Kinder Morgan, Inc.’s (NYSE: KMI) board of directors today
approved a cash dividend of $0.2625 per share for the fourth
quarter ($1.05 annualized), payable on February 16, 2021, to common
stockholders of record as of the close of business on February 1,
2021. This dividend represents a 5% increase over the fourth
quarter of 2019.
KMI is reporting fourth quarter net income attributable to KMI
of $607 million, compared to net income attributable to KMI of $610
million in the fourth quarter of 2019; and distributable cash flow
(DCF) of $1,250 million, an 8% decrease from the fourth quarter of
2019.
“Despite the pandemic’s continued drag on the economy and on
energy demand, our company weathered the fourth quarter well,
producing substantial earnings as expected and robust coverage of
this quarter’s dividend,” said KMI Executive Chairman Richard D.
Kinder.
“Our assets continue to provide strong cash flow and our
corporate philosophy remains sound: fund our capital needs
internally, maintain a healthy balance sheet, and return excess
cash to our shareholders through dividend increases and/or share
repurchases. As noted in our December financial guidance, the board
expects to increase the dividend by 3% for 2021, to $1.08 per share
(annualized). The company also has the capacity to engage in
opportunistic share repurchases up to $450 million,” Kinder
concluded.
“We are optimistic that the U.S. and global economies are poised
for a strong recovery as the vaccines are distributed and we return
to normal activity,” said KMI Chief Executive Officer Steve Kean.
“The measures we took in the face of that unprecedented challenge —
maintaining capital spending discipline, reducing expenses, and
increasing operational efficiency — will all contribute to a
stronger company in the months and years ahead. The services we
provide and the products we move remain critical to the quality of
life of millions of our fellow citizens, and we expect demand for
those services and products to rebound as the economic recovery
takes hold.
“I remain extremely proud of our employees, who throughout a
trying year kept their focus on their work providing essential
energy services for businesses and consumers,” Kean concluded.
“We generated fourth quarter earnings per share of $0.27, which
was flat compared to earnings per share of $0.27 in the fourth
quarter of 2019,” said KMI President Kim Dang. “At $0.55 per share,
DCF per share was down $0.04 from the fourth quarter of 2019. We
achieved $652 million of excess DCF above our declared dividend.
That excess cash resulted in part from a lower dividend than we
assumed in our plan, but was also the result of our cost savings
and reduced capital expenditures. Financial contributions from all
of our business segments were down compared to the fourth quarter
of 2019, due to lower energy demand as a result of the pandemic,
lower commodity prices, and the December 2019 sale of Kinder Morgan
Canada Limited (KML) and the U.S. Cochin Pipeline. This was
partially offset by lower interest expense and lower sustaining
capital expenditures compared to the fourth quarter of 2019,” said
Dang.
“One of the major highlights of the quarter was completing
construction of the Permian Highway Pipeline, which went into full
commercial service on January 1, overcoming multiple permitting and
legal challenges. Our project management teams and workers in the
field managed to complete several other important expansion
projects during the quarter while maintaining an outstanding safety
record in the face of the historic pandemic,” Dang continued.
For the full year 2020, KMI reported net income attributable to
KMI of $119 million compared to $2,190 million in 2019. Net income
attributable to KMI for the full year 2020 included a combined
$1,950 million of non-cash impairments associated with our Natural
Gas Pipelines Non-Regulated and CO2 reporting units. KMI’s 2020
full year DCF of $4,597 million was down 8% from $4,993 million in
2019. Adjusted EBITDA of $6,962 million was down 9% from $7,618
million in 2019. The decreases in DCF and Adjusted EBITDA are
consistent with previous guidance provided during 2020, and are
primarily attributable to pandemic-related reduced energy demand
and commodity price impacts, as well as the impact of the KML and
U.S. Cochin sale in the fourth quarter of 2019.
2021 Outlook
For 2021, KMI’s budget contemplates $2.1 billion in net income
attributable to KMI, or $0.92 earnings per share, declared
dividends of $1.08 per share, a 3% increase from the 2020 declared
dividends, DCF of approximately $4.4 billion ($1.95 per share), and
Adjusted EBITDA of approximately $6.8 billion. KMI also expects to
invest $0.8 billion in expansion projects and contributions to
joint ventures during 2021. KMI expects to generate $1.2 billion of
DCF in excess of discretionary expenditures and dividend payments.
KMI also expects to end 2021 with a Net Debt-to-Adjusted EBITDA
ratio of approximately 4.6 times.
As of December 31, 2020, we had over $3.9 billion of borrowing
capacity under our $4 billion credit facility and nearly $1.2
billion in cash and cash equivalents. We believe this borrowing
capacity, current cash on hand, and our cash from operations are
more than adequate to allow us to manage our cash requirements,
including maturing debt, through 2021.
Overview of Business
Segments
“The Natural Gas Pipelines segment’s financial
performance was down for the fourth quarter of 2020 relative to the
fourth quarter of 2019,” said Dang. “The segment experienced lower
contributions from multiple gathering and processing assets due to
sharply reduced natural gas production and from the sale of the
U.S. Cochin Pipeline in December 2019. These reduced contributions
were partially offset by greater contributions from the Texas
Intrastate systems, Natural Gas Pipeline of America (NGPL), and
Elba Island LNG.”
Natural gas transport volumes were down 2% compared to the
fourth quarter of 2019, with notable volume declines on Colorado
Interstate Gas Pipeline and Wyoming Interstate Pipeline due to the
production declines in the Rockies basin, and on El Paso Natural
Gas due to increases in transportation alternatives for Permian
basin production. These declines were partially offset by:
increased volumes on the Texas Intrastate systems due primarily to
increased Gulf Coast contract activity largely serving LNG and
industrial markets; on Tennessee Gas Pipeline driven by increased
LNG and power plant deliveries sourced largely from the Appalachian
region; and, on Elba Express due to increased deliveries to Elba
Island. Natural gas gathering volumes were down 20% from the fourth
quarter of 2019 across nearly all our systems, most notably on the
KinderHawk and Eagle Ford systems.
“Continued low refined products demand and lower crude and
condensate volumes during the fourth quarter reduced contributions
from the Products Pipelines segment,” Dang said. “Crude and
condensate pipeline volumes were down 26% and total refined
products volumes were down 13% compared to the fourth quarter of
2019. Gasoline volumes were below the comparable period last year
by 10% and jet volumes were still very weak (down 47%) but diesel
volumes were strong, 7% above the fourth quarter of 2019.
“Terminals segment earnings were essentially flat
compared to the fourth quarter of 2019 after adjusting for the
impact of the December 2019 KML sale. Refined product volumes that
move through our terminals continued to reflect reduced demand due
to the pandemic, though they recovered meaningfully during the
second half of the year. Conversely, we saw historically-high
effective utilization across our network of nearly 80 million
barrels of storage capacity due to term contracts entered into
during the second quarter of 2020,” said Dang. “Due to the
structure of our contracts, a much more significant portion of our
revenue comes from fixed monthly payments on tank leases versus the
revenue we receive for moving product through our terminals. During
the quarter, we also saw weakness in our Jones Act tanker business
that was offset by expansion projects. Our bulk business benefited
from a strong rebound in ores and metals volumes as well as gains
realized in connection with the redemption of certain equity
investment-interests and an asset sale.
“CO2 segment earnings were down compared to the fourth
quarter of 2019 due to lower CO2 sales volumes and lower crude
production, partially offset by lower operating expenditures and
higher realized crude prices. Our realized weighted average crude
oil price for the quarter was up 11% at $55.41 per barrel compared
to $49.90 per barrel for the fourth quarter of 2019, largely driven
by our improved Midland-to-Cushing basis hedges,” said Dang.
“Fourth quarter 2020 combined oil production across all of our
fields was down 16% compared to the same period in 2019 on a net to
KMI basis, and CO2 sales volumes were down 35%.”
Other News
Corporate
- In early January 2021, KMI repaid the $750 million principal
amount of 3.50% senior notes due in March 2021.
Natural Gas Pipelines
- The Permian Highway Pipeline (PHP) was placed in full
commercial service on January 1, 2021. The approximately $2 billion
pipeline is designed to transport up to 2.1 billion cubic feet per
day (Bcf/d) of natural gas through approximately 430 miles of
42-inch pipeline from the Waha area to U.S. Gulf Coast and Mexico
markets. PHP is fully subscribed under long-term, firm
transportation agreements. Kinder Morgan Texas Pipeline (KMTP),
EagleClaw Midstream and Altus Midstream each hold an ownership
interest of approximately 26.7%, and an affiliate of an anchor
shipper has a 20% interest. KMTP operates the pipeline.
- KMI’s Crossover II project was placed in service on November 6,
2020. The approximately $260 million expansion project increases
the delivery capacity on our Texas intrastate system by 1.4 Bcf/d.
This expansion capacity serves LNG, industrial, electric generation
and local distribution company expansions along the Texas Gulf
Coast.
- Kinder Morgan Louisiana Pipeline began construction on its
approximately $145 million Acadiana expansion project to provide
945,000 dekatherms per day (Dth/d) of capacity to serve Train 6 at
Cheniere’s Sabine Pass Liquefaction facility in Cameron Parish,
Louisiana. The project is anticipated to be placed into commercial
service as early as the first quarter of 2022.
- Construction continues on NGPL’s Gulf Coast Southbound project.
In mid-December, NGPL placed compressor stations 300 and 301 into
service ahead of schedule. The full project is expected to be
placed into service in the first quarter of 2021 and is supported
by a long-term take-or-pay contract. The approximately $203 million
project (KMI’s share: $101.5 million) will increase southbound
capacity on NGPL’s Gulf Coast System by approximately 300,000 Dth/d
to serve Cheniere’s Corpus Christi Liquefaction facility in San
Patricio County, Texas.
Terminals
- In the fourth quarter of 2020, KMI closed on the sale of its
idled three million barrel petroleum storage facility in Staten
Island, NY. The approximately 250-acre site was sold to affiliates
of NorthPoint Development, LLC (NorthPoint), a Kansas City,
Missouri-based industrial real estate developer, for gross proceeds
of $85 million. As part of the sale, NorthPoint assumed the costs
and lead responsibility for site investigation and remediation
obligations.
- KMI’s Class A Preferred Shares and Class C Common Shares in
Watco Companies L.L.C (Watco) were redeemed in the fourth quarter
of 2020 for total gross proceeds of approximately $125 million. KMI
remains invested in Watco, one of the largest short-line rail
operators in North America, through its Class B Convertible
Preferred Shares.
- Major elements of the butane-on-demand blending system at KMI’s
Galena Park Terminal, including the construction of a 30,000-barrel
butane sphere and a new inbound C4 pipeline connection, were
successfully completed and placed in service in the fourth quarter
of 2020. The balance of the work, including tank and piping
modifications to extend butane blending capabilities to 25 tanks,
two ship docks, and six cross-channel pipelines, is expected to be
complete in the first quarter of 2021. The approximately $52
million project is supported by a long-term agreement with an
investment-grade midstream company.
- Construction is complete on an expansion of KMI’s
market-leading Argo ethanol hub. The project, which spans both the
Argo and Chicago Liquids facilities, included the addition of
105,000 barrels of ethanol storage capacity and enhancements to the
system’s rail loading, rail unloading and barge loading
capabilities. The approximately $18 million project improved the
system’s inbound and outbound modal balances, adding greater
product-clearing efficiencies to this industry-critical pricing and
liquidity hub.
- Construction is complete on a facility upgrade at the
Battleground Oil Specialty Terminal Company LLC (BOSTCO) terminal,
a leading fuel oil storage terminal on the Houston Ship Channel.
The approximately $17 million project added piping to allow for
segregation of high sulfur and low sulfur fuel oils. KMI owns a 55%
interest in and is the operator of BOSTCO.
CO2
- The CO2 segment remained focused on production optimization,
project execution and continuous operational improvement. As a
result of these actions, the CO2 segment’s 2020 Free Cash Flow
exceeded budget expectations.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy
infrastructure companies in North America. Access to reliable,
affordable energy is a critical component for improving lives
around the world. We are committed to providing energy
transportation and storage services in a safe, efficient and
environmentally responsible manner for the benefit of the people,
communities and businesses we serve. We own an interest in or
operate approximately 83,000 miles of pipelines and 144 terminals.
Our pipelines transport natural gas, refined petroleum products,
crude oil, condensate, CO2 and other products, and our terminals
store and handle various commodities including gasoline, diesel
fuel, chemicals, ethanol, metals and petroleum coke. For more
information, please visit www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. Eastern Time on
Wednesday, January 20, at www.kindermorgan.com for a LIVE webcast conference
call on the company’s fourth quarter earnings. Kinder Morgan’s
annual Investor Day will also be webcast live at 9:00 a.m. Eastern
Time on Wednesday, January 27, at www.kindermorgan.com.
Non-GAAP Financial
Measures
The non-generally accepted accounting principles (non-GAAP)
financial measures of Adjusted Earnings and distributable cash flow
(DCF), both in the aggregate and per share for each; segment
earnings before depreciation, depletion, amortization (DD&A),
amortization of excess cost of equity investments and Certain Items
(Adjusted Segment EBDA); net income before interest expense, income
taxes, DD&A, amortization of excess cost of equity investments
and Certain Items (Adjusted EBITDA); Net Debt; Net Debt-to-Adjusted
EBITDA; and Free Cash Flow in relation to our CO2 segment are
presented herein.
Our non-GAAP financial measures described below should not be
considered alternatives to GAAP net income (loss) or other GAAP
measures and have important limitations as analytical tools. Our
computations of these non-GAAP financial measures may differ from
similarly titled measures used by others. You should not consider
these non-GAAP financial measures in isolation or as substitutes
for an analysis of our results as reported under GAAP. Management
compensates for the limitations of these non-GAAP financial
measures by reviewing our comparable GAAP measures, understanding
the differences between the measures and taking this information
into account in its analysis and its decision-making processes.
Certain Items, as adjustments used
to calculate our non-GAAP financial measures, are items that are
required by GAAP to be reflected in net income (loss), but
typically either (1) do not have a cash impact (for example, asset
impairments), or (2) by their nature are separately identifiable
from our normal business operations and in our view are likely to
occur only sporadically (for example, certain legal settlements,
enactment of new tax legislation and casualty losses). We also
include adjustments related to joint ventures (see “Amounts from Joint Ventures” below and the
accompanying Tables 4 and 7.)
Adjusted Earnings is calculated by
adjusting net income attributable to Kinder Morgan, Inc. for
Certain Items. Adjusted Earnings is used by us and certain external
users of our financial statements to assess the earnings of our
business excluding Certain Items as another reflection of our
ability to generate earnings. We believe the GAAP measure most
directly comparable to Adjusted Earnings is net income (loss)
attributable to Kinder Morgan, Inc. Adjusted Earnings per share
uses Adjusted Earnings and applies the same two-class method used
in arriving at basic earnings per share. (See the accompanying
Tables 1 and 2.)
DCF is calculated by adjusting net
income attributable to Kinder Morgan, Inc. for Certain Items
(Adjusted Earnings), and further by DD&A and amortization of
excess cost of equity investments, income tax expense, cash taxes,
sustaining capital expenditures and other items. We also include
amounts from joint ventures for income taxes, DD&A and
sustaining capital expenditures (see “Amounts
from Joint Ventures” below). DCF is a significant
performance measure useful to management and external users of our
financial statements in evaluating our performance and in measuring
and estimating the ability of our assets to generate cash earnings
after servicing our debt, paying cash taxes and expending
sustaining capital, that could be used for discretionary purposes
such as dividends, stock repurchases, retirement of debt, or
expansion capital expenditures. DCF should not be used as an
alternative to net cash provided by operating activities computed
under GAAP. We believe the GAAP measure most directly comparable to
DCF is net income attributable to Kinder Morgan, Inc. DCF per share
is DCF divided by average outstanding shares, including restricted
stock awards that participate in dividends. (See the accompanying
Tables 2 and 3.)
Adjusted Segment EBDA is calculated
by adjusting segment earnings before DD&A and amortization of
excess cost of equity investments (Segment EBDA) for Certain Items
attributable to the segment. Adjusted Segment EBDA is used by
management in its analysis of segment performance and management of
our business. General and administrative expenses and certain
corporate charges are generally not under the control of our
segment operating managers, and therefore, are not included when we
measure business segment operating performance. We believe Adjusted
Segment EBDA is a useful performance metric because it provides
management and external users of our financial statements
additional insight into the ability of our segments to generate
cash earnings on an ongoing basis. We believe it is useful to
investors because it is a measure that management uses to allocate
resources to our segments and assess each segment’s performance. We
believe the GAAP measure most directly comparable to Adjusted
Segment EBDA is Segment EBDA. (See the accompanying Tables 3 and
7.)
Adjusted EBITDA is calculated by
adjusting net income before interest expense, income taxes,
DD&A, and amortization of excess cost of equity investments
(EBITDA) for Certain Items. We also include amounts from joint
ventures for income taxes and DD&A (see “Amounts from Joint Ventures” below). Adjusted
EBITDA is used by management and external users, in conjunction
with our Net Debt (as described further below), to evaluate certain
leverage metrics. Therefore, we believe Adjusted EBITDA is useful
to investors. We believe the GAAP measure most directly comparable
to Adjusted EBITDA is net income. (See the accompanying Tables 3
and 4.)
Amounts from Joint Ventures -
Certain Items, DCF and Adjusted EBITDA reflect amounts from
unconsolidated joint ventures (JVs) and consolidated JVs utilizing
the same recognition and measurement methods used to record
“Earnings from equity investments” and “Noncontrolling interests
(NCI),” respectively. The calculations of DCF and Adjusted EBITDA
related to our unconsolidated and consolidated JVs include the same
items (DD&A and income tax expense, and for DCF only, also cash
taxes and sustaining capital expenditures) with respect to the JVs
as those included in the calculations of DCF and Adjusted EBITDA
for our wholly-owned consolidated subsidiaries. (See Table 7,
Additional JV Information.) Although these amounts related to our
unconsolidated JVs are included in the calculations of DCF and
Adjusted EBITDA, such inclusion should not be understood to imply
that we have control over the operations and resulting revenues,
expenses or cash flows of such unconsolidated JVs. DCF and Adjusted
EBITDA are further adjusted for certain KML activities attributable
to our noncontrolling interests in KML for the periods presented
through KML’s sale on December 16, 2019 (See Table 7, KML
Activities Prior to December 16, 2019.)
Net Debt is calculated by
subtracting from debt (1) cash and cash equivalents, (2) the
preferred interest in the general partner of Kinder Morgan Energy
Partners L.P. (which was redeemed in January 2020), (3) debt fair
value adjustments, and (4) the foreign exchange impact on
Euro-denominated bonds for which we have entered into currency
swaps. Net Debt is a non-GAAP financial measure that management
believes is useful to investors and other users of our financial
information in evaluating our leverage. We believe the most
comparable measure to Net Debt is debt net of cash and cash
equivalents as reconciled in the notes to the accompanying
Preliminary Consolidated Balance Sheets in Table 6.
Free Cash Flow, as used in relation
to our CO2 segment, is calculated by reducing Segment EBDA (GAAP)
by Certain Items and capital expenditures (sustaining and
expansion). Management uses Free Cash Flow as an additional
performance measure for our CO2 segment. We believe the GAAP
measure most directly comparable to Free Cash Flow is Segment EBDA
(GAAP). (See the accompanying Table 7.)
Our guidance for 2021 includes a forecast of net income
attributable to KMI, which we previously have not provided due to
the impracticability of predicting certain components of net income
required by GAAP. As a result of changes to GAAP rules and guidance
and our 2019 sale of Kinder Morgan Canada Limited, the impact of
components related to commodity and interest rate hedge
ineffectiveness and foreign currency fluctuations will be
inconsequential. In addition, based on our current circumstances,
we do not expect that changes in unrealized gains and losses on
derivatives marked to market and potential changes in estimates for
certain contingent liabilities will materially impact our ability
to forecast net income for 2021. If the circumstances relating to
these items or other GAAP requirements change and we determine that
the difficulty of predicting components required by GAAP makes it
impracticable for us to forecast net income attributable to KMI, we
will cease to provide a forecast of net income attributable to KMI
and will disclose the factors affecting our ability to do so. (See
the accompanying Tables 8 and 9).
Important Information Relating to
Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities Exchange Act of 1934.
Generally the words “expects,” “believes,” “anticipates,” “plans,”
“will,” “shall,” “estimates,” and similar expressions identify
forward-looking statements, which are generally not historical in
nature. Forward-looking statements in this news release include,
among others, express or implied statements pertaining to: the
long-term demand for KMI’s assets and services; the future impact
on our business of the global economic consequences of the COVID-19
pandemic, including the timing and extent of any economic recovery,
KMI’s expected Net income attributable to Kinder Morgan, Inc., DCF
and Adjusted EBITDA for 2021 and expected Net Debt-to-Adjusted
EBITDA ratio at the end of 2021; anticipated dividends; and KMI’s
capital projects, including expected completion timing and benefits
of those projects. Forward-looking statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of
management, based on information currently available to them.
Although KMI believes that these forward-looking statements are
based on reasonable assumptions, it can give no assurance as to
when or if any such forward-looking statements will materialize nor
their ultimate impact on our operations or financial condition. In
addition to the risk factors described herein, other important
factors that could cause actual results to differ materially from
those expressed in or implied by these forward-looking statements
include the risks and uncertainties described in KMI’s reports
filed with the Securities and Exchange Commission (SEC), including
its Annual Report on Form 10-K for the year-ended December 31, 2019
and its Quarterly Report on Form 10-Q for the quarter ended March
31, 2020 (under the headings “Risk Factors” and “Information
Regarding Forward-Looking Statements” and elsewhere), and its
subsequent reports, which are available through the SEC’s EDGAR
system at www.sec.gov and on our website at ir.kindermorgan.com.
Forward-looking statements speak only as of the date they were
made, and except to the extent required by law, KMI undertakes no
obligation to update any forward-looking statement because of new
information, future events or other factors. Because of these risks
and uncertainties, readers should not place undue reliance on these
forward-looking statements.
Table 1
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Statements of Income
(In millions, except per share
amounts, unaudited)
Three Months Ended December
31,
% change
Year Ended December
31,
% change
2020
2019
2020
2019
Revenues
$
3,115
$
3,352
$
11,700
$
13,209
Operating costs, expenses and other
Costs of sales
786
776
2,545
3,263
Operations and maintenance
606
679
2,475
2,591
Depreciation, depletion and
amortization
528
661
2,164
2,411
General and administrative
187
134
648
590
Taxes, other than income taxes
83
102
378
426
(Gain) loss on divestitures and
impairments, net
(55
)
(929
)
1,932
(942
)
Other income, net
—
(2
)
(2
)
(3
)
Total operating costs, expenses and
other
2,135
1,421
10,140
8,336
Operating income
980
1,931
1,560
4,873
Other income (expense)
Earnings (loss) from equity
investments
218
(425
)
780
101
Amortization of excess cost of equity
investments
(41
)
(22
)
(140
)
(83
)
Interest, net
(381
)
(442
)
(1,595
)
(1,801
)
Other, net
24
40
56
75
Income before income taxes
800
1,082
661
3,165
Income tax expense
(177
)
(455
)
(481
)
(926
)
Net income
623
627
180
2,239
Net income attributable to NCI
(16
)
(17
)
(61
)
(49
)
Net income attributable to Kinder
Morgan, Inc.
$
607
$
610
119
2,190
Class P Shares
Basic and diluted earnings per share
$
0.27
$
0.27
—
%
$
0.05
$
0.96
(95
)%
Basic and diluted weighted average shares
outstanding
2,264
2,265
—
%
2,263
2,264
—
%
Declared dividends per share
$
0.2625
$
0.25
5
%
$
1.05
$
1.00
5
%
Adjusted Earnings (1)
$
604
$
589
3
%
$
2,011
$
2,161
(7
)%
Adjusted Earnings per share (1)
$
0.27
$
0.26
4
%
$
0.88
$
0.95
(7
)%
Note
(1)
Adjusted Earnings is Net income
attributable to Kinder Morgan, Inc. adjusted for Certain Items, see
Table 2. Adjusted Earnings per share uses Adjusted Earnings and
applies the same two-class method used in arriving at basic
earnings per share.
Table 2
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income
attributable to Kinder Morgan, Inc. to Adjusted Earnings to DCF
Reconciliation
(In millions,
unaudited)
Three Months Ended December
31,
% change
Year Ended December
31,
% change
2020
2019
2020
2019
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
607
$
610
$
119
$
2,190
Total Certain Items
(3
)
(21
)
1,892
(29
)
Adjusted Earnings (1)
604
589
3
%
2,011
2,161
(7
)%
DD&A and amortization of excess cost
of equity investments for DCF (2)
659
774
2,671
2,867
Income tax expense for DCF (1)(2)
186
193
670
714
Cash taxes (3)
(11
)
(14
)
(68
)
(90
)
Sustaining capital expenditures (3)
(181
)
(211
)
(658
)
(688
)
Other items (4)
(7
)
23
(29
)
29
DCF
$
1,250
$
1,354
(8
)%
$
4,597
$
4,993
(8
)%
Table 3
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Adjusted Segment
EBDA, Adjusted EBITDA and DCF
(In millions, except per share
amounts, unaudited)
Three Months Ended December
31,
% change
Year Ended December
31,
% change
2020
2019
2020
2019
Natural Gas Pipelines
$
1,189
$
1,248
(5
)%
$
4,466
$
4,610
(3
)%
Products Pipelines
258
322
(20
)%
1,027
1,258
(18
)%
Terminals
258
290
(11
)%
990
1,174
(16
)%
CO2
167
185
(10
)%
652
707
(8
)%
Adjusted Segment EBDA (1)
1,872
2,045
(8
)%
7,135
7,749
(8
)%
General and administrative and corporate
charges (1)
(125
)
(131
)
(561
)
(598
)
JV DD&A and income tax expense
(1)(5)
106
119
449
487
Net income attributable to NCI (net of KML
NCI and Certain Items) (1)
(16
)
(13
)
(61
)
(20
)
Adjusted EBITDA
1,837
2,020
(9
)%
6,962
7,618
(9
)%
Interest, net (1)
(388
)
(451
)
(1,610
)
(1,816
)
Cash taxes (3)
(11
)
(14
)
(68
)
(90
)
Sustaining capital expenditures (3)
(181
)
(211
)
(658
)
(688
)
KML NCI DCF adjustments (6)
—
(13
)
—
(60
)
Other items (4)
(7
)
23
(29
)
29
DCF
$
1,250
$
1,354
(8
)%
$
4,597
$
4,993
(8
)%
Weighted average shares outstanding for
dividends (7)
2,277
2,277
2,276
2,276
DCF per share
$
0.55
$
0.59
$
2.02
$
2.19
Declared dividends per share
$
0.2625
$
0.25
$
1.05
$
1.00
Notes
(1)
Amounts are adjusted for Certain Items.
See Tables 4 and 7 for more information.
(2)
Includes DD&A or income tax expense,
as applicable, from JVs. 2019 amounts are also net of DD&A or
income tax expense attributable to KML NCI. See Table 7 for more
information.
(3)
Includes cash taxes or sustaining capital
expenditures, as applicable, from JVs. See Table 7 for more
information.
(4)
Includes pension contributions and
non-cash pension expense, and non-cash compensation associated with
our restricted stock program.
(5)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
(6)
2019 amounts represent the combined net
income, DD&A and income tax expense adjusted for Certain Items,
as applicable, attributable to KML NCI. See Table 7 for more
information.
(7)
Includes restricted stock awards that
participate in dividends.
Table 4
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income to
Adjusted EBITDA Reconciliation
(In millions,
unaudited)
Three Months Ended December
31,
% change
Year Ended December
31,
% change
2020
2019
2020
2019
Net income (GAAP)
$
623
$
627
(1
)%
$
180
$
2,239
(92
)%
Certain Items:
Fair value amortization
(4
)
(7
)
(21
)
(29
)
Legal, environmental and taxes other than
income tax reserves
(12
)
18
26
46
Change in fair value of derivative
contracts (1)
5
(2
)
(5
)
(24
)
(Gain) loss on divestitures and
impairments, net (2)
(55
)
(275
)
327
(280
)
Loss on impairment of goodwill (3)
—
—
1,600
—
Restricted stock accelerated vesting and
severance
52
—
52
—
COVID-19 costs
4
—
15
—
Income tax Certain Items
7
284
(107
)
299
NCI associated with Certain Items
—
(3
)
—
(4
)
Other
—
(36
)
5
(37
)
Total Certain Items (4)
(3
)
(21
)
1,892
(29
)
DD&A and amortization of excess cost
of equity investments
569
683
2,304
2,494
Income tax expense (5)
170
171
588
627
JV DD&A and income tax expense
(5)(6)
106
119
449
487
Interest, net (5)
388
451
1,610
1,816
Net income attributable to NCI (net of KML
NCI (5))
(16
)
(10
)
(61
)
(16
)
Adjusted EBITDA
$
1,837
$
2,020
(9
)%
$
6,962
$
7,618
(9
)%
Notes
(1)
Gains or losses are reflected in our DCF
when realized.
(2)
Year ended December 31, 2020 amount
includes a pre-tax non-cash impairment loss of $350 million related
to oil and gas producing assets in our CO2 business segment driven
by low oil prices and $21 million for asset impairments in our
Products Pipelines business segment, which are reported within
“(Gain) loss on divestitures and impairments, net” on the
accompanying Preliminary Consolidated Statement of Income. Three
months and year ended December 31, 2019 amounts primarily include:
(i) a $1,296 million pre-tax gain on the sale of KML and U.S.
Cochin Pipeline and a pre-tax loss of $364 million for asset
impairments, related to gathering and processing assets in Oklahoma
and northern Texas in our Natural Gas Pipelines business segment
and oil and gas producing assets in our CO2 business segment, which
are reported within “(Gain) loss on divestitures and impairments,
net” on the accompanying Preliminary Consolidated Statement of
Income; and (ii) a pre-tax $650 million loss for an impairment of
our investment in Ruby Pipeline which is reported within “Earnings
(loss) from equity investments” on the accompanying Preliminary
Consolidated Statement of Income. (See Table 1.)
(3)
Year ended December 31, 2020 amount
includes non-cash impairments of goodwill of $1,000 million and
$600 million associated with our Natural Gas Pipelines
Non-regulated and CO2 reporting units, respectively.
(4)
Three months ended December 31, 2019
amount includes $649 million, and years ended December 31, 2020 and
2019 amounts include $(4) million and $634 million, respectively,
reported within “Earnings (loss) from equity investments.”
(5)
Amounts are adjusted for Certain Items.
See Table 7 for more information.
(6)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
Table 5
Volume and CO2 Segment Hedges
Highlights
(Historical pro forma for
acquired and divested assets, JV volumes at KMI share)
Three Months Ended December
31,
Year Ended December
31,
2020
2019
2020
2019
Natural Gas Pipelines
Transport volumes (BBtu/d)
38,664
39,272
37,487
36,793
Sales volumes (BBtu/d)
2,421
2,374
2,353
2,420
Gathering volumes (BBtu/d)
2,829
3,521
3,039
3,382
NGLs (MBbl/d) (1)
27
31
27
32
Products Pipelines (MBbl/d)
Gasoline (2)
922
1,029
897
1,041
Diesel fuel
389
363
375
368
Jet fuel
165
311
179
306
Total refined product volumes
1,476
1,703
1,451
1,715
Crude and condensate
498
671
552
651
Total delivery volumes (MBbl/d)
1,974
2,374
2,003
2,366
Terminals (1)
Liquids leasable capacity (MMBbl)
79.7
79.7
79.7
79.7
Liquids utilization %
95.3
%
93.2
%
95.3
%
93.2
%
Bulk transload tonnage (MMtons)
12.6
13.3
48.0
55.3
CO2
SACROC oil production
20.93
23.50
21.83
23.90
Yates oil production
6.37
7.48
6.61
7.19
Katz and Goldsmith oil production
2.57
3.60
2.75
3.79
Tall Cotton oil production
1.16
2.25
1.69
2.33
Total oil production - net (MBbl/d)
(3)
31.03
36.83
32.88
37.21
NGL sales volumes - net (MBbl/d) (3)
9.67
9.79
9.49
10.10
CO2 sales volumes - net (Bcf/d)
0.39
0.60
0.44
0.61
Realized weighted average oil price ($ per
Bbl)
$
55.41
$
49.90
$
53.78
$
49.49
Realized weighted average NGL price ($ per
Bbl)
$
18.45
$
23.34
$
17.95
$
23.49
CO2 Segment Hedges
2021
2022
2023
2024
Crude Oil (4)
Price ($ per Bbl)
$
50.37
$
50.98
$
49.78
$
43.50
Volume (MBbl/d)
25.70
10.80
5.45
1.55
NGLs
Price ($ per Bbl)
$
29.26
Volume (MBbl/d)
4.24
Midland-to-Cushing Basis Spread
Price ($ per Bbl)
$
0.26
Volume (MBbl/d)
24.55
Notes
(1)
Volumes for assets sold are excluded for
all periods presented.
(2)
Gasoline volumes include ethanol pipeline
volumes.
(3)
Net of royalties and outside working
interests.
(4)
Includes West Texas Intermediate
hedges.
Table 6
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Balance Sheets
(In millions,
unaudited)
December 31,
December 31,
2020
2019
Assets
Cash and cash equivalents
$
1,184
$
185
Other current assets
2,019
3,053
Property, plant and equipment, net
35,836
36,419
Investments
7,917
7,759
Goodwill
19,851
21,451
Deferred charges and other assets
5,166
5,290
Total assets
$
71,973
$
74,157
Liabilities, Redeemable Noncontrolling
Interest and Shareholders' Equity
Short-term debt
$
2,558
$
2,377
Preferred interest in general partner of
KMP
—
100
Other current liabilities
2,516
2,623
Long-term debt
30,838
30,883
Debt fair value adjustments
1,293
1,032
Other
2,202
2,253
Total liabilities
39,407
39,268
Redeemable Noncontrolling Interest
728
803
Other shareholders' equity
31,843
34,075
Accumulated other comprehensive loss
(407
)
(333
)
KMI equity
31,436
33,742
Noncontrolling interests
402
344
Total shareholders' equity
31,838
34,086
Total liabilities, redeemable
noncontrolling interest and shareholders' equity
$
71,973
$
74,157
Net Debt (1)
$
32,042
$
33,031
Adjusted EBITDA Twelve Months
Ended
December 31,
December 31,
Reconciliation of Net Income to
Adjusted EBITDA
2020
2019
Net income (GAAP)
$
180
$
2,239
Total Certain Items
1,892
(29
)
Net income attributable to NCI (net of KML
NCI) (2)
(61
)
(16
)
DD&A and amortization of excess cost
of equity investments
2,304
2,494
Income tax expense (3)
588
627
JV DD&A and income tax expense
(3)(4)
449
487
Interest, net (3)
1,610
1,816
Adjusted EBITDA
$
6,962
$
7,618
Net Debt-to-Adjusted EBITDA
4.6
4.3
Notes
(1)
Amounts exclude: (i) the preferred
interest in general partner of KMP (which was redeemed in January
2020); (ii) debt fair value adjustments; and (iii) the foreign
exchange impact on our Euro denominated debt of $170 million and
$44 million as of December 31, 2020 and December 31, 2019,
respectively, as we have entered into swaps to convert that debt to
U.S.$.
(2)
2019 amount is net of KML NCI, for the
period through its December 16, 2019 sale, of $33 million.
(3)
Amounts are adjusted for Certain Items.
See Table 4 for more information.
(4)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
Table 7
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Supplemental
Information
(In millions,
unaudited)
Three Months Ended December
31,
Year Ended December
31,
2020
2019
2020
2019
Segment EBDA
Natural Gas Pipelines (GAAP)
$
1,199
$
1,278
$
3,483
$
4,661
Certain Items
(10
)
(30
)
983
(51
)
Natural Gas Pipelines Adjusted Segment
EBDA
1,189
1,248
4,466
4,610
Products Pipelines (GAAP)
258
317
977
1,225
Certain Items
—
5
50
33
Products Pipelines Adjusted Segment
EBDA
258
322
1,027
1,258
Terminals (GAAP)
313
622
1,045
1,506
Certain Items
(55
)
(332
)
(55
)
(332
)
Terminals Adjusted Segment EBDA
258
290
990
1,174
CO2 (GAAP)
161
123
(292
)
681
Certain Items
6
62
944
26
CO2 Adjusted Segment EBDA
167
185
652
707
Kinder Morgan Canada (GAAP)
—
—
—
(2
)
Certain Items
—
—
—
2
Kinder Morgan Canada Adjusted Segment
EBDA
—
—
—
—
Total Segment EBDA (GAAP)
1,931
2,340
5,213
8,071
Total Segment EBDA Certain Items
(59
)
(295
)
1,922
(322
)
Total Adjusted Segment EBDA
$
1,872
$
2,045
$
7,135
$
7,749
Depreciation, depletion and amortization
(GAAP)
$
(528
)
$
(661
)
$
(2,164
)
$
(2,411
)
Amortization of excess cost of equity
investments (GAAP)
(41
)
(22
)
(140
)
(83
)
DD&A and amortization of excess cost
of equity investments
(569
)
(683
)
(2,304
)
(2,494
)
JV DD&A
(90
)
(95
)
(367
)
(392
)
DD&A attributable to KML NCI
—
4
—
19
DD&A and amortization of excess cost
of equity investments for DCF
$
(659
)
$
(774
)
$
(2,671
)
$
(2,867
)
General and administrative (GAAP)
$
(187
)
$
(134
)
$
(648
)
$
(590
)
Corporate benefit (charges)
6
1
(5
)
(21
)
Certain Items
56
2
92
13
General and administrative and corporate
charges (1)
$
(125
)
$
(131
)
$
(561
)
$
(598
)
Interest, net (GAAP)
$
(381
)
$
(442
)
$
(1,595
)
$
(1,801
)
Certain Items
(7
)
(9
)
(15
)
(15
)
Interest, net (1)
$
(388
)
$
(451
)
$
(1,610
)
$
(1,816
)
Income tax expense (GAAP)
$
(177
)
$
(455
)
$
(481
)
$
(926
)
Certain Items
7
284
(107
)
299
Income tax expense (1)
(170
)
(171
)
(588
)
(627
)
Unconsolidated JV income tax expense
(1)(2)
(16
)
(24
)
(82
)
(95
)
Income tax expense attributable to KML NCI
(1)
—
2
—
8
Income tax expense for DCF (1)
$
(186
)
$
(193
)
$
(670
)
$
(714
)
KML activities prior to December 16,
2019
Net income attributable to KML NCI
$
—
$
(4
)
$
—
$
(29
)
KML NCI associated with Certain Items
—
(3
)
—
(4
)
KML NCI (1)
—
(7
)
—
(33
)
DD&A attributable to KML NCI
—
(4
)
—
(19
)
Income tax expense attributable to KML NCI
(1)
—
(2
)
—
(8
)
KML NCI DCF adjustments (1)
$
—
$
(13
)
$
—
$
(60
)
Net income attributable to NCI (GAAP)
$
(16
)
$
(17
)
$
(61
)
$
(49
)
Less: KML NCI (1)
—
(7
)
—
(33
)
Net income attributable to NCI (net of KML
NCI (1))
(16
)
(10
)
(61
)
(16
)
NCI associated with Certain Items
—
(3
)
—
(4
)
Net income attributable to NCI (net of KML
NCI and Certain Items)
$
(16
)
$
(13
)
$
(61
)
$
(20
)
Additional JV information
Unconsolidated JV DD&A
$
(101
)
$
(103
)
$
(407
)
$
(411
)
Less: Consolidated JV partners'
DD&A
(11
)
(8
)
(40
)
(19
)
JV DD&A
(90
)
(95
)
(367
)
(392
)
Unconsolidated JV income tax expense
(1)(2)
(16
)
(24
)
(82
)
(95
)
JV DD&A and income tax expense (1)
$
(106
)
$
(119
)
$
(449
)
$
(487
)
Unconsolidated JV cash taxes (2)
$
(11
)
$
(11
)
$
(62
)
$
(61
)
Unconsolidated JV sustaining capital
expenditures
$
(36
)
$
(29
)
$
(120
)
$
(114
)
Less: Consolidated JV partners' sustaining
capital expenditures
(2
)
(1
)
(6
)
(6
)
JV sustaining capital expenditures
$
(34
)
$
(28
)
$
(114
)
$
(108
)
CO2 Segment EBDA (GAAP) to CO2 Segment
Free Cash Flow Reconciliation
CO2 Segment EBDA (GAAP)
$
161
$
123
$
(292
)
$
681
Certain Items:
Change in fair value of derivative
contracts
6
(13
)
(6
)
(49
)
Loss on impairments
—
75
950
75
CO2 Segment Certain Items
6
62
944
26
Capital expenditures (3)
(32
)
(88
)
(186
)
(349
)
CO2 Segment Free Cash Flow (1)
$
135
$
97
$
466
$
358
Notes
(1)
Amounts are adjusted for Certain
Items.
(2)
Amounts are associated with our Citrus,
NGPL and Plantation equity investments.
(3)
Includes sustaining and expansion capital
expenditures for our CO2 segment.
Table 8
Kinder Morgan, Inc. and
Subsidiaries
Reconciliation of Budgeted Net
Income Attributable to Kinder Morgan, Inc. to Budgeted DCF
(In billions,
unaudited)
Budgeted
2021
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
2.1
Total Certain Items (1)
—
DD&A and amortization of excess cost
of equity investments for DCF (2)
2.5
Income tax expense for DCF (2)(3)
0.7
Cash taxes (4)
(0.1
)
Sustaining capital expenditures (4)
(0.8
)
Other items (1)
—
DCF
$
4.4
Table 9
Kinder Morgan, Inc. and
Subsidiaries
Reconciliation of Budgeted Net
Income Attributable to Kinder Morgan, Inc. to Budgeted
Adjusted EBITDA
(In billions,
unaudited)
Budgeted
2021
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
2.1
Total Certain Items (1)
—
DD&A and amortization of excess cost
of equity investments
2.2
Income tax expense (3)
0.6
JV DD&A and income tax expense (5)
0.4
Interest, net (3)
1.5
Adjusted EBITDA
$
6.8
Notes
(1)
Aggregate adjustments for Total Certain
Items and Other items (such as non-cash pension expense and
non-cash compensation associated with our restricted stock program)
are currently estimated to be less than $100 million.
(2)
Includes DD&A or income tax expense,
as applicable, from unconsolidated JVs, reduced by consolidated JV
partners' DD&A.
(3)
Amounts are adjusted for Certain
Items.
(4)
Includes cash taxes or sustaining capital
expenditures, as applicable, from unconsolidated JVs reduced by
consolidated JV partners' sustaining capital expenditures.
(5)
Represents unconsolidated JV DD&A and
income tax expense, reduced by consolidated JV partners'
DD&A.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210120005606/en/
Dave Conover Media Relations (713) 420-6397
Newsroom@kindermorgan.com
Investor Relations (800) 348-7320 km_ir@kindermorgan.com
www.kindermorgan.com
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