10-QPeriod: Q3 FY2018

KINDER MORGAN, INC. Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 19, 2018For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported strong financial results for the three and nine months ended September 30, 2018. Total revenues increased year-over-year, driven by growth across most segments, particularly Natural Gas Pipelines. Net income attributable to Kinder Morgan, Inc. saw a significant increase, largely influenced by the divestiture of the Trans Mountain Pipeline (TMPL) system and its expansion project, which resulted in a substantial pre-tax gain. The company also demonstrated robust operating cash flow, reflecting the underlying strength of its midstream infrastructure business. Liquidity remains strong, with a significant increase in cash and cash equivalents due to proceeds from the TMPL sale and ongoing operational cash generation. KMI continues to manage its debt effectively, and the company announced its intention to use a portion of the TMPL sale proceeds to pay down debt. The company remains committed to returning value to shareholders through dividends and share repurchases, while also maintaining disciplined capital allocation for growth initiatives.

Financial Highlights

51 data points
Beta

Revenue

$3.52B

67.7% Gross Margin

Net Income

$732.00M

20.8% Net Margin

EPS (Diluted)

$0.31

Total Assets

$79.06B

Cash & Equivalents

$3.46B

Free Cash Flow

$174.00M

Financial Statements
Beta
Revenue$3.52B
Cost of Revenue$1.14B
Gross Profit$2.38B
Operating Expenses$2.00B
Operating Income$1.51B
Net Income$732.00M
EPS (Basic)$0.31
Shares Outstanding (Basic)2.21B

Key Highlights

  • 1Total revenues increased to $3.52 billion for the three months ended September 30, 2018, up from $3.28 billion in the prior year period.
  • 2Net income attributable to Kinder Morgan, Inc. rose to $732 million ($0.31 per share) for the three months ended September 30, 2018, compared to $373 million ($0.15 per share) in the prior year period.
  • 3The divestiture of the Trans Mountain Pipeline (TMPL) system and its expansion project on August 31, 2018, resulted in a pre-tax gain of $622 million.
  • 4Cash flows from operating activities were strong, totaling $3.38 billion for the nine months ended September 30, 2018, compared to $3.31 billion in the prior year period.
  • 5Cash and cash equivalents increased significantly to $3.46 billion as of September 30, 2018, up from $264 million as of December 31, 2017, driven by proceeds from the TMPL sale.
  • 6The company declared a quarterly dividend of $0.20 per common share for the period, an increase from $0.125 per share in the prior year period.
  • 7Segment EBDA (Earnings Before Depreciation, Depletion and Amortization) increased to $2.42 billion for the nine months ended September 30, 2018, up from $2.41 billion in the prior year period, before considering specific "certain items."

Frequently Asked Questions

The sale of the Trans Mountain Pipeline system and its expansion project on August 31, 2018, significantly boosted Kinder Morgan's financial results. It generated a pre-tax gain of $622 million and substantially increased the company's cash and cash equivalents, contributing to a strong improvement in net income and overall liquidity.

Kinder Morgan's Natural Gas Pipelines segment showed strong performance, with Segment EBDA increasing year-over-year. The CO2, Terminals, and Products Pipelines segments also reported positive or stable results. The Kinder Morgan Canada segment's results were significantly impacted by the sale of its assets, with Segment EBDA reflecting only a partial period's operations.

Kinder Morgan's liquidity is robust, with cash and cash equivalents increasing substantially due to the TMPL sale proceeds. The company has ample borrowing capacity under its credit facilities. KMI plans to use a portion of the TMPL sale proceeds to pay down debt, demonstrating a focus on deleveraging and financial strength.

The company continues to demonstrate its commitment to shareholder returns through increased common stock dividends and its ongoing share buyback program. For the quarter, the declared dividend was $0.20 per common share, up from $0.125 in the prior year, and the company has repurchased approximately $250 million in shares during the nine-month period.