10-QPeriod: Q2 FY2019

KINDER MORGAN, INC. Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 19, 2019For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported a significant increase in net income attributable to common stockholders for the six months ended June 30, 2019, reaching $1,074 million, a substantial improvement from the $383 million reported in the same period of 2018. This positive trend was driven by strong performance across its Natural Gas Pipelines segment, which saw a 59% increase in Segment EBDA before certain items. The company also benefited from lower interest expenses and a reduction in general and administrative costs. While overall revenues slightly decreased year-over-year, the improved profitability reflects effective cost management and operational efficiencies. The company's liquidity remains robust, supported by strong operating cash flows and available borrowing capacity. KMI also reiterated its commitment to returning capital to shareholders, declaring a quarterly dividend of $0.25 per common share.

Financial Highlights

52 data points
Beta

Revenue

$3.21B

75.8% Gross Margin

Net Income

$518.00M

16.1% Net Margin

EPS (Diluted)

$0.23

Total Assets

$76.69B

Cash & Equivalents

$213.00M

Free Cash Flow

$839.00M

Financial Statements
Beta
Revenue$3.21B
Cost of Revenue$777.00M
Gross Profit$2.44B
Operating Expenses$2.24B
Operating Income$973.00M
Net Income$518.00M
EPS (Basic)$0.23
Shares Outstanding (Basic)2.26B

Key Highlights

  • 1Net income attributable to common stockholders surged to $1,074 million for the six months ended June 30, 2019, up from $383 million in the prior year period.
  • 2Natural Gas Pipelines segment demonstrated strong growth, with Segment EBDA before certain items increasing by 10% year-over-year for the six months ended June 30, 2019.
  • 3Total revenues for the six months ended June 30, 2019, were $6,643 million, a slight decrease from $6,846 million in the prior year period.
  • 4Consolidated operating expenses decreased by approximately $900 million for the six months ended June 30, 2019, compared to the prior year, primarily due to a significant reduction in costs related to impairments and divestitures.
  • 5Interest expense, net, decreased by $71 million for the six months ended June 30, 2019, compared to the prior year, reflecting lower average debt balances.
  • 6Kinder Morgan declared a quarterly cash dividend of $0.25 per common share for the period ended June 30, 2019, payable in August 2019.
  • 7The company maintained sufficient liquidity with $213 million in cash and cash equivalents and significant borrowing capacity available under its credit facilities as of June 30, 2019.

Frequently Asked Questions

The primary driver for the improved net income in the first half of 2019 was the strong performance of the Natural Gas Pipelines segment, coupled with a significant reduction in operating expenses, particularly those related to impairments and divestitures in the prior year. Lower interest expenses also contributed positively.

The sale of the Trans Mountain Pipeline System (TMPL) in August 2018 provided significant cash proceeds. In early 2019, KMI distributed approximately $0.9 billion of these proceeds to its restricted voting shareholders and used the remaining portion to repay commercial paper borrowings and pay down maturing long-term debt, which contributed to a reduction in interest expense.

Kinder Morgan declared a quarterly cash dividend of $0.25 per common share for the period ended June 30, 2019, payable in August 2019. The company expects to declare common stock dividends of $1.00 per share for the full year 2019. However, the actual amount of future dividends depends on various factors, including financial condition, results of operations, and business prospects.

As of June 30, 2019, Kinder Morgan had $213 million in cash and cash equivalents. The company also has significant borrowing capacity under its $4.5 billion revolving credit facilities and its associated $4.0 billion commercial paper program, which provides ample liquidity to manage its day-to-day operations and anticipated obligations.