10-QPeriod: Q3 FY2016

KINDER MORGAN, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 21, 2016For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported a net loss of $183 million for the three months ended September 30, 2016, a significant decline from a net income of $183 million in the same period of the prior year. This was driven by substantial losses on impairments and divestitures, particularly related to equity investments and pipeline projects. Revenues also saw a decrease, declining to $3.33 billion from $3.71 billion year-over-year. Despite the quarterly loss, the company's financial performance for the nine months ended September 30, 2016, showed a net income of $506 million, down from $944 million in the prior year, reflecting the impact of these impairment charges. KMI's balance sheet shows a reduction in total assets and total liabilities compared to the end of 2015, with a notable decrease in long-term debt. The company's liquidity remains supported by cash flows from operations and its revolving credit facility, and it completed the sale of a 50% interest in its SNG natural gas pipeline system, using the proceeds to reduce debt.

Financial Highlights

52 data points
Beta

Revenue

$3.33B

70.8% Gross Margin

Net Income

-$188.00M

-5.6% Net Margin

EPS (Diluted)

$-0.10

Total Assets

$81.60B

Cash & Equivalents

$357.00M

Free Cash Flow

$519.00M

Financial Statements
Beta
Revenue$3.33B
Cost of Revenue$971.00M
Gross Profit$2.36B
Operating Expenses$2.45B
Operating Income$882.00M
Net Income-$188.00M
EPS (Basic)$-0.10
EPS (Diluted)$-0.10
Shares Outstanding (Basic)2.23B
Shares Outstanding (Diluted)2.23B

Key Highlights

  • 1Net loss of $183 million for Q3 2016, compared to net income of $183 million in Q3 2015.
  • 2Total revenues decreased to $3.33 billion in Q3 2016 from $3.71 billion in Q3 2015.
  • 3Significant non-cash pre-tax losses on impairments and divestitures amounted to $76 million in Q3 2016 and $307 million for the nine months ended September 30, 2016.
  • 4Sold a 50% interest in the SNG natural gas pipeline system for $1.4 billion, which was used to reduce outstanding debt.
  • 5Total assets decreased to $81.6 billion as of September 30, 2016, from $84.1 billion as of December 31, 2015.
  • 6Long-term debt decreased to $38.5 billion as of September 30, 2016, from $42.4 billion as of December 31, 2015.
  • 7Cash flows from operating activities remained strong, with $3.5 billion for the nine months ended September 30, 2016.

Frequently Asked Questions

The primary reason for the net loss of $183 million in the third quarter of 2016 was significant non-cash losses on impairments and divestitures, including an $84 million loss on the sale of a 50% interest in the SNG natural gas pipeline system and other project write-offs and impairments.

Kinder Morgan's long-term debt has decreased significantly, from $42.4 billion at the end of 2015 to $38.5 billion as of September 30, 2016. This reduction was partly achieved by using proceeds from the sale of a 50% interest in the SNG natural gas pipeline system.

Kinder Morgan expects to fund its growth projects in 2016 primarily through retained cash from operations and does not anticipate needing to access capital markets beyond 2016 for growth projects. The company also declared a common stock dividend of $0.125 per share for the quarter, maintaining its expected annual dividend of $0.50 per share for 2016.

Kinder Morgan operates primarily through Natural Gas Pipelines, CO2, Terminals, and Products Pipelines. The Natural Gas Pipelines segment experienced a significant decrease in Segment EBDA due to impairments and lower volumes. The CO2 segment also saw a decline in Segment EBDA, impacted by lower commodity prices and volumes. The Terminals segment showed growth in Segment EBDA, driven by marine operations and acquisitions. The Products Pipelines segment saw modest growth in Segment EBDA despite lower revenues.