10-QPeriod: Q3 FY2011

KINDER MORGAN, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 2, 2011For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported its financial results for the third quarter and the first nine months of 2011. The company experienced significant revenue growth, particularly in its Products Pipelines and Terminals segments, driven by higher volumes and expanded capacity. Net income attributable to Kinder Morgan, Inc. saw a substantial increase to $151.5 million for the third quarter, compared to $10.6 million in the prior year's quarter, and a net income of $438.6 million for the nine months ended September 30, 2011, compared to a net loss of $104.3 million in the same period last year. This performance was bolstered by operational improvements, strategic acquisitions, and effective cost management. Notably, the company announced a significant definitive agreement to acquire El Paso Corporation, a move expected to create a larger, more integrated energy infrastructure company with an enterprise value of approximately $94 billion. KMI's financial health remains robust, supported by strong operating cash flows and disciplined capital allocation. The company also provided an update on its ongoing litigation matters, most of which are not expected to have a material adverse impact on its financial position. The El Paso acquisition represents a significant strategic step for Kinder Morgan, aimed at expanding its natural gas pipeline network and overall market presence. Investors should monitor the progress of this acquisition and its integration as a key factor for future growth and value creation.

Financial Highlights

43 data points
Beta

Revenue

$2.12B

Net Income

$152.00M

7.2% Net Margin

Total Assets

$30.16B

Cash & Equivalents

$273.90M

Free Cash Flow

$337.00M

Financial Statements
Beta
Revenue$2.12B
Operating Expenses$1.74B
Operating Income$381.00M
Interest Expense$176.00M
Net Income$152.00M

Key Highlights

  • 1Total revenues increased to $2,206.0 million for Q3 2011, up from $2,088.2 million in Q3 2010.
  • 2Net income attributable to Kinder Morgan, Inc. dramatically increased to $151.5 million in Q3 2011 from $10.6 million in Q3 2010.
  • 3For the nine months ended September 30, 2011, net income attributable to Kinder Morgan, Inc. was $438.6 million, a significant turnaround from a net loss of $104.3 million in the comparable period of 2010.
  • 4The company announced a definitive agreement to acquire El Paso Corporation for approximately $38 billion, creating a combined entity valued at $94 billion.
  • 5Operating cash flow for the nine months ended September 30, 2011, was $1,587.7 million, an increase from $1,218.5 million in the same period of 2010.
  • 6Kinder Morgan underwent an initial public offering (IPO) on February 16, 2011, raising approximately $3.3 billion.

Frequently Asked Questions

The most significant event disclosed is the announcement of a definitive agreement to acquire El Paso Corporation for approximately $38 billion. This transaction is expected to create a combined enterprise valued at $94 billion, significantly expanding Kinder Morgan's natural gas pipeline network and overall market reach.

Kinder Morgan showed substantial improvement. Total revenues rose to $2,206.0 million from $2,088.2 million. More importantly, net income attributable to Kinder Morgan, Inc. surged to $151.5 million from just $10.6 million in the prior year's quarter, demonstrating strong operational and financial execution.

Kinder Morgan focuses on both sustaining capital expenditures (to maintain existing assets) and discretionary capital expenditures (for expansion and growth). In the first nine months of 2011, sustaining capital expenditures were $140.7 million, while discretionary capital expenditures totaled $707.8 million. The company plans to fund these primarily through cash flow from operations and debt financing.

Recent acquisitions, such as the purchase of the remaining interest in KinderHawk Field Services LLC and assets from TGS Development, L.P., have contributed to the company's growth. The acquisition of KinderHawk, in particular, led to a non-cash loss of $167.2 million upon remeasurement to fair value but will be consolidated going forward, contributing to future revenues and earnings.