.9 million, or 41%, to $130.4 million for the nine months ended September 30, 2023, compared to $92.6 million for the same period in 2022.

The increase was driven by higher debt obligations from the comprehensive refinancing completed in June 2022, as well as an overall increase in interest rates associated with the Term Loan Credit Facility and Revolving Credit Facility, which carried some variability.

The increase was partially offset by higher realized gains and favorable valuation marks on interest rate swaps of $21.1 million when comparing the nine months ended September 30, 2023 to the same period in 2022.

Interest expense decreased by $21.8 million, or 32%, to $47.5 million for the three months ended March 31, 2024, compared to $69.3 million for the same period in 2023.

The decrease was primarily driven by realized gains and favorable valuation marks on our interest rate swaps totaling $13.3 million for the first quarter of 2024 compared to unfavorable valuation marks of $17.2 million for the same period in 2023.

Refer to Note—11 Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk.

This decrease was partially offset by higher period over period interest expense of $7.2 million due primarily to higher realized interest rates .

Equity in earnings of unconsolidated affiliates

Income from EMI pipelines increased by $26.1 million, or 22%, to $146.8 million for the nine months ended September 30, 2023, compared to $120.7 million for the same period in 2022.

The increase was due to the recognition of nine months of operations from the Company’s EMIs in 2023 compared to the recognition of seven months of operations in 2022 since the closing of the Transaction in February 2022.

The increase also reflected higher profitability by the EMIs.

Income from EMI pipelines increased by $14.0 million, or 30%, to $60.5 million for the three months ended March 31, 2024, compared to $46.5 million for the same period in 2023.

The increase was driven by higher profitability from the Company’s investment in PHP due to its expanded capacity that was placed into service in December 2023.

Key Performance Metrics

Adjusted EBITDA

Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from our equity method investments, equity in earnings from investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to trading and hedging agreements, extraordinary losses and unusual or non-recurring charges.

Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, warrant valuation, loss on disposal of assets, the proportionate EBITDA from our EMI pipelines, equity income from investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to trading and hedging activities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges.

Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

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• is widely used by analysts, investors and competitors to measure a company’s operating performance;

• is a financial measurement that is used by rating agencies, lenders and other parties to evaluate our credit worthiness;

• is used by our management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting.

• is a financial measurement that is used by rating agencies and other parties to evaluate our credit worthiness;

• is used by our management for various purposes, including as a basis for strategic planning and forecasting.

Adjusted EBITDA is not defined in GAAP

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The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interest to the non-GAAP financial measure of Adjusted EBITDA.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

2024 2023 % Change

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Reconciliation of net income including noncontrolling interest to Adjusted EBITDA

Net income including noncontrolling interest $ 43,131 $ 49,422 (13 %) $ 119,098 $ 202,259 (41 %)

Net income including noncontrolling interest $ 35,407 $ 4,299 NM

Interest expense 47,467 69,308 (32 %)

Income tax expense 1,303 1,406 (7 %) 2,030 2,244 (10 %)

Income tax expense 3,787 416 NM

Depreciation and amortization 73,606 68,854 7 %

Amortization of contract costs 1,655 448 NM 4,965 1,344 NM

Amortization of contract costs 1,655 1,655 — %

Proportionate EMI EBITDA 88,402 71,867 23 %

Share-based compensation 22,561 17,540 29 %

Loss on disposal of assets 2,927 3,946 (26 %) 15,166 12,602 20 %

Loss on debt extinguishment — — — % — 27,975 (100 %)

Unrealized loss on derivatives 8,259 — 100 % 616 — 100 %

Loss on disposal of assets 4,166 102 NM

Commodity hedging unrealized loss (gain)

15,088 (4,987) NM

Integration costs

Transaction Costs 378 62 NM 648 6,412 (90 %)

41 925 (96 %)

Transaction costs

— 268 (100 %)

Other one-time cost or amortization 2,425 3,748 (35 %)

Warrant valuation adjustment 4 — 100 % — %

Interest income 577 — 100 %

Warrant valuation adjustment — 44 (100 %)

Gain on redemption of mandatorily redeemable Preferred Units — — — % — 9,580 (100 %)

Gain on embedded derivative — 488 (100 %) — 89,050 (100 %)

Equity income from EMI's 60,469 46,464 30 %

Adjusted EBITDA $ 233,559 $ 187,487 25 %

* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022.

Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies for further information on the Company’s basis of presentation.

NM - not meaningful

Adjusted EBITDA increased by $3.0 million, or 1%, to $215.3 million for the three months ended September 30, 2023, compared to $212.4 million for the same period in 2022.

Adjusted EBITDA increased by $49.7 million, or 9%, to $610.8 million for the nine months ended September 30, 2023, compared to $561.1 million for the same period in 2022.

Adjusted EBITDA increased by $46.1 million, or 25%, to $233.6 million for the three months ended March 31, 2024, compared to $187.5 million for the same period in 2023.

As discussed in the Item 2.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations — R esults of O perations to this Quarterly Report Form 10-Q, $15.9 million of the increase was due to lower cost of sales (exclusive of depreciation and amortization) of $44.1 million, partially offset by decreased total operating revenues of $10.5 million and increased operating expenses of $17.8 million.

The increase was also driven by (i) higher proportionate EMI EBITDA of $34.5 million due to owning the EMI investments acquired through the Transaction for a full nine months during 2023 and (ii) an increase in the add back related to share-based compensation of $12.4 million due primarily to a full nine months of amortization for the Class A Shares versus only seven months in the prior period.

These increases were partially offset by decreases in the add backs related to transaction and integration costs totaling $14.8 million related to the Transaction from 2022.

“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” to this Quarterly Report on Form 10-Q, $7.7 million of the increase was due to increased total operating revenue of $60.4 million, partially offset by increased cost of sales (exclusive of depreciation and amortization) of $37.8 million and an increase in operating expenses, ad valorem taxes and General and Administrative Expenses totaling of $14.9 million.

The increase was also driven by (i) higher proportionate EMI EBITDA of $16.5 million due to expanded capacity on PHP that was placed into service in December 2023 (ii) increases in the add backs related to unrealized loss (gain) on commodity hedging activities and share-based compensation.

Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our equity method investments and other non-recurring items.

The following table presents segment adjusted EBITDA for the three and nine month periods ended September 30, 2023 and 2022.

Also refer to Note 17—Segments in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for a reconciliation of segment adjusted EBITDA to net income including noncontrolling interest.

Three Months Ended September 30, Nine Months Ended September 30,

The following table presents Segment Adjusted EBITDA for the three months ended March 31, 2024 and 2023.

Also refer to Note 16—Segments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a reconciliation of Segment Adjusted EBITDA to net income before income taxes.

Three Months Ended March 31,

2024 2023 % Change

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Total Segment Adjusted EBITDA

* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022.

Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies for further information on the Company’s basis of presentation.

$ 233,559 $ 187,487 25 %

(1) Corporate and Other represents those results that:

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(ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

Midstream Logistics segment adjusted EBITDA increased by $2.9 million, or 2%, to $140.4 million for the three months ended September 30, 2023, compared to $137.5 million for the same period in 2022.

Midstream Logistics segment adjusted EBITDA increased by $15.9 million, or 4%, to $396.8 million for the nine months ended September 30, 2023, compared to $380.9 million for the same period in 2022.

The increase was primarily due to the lower cost of sales (exclusive of depreciation and amortization) of $44.1 million, partially offset by decreased total operating revenues of $11.9 million and increased operating expenses of $18.0 million.

The reasons for the fluctuations are discussed in the Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report Form 10-Q,

Pipeline Transportation segment adjusted EBITDA increased by $0.2 million to $78.9 million for the three months ended September 30, 2023, compared to $78.7 million for the same period in 2022.

Pipeline Transportation segment adjusted EBITDA increased by $36.0 million, or 19%, to $226.0 million for the nine months ended September 30, 2023, compared to $190.0 million for the same period in 2022.

The increase was primarily driven by increases in the Company’s proportionate share of its EMIs’ EBITDA of $34.5 million due to owning the EMI investments acquired through the Transaction for a full nine months during 2023 versus approximately seven months during 2022.

Midstream Logistics Segment Adjusted EBITDA increased by $23.7 million, or 20%, to $143.0 million for the three months ended March 31, 2024, compared to $119.2 million for the same period in 2023.

The increase was primarily due to the increased total operating revenue of $52.8 million, partially offset by increases in cost of sales (exclusive of depreciation and amortization) of $37.8 million and operating expense of $7.2 million.

The reasons for the fluctuations are discussed in Item 2.

“ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” to this Quarterly Report on Form 10-Q.

The increase was also driven by an increase in add back related to unrealized loss (gain) on commodity hedging activities of $20.1 million.

Pipeline Transportation Segment Adjusted EBITDA increased by $23.2 million, or 32%, to $95.5 million for the three months ended March 31, 2024, compared to $72.3 million for the same period in 2023.

The increase was primarily driven by higher proportionate EMI EBITDA of $16.5 million due to the expanded capacity on PHP that was placed into service in December 2023 and an increase in segment revenues of $7.6 million from the Delaware Link Pipeline that was placed into service during October 2023.

Contractual Obligations

We have contractual obligations for principal and interest payments on our Term Loan Credit Facility.

See Note 7 —Debt and Financing Costs in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.

Under certain of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume during any year, then we will pay a deficiency payment for transportation based on the volume shortfall up to the MVC amount.

The Company has made no historical shortfall payments through September 30, 2023.

We have contractual obligations for principal and interest payments on our 2028 Notes, 2030 Notes and Term Loan Credit Facility.

See Note 7 — Debt and Financing Costs in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Under certain clauses of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume, then we will pay certain deficiency payments for transportation based on the volume shortfall up to the MVC amount.

Capital Resources and Liquidity

The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisition of the EMI pipelines and associated subsequent construction costs.

For 2023, the Company’s primary capital spending requirements are related to the PHP expansion project, the midstream infrastructure acquisition and other budgeted capital expenditures for construction of gathering and processing assets, the Company’s contractual debt obligations and quarterly cash dividends.

In addition, the Board of Directors (the “Board”) has approved the Repurchase Program (as defined below) authorizing discretionary purchases of the Company’s Class A Common Stock up to $100 million in aggregate.

During the nine months ended September 30, 2023, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility and cash generated from operations.

Based on the Company’s current financial plan and related assumptions including the Reinvestment Agreement (as defined below), the Company believes that cash from operations and distributions from the EMI pipelines, and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months.

Additionally, the Company has locked in the floating base rate on its Term Loan Credit Facility with interest rate swaps with a $2.25 billion notional that are effective through May 31, 2025 swapping floating SOFR for a fixed swap rate between 4.38% and 4.49%.

Comprehensive Refinancing

On June 8, 2022, the Partnership completed the private placement of $1.00 billion aggregate principal amount of 5.875% Senior Notes due 2030, which are fully and unconditionally guaranteed by the Company.

The Notes were issued under our Sustainability-Linked Financing Framework and include sustainability-linked features.

In addition, the Partnership entered into the revolving credit agreement with Bank of America, N.A.

as administrative agent, which provides for a $1.25 billion senior unsecured revolving credit facility maturing on June 8, 2027 (the “Revolving Credit Facility”), and the term loan credit agreement with PNC Bank as administrative agent, which provided for a $2.00 billion senior unsecured term loan credit facility maturing on June 8, 2025 (the “Term Loan Credit Facility”).

Proceeds from the Notes and the Term Loan Credit Facility were used to repay all outstanding borrowings under our existing credit facilities and to pay fees and expenses related to the offering.

See Note 8—Debt and Financing Costs in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for further information.

The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as acquisitions, including the EMI pipelines and associated subsequent construction costs.

For 2024, the Company’s primary capital spending requirements are expected to relate to the Durango Acquisition and budgeted capital expenditures for construction and maintenance of gathering and processing assets, , the Company’s contractual debt obligations and quarterly cash dividends.

In addition, the Company may repurchase its Class A Common Stock pursuant to the Share Repurchase Program from time to time.

During the three months ended March 31, 2024, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility and cash generated from operations.

Based on the Company’s current financial plan, the Company believes that cash from operations and distributions from the EMI pipelines, and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months.

The Company expects to fund the cash consideration required to close the Durango Acquisition (“Closing Cash Consideration”) with proceeds from the GCX Sale.

However, if the Durango Acquisition closes prior to the GCX Sale, the Company expects to fund the Closing Cash Consideration with borrowings under its revolving credit facility.

On April 2, 2024, Kinetik Receivables, a bankruptcy remote special purpose entity formed as a direct subsidiary of the Partnership , entered into an A/R Facility which has a scheduled termination date of April 1, 2025 with renewal options.

The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the Term Loan Credit Facility, lowering the remaining balance to $1.0 billion.

As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026.

Capital Requirements and Expenditures

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations.

During the nine months ended September 30, 2023 and 2022, capital spending for property, plant and equipment totaled $245.8 million and $160.5 million, respectively, and intangible asset purchases totaled $15.1 million and $13.3 million, respectively.

In addition to contributing to the PHP expansion, the Company also acquired certain midstream infrastructure assets totaling $65.0 million in the first quarter of 2023, as discussed in Note 2—Business Combinations .

During the three months ended March 31, 2024 and 2023, capital spending for property, plant and equipment totaled $58.0 million and $58.9 million, respectively, intangible asset purchases totaled $2.2 million and $9.8 million, respectively, and contributions to EMI totaled $3.3 million and $58.7 million, respectively.

The decrease in capital spending was mainly due to the completion of the Delaware Link Pipeline and PHP expansion projects in the second half of 2023.

Management believes its existing gathering, processing and transmission infrastructure capacity is capable of fulfilling its midstream contracts to service its customers.

The Company anticipates its existing capital resources will be sufficient to fund the future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months.

For further information on EMIs, refer to Note 6—Equity Method Investments in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.

For further information on EMIs, refer to Note 6—Equity Method Investments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

The following tables present cash flows from operating, investing and financing activities during the periods presented:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Cash used in investing activities $ (61,980) $ (246,468)

Cash provided by (used in) financing activities $ 170,689 $ (243,827)

Cash (used in) provided by financing activities $ (86,479) $ 122,467

Operating activities .

Net cash provided by operating activities decreased by $47.7 million for the nine months ended September 30, 2023 compared with the same period in 2022.

The change in the operating cash flows reflected increases in adjustments related to non-cash items of $72.9 million, which was mainly driven by increases in fair value adjustment for derivatives of $62.0 million and share-based compensation of $12.4 million.

The increase was partially offset by a decrease in working capital of $37.4 million and a decrease in net income including noncontrolling interests of $83.2 million.

Net cash provided by operating activities increased by $34.1 million for the three months ended March 31, 2024 compared with the same period in 2023.

The change in the operating cash flows reflected (i) an increase in net income including noncontrolling interests of $31.1 million;

(ii) an increase in net income reconciliation adjustments of $5.8 million, which was mainly driven by increases in distributions from EMIs of $9.4 million, share-based compensation of $5.0 million, loss on disposal of assets $4.1 million and depreciation and amortization expense of $4.8 million, partially offset by a decrease in net derivative activity of $7.0 million and an increase in earnings from EMIs of $14.0 million and (iii) a decrease in working capital of $2.8 million.

Investing activities .

Net cash used in investing activities increased by $366.2 million for the nine months ended September 30, 2023 compared with the same period in 2022.

The increase was primarily driven by an increase in cash used in a business acquisition of $138.4 million for certain midstream assets, an increase in property, plant and equipment expenditures of $85.3 million and an increase in contributions made to unconsolidated affiliates of $146.5 million related to the PHP expansion project.

Net cash used in investing activities decreased by $184.5 million for the three months ended March 31, 2024 compared with the same period in 2023.

The decrease was primarily driven by decreases in cash outflows related to the business acquisition of $125.0 million for certain midstream assets made in the first quarter of 2023 and contributions made to unconsolidated affiliates of $55.4 million, as the PHP expansion project reached commercial in service during December 2023.

Financing activities .

Net cash provided by financing activities was $170.7 million for the nine months ended September 30, 2023, which was comprised of net proceeds from the Company’s Revolving Credit Facility of $235.0 million, offset by cash dividends of $58.6 million and repurchase of Class A common stock of $5.8 million.

Net cash used in financing activities was $243.8 million for the nine months ended September 30, 2022, which was comprised of redemption of mandatorily redeemable Preferred Units of $183.3 million, payments on debt issuance costs of $36.9 million and cash dividends of $34.1 million, offset by net proceeds on the Company’s outstanding indebtedness of $471.9 million.

Net cash used in financing activities was $86.5 million for the three months ended March 31, 2024, which was primarily comprised of net payments on the Partnership’s Revolving Credit Facility of $47.0 million and cash dividends of $39.5 million paid to the holders of Class A Common Stock and Common Units, compared with net cash provided by financing activities of $122.5 million for the three months ended March 31, 2023, which was primarily comprised of net proceeds from the Partnership’s Revolving Credit Facility of $142.0 million and cash dividends of $17.1 million paid to the holders of Class A Common Stock and Common Units.

Dividend and Distribution Reinvestment Agreement

On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator LP, Buzzard Midstream LLC, APA Corporation, Apache Midstream LLC and certain individuals (each, a “Reinvestment Holder”).

Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock.

The Audit Committee resolved that for the calendar year 2023, 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in shares of Class A Common Stock.

During the first nine months of 2023, the Company made cash dividend payments of $58.6 million to holders of Class A Common Stock and Class C Common Units and $263.8 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.

On May 19, 2022, the Company announced the Stock Split with respect to its Class A Common Stock and Class C Common Stock in the form of a stock dividend.

The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding.

The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

On November 1, 2023, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock which will be payable to stockholders on November 13, 2023.

The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units, which will be payable on November 22, 2023.

Core Shareholders have agreed to reinvest 100% of dividends received on Class C Common Units based on the Reinvestment Agreement.

Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest a specified percent of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock.

The Reinvestment Agreement terminated automatically on March 8, 2024.

During the first three months ended March 31, 2024, the Company made cash dividend payments of $39.5 million to holders of Class A Common Stock and Common Units and $74.2 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.

On April 18, 2024, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock which will be payable to stockholders on May 9, 2024.

As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

Share Repurchase Program

In February 2023, the Board approved a share repurchase program (the “Repurchase Program”), authorizing discretionary purchases of the Company’s Class A Common Stock up to $100.0 million in the aggregate.

Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act.

Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations.

The repurchases will depend on market conditions and may be discontinued at any time without prior notice.

The Company did not repurchase any outstanding shares during the three months ended September 30, 2023.

For the nine months ended September 30, 2023, the Company repurchased 194,174 shares at a total cost of $5.8 million.

The Company retired all treasury stock as of September 30, 2023.

For additional information regarding the Repurchase Program, see “Part II, Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds” in this Quarterly Report on Form 10-Q.

The Inflation Reduction Act of 2022 provides for, among other things, the imposition of a 1% non-deductible U.S.

federal excise tax (the “Stock Buyback Tax”) on certain repurchases of stock by publicly traded U.S.

corporations such as us after December 31, 2022.

Accordingly, the Stock Buyback Tax will apply to our share repurchase program in 2023 and in subsequent taxable years, provided, that the amount of share repurchases in the relevant taxable year subject to the Stock Buyback Tax is reduced by the fair market value of any stock issued by us during such taxable year, including the fair market value of any stock issued or provided to our employees or specified affiliates.

The Biden Administration has proposed increasing the amount of the Stock Buyback Tax from 1% to 4%;

however, it is unclear whether such a change in the amount of the Stock Buyback Tax will be enacted and, if enacted, how soon any such change could take effect.

For the three months ended March 31, 2024, the Company did not repurchase any of its outstanding shares.

For more information regarding the 1% U.S.

federal excise tax imposed on certain repurchases of stock by publicly traded U.S.

corporations, please refer to Part I, Item 1A.—”Risk Factors— Risks Related to Ownership of our Common Stock” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024.

The following table presents a summary of the Company’s key liquidity indicators at the dates presented:

September 30, December 31,

March 31, December 31,

(In thousands)

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Available committed borrowing capacity $ 690,400 $ 643,400

Cash and cash equivalents

As of September 30, 2023 and December 31, 2022, the Company had $0.1 million and $6.4 million, respectively, in cash and cash equivalents.

Total debt and available credit facilities

There is no assurance that the financial condition of banks with lending commitments to the Company will not deteriorate.

There is no assurance that the financial condition of banks with lending commitments to the Company and its subsidiaries will not deteriorate.

The Company closely monitors the ratings of the banks in the Company’s bank group.

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Off-Balance Sheet Arrangements

As of September 30, 2023, there were no off-balance sheet arrangements.

As of March 31, 2024, there were no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates from those disclosed on our Annual Report Form 10-K for the year ended December 31, 2022.

There have been no significant changes to our critical accounting policies and estimates from those disclosed on our Annual Report on Form 10-K for the year ended December 31, 2023.

Please refer to information regarding our critical accounting policies and estimates included in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Commission on March 7, 2023.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Commission on March 5, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis