{"id":418063,"date":"2021-01-20T16:08:22","date_gmt":"2021-01-20T21:08:22","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=418063"},"modified":"2021-01-20T16:08:22","modified_gmt":"2021-01-20T21:08:22","slug":"kinder-morgan-announces-results-for-fourth-quarter-of-2020-maintains-0-2625-per-share-dividend","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/kinder-morgan-announces-results-for-fourth-quarter-of-2020-maintains-0-2625-per-share-dividend\/","title":{"rendered":"Kinder Morgan Announces Results for Fourth Quarter of 2020; Maintains $0.2625 Per Share Dividend"},"content":{"rendered":"

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Kinder Morgan Announces Results for Fourth Quarter of 2020; Maintains $0.2625 Per Share Dividend<\/b><\/p>\n

HOUSTON–(BUSINESS WIRE<\/a>)–
\nKinder Morgan, Inc.\u2019s (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.\n<\/p>\n

\nKMI 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.\n<\/p>\n

\n\u201cDespite the pandemic\u2019s 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\u2019s dividend,\u201d said KMI Executive Chairman Richard D. Kinder.\n<\/p>\n

\n\u201cOur 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,\u201d Kinder concluded.\n<\/p>\n

\n\u201cWe 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,\u201d said KMI Chief Executive Officer Steve Kean. \u201cThe measures we took in the face of that unprecedented challenge \u2014 maintaining capital spending discipline, reducing expenses, and increasing operational efficiency \u2014 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.\n<\/p>\n

\n\u201cI 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,\u201d Kean concluded.\n<\/p>\n

\n\u201cWe 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,\u201d said KMI President Kim Dang. \u201cAt $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,\u201d said Dang.\n<\/p>\n

\n\u201cOne 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,\u201d Dang continued.\n<\/p>\n

\nFor 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<\/sub> reporting units. KMI\u2019s 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.\n<\/p>\n

2021 Outlook<\/span><\/b><\/p>\n

\nFor 2021, KMI\u2019s 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.\n<\/p>\n

\nAs 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.\n<\/p>\n

Overview of Business Segments<\/span><\/b><\/p>\n

\n\u201cThe Natural Gas Pipelines<\/b> segment\u2019s financial performance was down for the fourth quarter of 2020 relative to the fourth quarter of 2019,\u201d said Dang. \u201cThe 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.\u201d\n<\/p>\n

\nNatural 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.\n<\/p>\n

\n\u201cContinued low refined products demand and lower crude and condensate volumes during the fourth quarter reduced contributions from the Products Pipelines<\/b> segment,\u201d Dang said. \u201cCrude 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.\n<\/p>\n

\n\u201cTerminals<\/b> 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,\u201d said Dang. \u201cDue 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.\n<\/p>\n

\n\u201cCO2<\/sub><\/b> segment earnings were down compared to the fourth quarter of 2019 due to lower CO2<\/sub> 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,\u201d said Dang. \u201cFourth 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<\/sub> sales volumes were down 35%.\u201d\n<\/p>\n

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