Kinder Morgan Inc. (NYSE:KMI)

Total Assets

The reported total assets show a declining trend from 84,104 million US dollars in 2015 to 74,157 million US dollars in 2019. This represents a gradual reduction of approximately 12% over the five-year period. Similarly, the adjusted total assets, which exclude goodwill, also decreased from 60,314 million US dollars in 2015 to 52,706 million US dollars in 2019, marking a decline of about 13%. The parallel decrease in both reported and adjusted assets suggests a sustained contraction in the asset base over time.

Stockholders' Equity

The reported stockholders' equity remained relatively stable, with minor fluctuations from 35,119 million US dollars in 2015 to 33,742 million US dollars in 2019, showing a slight overall decrease. In contrast, the adjusted stockholders' equity, excluding goodwill, fluctuated more noticeably, starting at 11,329 million US dollars in 2015, rising to 12,279 million in 2016, then decreasing in 2017 before increasing again to 12,291 million in 2019. This indicates variability in the non-goodwill equity component, but a general recovery by the end of the period.

Net Income Attributable to Kinder Morgan, Inc.

The net income attributable to the company showed considerable volatility. The reported net income was 253 million US dollars in 2015, significantly increased to 708 million in 2016, then dropped sharply to 183 million in 2017. Subsequently, there was a notable rise to 1,609 million in 2018 and further growth to 2,190 million in 2019. The adjusted net income follows the same pattern as the reported net income except in 2015 where the adjusted net income is substantially higher at 1,403 million US dollars compared to the reported 253 million. This discrepancy suggests the presence of significant adjustments, possibly related to goodwill impairment or other non-recurring items, impacting the reported income figures in that year.

Overall Analysis

The company experienced a consistent decline in total assets, both reported and adjusted, over the five years analyzed. Despite this contraction, the reported stockholders’ equity remained relatively stable, while the adjusted equity showed some variability but ended slightly higher than the initial level. Net income demonstrated strong fluctuations, with substantial growth in the latter years, especially in 2018 and 2019. The variance between reported and adjusted net income in 2015 highlights the effect of accounting adjustments, emphasizing the importance of examining adjusted figures for a clearer picture of operational profitability.

The financial data reveals distinct differences between reported and goodwill adjusted figures across all measured metrics over the five-year period from December 31, 2015, to December 31, 2019. Both sets show certain trends, but the adjusted data consistently indicates stronger performance levels compared to the reported data.

Net Profit Margin

The reported net profit margin exhibits a general upward trend, starting at 1.76% in 2015 and rising significantly to 16.58% by 2019. The adjusted net profit margin follows the same pattern, but with notably higher initial value of 9.74% in 2015, converging with the reported figure by 2016, and then increasing in parallel to 16.58% in 2019. This suggests that goodwill adjustments in earlier years reveal a higher profitability base which diminishes over time, aligning both margins in more recent years.

Total Asset Turnover

The reported total asset turnover remains relatively stable, fluctuating slightly between 0.16 and 0.18 throughout the period. The adjusted total asset turnover is consistently higher, starting at 0.24 in 2015 and gradually increasing to 0.25 by 2019. The steadiness in both metrics implies limited changes in asset utilization efficiency, with the adjusted figures indicating a more optimized use of assets after goodwill adjustment.

Financial Leverage

Reported financial leverage shows a slight decreasing trend from 2.39 in 2015 to 2.20 in 2019, indicating a modest reduction in the use of debt relative to equity. Adjusted financial leverage figures are substantially higher, beginning at 5.32 in 2015 and decreasing to 4.29 by 2019. Despite the decline, the adjusted leverage remains significantly elevated compared to reported leverage, highlighting the impact of goodwill adjustments on the company’s capital structure, suggesting a higher risk profile when intangible assets are considered.

Return on Equity (ROE)

The reported ROE similarly trends upwards, from a low of 0.54% in 2017 to 6.49% in 2019, mirroring an improvement in overall profitability relative to equity. The adjusted ROE presents a different magnitude and volatility, starting at 12.38% in 2015, dropping to 1.59% in 2017, then rising sharply to 17.82% in 2019. This variability could be attributed to changes in the adjustments to equity stemming from goodwill accounting, which greatly affect the returns measured.

Return on Assets (ROA)

Reported ROA increases from 0.23% in 2017 to 2.95% in 2019, showing improving efficiency in generating profits from assets. Adjusted ROA follows a similar trend but with higher levels throughout, from 2.33% in 2015 to 4.16% in 2019. These higher adjusted returns suggest that the exclusion of goodwill reduces asset base inflations, thus reflecting a more efficient asset utilization.

In summary, the goodwill adjusted data consistently reveals higher profitability and efficiency metrics than the reported data, emphasizing how goodwill accounting significantly impacts the portrayal of the company’s financial performance. Although reported figures show improvement over time, adjusted values reveal more pronounced variations and generally superior return measures, indicating that the company’s underlying operations are stronger than reported figures alone suggest. The trend of declining financial leverage in both sets points to a gradual deleveraging strategy, but the adjusted leverage remains comparatively high, which may signify continued exposure to financial risk when goodwill is accounted for.

The financial data indicates significant variability in both reported and adjusted net income attributable to Kinder Morgan, Inc. over the five-year period. Notably, the reported net income shows a pronounced increase from 253 million USD in 2015 to 2,190 million USD in 2019, albeit with a marked dip to 183 million USD in 2017. The adjusted net income, starting significantly higher than the reported figure at 1,403 million USD in 2015, aligns with the reported net income in 2016 and continues the pattern observed in subsequent years.

The net profit margins provide insight into the company's profitability relative to its revenue. The reported net profit margin exhibits a general upward trend, rising from 1.76% in 2015 to a peak of 16.58% in 2019, with a low point in 2017. The adjusted net profit margin follows the same trajectory as the reported margin from 2016 onward, with a notable difference in 2015, where it is substantially higher than the reported margin.

Net Income Trends

The fluctuation in reported net income, especially the low value in 2017, suggests variability in operational or financial outcomes that year. The substantial increase in 2018 and 2019 indicates a recovery or improvement in financial performance.

Adjusted vs. Reported Figures

The divergence between adjusted and reported net income in 2015 suggests the presence of non-recurring items or significant adjustments affecting that year’s earnings. From 2016 onwards, the adjusted figures mirror the reported values, implying fewer or no adjustments were necessary in those years.

Profit Margin Analysis

The consistent increase in net profit margins over the period reflects improved efficiency or profitability. The alignment of adjusted and reported margins from 2016 to 2019 further supports the inference that the adjustments impacting net income were primarily relevant to 2015.

Total Assets (Reported vs Adjusted)

The reported total assets demonstrate a gradual decline over the five-year period, decreasing from US$84,104 million in 2015 to US$74,157 million in 2019. Similarly, adjusted total assets also show a decreasing trend, falling from US$60,314 million in 2015 to US$52,706 million in 2019. Both measures suggest a consistent contraction in asset base, with the adjusted figures being significantly lower than the reported amounts across all years, reflecting the impact of goodwill adjustment.

Total Asset Turnover (Reported vs Adjusted)

Reported total asset turnover remains relatively stable, ranging between 0.16 and 0.18 during the five years. It starts at 0.17 in 2015, dips slightly to 0.16 in 2016, and then shows a gradual increase, reaching 0.18 by 2018 and maintaining that level into 2019. The adjusted total asset turnover follows a similar pattern but at higher values, starting at 0.24 in 2015, slightly decreasing to 0.22 in 2016, and then rising to 0.25 by 2018, remaining steady through 2019. This indicates an improvement in asset efficiency when excluding goodwill.

Comparison and Insights

The differential between reported and adjusted figures reveals the considerable effect of goodwill on reported total assets, which in turn affects turnover ratios. The adjusted asset turnover being higher reflects more efficient use of the company's tangible or core assets in generating revenue. The stable to improving turnover ratios despite decreasing asset bases could indicate better operational efficiency or optimized asset management over the years.

Total Assets

The reported total assets demonstrate a gradual decline over the five-year period, decreasing from 84,104 million US dollars in 2015 to 74,157 million in 2019. Similarly, the adjusted total assets, which exclude goodwill, also show a consistent downward trend, falling from 60,314 million to 52,706 million US dollars over the same timeframe. This indicates a reduction in asset base both on a gross and adjusted basis.

Stockholders’ Equity

The reported stockholders’ equity remains relatively stable, with a slight decrease observed from 35,119 million US dollars in 2015 to 33,742 million in 2019. In contrast, the adjusted stockholders’ equity, which accounts for the removal of goodwill, fluctuates more noticeably, initially increasing from 11,329 million in 2015 to 12,279 million in 2016, then dipping in 2017 to 11,474 million, followed by a gradual rise to 12,291 million in 2019. This pattern suggests variability in underlying equity components when goodwill is excluded.

Financial Leverage

Reported financial leverage ratios are relatively stable, showing a modest decline from 2.39 in 2015 to 2.20 in 2019, signifying a slight reduction in the use of debt relative to equity. The adjusted financial leverage, however, remains significantly higher throughout the period, beginning at 5.32 in 2015 and declining to 4.29 by 2019. Despite this decrease, the ratio indicates a consistently higher reliance on debt when goodwill adjustments are made, reflecting a more leveraged capital structure under the adjusted figures.

Summary of Trends

The overarching trend in the data evidences a contraction in both reported and adjusted asset bases over the examined years. Stockholders’ equity shows relative stability in reported terms but more fluctuation upon adjustment. Financial leverage ratios suggest a moderate deleveraging trend, more pronounced in the adjusted data, highlighting the impact of goodwill adjustments on perceived capital structure risk. The adjusted measures provide a more conservative view of financial position, showing higher leverage and lower equity corresponding to asset reductions.

Net Income Trends

The reported net income attributable to the company exhibited significant fluctuations over the analyzed period. Beginning at $253 million in 2015, it increased sharply to $708 million in 2016, then sharply declined to $183 million in 2017 before rising markedly to $1,609 million in 2018 and further to $2,190 million in 2019. The adjusted net income mirrored this general pattern but started at a notably higher value of $1,403 million in 2015, aligning fully with the reported figures from 2016 onward. This suggests adjustments for goodwill had a substantial impact on the earlier year's results.

Stockholders’ Equity Developments

The reported total stockholders’ equity remained relatively stable throughout the period, fluctuating slightly from $35,119 million in 2015 to $33,742 million in 2019, with minor decreases each year. In contrast, the adjusted equity, which excludes goodwill impact, was significantly lower than the reported figures and showed slight variability, decreasing from $11,329 million in 2015 to $11,474 million in 2017, then gradually increasing to $12,291 million by 2019. This indicates that goodwill adjustments result in a materially lower equity base but reflect a modest growth trend in equity when adjusted.

Return on Equity (ROE) Behavior

The reported ROE demonstrated volatility over the five years, beginning at a low of 0.72% in 2015, rising to 2.06% in 2016, dipping to the lowest point of 0.54% in 2017, and then increasing significantly in 2018 and 2019 to 4.78% and 6.49%, respectively. The adjusted ROE, calculated on the goodwill-adjusted equity, showed a distinctly higher and more variable pattern. It started at a relatively high 12.38% in 2015, decreased to a low of 1.59% in 2017, before rising markedly to 13.74% and then 17.82% in 2018 and 2019. This suggests that goodwill adjustments provide a clearer measure of profitability relative to the core equity base, reflecting improved performance particularly in the later years.

Overall Insights

The adjustments for goodwill significantly influence reported financial figures by reducing equity and altering profitability ratios. The adjusted data reveals stronger net income and returns on a leaner equity base, particularly highlighting a marked improvement in financial performance from 2017 onwards. Stability in reported equity contrasts with modest growth in adjusted equity, underpinning the importance of considering goodwill adjustments for accurate assessment of financial health and performance trends.

The financial data reveal discernible trends in the performance and asset management of the company over the five-year period ending December 31, 2019. The reported net income attributable to the company exhibits considerable volatility, with an initial rise from 253 million US dollars in 2015 to 708 million in 2016, followed by a sharp decrease to 183 million in 2017, and then a substantial increase through 2018 and 2019, reaching 2,190 million US dollars.

Adjusted net income shows a different pattern in the earlier years, starting significantly higher at 1,403 million US dollars in 2015 but converging with the reported figures in 2016 and 2017, before paralleling the reported increases in 2018 and 2019. This suggests the presence of adjustments or non-recurring items that had a notable impact primarily in 2015.

Regarding asset base, reported total assets demonstrate a steady decline over the period, dropping from 84,104 million US dollars in 2015 to 74,157 million by 2019. Adjusted total assets similarly decrease, starting at 60,314 million US dollars and reducing consistently to 52,706 million by 2019. The consistent reduction in both reported and adjusted asset values may indicate asset disposals, depreciation outpacing acquisitions, or strategic downsizing of the asset base.

Return on assets (ROA) figures illustrate meaningful variation. The reported ROA starts at a low 0.3% in 2015, improving moderately to 0.88% in 2016, then declining in 2017 before increasing significantly in the final two years, reaching 2.95% in 2019. Adjusted ROA follows a parallel but consistently higher curve, starting at 2.33% in 2015, dipping in subsequent years, and surging sharply to 4.16% by 2019. The adjusted ROA indicates a notably stronger profitability performance relative to assets when excluding certain items, particularly highlighted by the marked improvement in the last two years.

Income Trends

There is significant fluctuation in reported net income with a strong upward trend towards the end of the period, accompanied by a convergence of adjusted and reported incomes in later years.

Asset Base

Assets, both reported and adjusted, show a consistent declining trend, indicating shrinking asset holdings or revaluations.

Profitability (ROA)

Both reported and adjusted ROA increase in the final years, with adjusted ROA consistently outperforming reported ROA, suggesting enhanced asset utilization efficiency when adjustments are applied.

Adjustments Impact

Adjustments have a significant effect on profitability and net income figures early in the period, but this impact reduces over time as adjusted figures align closely with reported ones in the latter years.

Overall, the analysis reflects a company experiencing asset contraction while improving profitability, particularly in the last two years. The substantial rise in net income and ROA towards the end of the period signals enhanced financial performance, despite a reducing asset base. The effect of adjustments diminishes over time, indicating possibly reduced one-time charges or accounting changes as the company stabilizes earnings and asset values.