10-QPeriod: Q1 FY2017

KINDER MORGAN, INC. Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 21, 2017For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported strong financial results for the first quarter ended March 31, 2017. Total revenues increased to $3.424 billion from $3.195 billion in the prior year's comparable period. Net income attributable to Kinder Morgan, Inc. saw a significant jump to $440 million ($0.18 per diluted share) from $315 million ($0.12 per diluted share) in the first quarter of 2016. This improvement was driven by higher Segment EBDA across most segments, particularly Products Pipelines and Terminals, and a substantial reduction in impairment charges compared to the prior year. The company also maintained its quarterly dividend of $0.125 per common share. Despite a decrease in cash and cash equivalents from the prior year-end, KMI's liquidity remains strong, supported by its revolving credit facility and operating cash flows.

Financial Highlights

51 data points
Beta

Revenue

$3.42B

69.0% Gross Margin

Net Income

$440.00M

12.9% Net Margin

EPS (Diluted)

$0.18

Total Assets

$79.79B

Cash & Equivalents

$396.00M

Free Cash Flow

$222.00M

Financial Statements
Beta
Revenue$3.42B
Cost of Revenue$1.06B
Gross Profit$2.36B
Operating Expenses$2.45B
Operating Income$977.00M
Net Income$440.00M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)2.23B
Shares Outstanding (Diluted)2.23B

Key Highlights

  • 1Total revenues increased by 7% to $3.424 billion for Q1 2017 compared to Q1 2016.
  • 2Net income attributable to Kinder Morgan, Inc. rose significantly by 40% to $440 million ($0.18 per diluted share) in Q1 2017, up from $315 million ($0.12 per diluted share) in Q1 2016.
  • 3Segment EBDA increased by 15% to $1.910 billion, driven by strong performance in Products Pipelines (+62%) and Terminals (+18%).
  • 4Losses on impairments and divestitures decreased substantially to $6 million in Q1 2017 from $235 million in Q1 2016.
  • 5The company declared a quarterly dividend of $0.125 per common share, consistent with the prior year's period.
  • 6Total assets decreased slightly to $79.793 billion as of March 31, 2017, from $80.305 billion as of December 31, 2016.
  • 7Long-term debt decreased to $35.464 billion from $37.354 billion during the same period.

Frequently Asked Questions

Kinder Morgan's revenue growth in Q1 2017 was primarily driven by increases in its Natural Gas Pipelines and Products Pipelines segments. The Products Pipelines segment, in particular, saw a significant 62% increase in Segment EBDA, benefiting from higher service revenues and volumes. The Terminals segment also contributed positively with an 18% increase in Segment EBDA due to higher volumes and expansion projects.

Kinder Morgan has actively managed its debt. Long-term debt decreased from $37.354 billion at the end of 2016 to $35.464 billion by March 31, 2017. This reduction was facilitated by using proceeds from asset sales, such as the sale of a 50% interest in SNG, to pay down debt. The company also maintains significant available borrowing capacity under its $5.0 billion revolving credit facility.

Kinder Morgan expects to spend $636 million on sustaining capital expenditures and $3.428 billion on discretionary capital investments for the full year 2017. The company plans to fund these expenditures through operating cash flow and existing credit facilities, with no expected need to access equity markets in the foreseeable future. The company reaffirmed its commitment to its common stock dividend, expecting to declare $0.50 per share for 2017, paid quarterly at $0.125 per share.

Kinder Morgan is involved in several legal and environmental proceedings, including FERC proceedings related to tariffs and rates for SFPP and EPNG, and various litigation matters concerning pipeline easements, environmental cleanup liabilities (such as the Portland Harbor Superfund Site), and coastal erosion claims in Louisiana. While the company believes it has meritorious defenses and intends to vigorously defend itself, the ultimate resolution of these matters could potentially have an impact on its financial position, results of operations, or cash flows. The company has established reserves for certain of these contingencies.