10-KPeriod: FY2019

KINDER MORGAN, INC. Annual Report, Year Ended Dec 31, 2019

Filed February 12, 2020For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) operates as one of North America's largest energy infrastructure companies, managing extensive networks of pipelines and terminals. In 2019, KMI demonstrated a strategic focus on asset optimization and financial strengthening, highlighted by the significant divestiture of the U.S. portion of the Cochin Pipeline and its interest in KML for $2.5 billion. This move, along with the sale of other assets, allowed KMI to reduce debt and improve its financial flexibility. The company provided a positive outlook for 2020, projecting a 25% increase in declared dividends to $1.25 per share, substantial Distributable Cash Flow (DCF) generation, and significant Adjusted EBITDA. KMI's strategy centers on stable, fee-based assets, operational efficiency, disciplined capital allocation, and maintaining a strong financial profile. The company's diverse asset base, primarily in natural gas and products pipelines, positions it to benefit from ongoing energy demand, though it remains exposed to regulatory, operational, and commodity price risks.

Financial Highlights

53 data points
Beta

Revenue

$13.21B

75.3% Gross Margin

Net Income

$2.19B

16.6% Net Margin

EPS (Diluted)

$0.96

Total Assets

$74.16B

Cash & Equivalents

$185.00M

Free Cash Flow

$2.48B

Financial Statements
Beta
Revenue$13.21B
Cost of Revenue$3.26B
Gross Profit$9.95B
Operating Expenses$8.34B
Operating Income$4.87B
Net Income$2.19B
EPS (Basic)$0.96
EPS (Diluted)$0.96
Shares Outstanding (Basic)2.26B
Shares Outstanding (Diluted)2.26B

Key Highlights

  • 1Divested U.S. portion of Cochin Pipeline and KML for $2.5 billion, using proceeds to reduce debt.
  • 2Forecasted a 25% increase in 2020 dividends to $1.25 per share.
  • 3Projected robust financial performance for 2020, with an estimated $5.1 billion in DCF and $7.6 billion in Adjusted EBITDA.
  • 4Maintained a strong focus on stable, fee-based energy transportation and storage assets central to growing North American markets.
  • 5Invested $2.4 billion in expansion projects and joint ventures in 2020, primarily funded by internally generated cash flow.
  • 6Reported a Net Debt-to-Adjusted EBITDA ratio of 4.3x at the end of 2019.

Frequently Asked Questions

In 2019, Kinder Morgan strategically focused on strengthening its financial position. A significant move was the divestiture of the U.S. portion of the Cochin Pipeline and its interest in Kinder Morgan Canada (KML) for approximately $2.5 billion. These proceeds were primarily used to pay down debt, enhancing financial flexibility.

Kinder Morgan provided a positive outlook for 2020, anticipating a 25% increase in declared dividends to $1.25 per share. The company also projected generating approximately $5.1 billion in Distributable Cash Flow (DCF) and $7.6 billion in Adjusted EBITDA. Capital investments for 2020 were planned at $2.4 billion, to be funded by internally generated cash flow.

While the majority of Kinder Morgan's revenue is supported by long-term, fee-based contracts, its CO2 segment has direct commodity price sensitivity. To mitigate this, KMI uses hedging arrangements, primarily for crude oil and NGLs, to minimize price exposure. The company estimates that a $1 change in WTI crude oil price impacts DCF by approximately $5 million.

Kinder Morgan faces several key risks, including those related to operating its business (such as dependence on product supply and demand, competition, and operational hazards), financial risks (like substantial debt and interest rate fluctuations), and regulatory risks (including potential changes in FERC or CPUC regulations and environmental compliance). Additionally, the company is subject to risks associated with climate change policy and public opinion.