Author Topic: KMI - Kinder Morgan  (Read 137108 times)

frommi

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Re: KMI - Kinder Morgan
« Reply #270 on: December 09, 2015, 06:24:11 AM »
That makes basically no impact on leverage. This thing is levered 5.5x. Lowering to something reasonable needs at least ten times the ebitda you calced.

rough calc:

2017: 5.2 44/8.5
2018: 4.9 44/9
2019: 4.6 44/9.5

This is the magic of increasing EBITDA with leverage, it decreases the leverage at a faster rate than paying down debt.


Palantir

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Re: KMI - Kinder Morgan
« Reply #271 on: December 09, 2015, 06:42:43 AM »
Sigh...
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

RRJ

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Re: KMI - Kinder Morgan
« Reply #272 on: December 09, 2015, 12:29:15 PM »
+1.  Thanks.

That makes basically no impact on leverage. This thing is levered 5.5x. Lowering to something reasonable needs at least ten times the ebitda you calced.

rough calc:

2017: 5.2 44/8.5
2018: 4.9 44/9
2019: 4.6 44/9.5

This is the magic of increasing EBITDA with leverage, it decreases the leverage at a faster rate than paying down debt.

thefatbaboon

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Re: KMI - Kinder Morgan
« Reply #273 on: December 09, 2015, 12:59:02 PM »
Does anyone remember how they justified not factoring a depreciation charge against dcf for the Tankers? 


awindenberger

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Re: KMI - Kinder Morgan
« Reply #274 on: December 09, 2015, 01:21:47 PM »
+1.  Thanks.

That makes basically no impact on leverage. This thing is levered 5.5x. Lowering to something reasonable needs at least ten times the ebitda you calced.

rough calc:

2017: 5.2 44/8.5
2018: 4.9 44/9
2019: 4.6 44/9.5

This is the magic of increasing EBITDA with leverage, it decreases the leverage at a faster rate than paying down debt.

I personally think that KMI could still go cheaper, but why do you two disagree with Frommi? KMI management said they plan to use the $3.9bil in 2016 to fund almost all of their $4.2bil in growth capex projects. If they do actually get 13% return on their new investments, EBITDA would climb almost $500mil, with debt moving up incrementally. Maybe its not exactly what Frommi used, but wouldn't it look something like this:

2017: 5.25  44.6/8.5
2018: 5.00  44.9/9
2019: 4.75  45.2/9.5

The Debt/EBITDA ratio doesnt move down quite as fast as Frommi suggested, but it is being reduced.

RRJ

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Re: KMI - Kinder Morgan
« Reply #275 on: December 09, 2015, 01:39:17 PM »
If you were asking about my post, I was actually agreeing with frommi and you on this.   I see this as a perfectly rational and not that difficult a strategy to execute. 

awindenberger

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Re: KMI - Kinder Morgan
« Reply #276 on: December 09, 2015, 01:52:45 PM »
If you were asking about my post, I was actually agreeing with frommi and you on this.   I see this as a perfectly rational and not that difficult a strategy to execute.

I was referring to Palentir's post, but thought you agreed with him actually.

handycap5

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Re: KMI - Kinder Morgan
« Reply #277 on: December 09, 2015, 02:12:28 PM »
when i played with the numbers, i have them increasing their net debt in 2016.

a guess at 2016 might be:

EBITDA 7.8 (given)
Cash from ops (I assume this is the same as "distributable cash flow") 5.1 (given)
capex -4.7 (given)
JVs net 0.2 (guess)
acquisitions 0 (guess)
net of above 0.6 (math)
dividends to common and preferred -1.25 (given)
increase in net debt 0.7 (math)
44.7/7.8 EBITDA = 5.7x leverage.

i'm surprised they didn't cut dividend to zero and paint an attractive 2018 picture when they are delevered, pig is through the boa, and can start advertising faster growth. upside in the stock is if they can get the "ponzi scheme" MLP wheel rolling again with high priced equity issuance. limping along seems like a bad strategy, business will start to look like a capital intensive, slow growth C-corp (NO!)....

but others on this thread have been sharper with the numbers, what am i getting wrong?

thefatbaboon

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Re: KMI - Kinder Morgan
« Reply #278 on: December 09, 2015, 02:33:33 PM »
Handy you're alright except double counting the sustaining capex which is already excluded from dcf. Think that gets your increase to 0.2.
And you might want to double check your implied 44 starting net debt. Which I think will be a little lower.
« Last Edit: December 09, 2015, 02:44:51 PM by thefatbaboon »

thefatbaboon

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Re: KMI - Kinder Morgan
« Reply #279 on: December 12, 2015, 04:38:59 AM »
Filed an 8k yesterday about highstar getting margin called on some of their shares and going under 2.5% as a result and consequently losing a right to nominate director.