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On LNG exports, Kinder Morgan is exporting 3 Bcf a day to Mexico, which is 70% of the total US exports to Mexico. From a cash tax perspective, the new tax law postpones the date when $KMI begins to pay taxes by approx. one year to 2024. On the Trans Mountain expansion, the company has spent a total of C$930 million as of 2017 end.
Distributable cash flow (DCF), a key metric to measure financial health, rose 4%, to $0.53 a share, primarily due to growth in Kinder Morgan’s natural gas and terminal and products pipelines business. For 2018, $KMI expects DCF to reach $2.05 per share vs. $2 in 2017, adj. EBITDA of approx. $7.5Bil, and plans to invest $2.2Bil in growth projects.
Kinder Morgan posted a loss of $1.05Bil ($0.47 per share) in 4Q due to the new tax law. $KMI recorded a one-time tax charge of $1.4Bil since it has to revaluation of certain assets. Fourth quarter sales increased 7.2% reaching $3.63Bil vs. 4Q16. The company's Board has approved a cash dividend of $0.125 per share for the fourth quarter.
Kinder Morgan announced its preliminary 2018 financial outlook. It expects to generate $4.57Bil in cash flow and expects to pay $0.80 per share dividend for 2018. $KMI expects to pay $1 and $1.25 per share dividend in 2019 and 2020 respectively. On the Trans Mountain project, construction would start only after getting all approvals.
$KMI plans to increase its annual dividends from $0.50 to $0.80 in 2018, which is an increase of 60%. The company plans to further increase annual dividends by 25% in 2019 and 2020 ($1 in 2019 and $1.25 in 2020). The company's board has authorized $2Bil for share repurchases for next 3 years and plans to fund all expansion CapEx from its cash flow.
$KMI swung back to a profit of $334MM in 3Q17 vs. loss of $227MM in 3Q16. 3Q profits remained flat vs. 2Q17 due to the impact of Hurricane Harvey and loss of revenue from divestiture of its Canadian assets. The company expects a hit of about $20MM in distributable cash flow due to Harvey in 2017. It expects repair costs to be covered by insurance.
$KMI's distributable cash flow (DCF), a commonly used metric to measure the ability of assets to generate cash earnings, was $1.02Bil for 2Q17, down slightly from $1.05Bil a year ago. The decline was primarily attributable to the sale of 50% of Southern Natural Gas Company and the Kinder Morgan Canada Ltd (KML) IPO transaction.
At the end of 2Q17, $KMI's backlog stood at $12.2Bil. The company had new project additions in gas and CO2 which outpaced projects that were placed in service primarily in the terminals segment. The company continues to build out this backlog which it expects will contribute significant EBITDA to the segments when complete.
$KMI BoD approved a cash dividend of $0.125 per share for 2Q17. The dividend is payable on Aug. 15, 2017, to common shareholders of record as of the close of business on July 31, 2017. $KMI also expects to declare an annual dividend of $0.80 per share for 2018, a 60% increase from the expected 2017 dividend.
As a result of the recent IPO of its canadian assets, $KMI now expects to end FY17 with a net debt-to-Adjusted EBITDA ratio of approx. 5.2 times and growth capital investment of $3.1Bil. The company had earlier budgeted to invest $3.2Bil in growth projects and end the year with a net debt-to-Adjusted EBITDA ratio of approx. 5.4 times.
$KMI forecast to raise dividend by 60% for 2018, the first increase since Dec. 2015. The company, at the end of 2015, slashed its dividend by 75% in order to cut costs and survive during the oil downturn. The company plans to increase its dividend to $1.00 per share in 2019 and $1.25 per share in 2020, a growth rate of 25% annually. The board also authorized a $2Bil share buyback program.
Kinder Morgan Canada (KMC) and $KMI completed IPO of 102.942MM restricted voting shares of KMC at a price to the public of $17.00 per share for total gross proceeds of about C$1.75Bil. The proceeds will be used by KMC to indirectly buy from $KMI about 30% interest in limited partnership that holds the Canadian business of $KMI.
$KMI made a final investment decision on its Trans Mountain Expansion Project related to its indirect subsidiary, Kinder Morgan Canada Ltd., pricing its IPO of 102.9MM shares at a price to the public of C$17 per share (approx. US$12.64) for total gross proceeds of C$1.75Bil (approx. US$1.30Bil). The IPO would happen no later than May 31, 2017.
$KMI said that on the Permian Gulf Coast Express, the company has a non-binding open season that's closing. And while there is shipper interest, this is a maturing situation as DCP is looking at take away capacity out of the Permian and their own production. $KMI believes it has good offering and DCP can bring volumes to it themselves.