10-QPeriod: Q3 FY2015

KINDER MORGAN, INC. Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 23, 2015For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported a decrease in net income attributable to the company to $186 million for the third quarter of 2015, down from $329 million in the same period of 2014. This decline was largely driven by significant impairment charges of $387 million, primarily related to their CO2 business segment due to lower commodity prices. Total revenues also saw a decrease, falling to $3.7 billion from $4.3 billion year-over-year. Despite the earnings dip, KMI's financial position remains robust, supported by strong operating cash flows of $3.5 billion for the nine months ended September 30, 2015. The company's strategic acquisitions, including Hiland Partners and Vopak terminal assets, are being integrated. KMI reaffirmed its full-year 2015 dividend target of $2.00 per share, demonstrating continued commitment to returning value to shareholders, although the lower commodity price environment is expected to reduce the excess of cash available for dividends over the target.

Financial Highlights

52 data points
Beta

Revenue

$3.71B

70.2% Gross Margin

Net Income

$186.00M

5.0% Net Margin

EPS (Diluted)

$0.08

Total Assets

$85.68B

Cash & Equivalents

$179.00M

Free Cash Flow

-$121.00M

Financial Statements
Beta
Revenue$3.71B
Cost of Revenue$1.11B
Gross Profit$2.60B
Operating Expenses$2.99B
Operating Income$721.00M
Net Income$186.00M
EPS (Basic)$0.08
EPS (Diluted)$0.08
Shares Outstanding (Basic)2.20B
Shares Outstanding (Diluted)2.20B

Key Highlights

  • 1Net income attributable to Kinder Morgan, Inc. decreased to $186 million in Q3 2015 from $329 million in Q3 2014.
  • 2Total revenues for Q3 2015 were $3.7 billion, down from $4.3 billion in Q3 2014.
  • 3Significant non-cash impairment charges of $387 million were recorded in Q3 2015, primarily impacting the CO2 segment due to lower commodity prices.
  • 4Operating cash flow for the nine months ended September 30, 2015, remained strong at $3.5 billion.
  • 5The company acquired Hiland Partners, LP and Vopak terminal assets in early 2015, integrating them into its Natural Gas Pipelines and Terminals segments, respectively.
  • 6Kinder Morgan reaffirmed its full-year 2015 dividend target of $2.00 per share, an increase from $1.74 per share in 2014.
  • 7Total assets increased to $85.7 billion as of September 30, 2015, from $83.0 billion at the end of 2014, largely due to increases in property, plant, and equipment.

Frequently Asked Questions

The significant decrease in net income was primarily due to substantial non-cash impairment charges of $387 million recorded in the third quarter of 2015. These impairments were largely related to the CO2 business segment, driven by a decline in commodity prices.

Kinder Morgan financed its acquisitions, such as Hiland Partners, LP and Vopak terminal assets, through a combination of cash consideration and assumed debt. The company also utilizes borrowings under its credit facilities and commercial paper programs, alongside equity issuances, to fund its operations and growth initiatives.

Kinder Morgan reaffirmed its full-year 2015 dividend target of $2.00 per share, which represents an increase from the previous year. While the company anticipates its cash flows to remain relatively insulated from commodity price fluctuations due to take-or-pay contracts, it noted that lower commodity prices are expected to reduce the buffer of cash available above the dividend target.

Total long-term debt increased to $41.6 billion as of September 30, 2015, from $40.1 billion at the end of 2014. This increase is partly due to the financing of acquisitions and capital expenditures. The company has credit facilities and commercial paper programs available for liquidity.