10-QPeriod: Q1 FY2011

KINDER MORGAN, INC. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported a significant turnaround in its financial performance for the first quarter of 2011 compared to the same period in 2010. The company generated a net income of $155.0 million attributable to its stockholders, a substantial improvement from a net loss of $160.9 million in Q1 2010. This turnaround was driven by a recovery in operating income, largely due to the absence of a significant impairment charge that impacted the prior year's results and improved performance across most of its operating segments. Total revenues for the quarter were $2,008.1 million, a slight decrease from $2,157.6 million in the prior year, reflecting lower natural gas sales. However, operating costs also decreased, contributing to a higher operating income. The company also highlighted its successful initial public offering (IPO) in February 2011, which provided a significant infusion of capital and enhanced its financial flexibility. KMI's strategic focus on fee-based services and its operational efficiency remain key drivers of its performance.

Financial Highlights

21 data points
Beta

Revenue

$1.93B

Net Income

$155.00M

8.0% Net Margin

Free Cash Flow

$213.00M

Financial Statements
Beta
Revenue$1.93B
Operating Expenses$1.57B
Operating Income$365.00M
Interest Expense$174.00M
Net Income$155.00M

Key Highlights

  • 1Net income attributable to Kinder Morgan, Inc. stockholders was $155.0 million for Q1 2011, a significant improvement from a net loss of $160.9 million in Q1 2010.
  • 2Total revenues decreased slightly to $2,008.1 million in Q1 2011 from $2,157.6 million in Q1 2010, primarily due to lower natural gas sales.
  • 3Operating income significantly increased to $397.0 million in Q1 2011 from $244.4 million in Q1 2010.
  • 4The company completed its initial public offering (IPO) in February 2011, raising substantial capital.
  • 5Kinder Morgan Energy Partners, L.P. (KMP) distributions to Kinder Morgan, Inc. increased to $324.0 million in Q1 2011 from $287.0 million in Q1 2010.
  • 6The company reported $478.5 million in net cash provided by operating activities for Q1 2011, up from $438.7 million in Q1 2010.
  • 7Despite a slight decrease in total revenues, segment earnings before depreciation, depletion, and amortization (EBDA) across KMI's reportable segments (excluding specific one-time items) showed broad-based improvement, with the exception of NGPL PipeCo LLC.

Frequently Asked Questions

The primary driver for the substantial increase in net income was the absence of a significant non-cash impairment charge of $430.0 million related to its investment in NGPL PipeCo LLC that was recorded in the first quarter of 2010. Additionally, improved operating income across several segments, particularly Products Pipelines–KMP and Terminals–KMP, contributed to the turnaround.

Kinder Morgan completed its IPO in February 2011, raising substantial capital. While the proceeds went to existing investors and not directly to the company, the IPO strengthened its financial flexibility, improved its access to capital markets, and resulted in its common stock trading on the New York Stock Exchange under the ticker symbol 'KMI'.

The company believes its balance sheet and liquidity positions remain strong. KMP's expected growth in distributions for 2011 assumes an average West Texas Intermediate (WTI) crude oil price of approximately $89 per barrel, and KMP anticipates this average price may exceed $100 per barrel in 2011. Kinder Morgan, Inc. expects to pay quarterly dividends of $0.29 per share for 2011, representing an annualized rate of $1.16 per share.

The company is involved in several ongoing legal proceedings and environmental matters, including rate challenges by shippers on its SFPP and Calnev pipelines, and various environmental cleanup obligations. While the company has established reserves for potential liabilities and believes the ultimate resolution of these matters will not have a material adverse impact, they represent ongoing risks that require careful monitoring.