Kinder Morgan (KMI) Tops Q2 EPS by 27c

Kinder Morgan (NYSE: KMI) reported Q2 EPS of $0.44, $0.27 better than the analyst estimate of $0.17. Revenue for the quarter came in at $2.56 billion versus the consensus estimate of $2.89 billion.

2020 Outlook

For 2020, KMI’s original budget contemplated DCF of approximately $5.1 billion ($2.24 per common share) and Adjusted EBITDA of approximately $7.6 billion. Because of the pandemic-related reduced energy demand and the sharp decline in commodity prices, the company now expects DCF to be below plan by slightly more than 10 percent and Adjusted EBITDA to be below plan by slightly more than 8 percent. As a result, KMI now expects to end 2020 with a Net Debt-to-Adjusted EBITDA ratio of approximately 4.7 times. Because considerable uncertainty exists with respect to the future pace and extent of a global economic recovery from the effects of the pandemic, Table 8 below provides assumptions and sensitivities for impacts on our business over the remaining six months of 2020 that may be affected by that uncertainty.

Market conditions also negatively impacted a number of planned expansion projects such that they are not needed at this time or no longer meet our internal return thresholds. We therefore expect the budgeted $2.4 billion expansion projects and contributions to joint ventures for 2020 to be lower by approximately $660 million. With this reduction, DCF less expansion capital expenditures is improved by over $100 million compared to budget, helping to keep our balance sheet strong.

KMI expects to use internally generated cash flow to fully fund its 2020 dividend payments, as well as all of its 2020 discretionary spending.

As of June 30, 2020, we had over $3.9 billion of borrowing capacity under our $4 billion credit facility and $526 million in cash and cash equivalents. We believe our cash from operations, current cash on hand and excess borrowing capacity are more than adequate to allow us to manage our day-to-day cash requirements as well as the debt maturing over the next 18 months.

Due to the impracticality of predicting certain amounts required by GAAP such as unrealized gains and losses on derivatives marked to market and potential changes in estimates for certain contingent liabilities, KMI does not provide budgeted net income attributable to KMI and net income, the GAAP financial measures most directly comparable to the non-GAAP financial measures of DCF and Adjusted EBITDA, respectively, or budgeted metrics derived therefrom.

For earnings history and earnings-related data on Kinder Morgan (KMI) click here.

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