HOUSTON--(BUSINESS WIRE)--Kinder Morgan, Inc. (NYSE: KMI) today announced that the Kinder Morgan
Canada Limited (TSX: KML) board of directors has agreed to the purchase
of the Trans Mountain Pipeline system and the expansion project (TMEP)
by the Government of Canada for C$4.5 billion, and has agreed to work
with the Government of Canada to seek a third party buyer for the Trans
Mountain Pipeline system and TMEP through July 22, 2018.
As part of the agreement, the Government has agreed to fund the
resumption of TMEP planning and construction work by guaranteeing TMEP’s
advances under a separate Federal Government recourse credit facility
until the transaction closes. The parties expect to close the
transaction late in the third quarter or early in the fourth quarter of
2018, subject to KML shareholder and applicable regulatory approvals.
“We are pleased that KML and the Government were able to reach agreement
on a transaction that benefits the people of Canada, TMEP shippers and
both KMI and KML shareholders,” said KMI Chief Executive Officer, and
KML Chairman and CEO, Steve Kean. “The outcome reached represents the
best opportunity to complete TMEP and thereby realize the great economic
benefits promised by that project.
“For KMI, despite losing the EBITDA associated with the Trans Mountain
system, we still expect to meet or exceed our 2018 distributable cash
flow (DCF) per share target. The transaction will also have a positive
impact on our consolidated balance sheet, as we expect KMI’s
approximately 70 percent share of after tax proceeds to be approximately
US$2.0 billion. Additionally, we continue to expect a 2018 annualized
dividend of $0.80 per share, followed by $1.00 per share in 2019 and
$1.25 per share in 2020, a growth rate of 25 percent annually,” said
Kean. “We will provide additional financial guidance after the
transaction closes.
“With respect to future growth, we are confident that KMI will continue
to find investment opportunities across its unparalleled network of
midstream assets. Since mid-2015, we have added on average approximately
$1.3 billion per year to our backlog,” continued Kean.
“During the last twelve months, we have added approximately $2.1
billion. Assuming that KMI can invest $2.0 billion per year at an
average capital-to-Adjusted EBITDA multiple of approximately 7.0 times
(versus the on-average 6.0 times for our backlog as of the first quarter
of this year) those investments would yield KMI incremental annual
EBITDA of over $300 million, representing greater than 4 percent annual
EBITDA growth,” Kean concluded.
KMI does not provide forecasted net income (the GAAP financial measure
most directly comparable to the non-GAPP financial measures DCF and
Adjusted EBITDA) due to the impracticality of quantifying certain
amounts required by GAAP, such as realized and unrealized foreign
currency gains and losses and potential changes in estimates for certain
contingent liabilities.
There will be a LIVE KML webcast conference call to discuss this
announcement at 9:10 a.m. EDT on Tuesday, May 29, 2018, at
www.kindermorgancanadalimited.com
.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy
infrastructure companies in North America. It owns an interest in
or operates over 84,000 miles of pipelines and 150 terminals. KMI’s
pipelines transport natural gas, refined petroleum products, crude oil,
condensate, CO2 and other products, and its terminals transload and
store petroleum products, ethanol and chemicals, and handle such
products as steel, coal and petroleum coke. It is also a leading
producer of CO2 that we and others use for enhanced oil recovery
projects primarily in the Permian basin. For more information
please visit
www.kindermorgan.com
.
Non-GAAP Financial Measures
The non-generally accepted accounting principles (non-GAAP) financial
measures of distributable cash flow (DCF), both in the aggregate and per
share, and net income before interest expense, taxes, DD&A and Certain
Items (Adjusted EBITDA) are presented herein.
Certain Items
as used to
calculate our Non-GAAP measures, are items that are required by GAAP to
be reflected in net income, 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).
DCF
is calculated by adjusting
net income available to common stockholders before Certain Items for
DD&A, total book and cash taxes, sustaining capital expenditures and
other items. DCF is a significant performance measure useful to
management and by external users of our financial statements in
evaluating our performance and to measure and estimate the ability of
our assets to generate cash earnings after servicing our debt and
preferred stock dividends, paying cash taxes and expending sustaining
capital, that could be used for discretionary purposes such as common
stock dividends, stock repurchases, retirement of debt, or expansion
capital expenditures. We believe the GAAP measure most directly
comparable to DCF is net income available to common stockholders. A
reconciliation of net income available to common stockholders to DCF is
provided herein. DCF per share is DCF divided by average
outstanding shares, including restricted stock awards that participate
in dividends.
Adjusted EBITDA
is calculated by
adjusting net income before interest expense, taxes, and DD&A (EBITDA)
for Certain Items, non-controlling interests before Certain Items, and
KMI’s share of certain equity investees’ DD&A (net of consolidating
joint venture partners’ share of DD&A) and book taxes, which are
specifically identified in the footnotes to the accompanying tables. Adjusted
EBITDA is used by management and external users, in conjunction with our
net debt, 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.
Our non-GAAP measures described above should not be considered
alternatives to GAAP net income or other GAAP measures and have
important limitations as analytical tools. Our computations of
DCF, Segment EBDA before Certain Items and Adjusted EBITDA may differ
from similarly titled measures used by others. You should not
consider these non-GAAP measures in isolation or as substitutes for an
analysis of our results as reported under GAAP. DCF should not be
used as an alternative to net cash provided by operating activities
computed under GAAP. Management compensates for the limitations
of these non-GAAP 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.
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 and 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 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 that any such forward-looking statements will
materialize. 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, 2017 (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.
