The quarter came in ahead of the standing earnings bar. Published estimates had quarterly Adjusted EBITDA around $274 million, versus $280.8 million delivered, while diluted EPS was $0.64 versus a published estimate near $0.24. The revenue comparison was also strong, although product revenue drove much of the increase and is less representative of the fee-based earnings base.
| Metric | Q2 2026 | Q2 2025 | Change / expectation |
|---|---|---|---|
| Total operating revenue | $581.4M | $426.7M | +36% (Income Statement) |
| Net income including noncontrolling interest | $123.1M | $74.4M | +66% (Income Statement) |
| Diluted EPS | $0.64 | $0.33 | Published consensus near $0.24 |
| Adjusted EBITDA | $280.8M | $242.9M | +16%; consensus around $274M |
| Distributable cash flow | $194.9M | $153.3M | +27% (Reconciliation of GAAP to Non-GAAP Measures) |
| Free cash flow | $105.2M | $34.9M | +201% (Reconciliation of GAAP to Non-GAAP Measures) |
| Dividend coverage | 1.47x | — | (Financial Highlights) |
The core operating engine improved materially despite volume headwinds. Midstream Logistics Adjusted EBITDA rose 35% to $204.8 million even though processed gas volumes were flat at 1.74 Bcf/d and roughly 250 MMcf/d was shut in for Waha-price reasons. Better NGL recoveries, condensate yields, operating optimization and commodity spreads did the work. Pipeline Transportation was weaker at $83.0 million, down 14% because the late-2025 EPIC Crude divestiture removed earnings, but Permian Highway and Shin Oak performed better operationally than the prior year or expectations. (Segment Results — Midstream Logistics; Segment Results — Pipeline Transportation)
The most important change is the raised full-year outlook, not the record headline. Full-year 2026 Adjusted EBITDA guidance moved to $1.04 billion-$1.10 billion, with the midpoint 7% above the original outlook and approximately 15% above 2025 pro forma for EPIC Crude. Management also expects $260 million-$270 million in Q3 and $270 million-$280 million in Q4, implying that the upgrade reflects both first-half outperformance and better assumptions for the remaining quarters. (Financial Highlights; 2026 Guidance)
The upgrade comes with a heavier investment load and slightly higher leverage. Capital spending guidance is approximately $560 million, including KLII, accelerated producer development, ECCC expansion work and long-lead equipment for capacity beyond KLII. Net debt increased to $3.94 billion from $3.85 billion at March 31, while leverage stood at 3.85x and dividend coverage remained healthy at 1.47x. That leaves the read clearly positive versus expectations, but the incremental growth is being funded with substantial capital deployment rather than simply converted into near-term balance-sheet improvement. (Capital Expenditures Guidance; Net Debt; Financial Highlights)
Net read: a genuine beat-and-raise, with the upside broadening beyond one quarter. The market received stronger-than-expected EBITDA and EPS, a meaningful guidance increase, resilient core midstream performance and visible customer-backed expansion plans. The main qualification is that Pipeline Transportation declined after the EPIC Crude sale and debt plus growth capital are rising, but those issues do not outweigh the positive gap versus the pre-filing expectation.
Read the original 8-K on SEC EDGAR ↗