Sale to Pembina Pipeline Corporation
Remains on Track
CALGARY, Oct. 16, 2019 /PRNewswire/ - The Kinder Morgan
Canada Limited (TSX: KML) board of directors has declared a
dividend for the third quarter of 2019 of $0.1625 per restricted voting share ($0.65 annualized), payable on November 15, 2019, to restricted voting
shareholders of record as of October 31,
2019. KML's restricted voting share dividends are eligible
dividends for Canadian income tax purposes.
"I congratulate every KML employee for their focus and
dedication to business as we move toward closing the sale of KML to
Pembina," said KML Board Chairman and CEO Steve Kean. "The KML Pipelines and Terminals
segments' performance for the quarter was strong."
"We continue to work with Pembina toward the closing of the
transaction, which as previously disclosed we expect to occur late
in the fourth quarter of 2019 or in the first quarter of 2020,"
noted Dax Sanders, KML Chief
Financial Officer. "We have received early termination from the
U.S. Federal Trade Commission pursuant to the Hart-Scott-Rodino Act
and the parties are proactively engaged with the Canadian
Competition Bureau. The KML shareholder meeting to approve the
transaction is scheduled for December 10,
2019."
KML reported third quarter income from continuing operations of
$16.6 million, a decrease of
$5.6 million from the third quarter
of 2018. Distributable cash flow (DCF) from continuing operations
was $47.8 million, an increase of 23
percent compared to the comparable prior year period. Income from
continuing operations and DCF from continuing operations were both
adversely impacted by $7.0 million of
lower interest income relative to the prior period, due to interest
received in 2018 on the cash proceeds from the Trans Mountain sale
as well as higher general and administration expenses, partially
offset by an increase of earnings from continuing operations in the
Pipelines and Terminals segments of $6.5
million, an increase of 12 percent versus the same period in
2018. In addition, the increase in DCF from continuing operations
for the third quarter of 2019 included a net $9.7 million of cash tax refunds as compared to
$0.1 million of cash taxes paid in
the same period in 2018.
In the third quarter, KML generated earnings per restricted
voting share from continuing operations of $0.08. KML produced DCF from continuing
operations of $0.41 per restricted
voting share relative to our declared $0.1625 per restricted voting share dividend,
resulting in $8.6 million in excess
coverage over the dividend.
For the nine months of 2019, KML generated net income of
$59.5 million, Adjusted EBITDA of
$155.2 million, and DCF of
$98.5 million.
Pending Sale to Pembina
On August 21, 2019, KML announced
that Pembina agreed to acquire all of its outstanding common
equity, including the approximate 70% majority voting and economic
interest held by Kinder Morgan, Inc.
(KMI). On closing, KML's shareholders will receive 0.3068 of a
Pembina common share for each restricted voting share and each
special voting share (and associated Class B limited partnership
unit) outstanding. In addition, Pembina has agreed to purchase the
U.S. portion of the Cochin Pipeline from KMI. The closing of the
two transactions are cross-conditioned upon each other, and, in the
case of the KML acquisition, subject to KML shareholder, Court of
Queen's Bench of Alberta and
regulatory approvals. Collectively, these transactions are referred
herein as the "Pembina Transactions" and they are expected to close
late in the fourth quarter of 2019 or in the first quarter of
2020.
On September 10, 2019, KML
announced that, as part of its acquisition of KML, Pembina agreed
to exchange KML's outstanding preferred shares for Pembina
preferred shares with the same commercial terms and conditions as
the KML preferred shares. The exchange will be subject to KML
preferred shareholder approval and will close concurrently with the
acquisition by Pembina of KML's common equity, although this
approval is not a condition to closing of the Pembina Transactions
described above.
Overview of Business Segments
"Earnings contributions from the Terminals segment were up 8
percent compared to the third quarter of 2018 driven primarily by
storage capacity additions at our new Base Line Terminal joint
venture" noted John Schlosser, KML
President. "Volume at our Edmonton-area terminals was down 6.1 million
barrels, or 24 percent, year-over-year, as mandated production
curtailments continue to compress pricing differentials and
pressure crude-by-rail economics. The take-or-pay nature of our
contracts largely insulates segment earnings from short-term volume
fluctuations.
"Contributions from our Vancouver Wharves facility were flat
compared to the third quarter of 2018," continued Schlosser.
"Construction activities continued on the distillate storage
expansion project at the Wharves facility, with tank foundation
work commencing in the quarter. During this approximately
$50 million capital project, we will
construct two new distillate tanks with combined storage capacity
of 200,000 barrels and enhance railcar-unloading capabilities. The
project is supported by a 20-year initial term, take-or-pay
contract with an affiliate of a large, international integrated
energy company, and we expect to place it in service late in the
first quarter of 2021."
Pipeline segment earnings were up $3.2
million, or 36 percent, compared to the third quarter of
2018, primarily due to increased volumes and higher rates on
Cochin.
2019 Outlook
KML's 2019 budget contemplates declaring dividends of
$0.65 (annualized) per restricted
voting share, generating Adjusted EBITDA of $213 million and generating DCF from continuing
operations of approximately $109
million, representing DCF per restricted voting share of
$0.90. Our current expectation is
that our results for the year will be consistent with the
budget.
We do not provide forecasted income from continuing operations
(the GAAP financial measure most directly comparable to the
non-GAAP financial measures DCF from continuing operations 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.
Corporate News
Preferred Share Dividend
In addition to the above-described dividend declared on the
restricted voting shares, KML's board of directors declared a
quarterly dividend of $0.328125 per
Series 1 preferred share ($1.3125
annualized) and $0.3250 per Series 3
preferred share ($1.30 annualized),
each payable on November 15, 2019 to
Series 1 and Series 3 preferred shareholders of record as of
October 31, 2019. KML's preferred
share dividends are eligible dividends for Canadian income tax
purposes.
Normal Course Issuer Bid
As a consequence of the Pembina transaction announced in
August 2019, and the events leading
up to it, KML has not engaged in any share buybacks under the
program authorized by the KML board in July of this year.
About Kinder Morgan Canada Limited (TSX: KML). KML
manages and is the holder of an approximately 30 percent minority
interest in a portfolio of strategic energy infrastructure assets
across western Canada.
Kinder Morgan, Inc. (NYSE: KMI)
holds an approximately 70 percent majority voting interest in KML
and a corresponding 70 percent economic interest in KML's business
and assets. KML focuses on stable, fee-based energy transportation
and storage assets that are central to the energy infrastructure of
western Canada. We strive to
promote shareholder value by increasing utilization of our existing
assets while controlling costs and operating in a safe and
environmentally responsible way. For more information visit
kindermorgancanadalimited.com.
Please join KMI and KML at 4:30 p.m Eastern Time on
Wednesday, October 16, 2019, at
www.kindermorgan.com for a LIVE webcast conference call that will
include a discussion of KML's third quarter earnings. A
printer-friendly copy of this earnings release is available under
the "Earnings Releases" tab in the "Annual and Quarterly Reports"
section of our investor website, which can be accessed via the
following link:
https://ir.kindermorgancanadalimited.com/annual-and-quarterly-reports
Important Information Relating to Forward-Looking
Statements
This news release includes "forward-looking information,"
"financial outlook," and "forward-looking statements" within the
meaning of applicable securities laws (forward-looking statements).
Generally the words "expects," "believes," "anticipates," "plans,"
"will," "shall," "estimates," "contemplates," and similar
expressions identify forward-looking statements, which are
generally not historical in nature. Forward-looking statements in
this news release include statements, express or implied,
concerning, without limitation: statements pertaining to the
Pembina Transactions, including the timing of completion thereof,
the anticipated receipt of requisite approvals and consents,
including shareholder and court approvals, and satisfaction or
waiver of required closing conditions; KML's expected Adjusted
EBITDA and DCF for 2019 and expected Net Debt-to-Adjusted EBITDA
ratio at the end of 2019; anticipated dividends and the intended
payment thereof; and KML's capital projects, including expected
completion timing for those projects. Forward-looking statements
are not guarantees of performance. They involve significant risks,
uncertainties and assumptions. Any financial outlook or other
forward-looking statements provided in this news release have been
included for the purpose of providing information relating to
management's current expectations and plans for the future, are
based on a number of significant assumptions and may not be
appropriate, and should not be used, for any other purpose. Future
actions, conditions or events and future results of operations may
differ materially from those expressed in forward-looking
statements. Many of the factors that will determine these results,
including the ability of KML to pay dividends, are beyond the
ability of KML to control or predict. As noted above, the
forward-looking statements in this release are based on a number of
material assumptions, including among others those discussed in
this news release or inherent in the factors highlighted below.
Among other things, specific factors that could cause actual
results to differ from those indicated in the forward-looking
statements provided in this news release include, without
limitation: satisfaction of the terms and conditions of the
Arrangement Agreement, including receipt of requisite approvals and
consents in a timely manner and completion of the Pembina
Transactions; changes in demand for KML's services; issues, delays
or stoppages associated with major expansion projects; significant
unanticipated cost increases or required capital expenditures; the
breakdown or failure of equipment, pipelines and facilities,
releases or spills, operational disruptions or service
interruptions; the ability of KML's counterparties to perform; the
ability of KML to access sufficient external sources of financing,
and the cost of such financing; and changes in the regulatory
environment.
The foregoing list should not be construed to be exhaustive.
In addition to the foregoing, important additional information
respecting the material assumptions, expectations and risks
applicable to forward-looking statements included in this news
release are set out in KML's press release dated December 3, 2018 regarding financial expectations
for 2019 and KML's Annual Report on Form 10-K for the year-ended
December 31, 2018 (under the headings
"Risk Factors," "Information Regarding Forward-Looking Statements,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere) and KML's subsequent reports,
which are available through the SEC's EDGAR system at www.sec.gov,
under KML's profile on SEDAR at www.sedar.com and on KML's website
at ir.kindermorgancanadalimited.com. Shareholders and prospective
investors are urged to review and carefully consider such
information prior to making any investment decision in respect of
KML's restricted voting shares. The risk factors applicable to KML
could cause actual results to vary materially from those contained
in any forward-looking statements. KML disclaims any obligation,
other than as required by applicable law, to update the
forward-looking statements included in this release.
Additional Information about the KML-Pembina Transaction
and Where to Find It
This communication does not constitute an offer to sell or
the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. The proposed acquisition by
Pembina of KML (the "KML-Pembina Transaction") anticipates that the
offer and sale of Pembina common and preferred shares will be
exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Section 3(a)(10) of the
Securities Act. Consequently, such shares will not be registered
under the Securities Act or any state securities laws in the
U.S.
In connection with the KML-Pembina transaction, KML filed a
preliminary proxy statement with the United States Securities and
Exchange Commission (the "SEC") on September
18, 2019, and will file a definitive proxy statement, as
well as other materials. WE URGE INVESTORS TO READ THE PRELIMINARY
PROXY STATEMENT AND THE DEFINITIVE PROXY STATEMENT AND THESE OTHER
MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT KML AND THE PROPOSED
TRANSACTION. Investors may obtain a free copy of the preliminary
proxy statement and, when it becomes available, the definitive
proxy statement, at http://www.sec.gov, the SEC's website, or from
KML's website (www.kindermorgancanadalimited.com) under the tab,
"Investor Relations" and then under the heading "SEC
Filings."
Participants in the Solicitation
KML and KMI, and their respective directors and certain of
their executive officers, may be deemed, under SEC rules, to be
participants in the solicitation of proxies from KML's shareholders
with respect to the proposed KML-Pembina transaction. Information
regarding KML's officers and directors is included in KML's
definitive proxy statement for its 2019 annual meeting filed with
the SEC on April 18, 2019.
Information regarding KMI's officers and directors is included in
KMI's definitive proxy statement for its 2019 annual meeting filed
with the SEC on March 29, 2019. More
detailed information regarding the identity of potential
participants, and their direct or indirect interests, by securities
holdings or otherwise, will be set forth in the information
circular and proxy statement and other materials to be filed with
the SEC in connection with the proposed transaction.
Non-GAAP Financial Measures
KML's financial information has been prepared in accordance
with United States generally
accepted accounting principles (GAAP). In addition to using
measures prescribed by GAAP, this news release includes references
to DCF (both in the aggregate and per share), net income before
interest expense, income taxes, depreciation, depletion, and
amortization (DD&A) and adjusted for Certain Items (Adjusted
EBITDA), segment earnings adjusted for DD&A and Certain Items
(Adjusted Segment EBDA), Adjusted Earnings, Net Debt (Cash) and
Adjusted Net Debt (Cash), all of which are financial measures that
do not have any standardized meaning as prescribed by GAAP
(non-GAAP measures). DCF, Adjusted EBITDA, Adjusted Segment EBDA
and Adjusted Earnings should not be considered alternatives to net
cash provided by operating activities, net income or Segment EBDA,
respectively, computed under GAAP or any other GAAP measures, and
such non-GAAP measures have important limitations as analytical
tools. The computations of DCF, Adjusted EBITDA, Adjusted Segment
EBDA and Adjusted Earnings may differ from similarly titled
measures used by others. Accordingly the use of such terms may not
be comparable to similarly defined measures presented by other
entities and investors should not consider these non-GAAP measures
in isolation or as a substitute for an analysis of results reported
under GAAP. Management compensates for the limitations of these
non-GAAP performance 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.
The format of the reconciliations between our non-GAAP and
comparable GAAP financial measures has been modified from prior
period presentation to provide further transparency and information
on our business performance. The calculations and key components of
our non-GAAP financial measures remain unchanged from prior
periods.
Non-GAAP measures from continuing operations reflect our
ongoing operations and have been presented as DCF from continuing
operations, Adjusted EBITDA from continuing operations and Adjusted
Earnings from continuing operations. In addition, DCF per
restricted voting share presented herein reflects our January 4, 2019 one-for-three reverse stock split
and is presented as DCF from continuing operations per
split-adjusted restricted voting share for all periods presented.
The most comparable GAAP measure to the above non-GAAP measures
from continuing operations is income from continuing operations;
and the accompanying tables include reconciliations of the above
non-GAAP measures to income from continuing operations.
DCF from discontinued operations and Adjusted EBITDA from
discontinued operations, are reconciled to income from discontinued
operations, the most directly comparable GAAP measure, at the
bottom of Table 7. In addition, our aggregate DCF and Adjusted
EBITDA are presented at the bottom of Table 7.
Certain Items as adjustments used to calculate our
non-GAAP measures, are items that are required by GAAP to be
reflected in net income, but typically either (i) do not have a
cash impact or (ii) by their nature are separately identifiable
from our normal business operations and in our view are likely to
occur only sporadically (for example, gains and losses on asset
sales, legal settlements and casualty losses). See the accompanying
Tables 4 and 7.
Adjusted Earnings is net income before Certain Items.
Adjusted Earnings is used by us and certain external users of our
financial statements to assess the earnings of our business
excluding Certain Items as another reflection of our ability to
generate earnings. We believe the GAAP measure most directly
comparable to Adjusted Earnings is net income. See the accompanying
Table 2.
DCF is calculated by adjusting net income before
DD&A adjusted for (i) income tax expense and cash income taxes
(paid) refunded; (ii) sustaining capital expenditures; and (iii)
Certain Items. DCF is an important performance measure used by us
and external users of our financial statements in evaluating our
performance and in measuring and estimating our ability 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 distributions or
expansion capital expenditures. KML uses this performance measure
and believes it provides users of its financial statements a useful
performance measure reflective of our ability to generate cash
earnings to supplement the comparable GAAP measure. DCF should not
be used as an alternative to net cash provided by operating
activities computed under GAAP. We believe the GAAP measure most
directly comparable to DCF is net income. DCF per split-adjusted
restricted voting share is DCF divided by average outstanding
split-adjusted restricted voting shares, including stock awards
that participate in dividends.
Adjusted Segment EBDA is calculated by adjusting
segment earnings before DD&A (Segment EBDA) for Certain Items
attributable to the segment. Adjusted Segment EBDA is used by
management in its analysis of segment performance and management of
our business. KML believes that Adjusted Segment EBDA is a useful
measure of operating performance because it measures segment
operating results before DD&A and certain expenses that are
generally not controllable by the operating managers of the
respective business segments, such as general and administrative
expense, interest expense, income tax expense. We believe the GAAP
measure most directly comparable to Adjusted Segment EBDA is
Segment EBDA. See the accompanying Tables 3 and 7.
Adjusted EBITDA is used by KML and external users of
its financial statements, in conjunction with net debt, to evaluate
certain leverage metrics. Adjusted EBITDA is EBITDA adjusted for
Certain Items, as applicable. We believe the GAAP measure most
directly comparable to Adjusted EBITDA is net income. KML evaluates
adjusted EBTIDA in total and does not allocate Adjusted EBITDA
amongst equity interest holders as it views Net Debt (Cash) to
Adjusted EBITDA as a measure against our overall leverage. See the
accompanying Tables 3 and 4.
Net Debt (Cash) and Adjusted Net Debt (Cash), as used
in this news release, are non-GAAP financial measures that
management believes are useful to investors and other users of our
financial information in evaluating our leverage, individually and
in conjunction with Adjusted EBITDA. Net Debt (Cash) is calculated
by adding 50 percent of our outstanding preferred equity and
subtracting cash and cash equivalents from debt. Adjusted Net Debt
(Cash) is Net Debt (Cash) with the debt component including 50
percent of our outstanding preferred equity and the cash component
as of December 31, 2018 reduced by
the amount of cash distributed as a return of capital on
January 3, 2019 to our voting
shareholders. We believe the most comparable measure to Net Debt
(Cash) and Adjusted Net Debt (Cash) is debt net of cash and cash
equivalents as reconciled in the notes to the accompanying
Preliminary Consolidated Balance Sheet in Table 6.
Disclaimer
The information contained in the following tables does not
purport to be all‐inclusive or to contain all information that
prospective investors may require. Prospective investors are
encouraged to conduct their own analysis and review of information
contained in the accompanying tables as well as important
additional information through the SEC's EDGAR system at
www.sec.gov, under KML's profile on SEDAR at www.sedar.com and on
KML's website at ir.kindermorgancanadalimited.com.
Table 1
Kinder Morgan Canada Limited
and Subsidiaries
Preliminary Consolidated Statements of
Income
(Unaudited, in millions of Canadian dollars,
except per share amounts)
|
Three Months
Ended
September 30,
|
% change
|
Nine Months
Ended
September 30,
|
% change
|
|
2019
|
2018
|
2019
|
2018
|
Revenues
|
$
|
102.3
|
$
|
94.3
|
|
$
|
309.2
|
$
|
278.6
|
|
Operating costs,
expenses and other
|
|
|
|
|
|
|
|
Operations and
maintenance
|
40.4
|
39.2
|
|
118.2
|
116.8
|
|
Depreciation and
amortization
|
22.1
|
21.1
|
|
65.9
|
61.1
|
|
General and
administrative
|
13.4
|
7.1
|
|
33.8
|
26.6
|
|
Taxes, other than
income taxes
|
2.3
|
1.4
|
|
6.9
|
4.0
|
|
Other expense
(income), net
|
—
|
(0.9)
|
|
0.2
|
(9.3)
|
|
Total operating
costs, expenses and other
|
78.2
|
67.9
|
|
225.0
|
199.2
|
|
Operating
income
|
24.1
|
26.4
|
|
84.2
|
79.4
|
|
Other income
(expense)
|
|
|
|
|
|
|
Interest income,
net
|
0.1
|
6.1
|
|
0.7
|
6.1
|
|
Foreign exchange gain
(loss)
|
0.1
|
(0.6)
|
|
(0.1)
|
(0.4)
|
|
Other, net
|
(0.1)
|
(0.4)
|
|
0.1
|
(0.4)
|
|
Income from
continuing operations before income taxes
|
24.2
|
31.5
|
|
84.9
|
84.7
|
|
Income tax
expense
|
(7.6)
|
(9.3)
|
|
(25.4)
|
(25.0)
|
|
Income from
continuing operations
|
16.6
|
22.2
|
|
59.5
|
59.7
|
|
Income from
discontinued operations, net of tax (1)
|
—
|
1,327.2
|
|
—
|
1,347.8
|
|
Net income
|
16.6
|
1,349.4
|
|
59.5
|
1,407.5
|
|
Preferred share
dividends
|
(7.2)
|
(7.2)
|
|
(21.6)
|
(21.6)
|
|
Net income
attributable to KMI interest
|
(6.6)
|
(940.7)
|
|
(26.5)
|
(971.8)
|
|
Net income
available to restricted voting shareholders
|
$
|
2.8
|
$
|
401.5
|
(100)%
|
$
|
11.4
|
$
|
414.1
|
(97)%
|
Restricted Voting
Shares
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per restricted voting share from continuing
operations
|
$
|
0.08
|
$
|
0.14
|
(43)%
|
$
|
0.32
|
$
|
0.32
|
— %
|
Basic and diluted
earnings per restricted voting share from discontinued operations
(1)
|
|
|
$
|
11.40
|
(100)%
|
|
$
|
11.64
|
(100)%
|
Basic and diluted
weighted average restricted voting shares outstanding
(2)
|
34.9
|
34.8
|
— %
|
34.9
|
34.6
|
1 %
|
Notes
|
|
|
(1)
|
2018 amounts
represent income from Trans Mountain pipeline system, including a
gain of $1,308.0 million, net of tax.
|
(2)
|
Reflects our January
2019 1-for-3 reverse stock split for all periods presented in
accordance with U.S. GAAP.
|
Table 2
Kinder Morgan Canada Limited
and Subsidiaries
Preliminary Income from Continuing
Operations to DCF from Continuing Operations for Restricted Voting
Shareholders Reconciliation
(Unaudited, in millions of
Canadian dollars)
|
Three Months
Ended
September 30,
|
%
change
|
Nine Months
Ended
September 30,
|
%
change
|
|
2019
|
2018
|
2019
|
2018
|
Income from
continuing operations (GAAP)
|
$
|
16.6
|
$
|
22.2
|
|
$
|
59.5
|
$
|
59.7
|
|
Total Certain
Items
|
3.5
|
(0.6)
|
|
4.2
|
(5.0)
|
|
Adjusted earnings
from continuing operations (1)
|
20.1
|
21.6
|
(7)%
|
63.7
|
54.7
|
16%
|
DD&A
|
22.1
|
21.1
|
|
65.9
|
61.1
|
|
Income tax expense
(1)
|
8.3
|
8.8
|
|
26.3
|
22.9
|
|
Cash taxes
|
9.7
|
(0.1)
|
|
(21.6)
|
(8.4)
|
|
Sustaining capital
expenditures
|
(5.2)
|
(5.2)
|
|
(14.2)
|
(10.1)
|
|
Preferred share
dividends
|
(7.2)
|
(7.2)
|
|
(21.6)
|
(21.6)
|
|
DCF from
continuing operations (2)
|
47.8
|
39.0
|
|
98.5
|
98.6
|
|
DCF from continuing
operations to KMI interest
|
(33.4)
|
(27.3)
|
|
(68.9)
|
(69.1)
|
|
DCF from
continuing operations for restricted voting
shareholders
|
$
|
14.4
|
$
|
11.7
|
23%
|
$
|
29.6
|
$
|
29.5
|
—%
|
Table 3
Kinder Morgan Canada Limited
and Subsidiaries
Preliminary Adjusted Segment EBDA from
Continuing Operations to DCF from Continuing Operations for
Restricted Voting Shareholders Reconciliation
(Unaudited,
in millions of Canadian dollars, except per share amounts)
|
Three Months
Ended
September 30,
|
%
change
|
Nine Months
Ended
September 30,
|
%
change
|
|
2019
|
2018
|
2019
|
2018
|
Terminals
|
$
|
47.4
|
$
|
44.1
|
8%
|
$
|
150.1
|
$
|
131.3
|
14%
|
Pipelines
|
12.2
|
9.0
|
36%
|
33.8
|
25.5
|
33%
|
Adjusted Segment
EBDA from continuing operations
|
59.6
|
53.1
|
12%
|
183.9
|
156.8
|
17%
|
General and
administrative (1)
|
(9.2)
|
(8.7)
|
|
(28.7)
|
(25.2)
|
|
Adjusted EBITDA
from continuing operations
|
50.4
|
44.4
|
14%
|
155.2
|
131.6
|
18%
|
Interest income, net
(1)
|
0.1
|
7.1
|
|
0.7
|
7.1
|
|
Cash taxes
|
9.7
|
(0.1)
|
|
(21.6)
|
(8.4)
|
|
Sustaining capital
expenditures
|
(5.2)
|
(5.2)
|
|
(14.2)
|
(10.1)
|
|
Preferred stock
dividends
|
(7.2)
|
(7.2)
|
|
(21.6)
|
(21.6)
|
|
DCF from
continuing operations (2)
|
47.8
|
39.0
|
|
98.5
|
98.6
|
|
DCF from continuing
operations to KMI interest
|
(33.4)
|
(27.3)
|
|
(68.9)
|
(69.1)
|
|
DCF from
continuing operations for restricted voting
shareholders
|
$
|
14.4
|
$
|
11.7
|
23%
|
$
|
29.6
|
$
|
29.5
|
—%
|
|
|
|
|
|
|
Weighted average
split-adjusted restricted voting shares outstanding for
dividends (3)
|
35.2
|
35.0
|
|
35.2
|
34.9
|
|
DCF from continuing
operations per split-adjusted restricted voting share
|
$
|
0.41
|
$
|
0.33
|
|
$
|
0.84
|
$
|
0.85
|
|
Notes
|
(1)
|
Amounts are adjusted
for Certain Items. See Tables 4 and 7 for more
information.
|
|
|
(2)
|
2018 amounts exclude
discontinued operations. See Table 7 for the discontinued
operations and total DCF calculation.
|
|
|
(3)
|
Reflects our January
2019 1-for-3 reverse stock split for all periods presented in
accordance with U.S. GAAP. Also includes stock awards of restricted
voting shares that participate in dividends.
|
Table 4
Kinder Morgan Canada Limited
and Subsidiaries
Preliminary Income from Continuing
Operations to Adjusted EBITDA from Continuing Operations
Reconciliation
(Unaudited, in millions of Canadian
dollars)
|
Three Months
Ended
September 30,
|
%
change
|
Nine Months
Ended
September 30,
|
%
change
|
|
2019
|
2018
|
2019
|
2018
|
Income from
continuing operations (GAAP)
|
$
|
16.6
|
$
|
22.2
|
(25)%
|
$
|
59.5
|
$
|
59.7
|
— %
|
Certain
Items:
|
|
|
|
|
|
|
|
Costs of strategic
initiatives
|
4.2
|
—
|
|
5.1
|
—
|
|
Gain on divestitures,
net
|
—
|
(1.1)
|
|
—
|
(7.1)
|
|
Income tax Certain
Items
|
(0.7)
|
0.5
|
|
(0.9)
|
2.1
|
|
Total Certain
Items
|
3.5
|
(0.6)
|
|
4.2
|
(5.0)
|
|
DD&A
|
22.1
|
21.1
|
|
65.9
|
61.1
|
|
Income tax expense
(1)
|
8.3
|
8.8
|
|
26.3
|
22.9
|
|
Interest income, net
(1)
|
(0.1)
|
(7.1)
|
|
(0.7)
|
(7.1)
|
|
Adjusted EBITDA
from continuing operations (2)
|
$
|
50.4
|
$
|
44.4
|
13 %
|
$
|
155.2
|
$
|
131.6
|
18 %
|
Notes:
|
(1)
|
Amounts are adjusted
for Certain Items. See Table 7 for more information.
|
|
|
(2)
|
2018 amounts exclude
discontinued operations. See Table 7 for the discontinued
operations and total Adjusted EBITDA calculations.
|
Table 5
Volume
Highlights
(Historical pro forma for acquired and
divested assets)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Terminals
|
|
|
|
|
|
Liquids Leasable
Capacity (MMBbl) (1)
|
9.6
|
9.4
|
|
9.6
|
9.4
|
Liquids Utilization
%
|
96%
|
93%
|
|
96%
|
93%
|
Bulk Transload
Tonnage (MMtons)
|
1.3
|
1.1
|
|
3.2
|
2.9
|
|
|
|
|
|
|
Pipelines
|
|
|
|
|
|
Canadian Cochin
(MBbl/d - mainline throughput)
|
96
|
82
|
|
94
|
85
|
Note:
|
(1)
|
Includes KML's share
of Joint Venture capacity.
|
Table 6
Kinder Morgan Canada Limited
and Subsidiaries
Preliminary Consolidated Balance
Sheets
(Unaudited, in millions of Canadian
dollars)
|
September
30,
|
December
31,
|
|
2019
|
2018
|
Assets
|
|
|
Cash and cash
equivalents
|
$
|
65.2
|
$
|
4,338.1
|
Other current
assets
|
44.5
|
39.6
|
Property, plant and
equipment, net
|
950.6
|
981.3
|
Right of use
assets
|
510.2
|
—
|
Deferred charges and
other assets
|
11.0
|
10.6
|
Total
Assets
|
$
|
1,581.5
|
$
|
5,369.6
|
Liabilities and
Equity
|
|
|
Credit
facility
|
$
|
45.0
|
$
|
—
|
Distribution
payable
|
—
|
1,195.1
|
Distribution
payable-affiliate
|
—
|
2,782.3
|
Other current
liabilities (1)
|
93.1
|
423.2
|
Lease
liabilities
|
493.3
|
—
|
Other long-term
liabilities
|
75.0
|
76.5
|
Total
liabilities
|
706.4
|
4,477.1
|
Preferred share
capital
|
537.3
|
537.2
|
Other
equity
|
107.9
|
112.3
|
KML equity
|
645.2
|
649.5
|
KMI
interest
|
229.9
|
243.0
|
Total
equity
|
875.1
|
892.5
|
Total liabilities
and equity
|
$
|
1,581.5
|
$
|
5,369.6
|
Net Debt (Cash)
(2)
|
$
|
254.8
|
$
|
(4,063.1)
|
Adjusted Net Debt
(Cash) (3)
|
254.8
|
(85.7)
|
|
Adjusted EBITDA
Twelve Months Ended
|
Reconciliation of
Income from continuing operations to Adjusted EBITDA from
continuing operations
|
September
30,
2019
|
December
31,
2018
|
Income from
continuing operations (GAAP)
|
$
|
99.9
|
$
|
100.0
|
Total certain
items
|
7.0
|
(2.2)
|
DD&A
|
87.4
|
82.6
|
Income tax expense
(4)
|
40.2
|
36.9
|
Interest income, net
(4)
|
(21.9)
|
(28.2)
|
Adjusted EBITDA
from continuing operations
|
$
|
212.6
|
$
|
189.1
|
Net Debt (Cash) to
Adjusted EBITDA from continuing operations
|
1.2
|
(21.5)
|
Adjusted Net Debt
(Cash) to Adjusted EBITDA from continuing operations
|
1.2
|
(0.5)
|
Notes
|
(1)
|
December 31, 2018
amount includes accrued taxes resulting from the sale of Trans
Mountain pipeline system in 2018.
|
|
|
(2)
|
September 30, 2019
and December 31, 2018 amounts include: $275 million representing
50% of our preferred stock capital.
|
|
|
(3)
|
In addition to items
described in (2) above, the December 31, 2018 amount excludes
return of capital distributions of $3,977.4 million from cash and
cash equivalents.
|
|
|
(4)
|
Amounts are adjusted
for Certain Items.
|
Table 7
Kinder Morgan Canada Limited
and Subsidiaries
Preliminary Supplemental
Information
(Unaudited, in millions of Canadian
dollars)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Segment
EBDA
|
|
|
|
|
|
Terminals
(GAAP)
|
$
|
47.4
|
$
|
44.6
|
|
$
|
150.1
|
$
|
140.8
|
Certain
Items
|
—
|
(0.5)
|
|
—
|
(9.5)
|
Terminals Adjusted
Segment EBDA
|
$
|
47.4
|
$
|
44.1
|
|
$
|
150.1
|
$
|
131.3
|
Pipelines
(GAAP)
|
$
|
12.2
|
$
|
9.0
|
|
$
|
33.8
|
$
|
25.5
|
Certain
Items
|
—
|
—
|
|
—
|
—
|
Pipelines Adjusted
Segment EBDA
|
$
|
12.2
|
$
|
9.0
|
|
$
|
33.8
|
$
|
25.5
|
Total Segment EBDA
(GAAP)
|
$
|
59.6
|
$
|
53.6
|
|
$
|
183.9
|
$
|
166.3
|
Total Segment EBDA
Certain Items
|
—
|
(0.5)
|
|
—
|
(9.5)
|
Total Adjusted
Segment EBDA
|
$
|
59.6
|
$
|
53.1
|
|
$
|
183.9
|
$
|
156.8
|
General and
administrative (GAAP)
|
$
|
(13.4)
|
$
|
(7.1)
|
|
$
|
(33.8)
|
$
|
(26.6)
|
Certain
Items
|
4.2
|
(1.6)
|
|
5.1
|
1.4
|
General and
administrative (1)
|
$
|
(9.2)
|
$
|
(8.7)
|
|
$
|
(28.7)
|
$
|
(25.2)
|
Interest income, net
(GAAP)
|
$
|
0.1
|
$
|
6.1
|
|
$
|
0.7
|
$
|
6.1
|
Certain
Items
|
—
|
1.0
|
|
—
|
1.0
|
Interest income, net
(1)
|
$
|
0.1
|
$
|
7.1
|
|
$
|
0.7
|
$
|
7.1
|
Income tax expense
(GAAP)
|
$
|
(7.6)
|
$
|
(9.3)
|
|
$
|
(25.4)
|
$
|
(25.0)
|
Certain
Items
|
(0.7)
|
0.5
|
|
(0.9)
|
2.1
|
Income tax expense
(1)
|
$
|
(8.3)
|
$
|
(8.8)
|
|
$
|
(26.3)
|
$
|
(22.9)
|
|
|
|
|
|
|
|
|
Discontinued
Operations Impact on GAAP and Non-GAAP Measures for the Periods
Presented:
|
|
|
|
|
|
|
|
|
DCF
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
$
|
—
|
$
|
1,327.2
|
|
$
|
—
|
$
|
1,347.8
|
Total Certain
items
|
—
|
(1,304.6)
|
|
—
|
(1,260.2)
|
Adjusted earnings
from discontinued operations
|
—
|
22.6
|
|
—
|
87.6
|
DD&A
|
—
|
11.8
|
|
—
|
46.8
|
Income tax expense
(1)
|
—
|
13.1
|
|
—
|
35.0
|
Sustaining capital
expenditures
|
—
|
(5.9)
|
|
—
|
(18.6)
|
DCF from discontinued
operations
|
—
|
41.6
|
|
—
|
150.8
|
DCF from continuing
operations for restricted voting shareholders
|
14.4
|
11.7
|
|
29.6
|
29.5
|
DCF from continuing
operations to KMI interest
|
33.4
|
27.3
|
|
68.9
|
69.1
|
DCF
|
$
|
47.8
|
$
|
80.6
|
|
$
|
98.5
|
$
|
249.4
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
$
|
—
|
$
|
1,327.2
|
|
$
|
—
|
$
|
1,347.8
|
Total Certain
items
|
—
|
(1,304.6)
|
|
—
|
(1,260.2)
|
DD&A
|
—
|
11.8
|
|
—
|
46.8
|
Income tax expense
(1)
|
—
|
13.1
|
|
—
|
35.0
|
Interest income,
net
|
—
|
(2.7)
|
|
—
|
(6.0)
|
Adjusted EBITDA from
discontinued operations
|
—
|
44.8
|
|
—
|
163.4
|
Adjusted EBITDA from
continuing operations
|
50.4
|
44.4
|
|
155.2
|
131.6
|
Adjusted
EBITDA
|
$
|
50.4
|
$
|
89.2
|
|
$
|
155.2
|
$
|
295.0
|
Note:
|
(1)
|
Amounts are adjusted
for Certain Items.
|
View original
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SOURCE Kinder Morgan Canada Limited