NGI The Weekly Gas Market Report
Kinder Morgan, Inc. reported “a spectacular 2000,” with a 75%increase over 1999 and a 65% increase in fourth quarter earnings.In the fourth quarter KMI beat the consensus estimate of 41 cents ashare, coming in with earnings of 43 cents.
For calendar year 2000, KMIearnings were $146.7 million, or$1.28 per diluted common share, from continuing operations beforemerger-related costs and gain on the sale of assets. That comparesto $58.8 million, or $0.73 per diluted common share, for 1999.
Earnings for the fourth quarter were $50.6 million, or $0.43 perdiluted common share, from continuing operations beforemerger-related costs and gain on the sale of assets. That comparesto $28.7 million, or $0.26 per diluted common share, for the fourthquarter of 1999.
“KMI had a spectacular 2000, and we expect significantadditional growth in 2001 and beyond,” said Chairman Richard D.Kinder. “We have fully transformed KMI into a growth company bysuccessfully completing the KMI turnaround, which began when wemerged with KN Energy in the fall of 1999. Our ‘back-to-basics’strategy was a huge success, as we increased utilization ofexisting assets, reduced costs across the board, divested ournon-core assets and strengthened our balance sheet.” Kinder notedthat KMI’s total return to shareholders was nearly 160% in 2000.
“Looking ahead, 2001 is off to a good start,” Kinder said. “KMIanticipates earnings per share growth in the 30 to 40% range ($1.66to $1.79 earnings per share).
Overall, KMI reported fourth quarter net income of $54.8million, or $0.46 per diluted common share. That compares to a lossof $231.6 million, or a loss of $2.10 per diluted common share,during the fourth quarter of 1999 when KMI took a $248 million netafter-tax charge for the divestiture of non-core assets andmerger-related costs, and recorded a gain from the contribution ofassets to Kinder Morgan Energy Partners, L.P. In 2000, KMI produced$152.0 million in net income, or $1.32 per diluted common share,compared to a loss of $239.7 million, or a loss of $2.99 perdiluted common share, the previous year.
KMI benefited significantly from its ownership of the generalpartner of KMP, the largest pipeline master limited partnership inthe United States. KMI will receive $44.5 million in total cashdistributions from KMP for the fourth quarter of 2000, up 180% from$15.9 million during the same period last year. A full yearcomparison is not relevant because KMI did not own the generalpartner of KMP until the merger with KN Energy became final inOctober of 1999. “As KMP’s cash flow grows, KMI’s general partnershare of that cash flow grows dramatically,” Kinder explained.”KMI’s cash flow from KMP nearly tripled this quarter due tointernal growth in KMP’s pipeline segments and the strongperformance of recent KMP acquisitions.”
After the effects of equity accounting and amortization, KMPcontributed $34.7 million of pre-tax earnings to KMI in the fourthquarter and $112.6 million of pre-tax earnings in 2000.
Natural Gas Pipeline Company of America (NGPL), a wholly ownedsubsidiary of KMI, had segment earnings of $89.4 million in thefourth quarter, a 9% increase over the same period a year ago, and$342.9 million in 2000, about 12% higher than in 1999. Kinder notedthat NGPL has sold out its capacity through the winter season. “Dueto the high percentage of revenues that NGPL derives from demandcharges, we expect consistent results in the first quarter of2001.”
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