Kinder Morgan Inc. (NYSE:KMI)

Current Tax Expense (Benefit)

The current tax expense (benefit) displayed a negative and declining trend from 2015 through 2017, with values recorded at -128 million USD, -170 million USD, and -135 million USD, respectively. This indicates that the company benefited from current tax relief during this period. However, a notable shift occurred in 2018 when the current tax expense turned positive to 182 million USD, continuing to increase to 209 million USD in 2019. This reversal marks a significant change from benefiting on current taxes to incurring higher current tax expenses in the last two years of the period analyzed.

Deferred Tax Expense

The deferred tax expense exhibited considerable volatility throughout the five-year span. It started at 692 million USD in 2015, surged significantly to 1,087 million USD in 2016, and peaked sharply at 2,073 million USD in 2017. Following this peak, there was a pronounced decline to 405 million USD in 2018, followed by a moderate increase to 717 million USD in 2019. These fluctuations might reflect changes in timing differences, tax rate adjustments, or recognition of deferred tax assets and liabilities over time.

Income Tax Provision

The income tax provision, which is the aggregate of current and deferred tax expenses, mirrored the pattern seen in the deferred tax expense given its larger magnitude. It rose steadily from 564 million USD in 2015 to a high of 1,938 million USD in 2017 before dropping sharply to 587 million USD in 2018. The provision then increased once again to 926 million USD in 2019. This overall behavior indicates that the company's total tax expenses saw significant growth through 2017, followed by a decline, and a recovering trend in the final year under review.

Overall Analysis

The data suggests that the company experienced considerable tax-related expense variability between 2015 and 2019. Early in the period, the company benefited from current tax benefits, which shifted to positive current tax expenses in later years. Meanwhile, deferred tax expenses showed large swings, driving much of the variation in the overall income tax provision. The pronounced peak in deferred tax expense and income tax provision in 2017 followed by a reduction in 2018, and a pickup again in 2019 could signify significant tax strategy changes, regulatory adjustments, or underlying changes in the company's asset and liability positions affecting deferred taxes. The patterns emphasize the importance of deferred taxes as a key contributor to total tax expense volatility during this period.

The analysis of the financial data reveals significant variations in the effective income tax rate and its components over the five-year period ending in 2019. These fluctuations reflect changes in statutory rates, tax reforms, and other tax-related factors influencing the company's tax obligations.

Statutory Federal Income Tax Rate

The statutory federal tax rate remained constant at 35% for the years 2015 through 2017, followed by a marked reduction to 21% starting in 2018 and maintaining that level in 2019. This change aligns with the impact of tax reform implemented in 2017.

Taxes on Foreign Earnings, Net of Federal Benefit

Taxes on foreign earnings showed a downward trend from 3.5% in 2015 to 1.7% in 2016, with a slight rebound to 1.9% in 2017. A notable increase occurred in 2018, reaching 5.2%, before declining to 4.4% in 2019. This volatility suggests changing foreign income compositions or tax treatments.

Net Effects of Noncontrolling Interests

Noncontrolling interests impacted the tax rate positively by 2.0% in 2015 but shifted to a negative effect in subsequent years, reaching as low as -2.6% in 2018 before slightly improving to -0.3% in 2019. This pattern indicates variability in the share of income attributable to noncontrolling interests.

State Income Tax, Net of Federal Benefit

State income tax contributions increased steadily from 1.5% in 2015 to 2.1% in 2019, signaling gradually rising state tax obligations relative to federal benefits over time.

Dividend Received Deduction

The dividend received deduction consistently provided a negative adjustment, decreasing in magnitude from -6.6% in 2015 to -1.1% in 2019. The diminishing benefit may reflect changes in dividend income or tax legislation impacting deductions.

Adjustments to Uncertain Tax Positions

Adjustments for uncertain tax positions exhibited a narrowing negative impact, moving from -1.9% in 2015 to -0.2% in 2019, except for a slight spike to -1.9% in 2018. This trend suggests improved clarity or resolution in tax uncertainties over the period.

Nondeductible Goodwill

Nondeductible goodwill charges dramatically decreased from 41.7% in 2015 to 18.5% in 2016, disappeared from the data in 2017, reappeared modestly at 2.3% in 2018, and slightly increased to 3.4% in 2019. The initial high values might relate to significant goodwill impairments or accounting treatments that normalized later.

General Business Credit

Data for general business credits were absent in early years, with values recorded as -4.4% in 2017 and -2.6% in 2018, then missing again in 2019. This indicates tax credits provided a beneficial impact on the effective tax rate during those years.

Other Adjustments

Other unspecified adjustments fluctuated from -2.3% in 2015 to a positive 3.9% in 2016, then settled between 1.4% and 1.9% in later years, contributing minor variability to the overall tax rate.

Effective Income Tax Rate

The effective income tax rate before the 2017 tax reform decreased steadily from 72.9% in 2015 to 29.3% in 2019, with a marked reduction particularly after 2017. However, including the impact of the 2017 tax reform caused a spike to 89.7% in 2017. Post-reform rates settled at a lower level of 23.4% in 2018 and 29.3% in 2019, reflecting the influence of lower statutory rates and shifting tax components.

The data reveals several notable trends in the financial position over the five-year period.

Employee Benefits

There is a consistent decline in employee benefits liabilities, decreasing steadily from $394 million in 2015 to $208 million in 2019. This trend might indicate cost reductions or changes in benefit structures.

Accrued Expenses

Accrued expenses show a decreasing trend from $129 million in 2015 to $73 million in 2017, followed by a modest increase to $86 million by 2019. The initial reduction suggests improved expense management, though a slight reversal occurs in the last two years.

Net Operating Loss, Capital Loss, and Tax Credit Carryforwards

This item remains relatively stable, ranging from $1,113 million to $1,526 million, with a peak in 2018. The fluctuations may reflect tax planning strategies or changes in operational losses.

Derivative Instruments and Interest Rate and Currency Swaps

The values steadily decline from $45 million in 2015 to $9 million in 2018, with a slight recovery to $15 million in 2019. This could signify active risk management in derivatives exposure.

Debt Fair Value Adjustment

A clear downward trajectory is observable, dropping from $110 million in 2015 to $29 million in 2019, indicating either repayment or revaluation of debt instruments.

Investments

There is a significant decrease over the period where data is available, from $3,607 million in 2015 down to $177 million in 2018, with a reported negative value of -$418 million in 2019. The sharp decline suggests substantial divestitures or impairments, with the negative value possibly reflecting write-offs or reclassifications.

Other Items

The 'Other' category fluctuates, with an initial increase from $3 million in 2015 to $14 million in 2016, followed by intermittent values and negative figures in later years, indicating volatile or non-recurring elements.

Deferred Tax Assets, Before Valuation Allowances

A pronounced decrease occurs from $5,632 million in 2015 to $1,857 million in 2019, reflecting a reduction in recognized tax assets that could impact future tax benefits.

Valuation Allowances

Valuation allowances remain relatively stable, fluctuating modestly between -$155 million and -$184 million, suggesting consistent evaluation of realizability risks.

Deferred Tax Assets

Following the pattern of gross deferred tax assets, the net deferred tax assets decrease from $5,480 million in 2015 to $1,702 million in 2019, which aligns with reduced probable tax benefit realization.

Property, Plant and Equipment

The figures show increasing negative values, deteriorating from -$143 million in 2015 to -$385 million in 2019, indicating ongoing depreciation or asset disposals.

Deferred Tax Liabilities

There is a sharp increase in deferred tax liabilities, especially notable in 2019 when the figure escalates dramatically to -$845 million from -$315 million in 2018, which may signal changes in tax positions or increased future tax obligations.

Net Deferred Tax Assets (Liabilities)

The net position declines steadily from $5,323 million in 2015 to $857 million in 2019, reflecting the combined effects of decreasing deferred tax assets and increasing deferred tax liabilities, potentially reducing future tax asset benefits substantially.

Deferred Tax Assets

There is a clear declining trend in deferred tax assets over the five-year period from December 31, 2015, to December 31, 2019.

The deferred tax assets decreased consistently each year, starting from US$5,323 million in 2015 and falling sharply to US$857 million by the end of 2019.

The most significant year-over-year decreases occurred between 2016 and 2017, and between 2018 and 2019, indicating a potentially accelerated utilization or write-down of deferred tax assets.

This downward trend may reflect a reduction in deferred tax benefits available to the company, which could influence future tax expense and net income.

The continuous decline suggests that the company may be realizing these deferred tax assets over time or adjusting estimates related to their recoverability.

The data reveals notable trends in the financial position and performance over the five-year period ending December 31, 2019. Both reported and adjusted figures are provided for total assets, stockholders' equity, and net income attributable to the company, allowing for a comparison between standard accounting measures and those adjusted for income tax effects.

Total Assets

Reported total assets declined steadily from approximately $84.1 billion in 2015 to $74.2 billion in 2019, representing a reduction of about 12%. Similarly, adjusted total assets fell from about $78.8 billion to $73.3 billion during the same period. While the adjusted figures show slightly less volatility, the overall downward trend in both reported and adjusted assets suggests a contraction or divestiture of asset base over time.

Stockholders’ Equity

Reported stockholders' equity decreased marginally from $35.1 billion at the end of 2015 to $33.7 billion in 2019, indicating relative stability with a slight downward trend. In contrast, adjusted equity figures show a consistent increase from $29.8 billion in 2015 to $32.9 billion in 2019, reflecting a cumulative improvement of approximately 10%. The divergence between reported and adjusted equity may indicate the impact of deferred tax adjustments improving underlying equity levels over time.

Net Income Attributable to the Company

Reported net income displays considerable volatility, starting at $253 million in 2015, rising significantly to $1.6 billion in 2018, and peaking at $2.2 billion in 2019. There is an outlier low in 2017 at $183 million. The adjusted net income presents a smoother and generally upward trajectory, increasing steadily from $945 million in 2015 to $2.9 billion in 2019. Adjusted figures are consistently higher than reported figures, underscoring the effect of accounting for deferred income taxes in revealing stronger underlying profitability.

Overall, the financial data suggests that while the asset base has contracted moderately over the period, equity adjusted for tax considerations has strengthened somewhat. Moreover, profitability as measured by adjusted net income shows robust growth and less variability than reported figures, which could signify improved operational performance or tax-related accounting adjustments smoothing reported earnings. The data highlights the importance of considering deferred tax effects to gain a clearer picture of financial health and income trends.

The financial data exhibits several notable trends across the periods from 2015 to 2019. Overall, adjusted metrics consistently outperform reported figures, indicating the material impact of income tax adjustments on the company's financial performance.

Net Profit Margin

Both reported and adjusted net profit margins show a positive upward trend over the years. The reported net profit margin increases from 1.76% in 2015 to 16.58% in 2019. The adjusted net profit margin exhibits a similar but more pronounced rise, moving from 6.56% to 22.01%. This suggests improving profitability when factoring in deferred tax effects, with adjustments enhancing margin metrics significantly.

Total Asset Turnover

The reported total asset turnover ratio remains relatively stable, fluctuating narrowly between 0.16 and 0.18 throughout the five-year period. The adjusted total asset turnover closely mirrors this pattern, ranging from 0.17 to 0.18. This stability indicates consistent asset utilization efficiency, with little change in how the company's assets generate revenue after tax adjustments.

Financial Leverage

Financial leverage shows a gradual decreasing trend. The reported leverage declines from 2.39 in 2015 to 2.20 in 2019, while the adjusted leverage falls more sharply from 2.64 to 2.23. This reduction points to a decreasing reliance on debt financing or a strengthening equity base, with adjusted figures suggesting a more pronounced deleveraging when tax adjustments are considered.

Return on Equity (ROE)

Reported ROE shows improvement from 0.72% in 2015 to 6.49% in 2019 but remains lower overall than adjusted ROE. The adjusted ROE increases steadily from 3.17% to 8.84% in the same period, indicating enhanced shareholder returns after accounting for deferred tax effects. The widening gap between reported and adjusted ROE highlights the significance of adjustments in reflecting true profitability to equity holders.

Return on Assets (ROA)

Return on assets follows a similar pattern, with reported ROA climbing from 0.30% to 2.95% and adjusted ROA rising from 1.20% to 3.97%. Adjusted ROA consistently exceeds reported values, reinforcing the expected improvement in asset profitability once deferred taxes are accounted for. The rising ROA figures suggest more efficient use of assets generating earnings over time.

In summary, the adjustment for reported and deferred income taxes consistently enhances profitability ratios and leverage interpretation. The company's profitability, measured by both net margin and returns, has generally improved over the period, while asset efficiency remains stable and financial leverage declines moderately. These patterns indicate positive progress in operational efficiency and financial structure when viewed through both reported and adjusted lenses.

Reported Net Income Attributable to Kinder Morgan, Inc.

The reported net income shows significant fluctuations over the five-year period. It started at 253 million US dollars in 2015, increased substantially to 708 million in 2016, then declined sharply to 183 million in 2017. This was followed by a strong recovery in 2018 to 1,609 million and continued growth in 2019, reaching 2,190 million. The data suggests periods of volatility with an overall increasing trend in reported net income by the end of the period.

Adjusted Net Income Attributable to Kinder Morgan, Inc.

The adjusted net income, which accounts for annual reported and deferred income tax adjustments, exhibits a generally upward trend throughout the period. Beginning at 945 million US dollars in 2015, it rose consistently to 1,795 million in 2016, peaked at 2,256 million in 2017, slightly decreased to 2,014 million in 2018, and reached a new high of 2,907 million in 2019. This pattern indicates strong profitability when adjusting for tax effects, with a minor dip in 2018 before achieving its highest value.

Reported Net Profit Margin

The reported net profit margin mirrors the volatility seen in reported net income. It started at a low 1.76% in 2015, improved to 5.42% in 2016, sharply declined to 1.34% in 2017, then increased significantly to 11.38% in 2018 and further to 16.58% in 2019. This suggests that reported profitability relative to revenue experienced instability but improved markedly in the last two years, indicating better operational performance or more favorable reporting items.

Adjusted Net Profit Margin

The adjusted net profit margin consistently outperformed the reported margin during the entire period. It began at 6.56% in 2015, rose to 13.75% in 2016, peaked at 16.46% in 2017, then slightly decreased to 14.24% in 2018, and surged to a high of 22.01% in 2019. The adjusted margins reflect stronger profitability after tax adjustments, with a generally positive trend and robustness even in years where reported margin declined.

The financial data reveals several notable trends over the five-year period from 2015 to 2019. Reported total assets show a consistent downward trend, decreasing from $84,104 million in 2015 to $74,157 million in 2019. This decline is also reflected in the adjusted total assets, which decrease from $78,781 million to $73,300 million during the same period. The relatively smaller difference between reported and adjusted total assets suggests that adjustments for deferred income tax impact the asset base but do not significantly alter the overall downward trend.

In terms of asset utilization, the reported total asset turnover ratio remains relatively stable with a slight increase from 0.17 in 2015 to 0.18 in 2019, reaching a peak of 0.18 in the last two reported years. The adjusted total asset turnover exhibits a similar pattern, beginning at 0.18 in 2015, dipping to 0.17 in 2016, and then stabilizing at 0.18 from 2017 onwards.

Total Assets

Both reported and adjusted total assets demonstrate a gradual reduction over the five-year period, suggesting a contraction in the asset base.

Total Asset Turnover Ratios

The turnover ratios indicate stable efficiency in asset utilization, with a minor improvement evident in the latter years. The close alignment between reported and adjusted ratios suggests deferred income tax adjustments do not materially affect the measurement of asset turnover.

Overall, the data indicates a shrinking asset base accompanied by stable or slightly improved asset utilization efficiency, which may imply improved operational performance despite asset reductions.

Total Assets

The reported total assets show a decreasing trend from $84,104 million in 2015 to $74,157 million in 2019, indicating a reduction of approximately 12% over the five-year period. The adjusted total assets follow a similar downward pattern, declining from $78,781 million in 2015 to $73,300 million in 2019. The adjusted figures consistently register below the reported values, suggesting adjustments that reduce asset valuations each year while maintaining a generally stable level around the mid-$70,000 million range in the later years.

Stockholders’ Equity

Reported stockholders’ equity declined from $35,119 million in 2015 to $33,742 million in 2019, marking a gradual decrease of approximately 4%. In contrast, adjusted stockholders’ equity exhibits an increasing trend, rising from $29,796 million in 2015 to $32,885 million in 2019. This divergence points to adjustments that reduce equity early on but become less severe over time, ultimately enhancing the equity base when adjusted for deferred tax effects.

Financial Leverage

Reported financial leverage decreased slightly from 2.39 in 2015 to 2.20 in 2019, indicating a modest reduction in the company’s reliance on debt financing relative to equity. Adjusted financial leverage started higher at 2.64 in 2015 but steadily declined to 2.23 by 2019. The convergence of adjusted leverage towards the reported ratio suggests that adjustments related to deferred income tax reduce the apparent financial risk over time, with the most pronounced impact in earlier years.

Overall Patterns and Insights

The overall asset base of the company appears to be contracting moderately over the analyzed period, which may reflect strategic asset sales, depreciation, or operational adjustments. Equity trends differ when comparing reported and adjusted figures, implying that deferred tax considerations materially influence equity valuation. The reduction in financial leverage, both reported and adjusted, points to an improving capital structure with potentially lower financial risk. The gradual convergence of adjusted metrics towards reported values indicates that the impact of deferred tax adjustments diminishes over time.

Net Income Trends

The reported net income attributable to Kinder Morgan, Inc. exhibits significant volatility over the observed period. Starting at $253 million in 2015, it sharply increased to $708 million in 2016, then declined to $183 million in 2017 and $1609 million in 2018 before peaking at $2190 million in 2019. In contrast, the adjusted net income shows a more consistent upward trajectory, increasing steadily from $945 million in 2015 to $2907 million in 2019, despite a slight decline from 2017 to 2018.

Stockholders’ Equity Analysis

Reported total stockholders’ equity for Kinder Morgan, Inc. demonstrates a gradual decline from $35,119 million in 2015 to $33,742 million in 2019. Conversely, adjusted stockholders’ equity follows an opposite trend, showing a consistent increase from $29,796 million in 2015 to $32,885 million in 2019. This divergence suggests differences in accounting treatments or adjustments affecting equity valuation.

Return on Equity (ROE) Observations

Reported ROE fluctuates significantly, starting at 0.72% in 2015, peaking at 6.49% in 2019 with interim decreases, notably to 0.54% in 2017. The adjusted ROE exhibits a steadier and generally higher trend, commencing at 3.17% in 2015 and rising to 8.84% in 2019 with minor variation. The adjusted ROE consistently exceeds the reported ROE across all years, indicating that adjustments improve the perceived return efficiency on equity.

Overall Insights

The data reveals that adjustments for reported and deferred income taxes substantially affect the financial presentation of net income, equity, and profitability measures. Adjusted figures tend to smoothen fluctuations and provide higher values, indicating potentially more favorable financial performance and strength than the reported metrics alone suggest. The upward trends in adjusted net income and adjusted ROE reflect improving profitability, whereas the decline in reported stockholders' equity contrasts with growth in adjusted equity, indicating accounting treatments materially impact the reported capital base.

The analysis of the financial data over the five-year period reveals several important trends in both reported and adjusted figures. Reported net income attributable to the company exhibits significant variability, starting at 253 million US dollars in 2015, peaking to a high of 2,190 million US dollars by 2019. There is an overall upward trend despite fluctuations in 2016 and 2017, where net income notably decreased to 183 million US dollars in 2017 before recovering substantially in subsequent years.

Adjusted net income, which presumably accounts for deferred income tax and other adjustments, shows a steadier and more consistent upward trajectory. Starting at 945 million US dollars in 2015, it grows each year to reach a peak of 2,907 million US dollars in 2019. This continuous growth in adjusted net income suggests improved profitability when accounting for non-recurring or deferred tax effects.

Total assets present a contrasting pattern, with both reported and adjusted asset values gradually declining over the period. Reported total assets decrease from 84,104 million US dollars in 2015 to 74,157 million US dollars in 2019, reflecting a contraction in the asset base. Adjusted total assets follow a similar downward trend, starting at 78,781 million US dollars in 2015 and decreasing to 73,300 million US dollars by 2019. This decline in assets suggests a possible strategy of asset optimization, divestiture, or depreciation impacts exceeding new asset acquisitions.

Return on assets (ROA) further emphasizes the improvements in profitability relative to assets. Reported ROA increases from a modest 0.3% in 2015 to 2.95% in 2019, indicating a stronger generation of profit from the asset base over time, albeit with some inconsistency visible in 2017 where ROA dipped to 0.23%. Adjusted ROA shows a more robust improvement, climbing steadily from 1.2% in 2015 to 3.97% in 2019. This suggests that when adjusting for deferred income tax and other factors, the company has enhanced its efficiency in utilizing assets to generate returns.

Overall, the data indicates that the company has experienced substantial growth in adjusted profitability and efficiency despite a shrinking asset base. The disparity between reported and adjusted figures highlights the influence of tax-related adjustments on reported performance. The increasing ROA values imply enhanced asset management and improved returns over the analyzed timeframe.