10-QPeriod: Q1 FY2022

KINDER MORGAN, INC. Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 22, 2022For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported a notable decrease in revenues for the first quarter of 2022 compared to the prior year, primarily driven by a significant drop in commodity sales. This decline in top-line performance translated into a substantial reduction in net income and earnings per share, with net income attributable to Kinder Morgan, Inc. falling to $667 million from $1.409 billion in Q1 2021. The company's results were impacted by the extraordinary benefits seen in the first quarter of 2021 related to the February 2021 winter storm, which are non-recurring. Despite the revenue and income decline, KMI demonstrated resilience in its operating segments, particularly in Products Pipelines and Terminals, which saw increases in segment EBDA. The Natural Gas Pipelines segment experienced a significant decrease in segment EBDA, largely due to the lingering effects of commodity price volatility and the comparison against the strong prior-year period. The company also reaffirmed its commitment to returning capital to shareholders, declaring an increased quarterly dividend and providing a positive outlook for 2022 capital investments.

Financial Highlights

49 data points
Beta

Revenue

$4.29B

55.9% Gross Margin

Net Income

$667.00M

15.5% Net Margin

EPS (Diluted)

$0.29

Total Assets

$69.14B

Cash & Equivalents

$84.00M

Free Cash Flow

$677.00M

Financial Statements
Beta
Revenue$4.29B
Cost of Revenue$1.89B
Gross Profit$2.40B
Operating Expenses$3.27B
Operating Income$1.02B
Net Income$667.00M
EPS (Basic)$0.29
EPS (Diluted)$0.29
Shares Outstanding (Basic)2.27B
Shares Outstanding (Diluted)2.27B

Key Highlights

  • 1Total revenues decreased to $4.293 billion in Q1 2022 from $5.211 billion in Q1 2021, primarily due to lower commodity sales.
  • 2Net income attributable to Kinder Morgan, Inc. fell significantly to $667 million ($0.29 per share) from $1.409 billion ($0.62 per share) in the prior year, impacted by non-recurring benefits in Q1 2021 from the winter storm.
  • 3Segment EBDA (Earnings Before Depreciation, Depletion, and Amortization) decreased by 33% to $1.913 billion, with the Natural Gas Pipelines segment seeing a substantial 44% decline.
  • 4Products Pipelines and Terminals segments showed growth in Segment EBDA, increasing by 21% and 5% respectively, indicating segment-specific operational strengths.
  • 5The company maintained a strong liquidity position, with $3.6 billion in availability under its credit facilities and no borrowings outstanding under its main credit facilities as of March 31, 2022.
  • 6KMI declared an increased quarterly dividend of $0.2775 per share, a 3% rise from the prior year's dividend, and expects to declare $1.11 per share for the full year 2022.
  • 7Capital expenditures are planned at $1.5 billion for 2022, split between sustaining and discretionary investments.

Frequently Asked Questions

The substantial decrease in net income for Q1 2022 compared to Q1 2021 was primarily due to the absence of extraordinary benefits recognized in the prior year. Specifically, the first quarter of 2021 benefited from substantial, largely non-recurring earnings related to the February 2021 winter storm, which significantly boosted prior-year results. When comparing to a period with such significant one-time positive impacts, the current period's results naturally appear lower.

Kinder Morgan maintains a strong liquidity position. As of March 31, 2022, the company had $3.6 billion in available borrowing capacity under its credit facilities and no outstanding borrowings under its primary credit facilities. The company generated $1.084 billion in cash from operating activities in Q1 2022 and expects to fund its 2022 dividend payments and discretionary spending through operating cash flows, its cash position, and existing borrowing capacity, indicating a well-managed approach to debt and liquidity.

Kinder Morgan has reaffirmed its commitment to shareholder returns by increasing its quarterly dividend to $0.2775 per share, a 3% increase from the prior year, and anticipates declaring $1.11 per share for the full year 2022. For capital investments, the company expects to invest approximately $1.5 billion in expansion projects and discretionary capital expenditures for 2022, signaling confidence in its future growth prospects.

Kinder Morgan is involved in various legal and environmental matters, as detailed in the filing. While the company has accrued reserves for these matters and believes its defenses are meritorious, there are ongoing proceedings, including FERC rate proceedings and environmental remediation efforts at sites like Portland Harbor and the Lower Passaic River. The company's management believes that the ultimate resolution of these matters will not have a material adverse impact on its business, but investors should monitor these situations for any potential developments.