Kinder Morgan Inc. (NYSE:KMI)

Net operating profit after taxes (NOPAT)

The net operating profit after taxes exhibited a consistent upward trend throughout the observed period. Starting at $2,335 million in 2015, it increased each year, reaching $4,396 million by the end of 2019. This steady growth suggests improving operational efficiency and profitability over the five-year span.

Cost of capital

The cost of capital showed a fluctuating but generally increasing pattern. Beginning at 7.91% in 2015, it rose to 8.58% in 2016, then dropped slightly to 8.0% in 2017 before increasing again to 8.7% in 2018 and further to 9.13% in 2019. This trend indicates that the company faced gradually increasing expense for financing its capital, potentially reflecting changes in market conditions or risk profile.

Invested capital

The invested capital demonstrated a gradual decline over the period. It decreased from $72,098 million in 2015 to $67,164 million in 2019. The reduction in invested capital, despite growth in net operating profit, might imply increased capital efficiency or divestment of assets.

Economic profit

Economic profit remained negative throughout the entire timeframe, though the deficit narrowed over time. Starting with a loss of $3,370 million in 2015, the economic profit improved to a less negative $1,735 million by 2019. This improvement, despite persistent negative values, suggests that the company's operational gains progressively outpaced its capital costs, reducing the economic loss.

The financial data exhibits a notable progression across the five-year period from 2015 to 2019 in key profitability metrics.

Net Income Attributable to Kinder Morgan, Inc.

Net income shows a fluctuating pattern with significant variation. It increased substantially from 253 million USD in 2015 to 708 million USD in 2016, indicating a period of improved profitability. However, it then decreased sharply to 183 million USD in 2017 and slightly declined further to 160.9 million USD in 2018. In 2019, a pronounced rebound occurred, with net income surging to 2,190 million USD, representing the highest level within the period analyzed.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibits a consistent upward trajectory over the same time frame, indicating overall operational efficiency and profitability improvements. It rose steadily from 2,335 million USD in 2015 to 4,396 million USD in 2019. This steady increase contrasts the volatility seen in net income, suggesting that operational profitability strengthened continuously even during periods when net income faced short-term setbacks.

Overall, while net income experienced volatility with a significant dip in 2017 and 2018 before recovering sharply in 2019, NOPAT demonstrated consistent growth. The divergence between the volatility in net income and the stability in NOPAT could indicate the influence of non-operational factors, including one-time items, financing costs, or tax impacts affecting net income more directly. The improvement in NOPAT highlights enhanced core business performance throughout the period.

The analysis of the annual financial data reveals fluctuations in both income tax provision and cash operating taxes over the five-year period ending December 31, 2019.

Income Tax Provision

The income tax provision shows significant volatility during the period. Starting at USD 564 million in 2015, it increased notably to USD 917 million in 2016. A sharp rise was observed in 2017, with the provision peaking at USD 1,938 million. However, this high was not sustained, as the figure dropped substantially to USD 587 million in 2018, followed by a moderate increase to USD 926 million in 2019. The trend suggests that the income tax provision was influenced by fluctuating taxable income or changes in tax regulations during these years, with the 2017 value standing out as an outlier relative to other periods.

Cash Operating Taxes

Cash operating taxes remained relatively stable compared to the income tax provision. The values fluctuated within a narrow range from USD 472 million to USD 601 million throughout the five years. Notably, the cash operating taxes decreased from USD 601 million in 2015 to USD 472 million in 2016, then experienced minor increases and decreases over the subsequent years, ending at USD 590 million in 2019. This consistency indicates maintained cash tax obligations despite the volatility seen in the income tax provision, implying differences in timing or accounting recognition between these two tax-related metrics.

Overall, the data suggests that while cash taxes paid remained fairly steady, the reported income tax provisions varied considerably, reflecting potential changes in income, tax planning strategies, or tax regulation impacts during the period analyzed.

Total Reported Debt & Leases

Over the five-year period, there is a clear downward trend in the total reported debt and leases. Beginning at approximately 43.9 billion USD at the end of 2015, the debt level consistently decreased each year, reaching about 34.7 billion USD by the end of 2019. This reduction indicates a strategic effort to deleverage or reduce financial obligations over time.

Total Kinder Morgan, Inc.’s Stockholders’ Equity

The stockholders’ equity remained relatively stable throughout the period analyzed. Starting around 35.1 billion USD at the end of 2015, it experienced slight decreases over the next three years, bottoming out near 33.6 billion USD by the end of 2017. However, by the end of 2019, equity showed a minor recovery to approximately 33.7 billion USD. This stability suggests a balanced approach to equity management without significant dilution or accumulation.

Invested Capital

Invested capital demonstrated a modest decline from roughly 72.1 billion USD at the end of 2015 to about 67.2 billion USD by the end of 2019. The decrease was gradual, with minor fluctuations observed between the years, implying a steady but cautious approach to capital investment and asset base management.

Economic Profit

The economic profit displayed a consistent improvement over the five-year period. Starting at a substantial negative value of -3,370 million US dollars in 2015, it showed a gradual reduction in losses each year, reaching -1,735 million US dollars by 2019. Despite the losses, the negative trend became less severe, indicating progress toward better profitability or value creation over time.

Invested Capital

Invested capital demonstrated a slight decreasing trend throughout the period. Beginning at 72,098 million US dollars in 2015, it decreased modestly to 67,164 million US dollars by 2019. This decline suggests a gradual reduction in the amount of capital employed in the company's operations, potentially reflecting divestitures, asset sales, or capital efficiency measures.

Economic Spread Ratio

The economic spread ratio was consistently negative but showed an improving trend. It started at -4.67% in 2015 and improved to -2.58% by 2019. The ratio's progressive increase toward zero indicates that the company is narrowing the gap between its return on invested capital and its cost of capital, signaling enhanced operational efficiency or returns relative to the capital employed.

The financial data over the five-year period reveals several key trends related to profitability and revenue performance.

Economic Profit

The company consistently posted negative economic profit each year, indicating that it did not generate returns above its economic cost of capital. However, the magnitude of the negative economic profit showed a gradual improvement, decreasing in absolute terms from -3,370 million USD in 2015 to -1,735 million USD in 2019. This suggests a movement toward reducing economic losses and improving economic value creation.

Revenues

Revenue figures demonstrated fluctuations without a clear upward or downward trend. Revenues started at approximately 14,403 million USD in 2015, dropped to a low of 13,058 million USD in 2016, then partially rebounded to 14,144 million USD by 2018, before declining again to 13,209 million USD in 2019. Overall, revenues remained relatively stable within a range of roughly 13 to 14.5 billion USD.

Economic Profit Margin

The economic profit margin, reflecting economic profit relative to revenues, remained negative throughout the period but showed notable improvement. The margin increased from -23.4% in 2015 to -13.14% in 2019. This indicates that while profitability from an economic perspective was negative, the company progressively narrowed the gap between returns and costs, becoming less unprofitable year over year.

In summary, the data reflect ongoing economic challenges highlighted by sustained negative economic profits and margins. The company experienced relatively stable but slightly declining revenues. Encouragingly, the improvement in economic profit and margin over time suggests steps toward better operational efficiency or cost management, although the business had not yet achieved positive economic profitability by the end of 2019.